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You might consider rolling over funds from your Thrift Savings plan. Take a look at this. Save and Invest

How about investing in individual funds? This route is the best, and it’s what we recommend. You can pick how to balance each of the five types. Even if you do not want them to be in your portfolio, they can still be included. Your investment decisions are entirely yours.

After you have contributed sufficiently to receive the match, consult your financial advisor about opening a Roth IRA. A Roth IRA allows you to take full advantage of tax-free growth, withdrawals, and more options than what the TSP provides. You can max out Roth IRA but not reach 15%. If this happens, you can go to TSP and invest the remainder.

What is the Thrift Savings plan and how does it work?

How much should you invest in your TSP account from that 15%? We mentioned that you need to invest enough money in your TSP account so you can get the entire match. Do not leave money uninvested.

Talk with your tax or financial professional. Be open to discussing issues like tax consequences, service differences, fees, or expenses that may arise from retirement savings options. Ask your financial advisor if he or she recommends you to sell securities from your retirement plan, or buy securities in a new IRA. Don’t invest if you don’t fully understand the investment.

These funds make up Lifecycle funds. However, they can be invested on your terms according to your requirements. This allows you to retain control of your financial future, rather than leaving it in the hands a machine. Although individual investment funds may not offer the same investment options as a Roth IRA they are still a better option than a Lifecycle fund if there is the right combination. We recommend that you stay clear of Lifecycle funds, and instead choose individual investment funds which will keep you in control.

An IRS Form 5498 will be issued by the company receiving your IRA (IRA Contribution Information pdf). This tax form shows that the money was deposited in another retirement account. This form will protect you against being tagged with taxes or an early withdrawal penalty.

Learn the tax implications of your transfer

Through the Federal Employees Retirement System Act, 1986 saw the introduction of the Thrift Savings plan. TSPs allow federal employees to save tax-free money in retirement accounts. There are two types of TSPs: traditional TSPs where money is subject to tax when it’s withdrawn, and Roth TSPs which are exempt from tax on earnings but still pay tax on the contributions.

The money that you get may be rolled over to another person. You should ensure that your traditional IRA, or any other plan you have had in place, withholds enough taxes to cover the amount before the money is sent. If you don’t, your balance will be transferred to your account. You must make up any difference from your funds (i.e. the taxes withheld). You may have to pay federal income tax on any amount you don’t rollover and 10% penalty for early withdrawal.

After two years, in addition to the 1% contribution you are eligible for an additional 4% match. On the initial 3% that you contribute, the government will match your dollar for dollar. They match your next 22% for 50c per dollar. The full match is available if you pay 5%. This is an extra 5%

Talk to an investment professional if you would like more details about the TSP funds. These professionals can assist you in choosing the best funds while keeping your entire retirement plan in mind.

Be mindful

You can also transfer funds from any other retirement plan into your TSP account, such as 401k plans or other TSP accounts. If you’re not currently serving your country in the military, or are working for the Federal Government, then new contributions will be impossible. If you are looking to maximize the benefits of low expenses ratios, it is a good idea to keep your TSP account active.

If you are able to make tax-exempt contributions, you should have both a Traditional IRA as well as a Roth IRA.

Ryan founded The Military Wallet after separating as an active-duty military soldier in 2007. Since then, he has written about military benefits, financial and small business topics. He writes on personal finance, investing and other topics at Cash Money Life.

You can “rollover” money that you have received directly from your traditional IRA/plan and later you transfer it to your TSP account. Roth money cannot be transferred into the TSP. You must do your rollover no later than 60 days after you get your funds. To rollover eligible traditional money, use Form TSP-60 (Request for a Transfer to the TSP).