Thread: Confused about ANNUITIES

Some one can correct me if I'm wrong, but a recent IRA rule change allows your daughter (up till now it had to be a spouse) to inherit with no tax penalty.

Originally Posted by DDT

New to TSPtalk... and now confused after reading TSP Tips dated 9/18/06. Single life. This annuity is only paid to you over your lifetime -
Since I can't designate my daughter as a Joint Life recipient, I have named her as beneficiary in my will to receive all monies left in my TSP account. Is this the correct thing to do or should I be moving the monies out of TSP into CDs, Money Markets, etc? I don't want her to lose this money!
Thank you,
DDT

Annuities are an insurance that you purchase. Government employees already have one through the retirement system. I can't see using real money to buy another annuity when that money is setting in an account that has many options, and the ability to grow at a faster rate than CDs and M-Mkts.

Having that $$ available in TSP (even in L-income) is a good safety blanket for the future. Withdrawls at 4% or less will probably never touch the principal, and allow an inflation factor.

TSP can send you the forms for designating whomever, I know it's on the TSP-70.

Before opting out of TSP, suggest reading TSP Features ch#13, Getting Your Money Out After You Seperate.

Regards

Spaf

That's why I was confused after reading that article...
I already have designated my daughter as beneficiary using the TSP form and also in my will. That is sufficient, correct?

Thanks for your replies!!!

There was a very interesting question in the Q & A section of the Dec 2006 NARFE Mag. A FERS employee was looking into a Met Life annuity to purchase with his TSP Money, but he was worried about never being able to change his money back. NARFE responded by saying “that less than 2% of TSP Folks elect the annuity option. The main disadvantage is once your funds are transferred to Met life you no longer have control “ also that “most members choose a monthly distribution from there TSP account based on their needs. The monthly distribution can be changed once each year. You can continue to move your TSP balance from one fund to another. You may want to look at the booklet “Withdrawing Your TSP Account After Leaving Federal Service” at www.tsp.gov .

I’m about 8 years from retirement and will not put any of my money into an annuity. The only advantage an annuity has is a guaranteed monthly amount and once you die the money disappears. You can get a joint annuity, so your spouse can continue to receive money, but I think it may be at a reduced amount.

There are a couple of threads here talking about retirement. I was going to get an annuity also, but the more I researched it and learned from the guys here, there would be no way I’d get one, but then that’s just me. We all have different circumstance and needs.

CB

Good question DDT. I decided to create a new sub-forum for annuities so it can be discussed. I copied this thread here ... http://www.tsptalk.com/mb/annuities/