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Thanks TSP for joining the 1980s
- Thread starter snake020
- Start date
Can you say "financial services industry lobby" ?
Honestly, if it's an economist's "nudge" to say: "hey, these aren't a good option compared to what we offer already," I'm fine with it. Too many Sailors would have been lulled into poorly managed active funds with high expense ratios compared to now their Chief can say: "just go with C and S funds" or "just go with the L fund" in Boot Camp.
Stock pickers and market timers always lose. Always.
I can split this into another thread if @snake020 prefers, but I figured I'd piggy back here first...
I'm trying to figure out what to do with a 4-figure-ish 401K that isn't getting anything added to it, probably forever. I also have my TSP L-fund from the Navy and a much smaller Lifecycle 401K fund from my current employer.
Since usually, more money makes more money, I'm thinking of putting the dead account money into TSP, but I could also recharacterize it into my current employer fund. Anyone have an opinion on one over the other? Both funds are generally productive (the last few months notwithstanding), so it's more a matter of one being somewhat bigger than the other.
Or...am I missing something and can I even recharacterize a 401K into TSP? I thought I read you could, but I know many of you are smarter on this stuff than I am.
I'm trying to figure out what to do with a 4-figure-ish 401K that isn't getting anything added to it, probably forever. I also have my TSP L-fund from the Navy and a much smaller Lifecycle 401K fund from my current employer.
Since usually, more money makes more money, I'm thinking of putting the dead account money into TSP, but I could also recharacterize it into my current employer fund. Anyone have an opinion on one over the other? Both funds are generally productive (the last few months notwithstanding), so it's more a matter of one being somewhat bigger than the other.
Or...am I missing something and can I even recharacterize a 401K into TSP? I thought I read you could, but I know many of you are smarter on this stuff than I am.
I have consolidated money from several old 401ks from former civilian employers into my TSP. Unfortunately, I got "penalized" several years later during my divorce. But still, paying my ex off in pre-tax money that she can't collect for another 15 years was a small victory.
Just to offer another option, you could also roll it over into an IRA. This would open up much more investing options than a 401k or the TSP can offer. Info here. That said, if you're good with the L Fund or with your current employer's offerings, this probably doesn't help. But if you want more diversity in your retirement investments than those plans offer you, a rollover might be worth pursuing.
Outside of that, if it were me, I'd see how the two lifecycle funds compare to one another, with my biggest emphasis on expenses/fees, and a slightly smaller emphasis on how aggressive one is over the other, specifically which one is more suited to my risk tolerance. But I'd honestly probably prefer the IRA rollover option. The TSP's super-low fees aren't as competitive as they used to be. Vanguard and Fidelity are catching up, and the latter even offers some zero-fee products.
Here's info for moving a 401k into a TSP if you haven't already found it.
I have multiple IRAs with TRP already, so that's certainly an option. I guess I was hung up on the $5500/year limitation for contributions vs. rolling over. I also have a couple of life-cycle type IRAs, and TRP's fee vs performance has always been pretty solid. That may be the option.
Thanks.
TSP is now offering in-plan conversions (from traditional to Roth) and you don't have to do the whole thing at once, which is very attractive for tax planning. I'm now considering rolling my 401ks into TSP rather than into my Roth IRA (with employer matches being conversions) to give me that flexibility rather than having to do everything at once and potentially go into higher tax brackets. The additional problem with some of my legacy 401ks is the quarterly recordkeeping fees, so I'm looking to roll them out soon.
Anyone have buyers remorse from converting to TSP? My 401ks are in index funds that are roughly equivalent to the TSP C and S funds, so I'm not seeing a downside to this.
Anyone have buyers remorse from converting to TSP? My 401ks are in index funds that are roughly equivalent to the TSP C and S funds, so I'm not seeing a downside to this.
A bird in the hand, and all that.
I have multiple IRA/401k accounts with the ability to convert, so I've targeted a couple of those for conversion at a rate TBD. Thanks for reminding me to ask my financial advisor about that.
Wrong, but I understand why you think that. The Ramsey/Bogglehead/Weekend Portfolio Manager crowd are obsessed with the “only 20% of PMs beat the S&P in any year” soundbite even though they neglected to read the fine print of the SPIVA scorecards or take into account the real purpose of active management.
I’ll be the guy that says the unpopular thing in a chat clearly full of DIY-retirees. If you’re mass affluent (investable assets less than $2mn) then there is nothing wrong with keeping money in TSP or just indexing. You should consider asset allocation inside of your retirement plans as you approach retirement to mitigate sequence of returns risk; but you’re unlikely to get a significant performance contribution from investment selection at that asset level.
Once you’re above $2mn, there are absolutely material advantages to working with a portfolio manager to optimize your investments; even more so if the majority of your funds are in tax-deferred accounts.
I don't disagree, but you're talking about two different things here: Stock picking vs. working with a professional portfolio manager.
My take on the Ramsey messaging is that they're trying to discourage the Social Media fed DIY investor crowd (e.g. "get rich with this IPO!"), which statistically does tend to lose their ass. Like anything, it can be done right if you have the necessary knowledge and discipline, but most individual investors probably don't.
I consolidated all my 401K's to TSP when I took my GS appointment in 2020. I am really pleased with that decision. My experience with all the TSP fund options are positive especially the target year L funds. YMMV of course.
Couldn't you just roll your employer matches into a traditional IRA and do conversion on your own time instead of all at once?