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.