Q: It seems to me that the CSRS voluntary contributions program is the undiscovered gem of the CSRS system. I have already heard that the VC program can be used as a way to beef up a Roth IRA. However, I think that in my case (age 67), retirement and use of the VC account for its intended purpose — to purchase additional annuity — is a very good deal, which according to my calculations would yield 8.46 percent for life (which includes a 10 percent reduction for my spouse survivor’s annuity, who is 65). Compare that rate to a Met Life annuity purchased from the TSP account, which is yielding in the 3 percent range, or even the G fund, which is paying about 3 percent. My questions: Am I correct in my VC annuity rate calculation of 8.46 percent? Is there any way to transfer TSP monies into a VC account?
A: First, your calculations are incorrect. The rate you realize will depend upon how long you live. Remember that when you purchase the annuity, you are giving up the principal. Second, I don’t believe that you can transfer TSP money into a VC account.