Q. Is the term TSP Life Annuity synonymous with a Met Life Annuity? If I choose IV. Withdrawal Elections Monthly Payments is that subject to required minimum distribution? What happens to any money in the account when I die? They don’t ask for beneficiary information. A. As far as I’m concerned, TSP Life Annuity and MetLife Annuity are the same thing. You may elect fixed monthly payment or have the TSP compute your payments. In either case, you’ll be subject to the required minimum distribution rules, which require that a certain amount be withdrawn from your account each year, once…
Browsing: TSP annuity
Q: Monthly payments are considered a full withdrawal, but are they still in TSP and eligible to be invested in any of the accounts that are offered where interest can be accrued from them? A: Monthly payments are taken, pro-rata, from your invested TSP funds each month. Money in your TSP account remains invested, according to your direction, until it is distributed.
Q: I’m an Air National Guard technician under FERS with 34 years service. My first nine years were active-duty Air Force service, which I have bought back. I have a personal loan through TSP that will still have a balance of about $6,000 when I intend to retire next July at my MRA of 56. I intend to depend significantly upon TSP, $2,500 a month, until I reach the age of 59 3/4, when my military Guard retirement will start paying out. At that point, I’ll minimize my TSP annuity. Will the outstanding loan balance have any effect on my…
Q. In running various scenarios using the TSP website calculators for TSP payout options (life expectancy and/or specific dollar amount) I notice that all the monthly amounts paid will drop off sharply sometime soon after a person reaches 100-plus years of age. What if a centenarian is still in relatively good health by that time and still needs the income from the TSP? Also what about the effects of inflation after so many years? Does a person need to plan to reinvest some TSP payout into another type of investment in order to provide for very late old age? A. …
Q. I know that the TSP annuity means giving up your money forever, something to be carefully considered. I’m still trying to understand the math. If at age 62 I bought a $100,000 annuity, even at today basement rates of 2.37 percent, it would pay $497 a month, or $5,964 a year. That’s equivalent to earning a steady 5.964 percent on your money! How does 2.37 percent turn into almost 6 percent? I’m guessing that Met Life is figuring that some of us aren’t going to live long enough to collect a great amount on the annuity. Is that it?…
Q: Should I entertain the idea of purchasing a TSP annuity? Since I have been in the system, the annuity interest-rate index has tanked from well more than 4 percent to today’s rate of 2.875 percent. To me this means I would have made more per month a few years ago retiring when I had $300,000 than I can now with $560,000! Wow, big mistake. Can you advise if 1) the AIRI will bounce back? Or 2) what is my alternative if I should decide to pull the plug next July? A: You should always be willing to consider the…
Q: If I retire at the age of 50 (21.25 years of service), I have a question concerning TSP. If I choose the life expectancy withdrawal at that time, from what I gather it is penalty free. In the year I turn 55, can I switch to the monthly payment withdrawal, and would that too be penalty-free? A: You’re talking about avoiding the early withdrawal penalty by using a series of Substantially Equal Periodic Payments (SEPP), which must continue for five years, or until you reach age 59 1/2, whichever is longer. You will find a SEPP calculator and additional…
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…
Q: I have asked this question before but now I have been told the answer I received was wrong. Could you please verify your answer? Can one who has retired and is taking a full withdrawal by monthly payments from their TSP stop the payments and have the thrift buy an annuity through Met Life? Your answer was that I could by way of Form 70. A: I’m sorry if I misread or misunderstood your earlier question. You may NOT buy a TSP annuity with a final payment after receiving monthly payments. The monthly payments are requested using form TSP-70,…
Q: My wife retired in February. Our current plan is to take $50,000 from her Thrift Savings Plan to pay off some high-interest debt and leave the rest in the TSP to be invested into a monthly annuity. Is this allowed? Does she have options as to what annuity the money is invested in? Is their an option for a lump-sum survivor payment of the unpaid balance at the time of death? How does she proceed with implementing her final decision? A: She may take one partial withdrawal from her account, if she hasn’t already done so. She may also…