Immediate Annuity

[EarlyOut]

I will be leaving my government job with 17 years, at age 48. Can I get an immediate TSP annuity?

 

[Wheels]

I will be leaving my government job with 17 years, at age 48. Can I get an immediate TSP annuity?

Yes. The paperwork will probably be a bear. TSP says they will process it within 2 days once they receive it and forward it to Met Life (they are the annuity provider) where it will be processed for another couple of days. You will supposedly begin to receive checks about a month after all this processing takes place.

Purchasing an annuity is generally considered a bad idea. I'm sure that's not true in every circumstance, and I certainly don't know your circumstances, but please be sure to investigate this decision thoroughly.

 

[SkyPilot]

I echo Wheels remarks regarding a TSP annuity. At a recent retirement seminar, a retired HRM guy who contracts with our agency told us that a TSP annuity was the worst possible way to access our retirement funds, in almost every situation. He went on to demonstrate this in several scenarios. Most of the stuff I can't remember, but did hold on to this nugget.

Good luck, and be your own best advocate.

 

[Spaf]

I will be leaving my government job with 17 years, at age 48. Can I get an immediate TSP annuity?

Yes you can. I would recommend calling TSP an see how long it takes. They have always been good at answering mine. At the TSP.gov web site they have calculators for figuring the annuity, where you can list all your personal options.
The TSP-70 form will initiate your request and again list your options. You can download the form from TSP. TSP has to first recieve notice of seperation from OPM. you can ask that they give you a call. And then you can send them the form with what you want done with your TSP account.
Skypilot makes a good point, the annuity option needs careful consideration.

 

[Wheels]

I will be leaving my government job with 17 years, at age 48. Can I get an immediate TSP annuity?

Yes. The paperwork will probably be a bear. TSP says they will process it within 2 days once they receive it and forward it to Met Life (they are the annuity provider) where it will be processed for another couple of days. You will supposedly begin to receive checks about a month after all this processing takes place.

Purchasing an annuity is generally considered a bad idea. I'm sure that's not true in every circumstance, and I certainly don't know your circumstances, but please be sure to investigate this decision thoroughly.

A follow up to this advice. If you do decide to buy the annuity, be very careful with the paperwork. Here is a horror story from someone who is still trying to get their first annuity check.

http://www.tsptalk.com/mb/showpost.php?p=59619&postcount=1

 

[Pilgrim]

I will be leaving my government job with 17 years, at age 48. Can I get an immediate TSP annuity?

Its less valuable than before. Pasting from my earlier post:
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I have long maintained a retirement spreadsheet and have tweaked it over the years so that it could accurately predict what I could expect to have when I retired. One of the calculations it does concerns the TSP annuity. Using published tables from the TSP website and some basic curve fitting, it calculates the value of a TSP annuity assuming a balance and the prevailing interest rate index. All I have had to do is update that single number each month as the interest rate index changed.

Beginning on April 1 of this year, TSP did a new contract with Met Life and changed all of the tables. The primary change was to take account of the fact that people are living longer, and annuities were therefore too generous. You can guess the result.

When I put the new numbers into my spreadsheet and calculated estimates of an annuity from age 60 to age 70, using estimated balances for my account, I find that the dollar amounts I would receive each month are about 25% smaller than they were using the old tables.

If anyone is considering a TSP annuity, rather than taking a lump sum and investing it your self, be aware that as of April, 2006, the value of a TSP annuity has been reduced by 1/4.

 

[vol46]

OK, so you don't want an annunity. Can you have your lump sum rolled over into your TSP, for tax reasons, and just draw from that?
Later, Vol46

 

[SkyPilot]

OK, so you don't want an annunity. Can you have your lump sum rolled over into your TSP, for tax reasons, and just draw from that?
Later, Vol46

It is my understanding that you can, if you roll over to an IRA. However, if you roll over to a Roth, you must pay the tax. The tax on a lump sum may be considerable.