The $500K TSP Mistake Most Former Federal Employees Make — And How to Avoid It

If you’re a former federal employee with a sizable TSP balance, congratulations.
You’ve done the hard work of saving and building wealth over decades of public service.

But now that you’ve left government — whether due to retirement, downsizing, or agency changes like DOGE — the real challenge begins:

How do you turn your TSP into reliable, tax-efficient retirement income without losing a big chunk to the IRS or the stock market?

Unfortunately, many former federal employees make costly mistakes simply because they don’t know what’s coming.

Let’s explore the top three — and what you can do instead to secure a better financial outcome.

❌ Mistake #1: Leaving Your TSP Untouched — and Unplanned

After leaving federal service, some individuals choose to leave their TSP right where it is.
It feels simple. Safe. Familiar.

But there’s a catch…

Once you turn 73, the IRS requires you to begin Required Minimum Distributions (RMDs) — whether you need the income or not.

This triggers:

• Unwanted tax bills

• Increased taxable income in retirement

• Potential Medicare premium hikes

• Reduced Social Security efficiency

TSP is great for accumulation, but not optimized for distribution. Without a plan, it becomes a tax time bomb.

❌ Mistake #2: Rolling TSP Into a Traditional IRA — Without a Roth Strategy

Many retirees roll over their TSP into a traditional IRA. While this gives you more investment options, it does nothing to solve the tax trap.

Here’s what you’re missing:

You have a unique window of opportunity — typically between the time you leave service and age 73 — where you can gradually convert taxable retirement dollars into a Roth structure.

When done strategically, this Roth conversion approach (what we call the Roth Accelerator) can help you:

• Reduce future RMDs (or eliminate them)

• Create tax-free retirement income for life

• Improve estate outcomes for heirs

• Avoid being pushed into higher tax brackets later

Many federal employees miss this window. And the cost? Hundreds of thousands in unnecessary taxes.

❌ Mistake #3: Keeping Your Retirement Future Tied to the Market

TSP funds are heavily market-dependent — with limited protection in volatile years.

Even if you roll your TSP into an IRA, your money is still subject to:

• Stock market fluctuations

• Election-cycle uncertainty

• Inflation and interest rate swings

If your retirement income is entirely market-based, it’s also unpredictable.
And uncertainty in retirement creates stress — especially when withdrawals begin.

A smarter approach involves decoupling part of your retirement income from market risk — giving you a foundation of stable, tax-free cash flow you can count on, regardless of what the S&P 500 does next year.

✅ A Better Way Forward: Tax-Free Income, Lower Risk, and Greater Control

At Sure Life Plans, we specialize in helping former federal employees make the most of their TSP after separation or retirement.

We offer a Roth Accelerator Planning Strategy that helps you:

• Minimize taxes over your lifetime

• Build tax-free income streams using IRS-approved rules

• Protect wealth from future volatility or legislation

• Leave more to family — not the government

Unlike traditional advisors who focus only on market performance, our approach is outcome-driven.
We focus on how to maximize what you keep, not just what you earn.

📈 Real Example:

Imagine you have $500,000 in your TSP at age 60.
Left untouched, that could balloon to a $1M taxable account by your 70s — which triggers big RMDs and even bigger tax bills.

But using the Roth Accelerator strategy, you could convert that gradually over 5–10 years into a tax-free account, generate predictable income, and reduce or eliminate RMDs altogether.

🧭 Next Step: See How It Works for You

If you have $400K+ in your TSP and have recently left government service, let’s run a complimentary Roth Accelerator Scenario.

We'll show you:
✅ How much you can convert tax-efficiently
✅ What your tax-free retirement income could look like
✅ How to reduce long-term risk and maximize legacy

📅 Click here to request your free strategy session → Book Appointment

Or feel free to call or email us directly. We’re here to help federal professionals make smarter retirement moves — before it’s too late.