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Argh! I read a perplexing article today about opponents to investing any portion of Federal CSRS Pension funds in the Thrift Savings Plan, or a similar vehicle. See the Washington Post's article: C-Fund Is So Good, It's Scary, Sunday, July 12, 1998; Page B02.

I've been reading the Fool long enough to appreciate the Chicken Little attitude being asserted in this position. Here are some statements I lifted from the article, which are attributed to the National Association of Retired Federal Employees.

"Investing retirement money in the savings plan introduces an "unacceptable element of risk" to the defined benefits now promised by the federal retirement program."

"There is no benefit to workers and retirees -- but considerable risk -- if even a portion of retirement funds is invested in the stock market."

Why even a portion of the pension funds could not be invested in the TSP, or at least offered as an option to participants is beyond me. I am one of those who has benefitted greatly from the TSP in my short (8yr) tenure with Uncle Sam, although I also recognize it's potential for faltering years. As Fool readers will realize however, Market investing long term is what minimizes risk. After all, the TSP C-fund, which mirrors the S&P 500, had it been around, would have had practically the same return over the past 20 years: 16-17%! And with the TSP, Uncle Sam offers you 5% if you contribute 5%. Hello, this is free, pretax money! Anyway, I recognize the irrational (or rather unread) thinking going on here, but if only these opponents would do a little simple market analysis, perhaps options for nest-egg growth may be offered to pensioners too. Which brings me to a retirement question I have as a TSP participant and fellow Fool. While I'm now content to accept the 16-17% we all average with the TSP C-fund...while getting my free 5% contribution per year, if I should leave Federal Service, should I withdraw and go Foolish Four with my TSP earnings? Can I move this cash to some sort of IRA, Roth or otherwise, that allows my Foolish Four Folly without incurring lots of taxes? Should I care about those taxes? I realize that the Foolish Four strategy will (if history continues to repeat itself) reap some 16-17% AFTER tax returns for me, as outlined by the Fool in a recent column, but are there benefits to continuing TSP participation, such as good loan rates for education or homebuying, or perhaps some sort of financial shelter that make it worth staying with TSP post Federal Service? Thanks you Fools.
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