Things to Consider Before Moving Money Into TSP's G Fund (2024)

FAQs

Should I move TSP money to G fund? ›

If you choose to invest in the G Fund, you are placing a higher priority on the stability and preservation of your money than on the opportunity to potentially achieve greater long-term growth in your account through investment in the other TSP funds.

Over the last 10 years, this fund has averaged a return of about 2.3%. Over the same period, inflation averaged about 1.8%. If all your money is invested in the G-fund, after taking into account purchasing power, your account will grow very little. Inflation is the #1 risk people face in retirement.

Basic Info. Thrift Savings Plan G Fund Monthly Returns is at 0.32%, compared to 0.31% last month and 0.29% last year. This is lower than the long term average of 0.37%.

You might consider investing more in our stock funds (C, S, and I) than in the more conservative G and F Funds at this stage of your career. Stocks present more risk but offer the opportunity for potentially higher returns over time.

In a nutshell, Ramsey advises federal employees to invest at least 5% in a Roth TSP, then invest the rest in a Roth IRA. He also recommends investing in a handful of TSP funds -- funds C,S, and I -- with a higher percent in the C Fund (at least 60 to 80%).

G Fund Returns

The G Fund has earned a compound annualized return of 4.2% since August 1990. Its year-to-date return is 2.35%, and its 1-year return is 3.87%. A $1,000 investment in 1990 would be worth $3,923 today.

These rules of thumb say you should have saved ... 2 to 3 times your income by age 40. 3 to 4 times your income by age 45.

The TSP C-Fund which approximates the S&P 500, has had an average annual 12.29 percent gain between 1988 and 2020; the TSP F-Fund, a broad index representing the U.S. bond market, has had an average annual 6.29 percent from 1988 to 2020; and the G-fund, long term U.S. Treasury notes, has had an average annual of 4.70 ...

What happens to the G fund if the government defaults? ›

The G fund still earns the interest, just not in real time. Eventually, the Treasury will "pay back" the fund to make it as if it never happened.

The G Fund is intended for very conservative investors. A Lifecycle (L) Fund serves as the default fund for new plan participants who don't specify a contribution allocation when they make their contribution.

If you work for more than one employer in the same calendar year, it's possible to contribute too much and exceed the IRS limits. If you over contribute, you may request a refund of the excess amount from the TSP. For a limited in January each year, we make the Refund Request Form available.

The Aggressive Funds

The C, S, and I funds are the more aggressive of the funds in the TSP. The reason they are called “aggressive” is because they have a much higher chance of sustaining major growth over time. But because of this, they can also be much more volatile than the G and F funds.

It depends, but most people should contribute to their TSP at least up to the matching funds limit (3% of your salary). Beyond this, the TSP is better if your taxes are high today and you expect them to be much lower in retirement. It is better to use your deduction against the higher tax rate.

Many participants choose to keep their money in the TSP because of the TSP's low-cost funds. And you can always move money into your TSP account by making rollovers from eligible employer plans and from traditional IRAs.

Given the current economic and market cycle, if you're nearing retirement and your cash reserves are not close to at least 6-12 months of your expenses, you may want to consider slowing down your TSP contributions so that you are able to take more of your paycheck home and use that additional capital to build up your ...

Where should I put my TSP when I retire? In most instances, the best options are to transfer your TSP assets to your new 401(k) plan, your IRA, or leave the assets in your TSP account. It's best to consult with your financial advisor to make sure that you make the right choice for your situation.

The taxable portion of your withdrawal is subject to federal income tax at your ordinary rate. Also, you may have to pay state income tax. An additional IRS early withdrawal penalty of 10% may apply if you're under the age of 59½.