A comprehensive guide for government employees on managing your Thrift Savings Plan after separation from federal service
As a government employee, your retirement benefits typically consist of two main components:
Your pension provides a monthly income based on your years of service and high-3 average salary. This is a defined benefit that you receive for life after retirement, regardless of market performance.
Your TSP is similar to a 401(k) - a retirement savings account where you contribute pre-tax or Roth dollars. The government may also provide matching contributions. Unlike your pension, TSP balances fluctuate with market performance.
Whether you're laid off, taking early retirement, or simply separating from federal service, understanding your options is crucial:
If you've met the service requirements, your pension is secure. You'll receive monthly payments based on your years of service and salary. This income stream is protected and not affected by market volatility.
Your TSP account remains yours, but you have several options:
While TSP fees are relatively low, they still exist. When you roll over to an Index Universal Life policy or Fixed Index Annuity, you can eliminate many ongoing management fees and keep more of your money working for you.
TSP funds are invested in the market, which means they can lose value during downturns. Rolling over to a Fixed Index Annuity or IUL policy protects your principal from market losses while still allowing you to benefit from market gains.
With products like Fixed Index Annuities, your money is linked to market indexes but protected from losses. You get upside potential without downside risk - your account value can only go up or stay the same, never decrease due to market performance.
Unlike TSP, which can run out if you live long enough, a Fixed Index Annuity can provide guaranteed income for life. This gives you the peace of mind knowing you'll never outlive your retirement savings.
Many government employees worry about the safety of moving their hard-earned retirement savings. Here's why a TSP rollover is a secure decision:
TSP rollovers to qualified retirement accounts like IRAs, annuities, and life insurance policies are completely legal and approved by the IRS. When done correctly, there are no taxes or penalties.
Fixed Index Annuities and Index Universal Life policies are issued by insurance companies that are heavily regulated by state insurance departments. Your money is backed by the financial strength of these regulated institutions.
Unlike market-based investments in TSP, Fixed Index Annuities guarantee your principal. You cannot lose money due to market downturns - your account value is protected.
When you roll over your TSP, the funds transfer directly from the TSP to your new account. You never touch the money, which means no risk of taxes or penalties. This is called a direct rollover or trustee-to-trustee transfer.
Rolling over your TSP is easier than you might think. Here's how the process works:
First, we'll discuss your retirement goals, current financial situation, and the best strategy for your TSP funds. Carlos will explain all your options and help you determine which product (IUL, FIA, or traditional IRA) best fits your needs.
Carlos will present you with a customized strategy showing projected growth, guaranteed minimums, and income options. You'll see exactly how your retirement will look with different scenarios.
Once you've chosen your strategy, Carlos will help you complete the application for your new IUL policy or Fixed Index Annuity. This typically takes about 30-45 minutes and can often be done electronically.
Carlos will help you complete the TSP rollover paperwork. The TSP will send your funds directly to your new account via a direct trustee-to-trustee transfer. This typically takes 2-4 weeks.
Once the funds arrive in your new account, they're immediately protected from market losses and begin earning interest based on your selected index strategy. You'll receive regular statements and have access to your account information 24/7.
Carlos specializes in helping government employees navigate their retirement options after separation from federal service. He understands the unique challenges and opportunities that come with TSP rollovers.
Every government employee's situation is different. Carlos takes the time to understand your specific needs, goals, and concerns to create a personalized retirement strategy that works for you.
From the initial consultation through the rollover process and beyond, Carlos provides ongoing support. He'll answer your questions, handle the paperwork, and ensure your transition is smooth and stress-free.
Carlos believes in educating clients so they can make informed decisions. He'll explain all your options clearly, answer every question, and never pressure you into a decision. Your peace of mind is his priority.
No, as long as you do a direct rollover (trustee-to-trustee transfer) to a qualified retirement account, there are no taxes or penalties. The money moves directly from your TSP to your new account without you ever touching it.
Yes, but access depends on the product you choose. Index Universal Life policies often have more flexible access to cash value, while Fixed Index Annuities may have surrender periods. Carlos will help you select a product that balances growth with your liquidity needs.
The entire process typically takes 2-4 weeks from the time you submit your rollover paperwork to the TSP. Carlos handles most of the work, making it as simple as possible for you.
Generally, you cannot roll over your TSP while still employed by the federal government. However, if you're over 59½, you may have in-service distribution options. If you've separated from service or are planning to, that's when a rollover becomes available.
No, you can choose to roll over a portion of your TSP and leave the rest. However, many people choose to roll over the entire balance to maximize protection and minimize fees. Carlos will help you determine what makes sense for your situation.
Schedule a no-obligation consultation with Carlos to discuss your retirement income strategy and learn how these solutions might fit your goals.
Important: This information is educational in nature and is not intended as financial, tax, or legal advice. TSP rollovers involve important decisions that should be made in consultation with qualified professionals who understand your individual circumstances. Insurance products have specific terms, conditions, and limitations. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.