What are RMDs? Required Minimum Distributions (RMDs) are the minimum amounts the IRS requires you to withdraw annually from your retirement accounts, including the Thrift Savings Plan (TSP), starting at age 73.
What is TSP? The Thrift Savings Plan (TSP) is a federal government-sponsored retirement savings and investment plan.
Rolling TSP into an IRA Fixed Indexed Annuity
- Open an IRA Fixed Indexed Annuity: Contact a financial advisor, like The Annuity Expert, to assist in this process.
- Transfer Funds from TSP to IRA: Initiate a rollover of your TSP funds into the newly opened IRA fixed indexed annuity. This move should be a direct rollover to avoid tax penalties.
- Choose an Annuity with an Enhanced Death Benefit: Select an annuity that offers an enhanced death benefit. This feature acts similarly to life insurance, aiming to preserve the annuity’s value for beneficiaries.
Benefits of IRA Fixed Indexed Annuity with Enhanced Death Benefit
- Preservation of Wealth for Beneficiaries: The enhanced death benefit aims to maintain the annuity’s balance, ensuring a legacy for your heirs.
- Potential Tax Benefits: It may help offset taxes that beneficiaries owe upon inheriting the annuity.
Withdrawing RMDs While Maintaining Balance
- Calculate RMDs: Determine the required minimum distribution each year, starting at age 73.
- Withdraw Strategically: Withdraw RMDs in a way that minimizes the impact on the annuity’s balance.
By rolling your TSP into an IRA fixed indexed annuity with an enhanced death benefit, you can meet RMD requirements while preserving the balance for your beneficiaries. This strategy can provide a financial legacy and potential tax benefits for your heirs.
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