Transfer concerns with TSP and the Basic Benefit Plan - Federal Employees

Federal Employees who complete 5 years of creditable civilian service may qualify for both the TSP retirement savings (individual and agency contributions during service) and the Basic Benefit Plan, (in addition to Social Security) under the Federal Employee Retirement System.

Both plans provide for retirement income after you have met the age and service requirements.

Often, federal retirees will feel compelled to consider transferring their account values from one or both of these retirement benefits for investing in alternative financial products. 

Prior to making such a decision, consider the following:

  1. What is the need driving the decision, and is it aligned with your goal(s)?
  2. TSP funds provide for broad diversification and risk management, at the lowest fee structure you are likely to find.
  3. You are in control of your TSP account. Beyond meeting your retirement age, there are no complex requirements or third parties between you and accessing your funds. 
  4. Once you liquidate your federal retirement accounts there is no going back (Unless you go back to work for the federal government). 

On occasion, there are valid reasons to consider pulling your funds from your federal accounts.  These reasons are due to circumstances unique to the individual.

Take away - The federal retirement benefit structure is hard to replicate, from a risk:return relationship, for the saver, or the retiree.