Military TSP: A Comprehensive Guide to Maximizing Your Retirement Savings

beneficiary designation current. Life changes such as marriage, divorce, the birth of a child, or the death of a beneficiary should all prompt a review of your TSP beneficiary designation. You can update your beneficiary designation at any time through your TSP account online, and it is worth reviewing it at least once a year alongside your other account information.

What Happens to Your TSP When You Leave the Military?

When you separate or retire from the military, you have several options for your TSP account:

• You can leave your money in the TSP: The TSP’s low fees and solid investment options make this a reasonable choice for many former service members, and you can continue to manage your account after separation.

• You can roll your TSP into an IRA: This gives you more investment flexibility and access to a wider range of funds, though you will likely pay higher fees than the TSP charges. A Roth TSP balance should be rolled into a Roth IRA, and a traditional TSP balance into a traditional IRA, to avoid triggering a taxable event.

• You can roll your TSP into a civilian 401(k): If your new employer offers a 401(k) with good investment options and low fees, rolling your TSP into it can help consolidate your retirement accounts.

In most cases, leaving your money in the TSP or rolling it into an IRA are the two strongest options. What makes the most sense depends on your individual financial situation. A fee-only financial planner can help you evaluate which path is right for you.

Start Maximizing Your TSP Today

The TSP is one of the most powerful retirement savings tools available to military members, and its combination of low fees, tax advantages, government matching contributions, and deployment-specific benefits make it uniquely valuable for those who serve. The key is to start early, contribute consistently, and take full advantage of the benefits available to you.

For more information on maximizing your TSP, visit the Thrift Savings Plan website or speak with a fee-only financial planner familiar with military benefits.

Meet the Author

Kristi Muse is a military reservist spouse and freelance writer. She loves writing about strategies to save military families money, get out of debt, and live a frugal life.

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