By Mike Miles
September 3rd, 2014 | L Fund
Q. I’m a 40-year old mailman with 17 years service. I plan on leaving the post office when I hit 52 (30 years service). I understand I need to leave my TSP alone until 55 without penalty. My house will be paid off before I’m 51. I plan to work part-time with less stress after 52. I have $91,000 in traditional TSP now ($15,000 in L2030), the rest in G fund. I just switched from 10 percent to 15 percent payroll withdrawal. Should I change my contribution to 100 percent going into L fund, or remain with my current 70/30 split in favor of the G fund?
A. Unless you qualify for one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf, you’ll have to wait until you reach age 59-1/2 to tap your TSP account without penalty. How you allocate your account is up to your investment advisor or manager, since they are responsible for delivering the results you’ll need. The G Fund is the safest bet, but it may not provide the long-term returns you’ll need to meet your goals. In any event, you should put as little money at risk as possible as you proceed.