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…
- 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.
- 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.