The primary federal retirement program provides various ways in which to set up survivor benefits. The Thrift Saving Plan (TSP) offers a plethora of opportunities in setting up the annuity benefit. TSP withdrawals can be made by multiple of ways and annuity is just one of the options available, either through a lump sum, a monthly payment or through a combination of both.
There are three kinds of TSP annuities:
- Simple Life –This annuity is paid once to you in your life.
- Joint Life (with Spouse) –This annuity will be paid out to you while you’re both living. If one of you passes on, the annuity is given to the survivor.
- Joint Life (Not with a Spouse) –The annuity is paid to you and the person you designate for the benefit while living. Your designated chosen partner should have some insurable interest in you. The survivor of either one of you will get the benefit. People who are deemed to have an insurable interest in you include – blood relatives, former spouses, adopted relatives and those you’re dating and living with.
A joint life annuity pays a monthly payment of either 100 or 50 percent. If both you and the insured are still alive, it pays 100 percent. If either one of you dies, it pays a 50 percent survivor benefit.
There are some annuity features combinable with basic annuity kinds such as:
- Cash refund– This option means if either one of you dies before getting payments that equal the account balance amount, the difference between the annuity purchase balance and payment sum is given to the beneficiary in a cash refund.
- Increasing payments –With this option, the monthly payment amount grows up to three percent annually (dependent upon the consumer price index).
- 10-year definite payout –If you die during the first 10years of the annuity, the beneficiary gets payments for the rest of the 10
Available features may not be combined with all basic annuity types, and after the purchase of an annuity is made, the money is given to a private company. This company is the one that gives out the benefit.
- A married person with a $3,500 or more account balance means spouses’ right requirements are applied to the withdrawal choice.
- Married FERS participants’ spouses can have a joint and survivor annuity with its level payments, 50 percent survivor benefit level and the no cash refund feature unless they waive their rights to it.
- A married CSRS participant means the TSP will inform the spouse of the withdrawal choice.