How Do I Avoid Taxes on My TSP Withdrawal?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Avoiding Taxes on TSP Withdrawals

To avoid taxes on withdrawals from your Thrift Savings Plan (TSP), consider rolling over the TSP into a fixed index annuity with a premium bonus. This strategy can offset a significant portion of the taxes owed on a typical TSP withdrawal.

Example Using a $100,000 TSP Account

  • Starting Amount: $100,000 in your TSP account.
  • Rollover: Move the entire amount into a fixed index annuity.
  • Premium Bonus: Receive a bonus for the rollover. For example, a 10% bonus would add $10,000 to your investment.

Benefits of This Strategy

  1. Tax Offset: The premium bonus can offset the taxes you would owe on the TSP withdrawal.
  2. Penalty-Free Withdrawals: Certain annuities allow for penalty-free withdrawals under specific conditions.
  3. Guaranteed Lifetime Withdrawal Benefit: Adding this option can ensure you don’t run out of money in retirement.
Avoiding Taxes On Tsp Withdrawals

Considerations

  • Taxes: While the premium bonus offsets initial taxes, future withdrawals from the annuity may be taxable.
  • Annuity Terms: Understand the annuity contract’s fees, terms, and conditions.
  • Financial Advice: Consult a financial advisor to ensure this strategy aligns with your retirement goals.

Conclusion

Rolling over your TSP into a fixed index annuity with a premium bonus can effectively manage taxes on withdrawals. This approach provides a potential “free money” benefit, options for penalty-free withdrawals, and the opportunity for a guaranteed income in retirement. Consult a financial professional to assess if this strategy suits your financial situation.

Contact us today for a free quote.

Request A Quote

Get help or a quote from a licensed financial professional. This service is free of charge.

Contact Us
First
Last

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

Scroll to Top