The Thrift Savings Plan (TSP) Life Annuity is an insurance product from MetLife that offers a different option for taking distributions from your TSP account.* Selected by the TSP Investment Board, MetLife has been the exclusive annuity provider for the TSP since 1986.
Is The TSP Life Annuity A Good Choice For Your Retirement?
While many federal retirees choose to manage their TSP withdrawals on their own, the TSP Life Annuity may be a good choice for your retirement if you’re looking for a third source of guaranteed, lifetime income in addition to your FERS pension and Social Security benefits. However, there are facts to keep front of mind before you decide:
- It’s an irrevocable choice that cannot be changed under any circumstances.
- You give up access to the TSP funds you use to purchase the annuity.
- When you die, MetLife keeps the remaining balance of your TSP (unless you choose one of the beneficiary options that reduce your monthly payment).
Another drawback is that your TSP savings doesn’t grow significantly because MetLife only guarantees a fixed growth rate of approximately 2.6%.
“It’s important to understand that the MetLife TSP Annuity isn’t your only option.
The 3 Types Of TSP Life Annuities
Basically, the three types of TSP annuities are versions of an immediate 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 payments.
With level payments, the monthly amount you receive remains the same every year. If you buy one of the joint life annuities, monthly payments remain the same for as long as you and your joint annuitant live and you have the option of electing either the 100% survivor annuity or the 50% survivor annuity.
With increasing payments, the monthly payment increases by 2% on the anniversary date of the first payment. Increasing payments can be combined with either the single life annuity or the joint life annuity with a spouse. However, you cannot choose increasing payments when the joint annuitant is not your spouse.
The MetLife TSP Annuity Verses Annuities From Other Insurers
It’s important to understand that the MetLife TSP Annuity isn’t your only option. Private insurance companies offer different types of annuities that may provide a better payout plus riders that can be customized for your needs.
Make an informed decision — connect with an FRC® trained advisor who can help you compare the TSP annuity to other lifetime annuity products in the insurance market.
*The TSP Life Annuity has nothing to do with your FERS annuity.
Source: https://www.tsp.gov/publications/tspfs24.pdf
