Can I Withdraw From My TSP to Purchase an Annuity?

May 22, 2017 2:49 PM , Updated May 26, 2017 12:14 PM
View this article online at https://www.fedsmith.com/2017/05/22/can-i-withdraw-from-tsp-purchase-annuity/ and visit FedSmith.com to sign up for free news updates
One dollar bill placed in front of rolled up bills showing the faces of the presidents on the five, two, 100, 10, ,and 20 dollar bills

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.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2020 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

Tags:

About the Author

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.

Top