TSP-annuity basics


Q: I saw the following comment in response to the question regarding the Thrift Savings Plan annuity rate being 3.625 percent: “The annuity rate is used to determine, at the time of purchase, the size of the payment you’ll receive in exchange for the annuity purchase price.”

My question is surrounding the phrase “annuity purchase price.” Are you telling us that after all the years of contributing our own, hard-earned money into the TSP to secure a better retirement life for ourselves and our families, that we have to buy back that money from the TSP in order to use it in lieu of a steady income?

A: It’s not a secret that the TSP is a retirement savings and investment account. You’re free to use the money for anything you’d like, including using it to purchase an annuity from an insurance company. This is not mandatory, however, and you may simply withdraw your funds to spend as you see fit.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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