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TSP Life Annuity Options

TSP Life Annuity Options

November 10, 2016

The TSP program offers several annuity options as retirement income.  

  • Single Life Annuity: an annuity that provides monthly payments only to you as long as you live.  You may elect a Level Payments option or Increasing Payments option. The level payments option provides an equal amount of payment every month for as long as you live.  The increasing payment option allows for an annuity payment that can change each year on the anniversary date of the first payment.  Increases cannot exceed 3% per year, but monthly annuity payments cannot decrease.  There are two additional annuity features: Cash Refund (any unpaid balance is paid out to beneficiaries as a lump sum) or a 10-Yr 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).  Note: this 10-Yr Certain feature cannot be combined with a joint life annuity (described below).  
  • Joint Life Annuity: an annuity that provides monthly payments to you while you and the joint annuitant are alive. 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 annuitant are alive and the amount of the payment to the survivor depends on whether you choose 100% or a 50% survivor annuity.  Note: if you choose an annuity that provides for a joint annuitant other than your spouse, the joint annuitant must be either a former spouse or someone with an insurable interest in you.  You may choose the Level Payments option or the Increasing Payments option. (Note: The Increasing Payments option is not available for annuitants who are not a spouse) and Cash Refund feature with a Joint Life Annuity.

          Source: Withdrawing Your TSP Account After Leaving Federal Service Brochure, 2014

The decision on which option to choose is not an easy one.  Consult with a Financial Adviser who is familiar with federal retirement benefits.

Note:  Consult with your Financial and Tax Advisers to ensure you elect the option that best suits your retirement income needs.  

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