Q. Knowing that everything is a personal situation decision. I’ve gotten advice to take a TSP monthly payout versus the annuity or lump sum. What are the advantages of this action. A. The advantage versus the lump-sum payout is that the monthly withdrawals will allow you to continue to invest the balance in the TSP until it is withdrawn. The advantage versus the annuity is that you retain control of the assets.
Browsing: annuity
Q. Is there a difference for reported income from a Thrift Savings Plan withdrawal versus a TSP annuity payment? In your Q&A, the TSP withdrawal is said to be reported as income while the TSP annuity is not reported as income. Why? A. Distributions from your TSP account and payments from a TSP annuity are both considered taxable income.
Q. I am 50 years old and have 32 years of government service. If I defer my retirement until I am 56 years old, can I receive payments from my Thrift Savings Plan account through a life annuity. Also could I get another job and still receive the life annuity payments? A. Once you’ve separated from federal service, you may use your TSP assets to buy a life annuity at any time. Your annuity payments will continue regardless of your employment status, once they have begun.
Q. I am under the Federal Employees Retirement System. I am 49 with 21 years of service. I am being told there will be a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay offered this fall and next spring. I will turn 50 during the VERA/VSIP timeline. If I take the VERA, will my government annuity be reduced by 5 percent per year? Will I be able to receive both my government annuity and my Thrift Savings Plan annuity as soon as I leave service? Is there a penalty in taking the TSP annuity now? Will I qualify to get the Social…
Q. I have two questions on the Thrift Savings Plan MetLife annuity. On page 11, paragraph 1, under the heading, “How Your Annuity is Taxed,” in the TSP pamphlet, “Withdrawing your TSP Account After Leaving Federal Service” (June 2007), reads: “… your TSP annuity payments will be taxed as ordinary income in the years when you receive them. However, these annuity payments are not subject to the IRS early withdrawal penalty, even if you are under age 55 when they begin.” As both my wife and I are under 55 and are considering an early out/buyout that has just been…
Q. I am a Federal Employees Retirement System employee, and I am confused regarding which of my three retirement components are subject to federal and state taxes. Basic annuity? Thrift Savings Plan annuity? Social Security supplement? A. Distributions from your TSP account are considered taxable income.
Q. I plan to retire at my minimum retirement age of 56 with 31 years of service. I plan to get my Federal Employees Retirement System pension, as well as my Thrift Savings Plan annuity immediately. I know my FERS annuity is not subject to the minimum earnings test. Is my TSP annuity subject to that? Is the TSP annuity considered income? A. Annuity income from your TSP account is not considered earned income.
Q. Can I cash in U.S. Savings Bonds and use the money to add to my TSP annuity through Met Life? A. No
Q. When I use the TSP annuity calculator and plug in my numbers, I get a monthly dollar amount. Is this the actual amount I will receive every month or will there be processing/management fees from Met Life taken from the shown amount? If there are additional processing/management fees, how can I find out what my real monthly amount will be prior to making my decision on purchasing annuity vs. monthly payments? A. That is the amount you should expect to receive, before taxes, each month.
Q: In a recent response, you recommended a reader not take out an annuity using Thrift Savings Plan funds. Do you consider these annuities unsafe? I am thinking of taking an annuity when I retire to guarantee an income (along with my regular annuity and Social Security). I’m not sure that I would get enough through taking a set amount each month, or that it would last for the rest of my life. What do you see as the problems with the MetLife annuity? Are there fees for administering the account? A: Because it is an irreversible action, I generally…