Thrift Savings Plan (TSP) Annuity Guide
A Thrift Savings Plan (TSP) annuity provides monthly payments for as long as
you are alive. If you elect an annuity with survivor benefits, it will provide
payments as long as you (or your joint annuitant) are alive.
A TSP annuity is one of your options for
withdrawing your TSP account after you separate from federal service. If you
want a guaranteed stream of payments for as long as you (or your joint
annuitant) are alive, an annuity may be the right choice. You can use your
entire account balance to purchase a TSP annuity, or you can use a portion of
your account balance to purchase an annuity and choose a dif¬ferent withdrawal
option or options to withdraw the rest.
Amount of Your TSP Annuity
- The factors that affect the amount of your monthly annuity payments include:
- The annuity option you choose.
- Your age when your annuity is purchased (and the age of your spouse or other
joint annuitant if you choose a joint annuity).*
- The amount used to purchase your annuity.
- The "interest rate index" when your annuity is purchased.
You can use the TSP Annuity Calculator on the TSP website to "try out"
any number of possibilities. You can also contact the TSP to obtain an annuity
If you choose a TSP annuity, the balance in the account to which your annuity
request applies must be at least $3,500 at the time your annuity is purchased.
If you are using only a portion of your account for an annuity, the percentage
you choose when requesting your withdrawal must equal $3,500 or more of your
vested account balance.
Note: A TSP annuity is not the "basic annuity" that you will receive as a
result of your retirement cov¬erage under FERS or CSRS, or the retired pay that
members of the uniformed services receive. If you have questions about your
eligibility for the basic annuity or uniformed services retired pay, contact
your agency or service.
*For TSP annuity purposes, age is defined in whole years; months are not
considered in the annuity calculation.
TSP Annuity Options
The TSP, through its annuity provider, offers the following types of annuity
- Single life annuity -- with level or increasing payments.
- Joint life annuity with your spouse -- with level or increasing payments.
- Joint life annuity with someone other than your spouse -- with level
These annuities are described below, followed by a description of several
additional annuity features that you can consider.
Single Life and Joint Life Annuities
Single life annuity -- An annuity that provides monthly
payments only to you as long as you live.
Joint life annuity -- An annuity that provides monthly
payments to you while you and the person with whom you choose to share your
annuity (your "joint annuitant") are alive. (In most cases, the joint annuitant
is the participant's spouse.) When you or your joint annuitant dies, monthly
annuity payments will be made to the survivor for his or her lifetime. The
amount of the payment while you and your joint annuitant are alive and the
amount of the payment to the survivor depend on whether you choose a 100 percent
or a 50 percent survivor annuity (see below).
If you choose an annuity that provides for a joint annuitant other than your
spouse, the joint annui¬tant must be either a former spouse or someone with an
insurable interest in you. This means that the person is financially dependent
on you and could reasonably expect to derive financial benefit from your
continued life. Blood relatives or adopted relatives (but not relatives by
marriage) who are closer than first cousins are presumed to have an insurable
interest in you.
If the person you name as your joint annuitant does not have a presumed
insurable interest in you, you must submit an affidavit (i.e., a certification
signed before a notary public) from someone with personal knowledge that the
named person has an insurable interest in you. The certifier must know the
relationship between you and the joint annuitant and must state why he or she
believes that your joint annuitant might reasonably expect to benefit
financially from your continued life.
Two types of joint annuities are available:
100 percent survivor annuity. The amount of the monthly
annuity payment to the survivor is the same as the annuity payment made while
both you and your joint annuitant are alive. How¬ever, the amount of the monthly
payment that you receive while you are both alive is generally less than it
would be if you had selected the 50 percent survivor annuity.
50 percent survivor annuity. The amount of the monthly
annuity payment to the survivor -- whether the survivor is you or your joint
annuitant -- is cut in half (that is, cut to 50 per¬cent) of the annuity payment
made while both you and your joint annuitant are alive.
If you name a joint annuitant who is more than 10 years younger than you, you
must choose a joint life annuity with the 50 percent survivor benefit. The only
exception is for a former spouse to whom all or a portion of your TSP account is
payable under a retirement benefits court order.
Level and Increasing Payment Annuities
Once you have chosen either a single life or a joint life annuity, you must
decide whether you want to receive level or increasing payments.
Level payments. The amount of the monthly annuity payment
remains the same from year to year. Thus, with a single life annuity, you
receive the same monthly payment for as long as you live. With a joint life
annuity, you receive the same monthly payment for as long as you and your joint
annuitant are alive. The monthly payment to the survivor will depend on whether
you have chosen a 100 per¬cent survivor annuity or a 50 percent survivor
annuity, but it will remain at the same level for the life of the survivor.
Increasing payments. The amount of the monthly annuity
payment can change each year on the anniversary date of the first payment. The
amount of the change is based on the change in infla¬tion, as measured by the
consumer price index. Increases cannot exceed three percent per year, but
monthly annuity payments cannot decrease. When annuity payments start, they are
smaller than they would have been if you had selected level payments, but they
usually increase each year. Increasing payments can be combined with either the
single life annuity or the joint life annuity with spouse. You cannot choose
increasing payments when the joint annuitant is not your spouse.
Additional Annuity Features that Allow for Beneficiaries
There are two additional annuity features available: the cash refund feature,
and the 10-year certain feature.
Under certain circumstances, these features will provide payments to your
named beneficiary. When you choose one of these features, your monthly payments
will be less than they would have been if you had chosen an annuity without
either of these features.
Cash refund. If you (and your joint annuitant, if
applicable) die before the amount used to pur¬chase your annuity has been paid
out, the remaining amount will be paid to your beneficiary in a lump sum. This
feature can be combined with either a single life or a joint life annuity, and
with level or increasing payments.
Ten-year certain. If you die before receiving annuity
payments for a 10-year period, payments will continue to your beneficiary for
the rest of the 10-year period. If you live beyond the 10-year period, you will
continue to receive payments, but no payments will be made to a beneficiary when
you die. This feature can be combined with a single life annuity with either
level or increasing payments. It cannot be combined with a joint life
Choosing Among the Annuity Options
The value of the total expected payments under all of the annuity options is
comparable, but the amounts of each monthly payment that you receive -- and the
provision for continuing payments to a survivor or beneficiary -- are different.
For example, a monthly annuity payment under a single life annuity will
generally be more than the monthly payment under a joint life annuity. However,
there will generally be fewer payments under a single life annuity than under a
joint life annuity. This is because payments continue under the joint life
annuity after the death of one of the joint annuitants until the survivor
Estimating monthly annuity payments. To estimate annuity
payments, you must first estimate your TSP account balance at the expected
annuity purchase date. You can do so by using the Projecting Your Account
Balance calculator on the TSP website at http://www.tsp.gov. Then use the TSP Annuity Calculator to estimate the amounts of monthly
annuity payments for the different annuity options using the current interest
rate index. During the last week of each month, the interest rate index for
annuities purchased the following month is posted on the TSP Web site.
The exact amount of your monthly annuity payment cannot be determined until
the date of purchase, as opposed to the date the money is withdrawn from your
Requesting an Annuity
To request an annuity, complete Form TSP-70, Request for Full Withdrawal,
indicating that you want a TSP annuity (available at: https://www.tsp.gov/forms/formsPubs.shtml)
If you choose a joint life annuity, you will have to provide proof of your
joint annuitant's age. You can do so by providing a copy of your joint annuitant
's birth certificate. If the birth certificate is unavailable, refer to the form
for other documents that may be used.
If you are a married TSP participant,
spouses ' rights apply.
How Your Annuity Is Purchased
Your annuity will be purchased from the TSP annuity vendor, currently
Metropolitan Life Insurance Company (MetLife). MetLife is a major national
insurance company that was competitively chosen by the Federal Retirement Thrift
Investment Board, the agency that administers the TSP. After the TSP receives
all of the information and documentation necessary to purchase your annuity, we
will generally process your annuity request and disburse the funds for your
annuity within 10 business days. Once the funds for your annuity have been
disbursed, you cannot cancel the annuity, change the annuity option, or change
the joint annuitant.
On the date when the annuity provider receives your request and the money
from your TSP account -- generally within two business days after the money is
disbursed -- the annuity is purchased.
Once the money has left your account, you should direct all communications
concerning your an¬nuity to the annuity provider. The annuity provider will send
you a package of information and an annuity contract. Your monthly annuity
payments will begin approximately one month after the annu¬ity is purchased.
Note regarding timing of your annuity request: If you request an annuity
toward the end of a month, your annuity may not be purchased until the following
month. This means that the annuity provider will use the interest rate index in
effect for the month in which the annuity is purchased -- which may not be the
rate that was in effect when you sent your request or when the TSP processed
How Your Annuity Is Taxed
For FERS or CSRS TSP accounts: Taxes on all contributions to your TSP account
and the earnings on those contributions are deferred until the money is paid to
you. Therefore, your TSP annuity payments will be taxed as ordinary income in
the years when you receive them. However, these annuity payments are not subject
to the IRS early withdrawal penalty, even if you are under age 55 when they