What to Do with Your TSP If You Leave Federal Service: Navigating Uncertainty Without Panicking

Mass layoffs, agency restructuring, and talk of government-wide cost-cutting have left many wondering: Is my TSP safe? Should I move my money? What happens if I do nothing? There’s no sign that the government will seize or change existing TSP balances, but the sheer uncertainty is making a lot of people uneasy.

If you’re asking these questions, you’re not alone. Let’s break down what’s happening and the best moves you can make right now.

Should You Leave Your Money in the TSP?

The TSP is one of the lowest-cost retirement plans in existence, and that’s by design – it was created to give federal employees a cost-effective way to invest for retirement. But once you leave federal service, the dynamics change:

• You can keep your money in the TSP as long as your balance is at least $200.
• You cannot make new contributions unless you return to federal service.
• Your investment options remain limited compared to an IRA or a private-sector 401(k).

There are certainly plenty of attractive features you gain access to with your TSP. Expense ratios are a fraction of what many private-sector retirement plans charge, and the G Fund offers a stable return with no risk of loss – something that doesn’t exist anywhere else. Plus, starting in 2026, you’ll be able to convert traditional contributions to Roth contributions via a Roth in-plan conversion.

Can You Replicate the TSP in an IRA?

One major hesitation people have about rolling over their TSP is that they like how it works – especially its simplicity and low costs. The good news? You can recreate a similar investment strategy in an IRA using low-cost ETFs. If you roll over your TSP into an IRA, here’s how you can mimic each TSP fund:

TSP Fund	Equivalent Low-Cost ETF	What It Tracks
G Fund	No exact equivalent	G Fund is unique (low risk, stable returns)
F Fund	BND (Vanguard Total Bond ETF)	U.S. bond market
C Fund	VOO (Vanguard S&P 500 ETF)	S&P 500 (large-cap U.S. stocks)
S Fund	VXF (Vanguard Extended Market ETF)	U.S. mid/small-cap stocks
I Fund	VXUS (Vanguard Total International ETF)	International stocks

The G Fund is one of a kind  -no ETF perfectly replicates its low-risk, stable return. If you want something similar in an IRA, you’d need to mix Treasury bonds, short-term bond funds, and money market funds to get close.

Bottom Line: If you want to move your TSP but like the way it’s structured, you can replicate its funds using an IRA. Just make sure to choose an IRA provider with low fees, such as Vanguard, Fidelity, or Schwab.

The “What If” Question: Could the Government Take My TSP?

This is the real fear behind all the anxiety. People see mass layoffs, agencies being dismantled, and shifting policies, and they wonder – could the rules around the TSP change, too? Here’s what we know:

• Your TSP is your money. It is held in a trust fund and legally cannot be seized or repurposed by the government.
• TSP benefits have been debated before. Proposals in the past have included raising withdrawal ages, limiting the G Fund, or changing how employer contributions work – but never outright taking money from participant accounts.
• Future policy changes could happen. While there’s no current threat to the TSP itself, federal benefits – including retirement programs -are frequently reviewed and could be adjusted over time.

Bottom Line: There is no indication that the government will take your TSP. However, federal benefits in general are subject to political and economic shifts, so staying informed and having a strategy in place is key.

Could the Government Push People Away from the TSP?

Looking at government actions through the lens of who benefits, it’s worth considering whether there’s any incentive to weaken or privatize the TSP.

• The TSP as a whole is not a direct government expense, but the G Fund does create a financial obligation. The Treasury must pay interest on the securities held by the G Fund, sometimes at a higher rate than short-term borrowing. This creates a real cost for the government, especially in a rising interest rate environment.
• There have been past proposals to reduce G Fund returns. Some lawmakers have suggested lowering the interest rate formula to align more closely with short-term Treasury rates, which would reduce the government’s interest payments but make the G Fund less attractive to investors.
• If fewer people use the TSP, financial firms could benefit. If uncertainty around the TSP grows, federal employees may roll their accounts into private-sector IRAs or 401(k)s, sending billions in retirement savings to firms like Vanguard, Fidelity, and BlackRock.

While eliminating the TSP outright is unlikely, subtle policy shifts could make it less attractive over time, leading more people to voluntarily leave the system. If that happens, it might be worth reconsidering whether to keep your funds there.

Should You Move Your TSP Now or Wait?

If you’re still employed but fear you could be laid off soon, it’s understandable to want to act preemptively. However, moving your TSP isn’t something to do out of panic—it should be a calculated decision.

Questions to Ask Before Rolling Over:

• Do I want more investment choices? If yes, consider an IRA.
• Do I want to keep my costs as low as possible? If yes, the TSP still beats most IRAs and 401(k)s on fees.
• Am I concerned about government policy changes? If yes, an IRA might provide peace of mind, but there’s no current risk to TSP funds.

What to Avoid:

• Don’t withdraw your money in a panic – it could trigger taxes and penalties if you’re under 59½.
•  Don’t make a rushed decision – rolling over your TSP is irreversible.
• Don’t assume an IRA is automatically better – it depends on fees, investment choices, and your personal goals.

Bottom Line: There’s no one-size-fits-all answer, but now is the time to plan. Whether you move your TSP or keep it where it is, make sure it’s an intentional decision – not a reaction to fear.

Final Thoughts

The uncertainty surrounding federal jobs and benefits is real, and it’s understandable to feel uneasy. The key is to separate emotions from strategy.  If you like the TSP’s simplicity and low fees, keeping it there is a solid option. If you want more investment flexibility and control, rolling over to an IRA (with low-cost ETFs) could be the right move.  If you’re feeling lost, consult with a financial professional before making major decisions. At the end of the day, your TSP is still your money. No matter what changes come, taking calm, informed action is the best way to protect your financial future.