TSP withdrawal

Should I take my TSP as an annuity payment or roll it over to an IRA? I’m 61 years old and planning on retiring this year and I don’t need the money right away.



  • This is impossible to answer without knowing your entire financial situation. However, a life or joint life annuity results in opportunity costs. Once you request the annuity you are stuck with that decision for life. You no longer have access to any of the balance used to purchase the annuity, so if you for any reason need a substantial sum for housing, medical, or other purposes, you are out of luck. If you get any other pensions or SS benefits, those are also life annuities. The TSP has several options which you should carefully review in this booklet  https://www.tsp.gov/PDF/formspubs/tspbk02.pdf
  • For example, if you started out with monthly or periodic payments that were not annuities, you could see what it was like with a monthly flow. However, you still have access to the principal can can change that election at certain intervals. You could even purchase the life annuity later on if you wanted to. In other words, this keeps your options open to change, whereas a life annuity does not.
  • Since you do not need the money soon, you have plenty of time to think this over. TSP withdrawal options do have restrictions (especially if you have a Roth balance in addition to pre tax TSP) that you would not have with a rollover IRA. Recently, many large IRA custodians have been cutting their expenses and now offer index funds and ETFs with expense ratios almost as low as the TSP.
  • I think you can even do a direct rollover to a rollover IRA, and later on if you want to roll back to the TSP for some reason, you can except for any Roth money.


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