Can I Withdraw From My TSP to Purchase an Annuity?

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By on May 22, 2017 in Q&A, Retirement with 0 Comments

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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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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.