Rolling over your Thrift Savings Plan (TSP) into a MYGA or fixed indexed annuity can be an important step in your retirement income planning. Both options offer unique features that can fit different savers’ goals and time horizons. This checklist will help you evaluate a MYGA or fixed indexed annuity after a TSP rollover by covering key considerations, including contract features, fees, and potential benefits — all aligned with the latest IRS rules effective in 2026.

1. Understand What a MYGA and fixed indexed Annuity Offer

MYGA (Multi-Year Guaranteed Annuity): A MYGA provides a fixed, known interest rate for a set period, giving simplicity and predictability. It is often a better fit if you have a shorter time horizon or want a straightforward contract without variable returns.

fixed indexed Annuity (FIA): An FIA provides index-linked growth potential subject to caps, participation rates, or spreads. It guarantees a 0% floor so you do not lose principal from negative index changes. FIAs often offer optional lifetime income riders and may suit savers with longer time horizons who want the possibility of index-linked growth while protecting principal.

2. Confirm You Meet the IRS Rollover and Contribution Limits

Before moving forward, ensure your rollover and future contributions comply with 2026 IRS rules:

  • You can roll over your TSP balance without penalty as long as it is done properly.
  • The 401(k)/403(b)/457/TSP employee deferral limit for 2026 is $24,500, with catch-up contributions available if you are age 50 or older.
  • Required Minimum Distributions (RMDs) begin at age 73 or 75 if born in 1960 or later, so plan accordingly with how the annuity handles RMDs.

3. Review Contract Terms and Surrender Charges

Whether you choose a MYGA or fixed indexed annuity after a TSP rollover, reviewing contract terms is essential.

  • Surrender Periods: MYGAs often have fixed surrender charges tied to the guaranteed term. Fixed indexed annuities may have longer surrender charge periods, especially if a bonus is offered.
  • Surrender Charges: These fees can reduce your liquidity in early years. Understand how charges apply if you withdraw funds before the term expires or before contract maturity.

4. Evaluate Growth Potential and Crediting Methods (FIA Focus)

Fixed indexed annuities credit interest based on the performance of a stock market index, but with important trade-offs:

  • Growth is index-linked with a 0% floor to protect principal in down years.
  • Interest credits are subject to caps, participation rates, or spreads which limit maximum growth.
  • Be aware of different crediting methods available and choose one that aligns with your outlook and goals.

MYGAs do not involve index-linked growth but provide a fixed interest rate, which some savers may prefer for its predictability.

5. Consider Optional Riders and Their Fees

Many fixed indexed annuities offer optional lifetime income riders that can provide guaranteed income for life. When evaluating these:

  • Understand rider fees, which are typically charged as a percentage of the contract value or income base.
  • Consider whether guaranteed lifetime income fits your retirement income plan and whether you need that optional benefit.
  • MYGAs generally do not offer these riders, which may or may not be a consideration based on your needs.

6. Review the Issuer’s Financial Strength and Guarantees

Annuities are insurance products, so guarantees are backed by the claims-paying ability of the issuing insurance company. It’s important to:

  • Check the financial ratings of the insurance company issuing the annuity.
  • Remember that annuities are not backed by the FDIC or guaranteed by the federal government.

7. Understand Tax Implications and Distribution Rules

Rolling over your TSP into an annuity can affect your tax situation, including:

  • Traditional annuities are tax-deferred but withdrawals are taxed as ordinary income.
  • Payments received from the annuity must comply with Required Minimum Distribution (RMD) rules starting at the IRS-mandated age (73 or 75 for some in 2026).
  • Consider how early withdrawals or partial surrenders are taxed and whether any penalties apply.

8. Compare Liquidity Needs and Access to Funds

Both MYGAs and fixed indexed annuities typically have surrender charges and limited liquidity in the initial years.

  • Review any free withdrawal amounts allowed yearly without penalties (often 10%).
  • Consider whether the surrender charges and liquidity align with how soon you may need access to funds after rolling over your TSP.

9. Evaluate How the Product Fits Your Retirement Timeline

A MYGA might suit savers who want a fixed rate for a known shorter period — often 3 to 10 years — and value simplicity. Fixed indexed annuities tend to be better suited for those with longer time horizons who want index-linked growth potential, principal protection, and possible lifetime income.

10. Clarify Fees and Charges Beyond Surrender Penalties

Alongside surrender charges, review all fees such as:

  • Rider fees (for FIA optional income riders).
  • Administrative fees if any.
  • Commission impacts if working with an insurance agent (discussed transparently).

FAQ: Common Questions About a MYGA or Fixed Indexed Annuity After a TSP Rollover

Can I contribute more to an IRA after rolling over my TSP?

Yes, you can still contribute to an IRA, but keep in mind 2026 IRS limits: combined traditional and Roth IRA contributions are capped at $7,500 with an additional $1,100 catch-up if age 50 or older. Higher income may affect deductibility and Roth contribution eligibility.

Are fixed indexed annuities guaranteed not to lose money?

Fixed indexed annuities include a 0% floor on index-linked growth, which means you won’t lose principal due to negative index returns, but guarantees depend on the insurance company’s ability to pay claims.

What happens if I need to withdraw money early?

Early withdrawals may trigger surrender charges and taxes. Review the exact terms of your contract carefully, including any free withdrawal allowances and surrender penalties specific to your product.

How do I decide between a MYGA and a fixed indexed annuity?

Consider your risk tolerance, retirement timeline, and need for potential lifetime income. MYGAs fit those wanting fixed rates and simplicity, often for shorter terms. Fixed indexed annuities provide index-linked growth with downside protection and optional income riders, better for longer horizons.

Conclusion

Evaluating a MYGA or fixed indexed annuity after a TSP rollover requires careful consideration of contract terms, growth potential, fees, tax rules, and your retirement timeline. Use this checklist to guide your review and work with a trusted advisor to ensure your decision fits your personal goals. At FixedIRAs.com, we emphasize clarity and education so you can choose the option that supports your financial security in retirement without surprises.

Additional Educational Resources

Want help comparing your retirement options? Schedule a review or contact us today, or call (832) 685-8570.

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For more background, see our IRA Rollovers resource.

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