Road Map to Retirement: What do I do with my TSP?

Oct 4, 2022 | Retirement Income, Retirement Planning, Thrift Savings Plan

As a federal employee, you are probably aware that your Thrift Savings Plan offers many of the same advantages as a 401(k) plan often offered by private sector employers. There are many options to consider when managing your TSP—fund options, how much to contribute, and Traditional vs. Roth. Contribution limits usually go up a little bit each year, and your TSP offers investment options that are similar to those included within 401(k) and other retirement accounts.

The retirement income you will receive depends on how much you and your agency contribute over your working years. Participating in the TSP can significantly increase your retirement income, but it is important to start early. This gives the money in your account more time to increase in value through the compounding of earnings and contributions. 


Contribution limits for 2022 total $20,500.  For individuals over 50, the catch-up contribution limit is $6,500.  This amount is in addition to the regular TSP Limit of $20,500.  The government will match FERS participants if you contribute at least 5% of your bi-weekly gross pay each pay period.  You will receive the 4% Agency Matching contributions each pay period and the Agency Automatic 1% contribution each pay period. 


The money contributed to a Traditional TSP is pre-tax, meaning you’ll make your TSP contribution before your income is taxed.  However, when you withdraw money from the Traditional TSP, you will pay taxes on the contributions and earnings.  Contributions to a Roth TSP are taxed prior to going into your TSP.  The advantage is that you will not pay taxes when you withdraw money from a Roth TSP.  Deciding whether to have a Traditional, Roth, or both is an individual decision dependent upon your specific situation.  


There are two types of approaches when investing your funds – L Funds (known as lifecycle funds) and Individual Funds (G, F, C, S, and I Funds)

  • L Funds are a designed mix of stocks, bonds, and government securities.  L Fund holdings are adjusted periodically but are still comprised of G, F, C, S, & I Funds.  You select your L Fund based on the time you plan to start withdrawing your money.  The L 2065 fund will have more price variability than L 2025, that’s because L 2065 is designed for younger participants. L 2065 has more growth potential, though.  
  • With Individual Funds, you make your own decisions about your investment mix by choosing from any or all of the individual TSP investment funds (G, F, C, S, and I Funds).


This year there have been some significant updates to the TSP website and how to manage funds. The process of requesting a withdrawal or distribution is now more efficient and saves time with the ability to use electronic signatures and submit many requests entirely online. If you make a distribution request for installments from your traditional or Roth balance and want to roll over the money to an IRA or eligible account, you’ll be able to roll over the entire portion of the installment or specify a dollar amount for a partial rollover. 


If you are looking for guidance on how to manage your TSP account, Benchmark Financial Group is here to help. You have several options, whether managing the various Funds in TSP or choosing other options such as rolling it out of TSP if it makes sense for your situation. It’s always best to split between several accounts, which requires planning and attention to help you maximize your assets.


It all starts with gathering your information, discussing your goals, and preparing a plan so that we can help you maximize your income in retirement. With the right strategy, you can potentially get your income to be equal to or exceed your pre-retirement net income. To get started, schedule an appointment today with Benchmark Financial Group by filling out the form online or calling David Raetz at 913-534-8256 to discuss your financial needs. Benchmark Financial Group is happy to help you navigate your options and determine the best path to move toward your financial goals.

*Securities and Advisory Services Offered Through CreativeOne Securities, LLC  Member FINRA/SIPC and an Investment Advisor.  Benchmark Financial Group, LLC and CreativeOne Securities, LLC are not affiliated.

9300 W. 110th Street, Ste 160
Overland Park, KS 66210

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