Should you roll your Thrift Savings Plan into an IRA? If you separated from federal service during or after the calendar year you turned 55 and you are still under age 59½, consider waiting before completing a full TSP rollover.
The TSP Age 55 Rule may allow you to withdraw money from your TSP without paying the 10% early-withdrawal penalty. However, this exception does not transfer to an IRA. Rolling the entire balance into an IRA could limit penalty-free access to that money until age 59½, unless another IRS exception applies.
An IRA may provide more investment choices and greater flexibility, but the TSP offers very low administrative expenses and withdrawal rules that may be valuable during early retirement. You can generally complete a rollover later, so compare your income needs, investment options, fees, and tax consequences before moving the money.
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