Switching to annuity from fixed TSP payments


Q. On Oct. 10, 2009, you said that you could begin receiving fixed payments and switch to an annuity. On Nov. 8, 2010, you responded to a similar question with the opposite advice. I am trying to decide whether to take payments while hoping the providers’ rates improve or go to a fixed index annuity with another company.

Is the decision to take payments in the Thrift Savings Plan irreversible?

A. My Oct. 10, 2009, answer was incorrect. You may not end a series of automatic monthly payments with a TSP/MetLife annuity purchase. That option is only available when starting the monthly payments — that is, you may use part of your account to purchase an annuity and part for monthly payments.

If you want to end your monthly payments with an annuity purchase, you’ll have to roll the remaining TSP balance into an IRA and purchase an annuity from there.

Once you begin automatic monthly payments, they can only terminated with a final, full distribution of your TSP assets.


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.

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