[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR1650.12]

[Page 265-267]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
         CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
 
PART 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS PLAN--Table of Contents
 
                 Subpart B--Post-Employment Withdrawals
 
Sec. 1650.12  Annuities.

    (a) A participant can withdraw his or her entire account balance in 
the form of a life annuity. The participant's account balance must be 
$3,500 or more in order for the TSP to purchase an annuity. The TSP will 
send forms to a participant who chooses this method which ask him or her 
to choose an annuity method, name a beneficiary (if required), and 
provide any necessary spousal waiver or spousal information. Upon 
receipt of the required information, the TSP will purchase the annuity 
from the TSP's annuity vendor using the participant's entire account 
balance, except for any amount necessary to satisfy minimum distribution 
requirements. The first annuity payment will be made approximately 30 
calendar days after the purchase of the annuity. The annuity will 
provide a

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payment for life to the participant and, if applicable, the 
participant's survivor, in accordance with the type of annuity chosen.
    (b) The following types of annuities are available to participants:
    (1) A single life annuity with level payments. This annuity is based 
upon the life expectancy of the participant at the time of purchase and 
provides monthly payments to the participant as long as the participant 
lives.
    (2) A joint life annuity for the participant and his or her spouse 
with level payments. This annuity is based upon the combined life 
expectancies of the participant and the spouse and provides monthly 
payments to the participant, as long as both the participant and spouse 
are alive, and monthly payments to the survivor, as long as he or she is 
alive.
    (3) Either a single life or joint life annuity (as described in 
paragraph (b)(l) or (b)(2) of this section) where the amount of the 
monthly payment can increase each year on the anniversary date of the 
first annuity payment. The amount of the increase is based on the 
average annual change in the Consumer Price Index for Urban Wage Earners 
and Clerical Workers as measured between the period of July through 
September in the second calendar year preceding the anniversary date and 
July through September in the calendar year preceding the anniversary 
date. For example, if the anniversary of an increasing annuity occurs in 
November of 1995, the amount of the increase will be calculated based 
upon the change in the index between the July-September period in 1993 
and the July-September period in 1994. Monthly payments cannot decrease, 
nor can they increase more than 3 percent each year. If this option is 
chosen in conjunction with a joint life annuity with the spouse, the 
annual increase continues to apply to benefits received by the survivor.
    (4) A joint life annuity, with level payments, for the participant 
and another person who either is a former spouse or has an insurable 
interest in the participant. This annuity is based upon the combined 
life expectancies of the participant and the other person. It provides 
monthly payments to the participant as long as both the participant and 
the joint annuitant are alive, and monthly payments to the survivor as 
long as he or she is alive. Increasing payments cannot be chosen for a 
joint annuity with a person other than the spouse.
    (i) A person has an ``insurable interest'' in a participant if the 
person is financially dependent on the participant and could reasonably 
expect to derive financial benefit from the participant's continued 
life.
    (ii) A relative (whether blood or adopted, but not by marriage) who 
is closer than a first cousin will be presumed to have an insurable 
interest in the participant.
    (iii) A participant can establish that a person not described in 
paragraph (b)(4)(ii) of this section has an insurable interest in him or 
her by submitting with the annuity request an affidavit from a person 
other than the participant or the joint annuitant demonstrating that the 
designated joint annuitant has an insurable interest (as defined in 
paragraph (b)(4)(i) of this section) in the participant.
    (c) Participants who choose a joint life annuity (with either a 
spouse or a person with an insurable interest) must choose either a 50 
percent or a 100 percent survivor benefit. A 50 percent survivor benefit 
provides a monthly payment to the survivor which is 50 percent of the 
payment made when both the participant and the joint annuitant are 
alive. A 100 percent survivor benefit provides a monthly payment to the 
survivor which is the same amount as the payment made when both the 
participant and the survivor are alive. Either the 50 percent or the 100 
percent survivor benefit may be combined with any joint life annuity 
option, except that the 100 percent survivor benefit can be combined 
with a joint annuity with a person other than the spouse (or a former 
spouse, if required by a retirement benefits court order) only if the 
joint annuitant is not more than 10 years younger than the participant.
    (d) The following mutually exclusive features can be combined with 
certain types of annuities, as indicated:
    (1) Cash refund. This feature provides that, if the participant (and 
joint annuitant, if applicable) dies before an amount equal to the 
balance used to

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purchase the annuity has been paid out, the difference between the 
balance used to purchase the annuity and the sum of monthly payments 
already made will be paid to the named beneficiaries. The participant 
(or the joint annuitant, if the participant is deceased) may name or 
change the beneficiaries. This feature can be combined with any other 
annuity option.
    (2) Ten-year certain. This feature provides that, if the participant 
dies before annuity payments have been made for 10 years (120 payments), 
monthly payments will continue to be made to the beneficiaries selected 
by the participant until 120 payments have been made. This feature can 
be combined with any single life annuity option, but cannot be selected 
in conjunction with any joint life annuity option.
    (e) The Board can, from time to time, establish other types of 
annuities, other levels of survivor benefits, and other annuity 
features.
    (f) The Board can, from time to time, eliminate a type of annuity 
(except for those annuities described in paragraph (b) of this section), 
a survivor benefit level, or an annuity feature. However, if the Board 
does so, it must continue to allow participants to purchase annuities of 
the eliminated type or containing the eliminated feature for five years 
after the date the decision to eliminate the annuity type or feature is 
published in the Federal Register.
    (g) Once an annuity has been purchased, the type of annuity, any 
annuity features, and the identity of the annuitant cannot be changed, 
and the annuity cannot be terminated.