Suspending TSP annuities ?

[racfan9]

Good Morning To All,

Hi...I'm new to the forum so this is my 1st post. I retired about a year ago and will turn 62 in Sept. My wife has been without a job for almost 2 yrs and she will turn 62 in a little less than 3 yrs. My question is, Is there a way to start an annuity from my TSP and then suspend it in 3 yrs once my wife starts drawing her SS ? At the moment all my money is still in TSP.

Thanks,
Terry

 

[Cactus]

As I understand it, you can change your TSP withdrawl option once a year. So you can specify how much you want each year and then set it to zero after 3 years.

As for buying an annuity, that would be from another company. At that point you are no longer dealing with TSP and would have to find out what their terms are. If you arrange to buy the annuity directly from TSP I think they will go with Met Life. Not sure about that. Also, you designate the amount that goes into the annuity. It doesn't have to be the whole TSP amount.

 

[nasa1974]

Another option would be to find a local financial advisor and transfer your TSP funds into a 401k. This way you would have someone to talk to on a monthly basis and should be able to manage your money better. Plus they would be aware of both your needs and your wife's needs. TSP doesn't care.
I have been retired 5 years and will transfer my TSP funds into a private account early next year. This way if something happens to me my wife has better control over everything than trying to deal with TSP.

Good luck.

 

[evilanne]

Good Morning To All,

Hi...I'm new to the forum so this is my 1st post. I retired about a year ago and will turn 62 in Sept. My wife has been without a job for almost 2 yrs and she will turn 62 in a little less than 3 yrs. My question is, Is there a way to start an annuity from my TSP and then suspend it in 3 yrs once my wife starts drawing her SS ? At the moment all my money is still in TSP.

Thanks,
Terry

This calculator may be helpful https://www.tsp.gov/PlanningTools/Calculators/retirementCalculator.html
Annuities won't give you an option to suspend. You can determine the amount you want to withdraw and then reduce it as needed later. The calculator has separate tabs for annuities but with low interest rates, you would be better with the monthly withdrawal option IMO. It will calculate a fixed amount and amount based on life expectancy calculations based on your assumptions. You cannot reduce it to $0 but I believe you can reduce very low amount ($25). I'd be careful if you decide to roll over to IRA...with an advisor you will likely end up with a fee based account that charges you a percentage annually based on the value of your account but it is up to you. If you have not made any prior withdrawal, you also have option to do a partial withdrawal that you could roll over to an IRA. All traditional withdrawals are taxed as ordinary income so make sure you take that into consideration when determining your monthly/annual withdrawal amount in either case.

 

[racfan9]

Thanks for the quick replies, now how about one more question. Once I start my annuity will I still have the option of a lump sum withdrawal prior to me being 70 years old?

Thanks,
racfan9

 

[evilanne]

If you are talking about the monthly payment option (it is not an annuity), you can always increase the amount of the monthly payment (on annual basis) to deplete your account faster e.g. if you have a balance of $120K, you could set monthly payments to $10K/month. If you want the balance as a lump sum payment, I think you would need to close the account which is always an option but I would suggest that you call TSP to verify prior to taking any action to make sure you understand what you need to do. You should be able to roll it over directly to an IRA when you close the TSP account, if you wish, see table on page 3 "Final single payment after a series of monthly payments" https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. If you take it as a distribution, taxes will be withheld by TSP. There are some proposed changes that may change the withdrawal options in the future so it always good to check current rules and it may be good idea to get input from your tax or financial advisor as well to ensure adequate withholding or quarterly tax payments are made to avoid any penalties.