Q: I am approaching 70, close to the 70.5 years of age TSP participation cutoff. I am required to make a decision on where to move my TSP money. I need info on what happens to my thrift savings money, if I choose to move the account funds to Met Life management. I need to know if the TSP fund money I transfer will earn interest. Would the transferred money need to be reinvested so as to earn money ? What are, if any, Met’s management fees? Are there other business fees? Will MET Life REQUIRE use of the IRS life expectancy charts, without deviation, to compute monthly withdrawals? Can I use a monthly increment designation to receive an annuity payment not specifically listed on the IRS life expectancy chart, such as a shorter number of months, like 60 to 96 ?
A: You may continue to use the TSP for life, and I recommend that you do so as long as possible. You must begin taking annual distributions by April 1 of the year following the year in which you reach age 71 1/2. To meet this requirement with the smallest withdrawals possible, you may use form TSP-70 when the time comes. Check the box to have the TSP compute your minimum monthly payment in line 23.c of section IV. Simply pay the tax and reinvest the proceeds in a regular savings or investment account if you don’t need the money when you receive it.Using your TSP money to purchase a life annuity from MetLife is a big step and should be considered separately from the minimum withdrawal issue. Before making this commitment, I suggest that you seek fiduciary counsel. If you’re not sure, stick with the TSP and monthly withdrawals. You’ll find all of the info and forms you need concerning the required distributions at www.tsp.gov.
