Q. I am a FERS retiree and following your advice, I have not touched my TSP. This year I must start Required Minimum Distributions and am thinking of having TSP buy an annuity. The news says “the Fed” may raise rates soon. Will that raise the TSP annuity interest rate?
A. Since the TSP annuity rate index, which determines the payout you’ll receive if you use your TSP money to purchase a life annuity, tends to track the interest rate offered on U.S. Treasury debt, rising interest rates on that debt will translate into higher annuity payout rates.