TSP Retirement Planning Guide

An honest framework for the decisions at hand. Not tax or investment advice — your specifics matter.

The TSP is one of the best retirement vehicles in America

• Expense ratios of 0.05% on the C, S, I, F, G funds are among the cheapest in the industry.
• The G Fund is genuinely unique: a government-backed bond fund with intermediate-term yields but no interest-rate risk. Nothing comparable exists outside TSP.
• Don't roll TSP out purely for 'fund choice flexibility' — the flexibility usually costs you more in expense ratios than you gain in optimization.

Withdrawal flexibility — what changed in 2019

• Pre-2019: TSP withdrawal options were infamously limited.
• Post-2019 (TSP Modernization Act): monthly payments can be changed anytime, partial withdrawals allowed, in-service withdrawals at 59½, multiple withdrawal methods.
• Still less flexible than an IRA for complex withdrawal strategies (Roth conversion ladders, in-plan Roth conversions are unavailable).

Coordinating TSP with FERS and Social Security

• FERS retirement is a 3-legged stool: FERS basic annuity + TSP + Social Security. TSP is the variable component.
• FERS annuity + SS typically cover 60-80% of pre-retirement income. TSP covers the rest plus inflation protection.
• FERS supplement (if retiring before 62) bridges to SS — factor into TSP withdrawal rate.

Roth TSP vs Traditional TSP

• If your current tax bracket is lower than your expected retirement bracket, Roth wins.
• Most federal employees in GS-13+ brackets are already in the 24% bracket, likely dropping to 12-22% in retirement — traditional often wins marginally.
• Hedge: a mix of both. You'll have control over taxable income in retirement via withdrawal mix.

When rolling out of TSP makes sense

• Roth conversion ladder: TSP doesn't allow in-plan Roth conversions. To ladder, you need an IRA.
• Custom bond allocation: F Fund is bond aggregate; if you want TIPS, corporates, munis, you need IRA.
• Consolidation with spouse's estate planning: IRAs offer more beneficiary flexibility.
• Don't roll out just because an advisor gets AUM fees on IRA money and none on TSP money.