TSP Annuities |
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A TSP annuity is a benefit paid each month to you (or to your survivor) for life. The TSP purchases the annuity on your behalf from its annuity provider, Metropolitan Life Insurance Company (MetLife). An annuity can only be purchased for $3,500 or more. Therefore, your account balance must be at least $3,500 at the time the TSP uses it to purchase an annuity; or, if you are using only a portion of your account balance to purchase an annuity, that portion must be at least $3,500.
What types
of TSP annuities are available?
The TSP offers three basic types of annuities:
Joint life annuities may provide either a 100 percent or a 50 percent survivor benefit. This means that monthly payments will either continue in the same amount (100 percent) or be reduced by half (50 percent) for you or your joint annuitant when either one of you dies.
Several annuity features can be combined with the basic annuity types. Those features are increasing payments, cash refund, and a 10-year certain payout:
Not every feature can be combined with every basic annuity type. The chart below shows the various annuity options you can choose from.
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Summary of Annuity Options | |
| Single Life | |
| Level
Payments - with no additional features - with cash refund feature - with 10-year certain feature |
Increasing Payments - with no additional features - with cash refund feature - with 10-year certain feature |
| Joint Life with Spouse | |
| Level
Payments
- 100% survivor annuity - 50% survivor annuity - 100% survivor annuity with cash refund feature - 50% survivor annuity with cash refund feature |
Increasing Payments
- 100% survivor annuity - 50% survivor annuity - 100% survivor annuity with cash refund feature - 50% survivor annuity with cash refund feature |
| Joint Life with Other Survivor | |
| Level
Payments - 100% survivor annuity* - 50% survivor annuity - 100% survivor annuity with cash refund feature* - 50% survivor annuity with cash refund feature |
* Available only
if joint annuitant is not more |
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How can I
estimate my monthly annuity payments?
Use the Annuity Calculator to get an idea of what your monthly annuity payments might be. The amount of your monthly annuity payments depends to a large degree on the size of your TSP account balance (or the portion of your account that you intend to use to purchase the annuity). In addition, your annuity option and age (and your joint annuitant's age, in the case of a joint life annuity), as well as interest rates at the time that the TSP purchases your annuity, affect the monthly amount that you will receive.
How will my
annuity payments be taxed?
Your annuity payments (except for any portion attributable to tax-exempt contributions, i.e., contributions made from tax-exempt pay received in a combat zone) will be taxed as ordinary income in the years in which you receive them. The mandatory 20 percent Federal income tax withholding does not apply to annuity payments, and annuity payments are not subject to the IRS early withdrawal penalty tax.
How can I get
more information about TSP annuities?
Information about TSP annuities is in the booklet TSP Annuities, which is available on this Web site. You can also ask your service TSP representative for a copy. If you have left service, you can call or write the TSP Service Office for a copy. The booklet describes the annuity options in detail and includes a worksheet and tables so that you can estimate the amount of your monthly annuity payments. (You can also use the Annuity Calculator to estimate your payments.)
It is important that you read the booklet before choosing an annuity, because once the annuity is purchased, you cannot change or cancel it. Rates change over time, so be sure that you are using the most current booklet if you are close to purchasing an annuity.