Why You Should Roll Over a TSP sponsored by Aaron Steele

Why You Should Roll Over a TSP sponsored by Aaron Steele


As per Aaron Steele in the 13 years between 2000 and 2013, each year saw 40,000 or more federal employees enter retirement; in 2013 alone, this number was at 62,000. By 2023, it’s expected that 30% of the federal workplace will be eligible to retire. With this in mind, the TSP is already taking steps to encourage workers to keep their money invested even as retirement gets closer.


Aaron Steele said as you may have seen already, the board and body responsible for the TSP are claiming that keeping the balance invested provides freedom, simple choices, and easy transfers. In the interest of keeping things fair, we want to look into the other side of the argument and assess three reasons why you should roll over your TSP.


Lack of Financial Services


Unfortunately, one of the biggest downfalls of keeping funds in a TSP is the poor withdrawal options. In fact, Aaron Steele said this extends to several financial services including financial planning and investment management advice and guidance.


Last September, new withdrawal options were introduced, and this has provided some more flexibility. This being said, it still doesn’t compare to what can be found elsewhere. Within the distribution rules, it stated that both changes and withdrawals still needed a notarized signature or equivalent materials. If you have money elsewhere, all it would take to make adjustments is a call to your financial advisor.


With regards to financial services, withdrawals are one thing, but the lack of financial planning guidance is more important for many. Considering the many fantastic services away from a TSP, it’s hard to justify making big investment decisions alone. In truth, we can have gaps in our financial plan for months just because of this deficiency.


Lack of Investment Options


As far as employer-sponsored retirement plans go, the TSP has the lowest cost in the US, and we understand that this is a great advantage to have. On the other hand, it’s hard to overlook the lack of options. With only five to choose from, we can’t access emerging markets, medium-sized businesses, or alternative markets.


To stay affordable, the G fund is the only fund that isn’t indexed. While this definitely has advantages, there’s a danger to only having index funds in your portfolio. Especially with the lack of professional management, we’re blindly following a market index and hoping for the best. Without expert management, negative and unpredictable market environments can lead to increased market volatility for account holders.


Lack of Consolidation


As per Aaron Steele in recent years, it has become obvious that investment consolidation is the best way forward. With everything under one financial institution and fiduciary advisor, we enjoy the following benefits:


  • Simple estate planning admin
  • Simplified statements
  • Easy calculations for portfolio total returns


As you’ve probably guessed, we can only consolidate retirement assets with a TSP. For non-qualified investments, we work with another institution. For the best financial plan, we believe in consolidation with more than just retirement accounts. Without consolidation, there’s a risk to investment and estate planning as well as tax. Wouldn’t it be better to spend extra time with family and friends than have to manage various financial services?


We get that the TSP is a low-cost service, but this is reflected in the lack of services, investment options, and consolidation opportunities. To meet the goals of yourself and your family more closely, we highly recommend building a relationship with a finance professional. You’ll benefit from financial planning, tailored advice, more investment choices, and consolidation across your whole portfolio rather than just retirement assets.


Other Aaron Steele Articles

Six Reasons Why You Won't Receive Social Security

There Are New Things Coming for the TSP

Fund Retirement Needs and Increase Your TSP Contributions

Will IRA's Divesting From Fossil-Fuels Cost You? by, Aaron Steele

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