Reply to TSP when retiring-- keep it or move it?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Op here. Not being able to choose which fund to withdraw from for RMDs is a major negative.[/quote]

Why does that matter?  You could just take your distribution and then immediately rebalance.  So if $10,000 came from the C fund and $10,000 came from the G fund, but you wanted $20,000 from the G fund, you would just move $10,000 from the G fund to the C fund the same day, right?[/quote]

Because the process you described doesn't work for TSP withdrawals.  If you want $20k out of the TSP, you cannot choose to take it out of the G fund.  You would have to move ALL of your money to one fund, request the withdrawal, then move it all back to the allocation you want.  Otherwise, if you want $20k, they are taking it out of ALL of your funds such that the total is $20k withdrawn.  I would have to do this maneuver every time I want to take a withdrawal.

Ideally, I would keep my short-term money in the G fund, and have all of my equities in Vanguard 401k.   Then when the market was low, I'd pull RMDs from the G fund, and when the market is high, I'd pull from the Vanguard equities.   But, under current law this is not possible.

[/quote]

It does take an extra transaction, but not necessarily the one you're describing.  You do the withdrawal, you get $20,000.  But your C fund now has $10,000 less than you want in it, so you at the same time move $10,000 from your G fund to your C fund.  You sold at a low price but you bought it back the same day at the same low price, so nothing changed.  Maybe the transaction takes a day, so you get the next day's price.  Not a huge deal, seems to me, if staying in TSP has other benefits. I'm not sure it does, but this would be the way to make it work.  [/quote]

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