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Walt  
#1 Posted : Sunday, June 09, 2013 10:40:40 PM(UTC)
Walt

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I am retired FERS and have to start taking distributions. I am looking for ideas from anyone who is doing this. Is it more advantageous to roll all into a Fidelity plan or to leave the money in TSP and take payments. Fidelity has more options and they prepared a decent proposal for me but, of course, there are fees of 1% compared to .27% in TSP. Has anyone had experience they might share?
Skippy1134  
#2 Posted : Sunday, June 09, 2013 10:45:29 PM(UTC)
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We're leaving mine in the TSP but we're also moving to a state that won't tax my TSP distributions. If we moved them to another fund they would be taxable.

As you can see from the responses, there is no single correct answer.

See if you can find a financial adviser who doesn't have a vested interest in getting their hands on your TSP. You may pay them a fee for their advice but might save money in the long run in determining your financial goals and where to place your money.

We were fortunate that my wife's company has advisers that manage her company's investments so didn't hard sell to manage mine. In fact when they heard of our tax advantage in NC they provided advice for the best disposition of our money within the TSP Lifecycle funds. Skippy11342013-06-10 07:57:04
dhacker56  
#3 Posted : Sunday, June 09, 2013 10:45:40 PM(UTC)
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Not all Fidelity funds have fees of 1.00% some of the index funds are MUCH lower.
PCRit  
#4 Posted : Sunday, June 09, 2013 11:21:38 PM(UTC)
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The advantage of leaving your funds in TSP is low maintenance fees (around .05-.06% last time I checked). However, you can only change the monthly distribution amount from TSP once a year, during open season. So if you need more funds from your TSP for an emergency, you’re out of luck until open season rolls around. Moving your funds to Fidelity or another brokerage firm makes sense if you need/want flexibility on your monthly distributions and you want to have more choices to actively manage your funds. Most brokerage firms have ETF index funds with very low fees, usually between .10 to .20%, which is still pretty low, but a 1% fee to way too high.
Walt  
#5 Posted : Monday, June 10, 2013 12:28:59 AM(UTC)
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I think I could try using the L Income fund of TSP for a while. I think the only option after starting payments is to roll it all over and that could be done after trying TSP for a while.??
Hobson  
#6 Posted : Tuesday, June 11, 2013 1:11:05 AM(UTC)
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Do you have to start taking distributions because of your age or because you need the money? It makes a difference as far as which investments you might consider.

I have no experience with taking distributions. My husband and I each have a Vanguard IRA. I rolled my TSP into mine. He's older and not too far from taking required distributions, so he chose the most conservative fund.

With bond interest heading up, funds that are invested in bonds aren't doing that great right now. But if this is the way you want to go, you can't beat Vanguard's .16% expense ratio.

https://personal.vanguard.com/us/funds/snapshot?FundId=0308&FundIntExt=INT

You can get to the other Vanguard target retirement funds here:

https://personal.vanguard.com/us/funds/vanguard/TargetRetirementList
Walt  
#7 Posted : Tuesday, June 11, 2013 1:21:01 AM(UTC)
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Thanks.
I am at the age where distribution is required and I could also use extra income. Not sure where to go or to just leave it in TSP and take monthly distributions.
Walt  
#8 Posted : Tuesday, June 11, 2013 1:25:33 AM(UTC)
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Just wondering if you are FERS or CSRS? That makes a difference since FERS retirement depends on TSP.
kaljor  
#9 Posted : Tuesday, June 11, 2013 8:18:12 AM(UTC)
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Walt, the answer to your question has more to do with your goals and desires than with financial issues. From a strictly financial perspective, I see no need to move your money from the TSP to anywhere. If you have a compelling reason to do so, then that's a different animal.

If you are talking about taking your required minimum distribution (RMD) you can set up monthly payments that satisfy this requirement and leave the rest where it is. If you find you need a little more, you can raise the monthly amount once each year, at the end of the year.

If you withdraw your entire TSP balance and transfer it to a standard Fidelity account, you will be liable for Federal and State Income tax on the whole amount. If you transfer some of your TSP to an IRA, you wouldn't pay tax on that, but you would still have to take your RMD each year. So in that case its the same as leaving it where it is.

Obviously a forum like this can't begin to cover all the possibilities, and the Fidelity salesman has likely spoken to you in depth about what you want to happen, so that's of some value.

My main question to you would be "What do you want to accomplish by moving your TSP?"
LinkC  
#10 Posted : Friday, June 14, 2013 4:56:25 AM(UTC)
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I rolled over my TSP to a Fidelity IRA after I retired in '10. If you rollover an existing retirement acct into a NEW Fidelity IRA the account fee is .5% instead of their normal 1%. (I'm assuming they still still do that.)

You are free to move money around and make withdrawals at any time. No restrictions on amount or number. (RMD still applies, of course.) That's a plus to me.

But the biggest draw is the return on investment. My Fidelity IRA has consistently beat a comparable mix of TSP Funds by 2-3%. That more than makes up for the .25% higher fee.

TSP is a great vehicle to accumulate funds while working, but rather limited once retired, IMHO.
"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'" <br />--what Reagan REALLY said.
italy4me  
#11 Posted : Friday, June 14, 2013 6:37:50 AM(UTC)
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I moved my entire balance to a private IRA. The government has already borrowed from the "G" fund and I no longer wanted this government to handle ANY of my money
LinkC  
#12 Posted : Friday, June 14, 2013 9:10:28 AM(UTC)
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"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'" <br />--what Reagan REALLY said.
Walt  
#13 Posted : Friday, June 14, 2013 9:32:28 AM(UTC)
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Thanks for that post. That tells me plenty.
I like TSP, but it is very limited in how you can access funds. If Fidelity is making more for you than TSP, that is surely a plus. TSP is very user-unfriendly. They will not ever give advice, whereas Fidelity works for you and communicates with you.
Walt  
#14 Posted : Friday, June 14, 2013 9:35:45 AM(UTC)
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I'm just looking to where I can maximize growth and still have a source of income and money if I need it.
Tryno  
#15 Posted : Friday, June 14, 2013 9:42:24 PM(UTC)
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If you haven't start made a withdrawal yet, I believe you could roll a portion into an IRA and leave the rest in the TSP. I moved my into a Schwab IRA and it's beat the TSP. The 1% you mention sounds like a financial adviser fee, I pay .8% to mine. I know most feel that's wasted money but if something happened to me, my wife would have no idea what to do with the funds so I view his fee as insurance for her.
Walt  
#16 Posted : Friday, June 14, 2013 10:26:39 PM(UTC)
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I have thought of that but when you split the total amount into smaller ones, the earning power diminishes. I have known some who use Schwabb and are satisfied. Also Vanguard is reported to be good. Fidelity, however, is one that has offices and agents to sit with and they seem to take pride in making money for clients. Still debating....I'd also like to know my wife had someone to go to if I am not around. The TSP is pretty hard to deal with and will not advise.
Tryno  
#17 Posted : Saturday, June 15, 2013 10:06:16 AM(UTC)
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Walt wrote:
I have thought of that but when you split the total amount into smaller ones, the earning power diminishes. I have known some who use Schwabb and are satisfied. Also Vanguard is reported to be good. Fidelity, however, is one that has offices and agents to sit with and they seem to take pride in making money for clients. Still debating....I'd also like to know my wife had someone to go to if I am not around. The TSP is pretty hard to deal with and will not advise.


My wife was the key for me, I might be able to handle an IRA without the advisor but she couldn't. My wife and I talked to two before retiring. Settled on one we trust in MN. My brother had dealt with him for several years with good results. I think earlier I said the fee was .8% but that was wrong. I believe it's actually 1% on first $250K and .8% on anything over that, no trading fees. Actually not much trading. Vance believes in setting a long term plan suited to the individual's risk acceptance and then sticking to that plan.

To me it's worth it to know my wife won't have to deal with that alone and that she trusts Vance. Vance is in his 60s and trying to cutback to 4 days a week so I don't know if he would accept new clients or not.   Vance Brandt 952-945-6455, call him if you want too, although sure there are others just as good and maybe better. I'm just comfortable with him handling things.     
FlatBroke  
#18 Posted : Sunday, June 16, 2013 3:27:33 AM(UTC)
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Walt wrote:
I am retired FERS and have to start taking distributions. I am looking for ideas from anyone who is doing this. Is it more advantageous to roll all into a Fidelity plan or to leave the money in TSP and take payments. Fidelity has more options and they prepared a decent proposal for me but, of course, there are fees of 1% compared to .27% in TSP. Has anyone had experience they might share?

... I have thought of that but when you split the total amount into smaller ones, the earning power diminishes.

I'm just looking to where I can maximize growth and still have a source of income and money if I need it.


FUSVX 0.05% Spartan 500 Index = C Fund

FSEMX 0.10% Spartan Extended Market Index = S Fund

FSIVX 0.12% Spartan International Index - I Fund

TSP funds Expense Ratio = 0.027%

If you move to Fidelity you should consider their Spartan funds. What are supposedly getting for the high 1% fee?

Splitting "the total amount into smaller ones" should not result in diminished earning:

$100 * 10% = $10

$50 * 10% = $5
$50 * 10% = $5

Attempting to "maximize growth" is okay while employed but is a red flag if done at retirement.

Skippy1134  
#19 Posted : Sunday, June 16, 2013 4:01:38 AM(UTC)
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FlatBroke wrote:
Attempting to "maximize growth" is okay while employed but is a red flag if done at retirement.


I have to disagree with you a bit on that. If you anticipate a TSP to help you for perhaps 40 years or more it needs to grow.
italy4me  
#20 Posted : Sunday, June 16, 2013 4:58:29 AM(UTC)
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Personally, retirement is not the time to be taking big risks with mo ey it has taken an entire career to accumulate. Just my personal opinion
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