TSP withdrawals & annuity


Q. I am nearing retirement in law enforcement and will only be 47 years old. I am trying to determine the best way to withdraw a small portion of my TSP account to avoid the early withdrawal penalty. I am wondering about purchasing an annuity at less than 100 percent of my $400,000 TSP balance. These payments would be monthly for life I understand, but what happens to the remaining money I have in the TSP? May I invest it as I choose in the various funds and what are my withdrawal options for that money as I doubt I can purchase another annuity.

A. Using your TSP money to purchase an annuity through the TSP’s annuity must be done as part of a full withdrawal. The remaining balance must either be taken as a lump sum at the time of the withdrawal request or as a series of monthly distributions, or both. If you take the remainder as a series of monthly distributions, you will still be responsible for managing  the investment of the money until it has been completely distributed.



About Author

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.

1 Comment

  1. Frank St. John on

    If I could do only one option at a time should I put 5% of my pay into the TSP or use the 5% and buyback my military time (which would take about 13 months). I have 8 years until I reach full retirement age and I have been contributing to TSP for 24 years but have not bought back 4 years active duty time.

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