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Thread: Confused about ANNUITIES

  1. #1

    Join Date
    Nov 2006
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    Southern Pennsylvania
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    Question Confused about ANNUITIES

    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


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  3. Default Re: 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.

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  5. #3

    Join Date
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    Smile Re: Confused about ANNUITIES

    Quote Originally Posted by DDT View Post
    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

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  7. #4

    Join Date
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    Default Re: Confused about ANNUITIES

    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!!!

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  9. #5

    Join Date
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    Default Re: Confused about ANNUITIES

    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

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  11. #6

    Default Re: Confused about ANNUITIES

    Quote Originally Posted by CountryBoy View Post
    The main disadvantage is once your funds are transferred to Met life you no longer have control “ .........

    .........The only advantage an annuity has is a guaranteed monthly amount and once you die the money disappears.
    In actuality, the money is gone immediately. You are not moving your money into an annuity, you are buying an annuity from Met Life. Your account balance is gone the second you purchase the annuity. In return you get a guaranteed monthly amount of money. If you live to be 135 or so, you would probably make out pretty well on it, otherwise Met Life usually makes out a little better than you do.

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  13. #7

    Join Date
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    Post Re: Confused about ANNUITIES

    Annuities
    Something in retrospect!
    I worked for the AEtna Insurance Company years back and had an annuity. It was with Conneticut General, CG sold that operation to Conneticut General Insurance Company of North America (CIGNA). CIGNA later sold the pension plan annuity operation to Prudential Finance. Not that these transfers were bad, but, sometimes, companys that are in the red, buy companies in the black to get a better book of business. The take over can be hostile. The TSP is a semi-government operation, of which I would think would be more secure. This is MHO, in retrospect.
    Spaf

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  15. #8

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    Default Re: Confused about ANNUITIES

    Don't suppose there is any way we can get that govt. annunity rolled over into our TSP accounts?
    Wishfull thinking,
    Vol46

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  17. #9

    Default Re: Confused about ANNUITIES

    Not an HR expert or lawyer, but, as long as your beneficiary has a vested interest in you (e.g., daughter) you should be able to identify her as your beneficiary. Depending on her age it could reduce your annuity by a lot. Check it out with HR and let us know.

    Thanks.

    Ed


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  19. #10

    Join Date
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    Default Re: Confused about ANNUITIES

    Vol46,

    You can only get that money into your TSP plan if you are offered a defined contribution plan. My wife has one with her state job and she will retire with more money than any defined benefit plan could offer - and it's her money immediately. Of course she is subject to the vagaries of the markets with the inherent risks - but she has me looking over her shoulder.

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  21. #11

    Join Date
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    Default Re: Confused about ANNUITIES

    Vol46,

    I would not be surprised to see the military start to offer defined contribution plans as part of their new recruitment plans. The TSP is primed to offer the logistics to such a plan. I mean if you do 18 years with the military and finally run into an arm pit that forces you to get out - you leave with nothing. There are going to be some drastic changes on the horizon all for the good of the individual.

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  23. #12

    Default Re: Confused about ANNUITIES

    How does one buy into an annunity with TSP and does that bought into Met Life and what is wrong with that???

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