Why does your advisor want you out of the cheapest plan on earth?
The federal Thrift Savings Plan charges fees measured in hundredths of a percent. If you’re a federal employee, someone has probably still pitched you on rolling out of it. Follow the math and you’ll see why.
Consumer education, not investment advice. Paul Powell is not currently a licensed financial advisor.
The TSP’s expense ratios run a few hundredths of one percent a year — pennies per thousand dollars. An advisor can’t bill money that stays there. Roll it into an IRA under their management and the same dollars start paying an annual fee commonly around 1% — dozens of times the TSP’s cost. The pitch isn’t about your retirement. It’s about whose billing system your retirement sits in.
You already own what everyone else is selling
Let’s establish what you’d be leaving. The TSP is the retirement plan for federal employees and the military — millions of participants, hundreds of billions of dollars, run at a scale no retail firm can touch. That scale is why its funds cost a few hundredths of one percent a year. Not one percent. Hundredths of one percent. On $100,000, that’s tens of dollars a year, not a thousand. The pension plans I sat across from for twenty years spent careers negotiating for pricing like that. Federal employees get it by default.
Now the pitch. Around federal retirement seminars, agency break rooms, and LinkedIn inboxes, a small industry of advisors markets specifically to federal employees — often under titles like “federal benefits specialist” or “FERS retirement expert.” The message: the TSP is too limited, too rigid, too basic for someone like you. The prescription is always the same. Roll it into an IRA — with them.
Run the numbers on that prescription. Move $400,000 from the TSP into an IRA at a 1% advisory fee and your annual cost goes from roughly a couple hundred dollars to roughly $4,000 — before fund expenses, which are now retail too. Compounded over a retirement, that difference is not a rounding error. The compounding arithmetic is simple: a 1% annual fee on a $500,000 portfolio compounds to roughly $560,000 in forgone wealth over 25 years at a 7% return. That’s the size of the decision being made in a “free” retirement seminar.
Are there real reasons to move TSP money? A few, for some people: more withdrawal flexibility in some situations, broader investment choice, Roth conversion mechanics. Those are worth an honest conversation. But honesty here has a price tag attached — the person explaining your options earns thousands a year if you leave the TSP and nothing if you stay. The TSP, meanwhile, has no salesforce at all. Nobody gets a commission when you do the cheap, boring, mathematically sound thing. Which is exactly why you never hear the case for it.
Completely. That’s the point.
Marketing to federal employees is legal. Recommending a TSP rollover is legal — regulators have warned firms about misleading federal-employee marketing, and enforcement actions have occasionally followed the worst of it, but the ordinary pitch operates comfortably inside the rules. And the rule that would have forced rollover advice to a true fiduciary standard was vacated in court — for the second time — in 2026. This site doesn’t cover crooks; the justice system handles those. It covers the ordinary, structural, perfectly legal mechanics that quietly work against you — because those are the ones you’ll actually encounter.
The cheaper your current plan, the higher the bar any rollover has to clear — and the TSP sets the bar about as high as it gets on earth. An advisor moving you out of a 2% variable annuity has an easy case to make. An advisor moving you out of a plan costing hundredths of a percent has to justify multiplying your costs by a factor of ten, twenty, or more. If their written case doesn’t engage with that math directly — in dollars — it isn’t a case. It’s a pitch.
Make them beat the TSP on paper
Treat the TSP as the incumbent that any proposal must defeat in writing. Not with adjectives — “limited,” “basic,” “government fund” — but with numbers: your total annual cost today, in dollars, versus total annual cost under the proposal, and exactly what you receive for the difference. Remember that partial moves exist, and that money can also roll into the TSP. An advisor who never mentions either option is narrating a sale, not an analysis.
Then vet the person like any other candidate — a “federal benefits specialist” title changes nothing. Pull their record on BrokerCheck and Form ADV, send the written due-diligence questions, and if the pitch came with a free seminar, a countdown, or a scary story about the TSP’s limits, hold it against the Red-Flag Checklist before you sign anything.
“Please show me, in writing: my TSP’s total annual cost in dollars, the total annual cost of your proposal — your fee plus all fund expenses — and the specific benefits that justify the difference. Do you or your firm earn more if I move my money out of the TSP than if I keep it there?”
You spent a career earning access to the cheapest retirement plan on the planet. Why would you tip that advantage to the first person who calls it a limitation?
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