TSP Funds/SPIA

[guardiansatx]

Is anyone familiar Thrift Savings Plans? My father has retired and has a Thrift Savings Plan account. He would like to get a single premium immediate annuity. It appears like the only option for this is Metlife who has an exclusive contract to do them other than rolling the funds to an IRA first. Am I understanding this correctly?

Thanks in advance.

 

[JLoMeo]

My advice would be to shop around. Once he moves his money over to a SPIA, it'll be annuitized, and once you start annuitization, you can't stop it. What type of payout is your father looking for (ex. Life only, Life + 10 year period certain, Joint payments)? You are correct that moving the money to another carrier will convert the TSP to an IRA, but it'll be a tax-free exchange as long as you are transferring it. The only problem I see with SPIA's right now is that 1. - rates are too low, and 2. - your father looses control of the money. Don't get me wrong, there is definitely a need/fit for SPIA's, even in todays environment. I would find out what your fathers goals are with the money, and what he's trying to accomplish, then go from there.

 

[Norwayguy]

Is anyone familiar Thrift Savings Plans? My father has retired and has a Thrift Savings Plan account. He would like to get a single premium immediate annuity. It appears like the only option for this is Metlife who has an exclusive contract to do them other than rolling the funds to an IRA first. Am I understanding this correctly?

Thanks in advance.

I've seen ANICO quoting better monthly income and its a simple fix to rollover the funds to another companies SPIA.

 

[Tahoe Ray]

Is anyone familiar Thrift Savings Plans? My father has retired and has a Thrift Savings Plan account. He would like to get a single premium immediate annuity. It appears like the only option for this is Metlife who has an exclusive contract to do them other than rolling the funds to an IRA first. Am I understanding this correctly?

Thanks in advance.

You probably are. The real question is what kind of deal are they offering you? If there is some contractual minimum that Met is required to pay, it may be a good deal. If the plan is simply purchasing a retail SPIA from Met on behalf of your father, there may be better options. Thankfully, this is pretty easy to determine:

Father's birth month and year?

In what state does he live?

How much is the lump sum rollover option?

How much is the Metlife monthly income option?

Are there survivorship options? Is so, what are they and how much is being offered?

Get us this info and we can let you know if what he is being offered is competitive.

 

[TRSecurity]

I faxed in paperwork for a TSP today actually. Just contact the TSP and have them fax you the transfer paperwork. All of the options are listed on there. You can move it to an IRA.

Get the quote from Met and compare it to a SPIA from the rest of the market.

You might want to look at getting an annuity with an income rider that pays out right away. The reason for that will be based on your father's health and the payout amounts.

 

[SWM]

SPIA rates are incredibly low right now. Run a few comparisons with GMIB riders.

 

[guardiansatx]

Thank you for all of the replies.

I've seen ANICO quoting better monthly income and its a simple fix to rollover the funds to another companies SPIA.

He is wanting to place the funds in an ANICO annuity but that is where I am stuck. On the TSP paperwork it only has the option to choose the Metlife annuity through the government contract or transfer to an IRA or eligible employer account.

So if he withdraws this amount to place in an annuity without going with Metlife I am understanding he will have the 20% taxes withheld automatically. Is there a way around that? Am I missing something here?

 

[Tahoe Ray]

Thank you for all of the replies.



He is wanting to place the funds in an ANICO annuity but that is where I am stuck. On the TSP paperwork it only has the option to choose the Metlife annuity through the government contract or transfer to an IRA or eligible employer account.

So if he withdraws this amount to place in an annuity without going with Metlife I am understanding he will have the 20% taxes withheld automatically. Is there a way around that? Am I missing something here?

The section on withholding states that it does not apply if it is being rolled to an IRA. You really have two options, find out what his Metlife payment would be and compare that to other SPIAs (or any income product for that matter). If Met is the best, go there. If not, roll to an IRA where you have the option to purchase a product from the company of your choosing.

 

[guardiansatx]

The section on withholding states that it does not apply if it is being rolled to an IRA. You really have two options, find out what his Metlife payment would be and compare that to other SPIAs (or any income product for that matter). If Met is the best, go there. If not, roll to an IRA where you have the option to purchase a product from the company of your choosing.

Gotcha. Thanks Tahoe Ray.

 

[Norwayguy]

Thank you for all of the replies.

He is wanting to place the funds in an ANICO annuity but that is where I am stuck. On the TSP paperwork it only has the option to choose the Metlife annuity through the government contract or transfer to an IRA or eligible employer account.

So if he withdraws this amount to place in an annuity without going with Metlife I am understanding he will have the 20% taxes withheld automatically. Is there a way around that? Am I missing something here?

He would not be withdrawing the money. He would be rolling it over from the TSP a qualified plan to an IRA in a direct rollover no withholding nor taxes apply. The act of creating the new IRA is done with opening the new SPIA.
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The section on withholding states that it does not apply if it is being rolled to an IRA. You really have two options, find out what his Metlife payment would be and compare that to other SPIAs (or any income product for that matter). If Met is the best, go there. If not, roll to an IRA where you have the option to purchase a product from the company of your choosing.

Or what he said.....................................................