This video breaks down everything about the TSP Annuity. You’ll learn about the available annuity options, how you get monthly payments, the different beneficiary features, how the money is taxed, and more.

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⏰ Timecodes
0:00 – Intro & Agenda
1:08 – TSP Annuity Overview
2:26 – Life Annuity Options
3:00 – Survivor Benefits
3:49 – Payment Options
4:37 – Beneficiary Options
5:50 – Taxes
6:16 – Application Process
7:17 – Calculator & Resources
8:14 – Outro

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Fedway Financial provides financial planning, investment management, and benefits training to federal employees and retirees. Our goal is to help you understand and maximize your federal benefits program, and make prudent and informed decisions related to every facet of your financial life.

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Disclaimer: All content on this site is for general information purposes only and is not intended to provide any personalized financial advice….(read more)

LEARN MORE ABOUT: Retirement Annuities

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If you’re a federal employee or member of the military, chances are you are familiar with the Thrift Savings Plan (TSP). The TSP is a retirement savings plan available to federal employees and members of the uniformed services, offering tax-deferred benefits and investment options.

One of the options within the TSP is the TSP annuity, often overlooked but an important part of the overall retirement strategy. An annuity is a steady income stream paid out over a specified period, typically for the rest of your life.

So how exactly does the TSP annuity work?

When you reach retirement age and decide to start receiving payments from your TSP account, you have the option to convert part or all of your balance into an annuity. The annuity can be set up in different ways, such as a fixed monthly payment, an inflation-adjusted payment, or with survivor benefits to ensure payments continue to a beneficiary after you pass away.

Once you choose to purchase an annuity with your TSP balance, you are essentially transferring the risk of outliving your savings to an insurance company. In return for your lump-sum payment, the insurance company guarantees you regular payments for the duration of the annuity contract.

One important aspect to consider when choosing a TSP annuity is the annuity conversion rate. This rate determines how much of your TSP balance is used to purchase your annuity payments. The higher the rate, the smaller the monthly payments you will receive.

It’s also important to keep in mind that once you purchase a TSP annuity, you are locked into that decision. Unlike other investment options within the TSP, you cannot make changes or access your principal once the annuity is in place.

Ultimately, the decision to elect a TSP annuity depends on a variety of factors such as your retirement income needs, risk tolerance, and other sources of income. It’s a good idea to consult with a financial advisor or retirement planner to determine if a TSP annuity is the right choice for your individual situation.

In conclusion, the TSP annuity can be a valuable tool in your retirement planning toolkit. Understanding how it works and the implications of choosing this option can help you make informed decisions as you prepare for your retirement years.