Can I Withdraw From My TSP to Purchase an Annuity?

May 22, 2017 2:49 PM , Updated May 26, 2017 12:14 PM
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Q: Can I take a certain percentage out of my traditional TSP (all G fund) for two years, and then purchase an annuity? I’m thinking the answer is “no,” but I wanted to be sure. I do believe rates will be going up and don’t want to lock into a low rate. I can wait for a year or two before starting to take out any money, but not too long.

A: Under current rules, you couldn’t purchase a TSP annuity after having begun a series of monthly payments.  BUT…

  1. You could cash out (the TSP calls it taking a final payment after a series of monthly payments and it is considered an eligible rollover distribution) and purchase an annuity from an outside source.
  2. There is legislation in Congress that will loosen up the rules on TSP withdrawals and it might become possible to do what you would like.  The only question is when (if) the legislation will be enacted.

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John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.