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The federal Thrift Savings Plan allows retirees to direct the TSP to purchase an annuity from an insurance company (either the entire or partial balance of the participant) when participant retires. IRS pub 721 says the participant is not taxed until the annuity payments are paid to the participant. What IRS section allows the transfer of the purchased annuity from the TSP to the insurance company to be considered a nontaxable event? Is the annuity considered part of the TSP plan even though the insurance company is now in charge of the payments and issues the tax documents each year? Most plans require direct transfers or rollovers to remain tax free.