A TSP life annuity purchase and withdrawals from a TSP account are different ways to turn retirement savings into income. Compare the terms and the control you retain before comparing monthly dollar illustrations. Neither an attractive first payment nor the word guaranteed answers all the questions a household needs to settle.
The TSP's own annuity option is also separate from a FERS or CSRS pension and from an annuity offered outside the TSP. Identify which program and contract a discussion concerns. This worksheet addresses the TSP option using official TSP and regulatory sources; it does not compare private carrier bonuses or recommend a purchase.
Follow the money before following the payment
The official TSP retirement bulletin explains that an annuity purchase uses some or all of the account balance to buy a life annuity through the program's outside vendor. It describes exchanging control of the money used for the purchase for lifelong monthly payments under the selected terms.
Money kept in the account for withdrawals continues to have account-management and investment questions. An installment election sets a payment arrangement; it does not create the same vendor contract as an annuity purchase. Ask which balance remains in the TSP, which amount would be transferred for a purchase and which institution is responsible for each payment afterward.
The current regulation lists a $3,500 minimum for a TSP annuity contract. It also explains that traditional and Roth balances can require separate contracts when both are used. A minimum purchase amount is not a suitability threshold and does not establish that the option is right for an individual.
Compare the features that change the promise
| Feature to confirm | Why it matters in the comparison |
|---|---|
| Single or joint life | Identify whose life determines payments and what happens after a death. |
| Survivor payment | Confirm the actual survivor percentage and the event that changes the payment. |
| Level or increasing payment | Establish how later payments change and what the selected feature costs in the original illustration. |
| Refund or other death feature | Read who may receive any remaining benefit and which conditions apply. |
| Amount committed | Separate money used for the contract from money retained for other purposes. |
| Tax categories | Reconcile traditional, Roth and any other relevant tax records for the actual transaction. |
The TSP regulation describes several annuity types and feature combinations. Availability and restrictions depend on the selected combination and circumstances. Ask the recordkeeper or vendor to identify the exact contract choice instead of treating a sample illustration as a complete offer.
For a joint annuity, compare both the payment while both people are alive and the payment after either person's death. The same starting payment can hide different survivor terms. Record the age assumptions and other inputs used in the illustration so that later versions can be compared on the same basis.
Keep account access and household reserves visible
Before comparing income amounts, identify expenses that might require a separate accessible balance. Ask how each option would handle an irregular expense, a change in household income or a different investment need. Money committed to a completed annuity purchase does not function like money still held in an ordinary TSP account withdrawal arrangement.
Do not assume there is a right to reverse a completed purchase or change a feature later. Get the applicable purchase, cancellation and change rules before making an election. Also confirm who will answer service questions after the vendor begins payments.
If a person is married, required spousal consent or notification can depend on retirement coverage and the actual withdrawal choice. The TSP should confirm the applicable requirement. A household conversation, a beneficiary designation and a legally required consent are different records to complete.
Distinguish tax handling from income design
The regulation addresses required minimum distributions in connection with an annuity purchase. Ask TSP which amount must be paid directly before the purchase and which records will show that treatment. Withholding or a quoted net payment does not establish the household's final tax liability.
A conversion or rollover proposed alongside the annuity purchase also needs separate analysis. A traditional-to-Roth transaction can raise a current-year tax issue even if the eventual goal is retirement income. Read the traditional, Roth and conversion questions before combining several transactions into one assumed result.
Use a complete comparison record
Keep the dated illustration, selected features, assumptions, responsible provider, unresolved questions and the official explanation of control and change rights together. Compare the alternatives on the same date and with the same proposed amount where possible. Confirm what is estimated, what is contractual and what remains dependent on investment results.
For a review of the other account payment methods, use TSP withdrawals and installments. The purpose is a documented decision with qualified help, without an automatic instruction to move money or buy a contract.
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Sources
- eCFR: 5 CFR Part 1650 - Methods of Withdrawing Funds from the Thrift Savings Plan, checked November 3, 2026
- TSP: Let’s talk taxes—and choosing between withdrawal options, checked November 3, 2026
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