One of your many options when you want to make a TSP withdrawal is to use all of part of the funds in your account to buy a life annuity. It guarantees you monthly annuity payments as long as you are alive. If you choose a life annuity product that pays survivors or joint annuitants, then the annuity payments will continue as long as either of you is still alive.
Two points to be noted here. One is that buying this annuity is different from the choice of receiving monthly payments directly from your account. Secondly, the life annuity payments you get will be distinct from (and in addition to) the retirement payments you get as a federal annuitant from FERS or CSRS, or as a member of the uniformed services.
So, how exactly does one go about buying a life annuity through TSP?
Options For Buying a Life Annuity Through a TSP Withdrawal
You can purchase an annuity if you have $3,500 or more as your vested account balance. This applies separately to the traditional (non-Roth) and Roth balances in your account. You may opt for a Single life annuity by yourself, or a Joint life annuity with your spouse or with someone else. Payments from the former cease upon your death.
For joint life annuities, you have the option of choosing a 100% survivor annuity or a 50% survivor annuity. With the 100% option, you or the joint annuitant (whoever is the survivor) will continue to receive the same annuity payment that you received while both of you are still alive. With the 50% option, the annuity paid to the survivor is 50% of that which was paid while both of you are alive.
You can choose to receive fixed (level) payments, or increasing payments that rise with inflation to adjust for the cost of living.
How to Buy a Life Annuity Through a TSP Withdrawal
If you have decided that you want to buy a life annuity through a withdrawal, you need to fill up Form TSP-70. The rest of the process is handled without any action required on your part, and this may take several weeks. The TSP has its own annuity provider from whom they will buy the annuity you chose, using funds from your account.