Reviewed by the Rank and Pay editorial team. Content reflects current TSP annuity program rules as of 2026. Annuity rates change monthly, see tsp.gov for the current rate.
Table of Contents
- What Is a TSP Annuity?
- How the Annuity Purchase Works
- Your TSP Annuity Options
- How TSP Calculates Your Payout
- Is a TSP Annuity a Good Idea?
- TSP Annuity vs. Other Withdrawal Options
- Next Steps
- Frequently Asked Questions
What Is a TSP Annuity?
A TSP annuity is a lifetime income option you buy with money from your Thrift Savings Plan account. You hand over a lump sum. In exchange, the plan's outside insurer sends you a fixed monthly check for life.
It is not the same as your TSP balance, an IRA, or a bank account. Once you buy it, the money is no longer yours to manage or move. You cannot take it back out as a lump sum.
The TSP itself does not act as the insurer. It purchases the contract for you from MetLife, the plan's annuity provider.
A TSP annuity also differs from your FERS or CSRS pension, or your military retired pay. Those come from your years of federal service. A TSP annuity is a separate, optional purchase made with your own TSP savings.
Buying one is one of three ways to draw down your TSP balance after you separate from service. The other two are scheduled installments and a lump-sum distribution. For a full rundown of all three, see our guide to TSP withdrawal strategies.
How the Annuity Purchase Works
You buy a TSP annuity through My Account on tsp.gov, or by calling the ThriftLine. The minimum purchase is $3,500. That minimum applies separately to your traditional balance and your Roth balance.
The separate-minimum rule matters if you split the purchase between traditional and Roth money. Say your account is 80% traditional and 20% Roth.
A $10,000 annuity request would split the same way: $8,000 traditional, $2,000 Roth. Since the Roth share falls under $3,500, TSP would reject that request.
There are no commissions or sales fees on a TSP annuity purchase. Once your paperwork is complete, TSP typically sends the money to the provider within 5 business days.
MetLife usually finishes the purchase within 2 more business days. Your first monthly payment arrives roughly a month after that.
The purchase is final once the money leaves your TSP account. You cannot cancel it, change the annuity type, or swap your joint annuitant afterward. You can still change your named beneficiary later, directly with MetLife.
Married federal employees face one more rule. This applies if you're a married FERS or uniformed services participant with a balance over $3,500. Your spouse has a legal right to a joint life annuity by default.
That default pays a 50% survivor benefit with level payments. Choosing anything else requires your spouse's signed consent.
Your TSP Annuity Options
TSP annuities are built from three separate choices. You pick one option from each category. First single or joint life, then level or increasing payments, then whether to add a refund feature.
A single life annuity pays only you, for as long as you live. Payments stop at your death unless you added a refund feature.
A joint life annuity pays you and a named joint annuitant, usually your spouse. Payments continue as long as either of you is alive. Because it covers two lifespans, the monthly payment is smaller than a single life annuity of the same size.
You choose whether the survivor keeps receiving 100% of the payment, or drops to 50%. You can also name a joint annuitant other than your spouse, such as a former spouse or a dependent relative. That option only comes with level payments, not increasing ones.
Level payments stay the same amount every year. Increasing payments start smaller, then rise by a fixed 2% each year on your payment anniversary.
That 2% bump is not tied to the Consumer Price Index or actual inflation. It will not always keep pace with rising costs.
Two optional features let money pass to a beneficiary after you die. A cash refund feature pays out any unreceived part of your purchase amount, in one lump sum. A 10-year certain feature pays your beneficiary through the rest of a 10-year period if you die early.
Both features lower your monthly payment compared to an annuity with no beneficiary protection. The 10-year certain option only pairs with single life, not joint life.
| Choice | What It Means |
|---|---|
| Single life | Pays only you for life. Payments end at your death unless you add a refund feature. |
| Joint life | Pays you and a joint annuitant, usually your spouse, for as long as either of you lives. Monthly payments are smaller than single life because they cover two lifespans. |
| Level payments | The monthly amount stays the same every year for the life of the annuity. |
| Increasing payments | The monthly amount starts smaller, then rises by a fixed 2% each year on your payment anniversary. Not tied to CPI or actual inflation. |
| With cash refund | If you (and your joint annuitant, if any) die before receiving back the full purchase amount, the remainder goes to your beneficiary in one lump sum. |
| Without cash refund | No leftover balance passes to a beneficiary. This choice pays a higher monthly amount than the refund version. |
How TSP Calculates Your Payout
Your TSP annuity payout depends on four factors working together, not one fixed formula. TSP and MetLife combine all four the moment you buy the annuity.
The first factor is the dollar amount you use to purchase the annuity. A larger purchase produces a larger monthly check, all else equal.
The second factor is your age, and your joint annuitant's age if you choose that option. Older buyers generally get higher monthly payments. The insurer expects to pay for fewer years.
The third factor is the combination of options you pick. Single life pays more per month than joint life.
Level pays more up front than increasing. A refund feature lowers the monthly amount, because MetLife has to reserve money for a possible beneficiary payout.
The fourth factor is the "interest rate index," a rate tsp.gov publishes and updates every month. This index reflects broader interest rate conditions. It feeds directly into how MetLife prices new annuity contracts that month.
A higher index generally supports a higher payout for the same purchase amount. A lower index supports a smaller one. Timing matters, too, because of that monthly update.
If you submit your request near month-end, TSP may not complete the purchase until the next month. Your payout then reflects whichever month's index was in effect on the actual purchase date. It is not the rate that was in effect on the day you applied.
Because the index changes monthly, no single dollar figure applies to everyone. Rank and Pay is not publishing an estimated payout example here. Doing so without today's verified rate would risk misleading you about your own numbers.
The TSP Annuity Calculator on tsp.gov uses the live, current-month index. It is the accurate source for your specific numbers. We link to it in the Next Steps section below.
Is a TSP Annuity a Good Idea?
Whether a TSP annuity is a good idea depends on your income, health, and comfort with risk. There is no single right answer for every retiree.
The case for buying one centers on guaranteed income. A TSP annuity pays you every month for life, no matter how markets perform afterward. That can matter if you worry about outliving your savings, or want one predictable check on top of your pension.
A joint life option also protects a spouse who might outlive you. Federal spousal-rights rules exist precisely because this protection matters.
The case against buying one centers on control. Once you purchase the annuity, that money is gone from your TSP account for good. You cannot tap it for a medical emergency or a big one-time expense.
You also give up any further investment growth on that money. If you had kept it invested, it might have grown substantially over 20 or 30 years.
An annuity buyer never sees that upside. Level payments can also lose purchasing power over a long retirement. The increasing-payment option only adds a fixed 2% a year, which may not keep up.
Most retirees do not choose all-or-nothing. Many buy a partial annuity with only a portion of their balance. That covers essential expenses with guaranteed income while leaving the rest invested and flexible.
TSP Annuity vs. Other Withdrawal Options
A TSP annuity is one of three main ways to draw down your TSP balance, and each works differently. Comparing them side by side clarifies what you would be trading away.
TSP installments let you set up monthly, quarterly, or annual payments. Your remaining balance stays invested and keeps the potential to grow. You can stop or change installments almost anytime, which an annuity never allows.
See our TSP withdrawal options guide for how installments and partial distributions compare. Try the TSP withdrawal calculator to model different payment schedules.
Rolling your balance into an IRA keeps the money invested and under your control. You choose the investments, and you can withdraw as much or as little as IRS rules allow. The tradeoff is that you take on the market risk yourself, with no guaranteed floor.
Leaving money in the TSP works similarly, since you can still choose among the plan's own TSP funds. It offers a comparable growth-and-control tradeoff, typically at lower cost than many IRA providers charge.
Tax treatment differs by source, not by withdrawal method. Traditional TSP money is taxed as ordinary income whenever you receive it.
That's true whether it's an annuity payment, an installment, or a lump sum. Roth TSP money is generally tax-free if you meet the holding-period rules.
See our Roth vs. traditional TSP guide for how that split affects your overall tax picture. Notably, TSP annuity payments are never subject to the IRS's early withdrawal penalty, no matter your age.
An annuity is only one piece of your retirement income, alongside your pension and Social Security. See our federal retirement guide for the bigger picture.
Next Steps
Your next step is to run your own numbers on tsp.gov, not rely on any generic example. The TSP Annuity Calculator uses the current month's interest rate index. It also factors in your age and account details to estimate a real payment.
Log in to My Account on tsp.gov to model annuity options against installments and lump-sum distributions side by side. You can also call the ThriftLine Service Center to walk through the options with a representative.
Because an annuity purchase is irrevocable, run the numbers more than once. Try single versus joint life, and level versus increasing payments, before you submit a request.