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Thread: Bucket Strategy with TSP and Vanguard accounts

  1. #1

    Default Bucket Strategy with TSP and Vanguard accounts

    For my retirement, Iwill have ~80% of savings in TSP and the remaining 20% inVanguard. When I retire(between age 58 to 59), I plan to roll over a portion of my TSPbalance to Vanguard. Am I only allowed one time rollover at the timeof retirement? Is it possible to rollover additional amounts over aperiod of time (say once every year?) after I retire but under 59 and1/2?

    For my TSPallocation, I would like to allocate 15% in a conservative allocation(say L25 ) and 85% to an aggressive allocation (e.g, S, C, or Idepending on the market condition).

    If I begin monthlyinstallment of a fixed amount after my retire, my understanding isthat the amount that I withdraw will be based on my allocation. Whatmethod can I use so that the monthly installment will come out of theconservative allocation (L25 fund) only?

    If this is noteasily done, then my next strategy is to rollover some money once ayear from my TSP to Vanguard then I can make monthly withdraw from myVanguard account (which is set to a conservative allocation) whileallowing my TSP allocation to be more aggressive. Is this strategypossible? That is, can I make a rollover of TSP money to Vanguardonce a year after retirement?





    Thank you.


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  3. #2

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    Default Re: Bucket Strategy with TSP and Vanguard accounts

    Yes it is possible to move your funds to Vanguard. It is not possible to choose what fund to withdraw from in TSP though. That is one big shortfall of TSP.

    TSP withdrawals are taken proportionately from all the funds you currently hold. If you're 50 G, 50 C, the withdrawal would be 50% from each fund. You can't elect to draw only from G fund.

    You can roll into an IRA with ease, and brokerage accounts are dying to get their hands on your money, but the rules on the Roth IRA are a bit more complicated and will involve a big tax hit. The law currently allows you to roll into an IRA once every 12 months. If you're going to roll into a traditional IRA, do it in one fell swoop and be done with it. Also be sure to do a direct rollover as opposed to indirect.
    Last edited by Bullitt; 03-23-2021 at 06:29 PM.

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  5. #3

    Default Re: Bucket Strategy with TSP and Vanguard accounts

    Thank you for the quick reply.

    It is good to know that I can do a direct roll into an IRA once a year. This would work perfect for my bucket strategy since at the beginning of each year, I just need to do a direct rollover of my expected spending for that year:-)

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  7. #4

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    Default Re: Bucket Strategy with TSP and Vanguard accounts

    Actually, a 401k would probably be a "plan" to IRA rollover, so I don't think the yearly limit would apply for TSP. Either way, I'd contact Vanguard for guidance in the process. Like I said, they are dying to get their hands on your money.

    Is there an advantage to doing a rollover yearly? It just seems like less headache with a one and done approach.

    You generally cannot make more than one rollover from the same IRA within a 1-year period. You also cannot make a rollover during this 1-year period from the IRA to which the distribution was rolled over.

    Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.

    The one-per year limit does not apply to:


    • rollovers from traditional IRAs to Roth IRAs (conversions)
    • trustee-to-trustee transfers to another IRA
    • IRA-to-plan rollovers
    • plan-to-IRA rollovers
    • plan-to-plan rollovers
    https://www.irs.gov/retirement-plans...-distributions

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  9. #5

    Default Re: Bucket Strategy with TSP and Vanguard accounts

    I don’t see a real advantage to do a yearly rollover. It was just a thought. Thank you for the info about one-per year limit. This is very useful to me.

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  11. #6

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    Default Re: Bucket Strategy with TSP and Vanguard accounts

    Bullit is right that the IRA rules are more complicated, especially if you retire before 59.5. If you retire after 55 (50 for LEOs) you can withdraw from TSP without penalty. In IRA you would have to use 72t rules to avoid penalty and if you do this you would have to continue for 5 years (I would not recommend this...withdrawing from TSP before 59.5 is better option). The proportional withdrawal rules isn't that big of an issue with monthly distributions and now you can take the withdrawal quarterly or annually. If you are really concern on where money is drawn from you can put everything in G Fund prior to withdrawal(s) using an IFT.

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