TSP beneficiary question

Sort by newest Sort by date
J

JD1964

New member
I've set up a trust to manage passing my assets to my family members when I die. I'm concerned about how to best align the beneficiaries listed for my TSP account. Is it true that only a "primary" beneficiary can roll a TSP into an IRA? If so, and I want my trust to take disbursement of my TSP and roll it into an IRA, is it true that I must list the trust as the "primary" beneficiary?

I know there are other ways to manage passing assets and those ways may be a better choice. However, as I learn the rules and make my plans, I need to know the answer to my specific questions above. The reason is, in addition to making my own plans, I'm also trying to help another retired federal worker (family member) be clear on the rules too.

The language at this TSP website page linked below is what makes me believe in order for a trust to be able to convert a TSP to an IRA, the trust must be listed as the "primary beneficiary". Am I understanding this correctly?

This is the specific language I'm referring to:

Note: If a beneficiary participant dies, the new beneficiary(ies) cannot continue to maintain the account in the TSP. Also, the death benefit payment cannot be rolled over into any type of IRA or plan.

Thanks for your time.

 
According to Grok:

Based on the information provided and the TSP rules, here’s a direct answer to your questions:
  1. Can only a "primary" beneficiary roll a TSP into an IRA?

    Yes, only a primary beneficiary (or a surviving spouse, if applicable) can roll over a TSP death benefit payment into an IRA. The TSP rules specify that death benefit payments can be rolled over into an IRA or eligible plan only by a primary beneficiary, typically a spouse or a named individual. Non-spouse beneficiaries, including trusts, generally cannot roll over TSP distributions into an IRA.

  2. Must the trust be listed as the "primary" beneficiary to roll a TSP into an IRA?

    No, a trust cannot roll a TSP distribution into an IRA, even if listed as the primary beneficiary. According to TSP regulations, only an individual (typically a surviving spouse) can roll over a TSP death benefit into an IRA or another eligible retirement plan. Trusts are not considered eligible entities for rollovers under TSP rules. If you name your trust as the primary beneficiary, the trust will receive the TSP funds as a lump-sum distribution (subject to applicable taxes and rules), but it cannot roll those funds into an IRA.

  3. Are you understanding the TSP website language correctly?

    The language you referenced from the TSP website is correct but applies specifically to beneficiary participants (e.g., a spouse who inherits a TSP account and maintains it as a beneficiary participant account). The note indicates that if a beneficiary participant dies, their new beneficiaries (e.g., children or a trust) cannot maintain the account in the TSP, and the death benefit payment cannot be rolled over into an IRA. This aligns with the general rule that non-spouse beneficiaries, including trusts, cannot roll over TSP distributions.
Additional Notes:
  • If your goal is for the trust to manage the TSP funds, you can name the trust as the primary beneficiary, but the trust will receive the funds as a taxable distribution, not as a rollover into an IRA. The trust would then distribute the funds to its beneficiaries according to its terms, subject to tax implications.

  • For your family member (the retired federal worker), the same rules apply: naming a trust as the primary beneficiary will result in a lump-sum distribution to the trust, not a rollover into an IRA.

  • If preserving the ability to roll over the TSP into an IRA is critical, consider naming a spouse or individual as the primary beneficiary, who could then roll the funds into an IRA and potentially transfer them to the trust later, depending on your estate plan. Consult an estate planning attorney or financial advisor to align this with your trust’s structure.
For further clarity, refer to the TSP’s official guidance on beneficiaries and death benefits at tsp.gov or consult with a TSP representative or estate planning professional, as trust and tax laws can be complex and situation-specific.

Disclaimer: Grok is not a financial adviser or a lawyer; please consult one. Don’t share information that can identify you.
Click to expand...
 
Last edited:
Side note:,

www.moaa.org

Have a TSP Account? Know the Rules for Your Heirs

Find out what you can do in advance to ensure a smooth transition for your Thrift Savings Plan.
www.moaa.org www.moaa.org

From the article:
The spouse beneficiary can keep the balance in their TSP beneficiary account if they wish.

If the beneficiary on a TSP account is not a spouse, they can’t have a beneficiary participant account. The TSP will establish a temporary account for the non-spouse beneficiary. Payment from this account will be made directly to the non-spouse beneficiary or to an inherited individual retirement account (IRA).

Tax Implications​

Traditional accounts that are disbursed will be subject to federal income tax. Roth accounts are not subject to federal income tax, but earnings may be if less than five years have passed since the deceased participant made their first contribution.

Spouse beneficiaries can defer potential tax liability by keeping the funds in their beneficiary participant account or by rolling the funds into an IRA or an eligible employer plan.

(More at the link above. If you are leaving it to a Trust rather a spouse, there may be a taxable event.)
 
I actually have an appointment with my trust lawyer on June 5. I’ll what else he can clarify for me. I’ll post back what I learn in the meeting.
 
waltj said:
What if there is no living spouse and only a TRUST. Does that mean I am up the proverbial creek?
Click to expand...
Well, have you looked at the tax rate table for trusts? If the TSP pays directly to the trust, the tax rate is 37% for anything over $15,600. And thats just federal. Add you state and local taxes to the bill as well.
 
As I said in my initial post, I'm trying to best manage my estate and also learn options so another family member can best manage theirs.

In my case, I'm 61 years old and have already begun in service withdrawals. I'm moving the money into an individual investment fund (not IRA). My reason for doing this is to go ahead and pay the tax at the rate which I can control during my remaining life. I can pull 35K per year and still keep that within the 12% married filing jointly bracket. I should have enough remaining years in life to get most of it moved over at 12% but maybe some will be in the 24%. On the other hand, if I roll it all over into a traditional IRA in which my kids inherit, they may choose the option to take the distribution in one lump sum which would result in that money being taxed at a much higher rate. With my strategy, they will inherit an account that has already had the majority of the tax liability paid at 12%, instead of them choosing to take a full IRA distribution at say, 24 or 32%.

My overall plan is also to transfer as much as my assets as possible through title by using beneficiary selections associated with each account. My goal here is to minimize the money handled by the trust and thus minimize the time and expense of administering the trust.

My family member has a substantially larger TSP than mine and they are 87 years old. They have a trust as a contingent beneficiary of the TSP. I'm concerned that if the TSP pays out to the trust, that tax bill will be much much higher than it needs to be. Obviously, they have fewer remaining years in life to use my strategy of managing tax liability at lower rates, however, they could at least begin to do so partially. It's well known that a TSP participant can roll a Traditional TSP into a Traditional IRA and doing so would give their heirs the option of spreading out the distributions over currently allowable 10 years max. If my family member is interested in minimizing tax liability to their heirs, I'm hoping to convince them revisit and adjust their current strategy. Obviously I would suggest doing all of this with the help of a CFP.
 
I just got off the phone with the Thriftline. I wanted to make double sure so I called back a second time and got the same answer again from a different associate. Both TSP associates told me that if I die, or my spouse beneficiary dies, either together or in succession and a Trust is the next beneficiary, the Trustee will have 90 days to notify TSP. If the Trustee does this within the 90 day time frame, the full amount of the TSP can be rolled over into an inherited IRA. This action would not be considered a direct payout. The funds would not be subjected to any mandatory taxation at that point.

Any thoughts or concerns?
 
I don't know, so I turn to AI. Here's what Grok had to say. Hope it helps>>>

Grok:

Let’s break down your question about the Thrift Savings Plan (TSP) beneficiary rules, specifically regarding a trust as a beneficiary, the 90-day notification period, the ability to roll over funds into an inherited IRA, and the tax implications. I’ll address each part of your statement systematically, using the relevant information from the provided references and general knowledge about TSP and IRS rules, while critically examining the details to ensure accuracy.
Statement Analysis
Your statement: “If I die, or my spouse beneficiary dies, either together or in succession and a Trust is the next beneficiary, the Trustee will have 90 days to notify TSP. If the Trustee does this within the 90-day time frame, the full amount of the TSP can be rolled over into an inherited IRA. This action would not be considered a direct payout. The funds would not be subjected to any mandatory taxation at that point.”
Let’s evaluate each component:
  1. If I die, or my spouse beneficiary dies, either together or in succession, and a Trust is the next beneficiary:
    • TSP Beneficiary Rules: A TSP participant can designate a trust as a beneficiary using Form TSP-3 (Designation of Beneficiary). If you die and your spouse is the designated beneficiary, the TSP establishes a beneficiary participant account in their name, assuming the balance is at least $200. This account allows the spouse to maintain the funds in the TSP with certain restrictions. If the spouse then dies, the successor beneficiary (in this case, the trust) would receive the death benefit. Alternatively, if you designate a trust directly as the beneficiary (e.g., bypassing a spouse), the trust would receive the death benefit upon your death.
    • Succession Scenario: If both you and your spouse die together (simultaneously) or in succession, and a trust is the next designated beneficiary, the trust would be entitled to the TSP account balance, provided the beneficiary designation is properly filed with the TSP. The TSP honors Form TSP-3 designations over wills or other estate documents.
    • Evaluation: This part of the statement is correct. A trust can be named as a beneficiary, either directly by the TSP participant or as a successor beneficiary after the spouse’s death.
  2. The Trustee will have 90 days to notify TSP:
    • Notification Process: When a TSP participant or beneficiary participant dies, the TSP requires notification to process the death benefit. Form TSP-17 (Information Relating to Deceased Participant) must be submitted, typically with a certified death certificate, to identify and locate beneficiaries, including trusts. The TSP uses this form to verify details such as the trust’s Taxpayer Identification Number (TIN).
    • 90-Day Rule: The 90-day period is relevant for non-spouse beneficiaries, including trusts. If a non-spouse beneficiary (like a trust) does not initiate a payment election within 90 days of receiving the TSP’s determination election package, the TSP will automatically cash out the account and send a check to the beneficiary. This automatic payout occurs on the 90th day or the next business day. However, the references do not explicitly state that the trustee has 90 days to notify the TSP of the death; rather, the 90-day period applies to requesting payment or initiating a rollover after the TSP sends the election package. Notification of death (via Form TSP-17) should occur as soon as possible to start the process, but no strict 90-day notification deadline is specified in the provided references.
    • Evaluation: This part is partially incorrect. The 90-day period applies to the trustee’s action to request payment or a rollover, not specifically to notifying the TSP of the death. Notification should be prompt to initiate the process, but the references don’t impose a 90-day deadline for notification itself.
  3. If the Trustee does this within the 90-day time frame, the full amount of the TSP can be rolled over into an inherited IRA:
    • Rollover Eligibility for Trusts: A trust, as a non-spouse beneficiary, can request a direct rollover of the TSP death benefit into an inherited IRA, provided the IRA is properly titled as an inherited IRA (in the name of the deceased participant for the benefit of the trust). This option is available to avoid immediate taxation and allow tax-deferred growth for traditional TSP balances or tax-free growth for Roth TSP balances (subject to Roth rules).
    • 90-Day Time Frame: As noted, non-spouse beneficiaries, including trusts, have 90 days to request payment or a rollover after receiving the TSP’s determination election package. If the trustee acts within this period to request a direct rollover to an inherited IRA, the full amount can be transferred, assuming the trust meets IRS requirements for a valid beneficiary.
    • Trust Requirements: For a trust to roll over TSP funds into an inherited IRA, it must be a “see-through” trust under IRS rules, meaning the trust’s beneficiaries are treated as the designated beneficiaries of the IRA. This requires careful drafting by an experienced attorney to ensure compliance, as improper trust provisions can trigger accelerated distribution rules or disqualify the rollover.
    • Evaluation: This part is mostly correct, provided the trust is properly structured as a see-through trust and the trustee requests the rollover within the 90-day period. However, the ability to roll over the full amount depends on the trust meeting IRS eligibility criteria, which is not guaranteed without proper legal setup.
  4. This action would not be considered a direct payout:
    • Direct Rollover vs. Direct Payout: A direct rollover to an inherited IRA involves transferring the TSP funds directly from the TSP to the IRA custodian, without the beneficiary (trust) taking possession of the funds. This is distinct from a direct payout, where the TSP sends a check to the beneficiary, triggering immediate tax consequences. A direct rollover avoids immediate taxation, as the funds remain in a tax-advantaged account.
    • Evaluation: This part is correct. A direct rollover to an inherited IRA is not considered a direct payout, as the funds are transferred directly to the IRA custodian.
  5. The funds would not be subjected to any mandatory taxation at that point:
    • Tax Implications of a Rollover: A direct rollover to an inherited IRA defers taxation on the TSP funds. For a traditional TSP, distributions from the inherited IRA are taxable as ordinary income when withdrawn. For a Roth TSP, distributions of contributions are tax-free, and earnings are tax-free if the Roth account was held for at least five years at the time of withdrawal; otherwise, earnings may be taxable. No mandatory federal income tax withholding applies to a direct rollover, as the funds are not distributed to the beneficiary.
    • SECURE Act Considerations: Under the SECURE Act (2019), non-spouse beneficiaries, including trusts, must generally withdraw all funds from an inherited IRA within 10 years of the account owner’s death. If the original TSP participant had reached their required beginning date (RBD, typically age 73 for deaths after 2022), the trust may also need to take annual required minimum distributions (RMDs) during the 10-year period, which would be taxable for traditional TSP funds.
    • Evaluation: This part is correct. A direct rollover to an inherited IRA defers mandatory taxation at the time of the rollover, as the funds remain in a tax-advantaged account. However, future distributions from the inherited IRA will be subject to taxation based on the type of TSP (traditional or Roth) and IRS rules.
Additional Considerations
  • Successor Beneficiary Restrictions: If a spouse beneficiary participant dies and a trust is the successor beneficiary, the TSP does not allow the trust to maintain a beneficiary participant account or roll over the funds into an inherited IRA. Instead, the death benefit is paid directly to the trust as a taxable distribution. This is a critical distinction from the scenario where a trust is the primary beneficiary after the TSP participant’s death.
  • Tax Planning: Trusts face high tax rates on undistributed income, so careful planning with a qualified tax professional or estate attorney is essential to minimize tax liabilities. For example, a trust may distribute funds to its beneficiaries to shift the tax burden to their potentially lower tax brackets.
  • State Taxes: The TSP does not withhold state income taxes, so the trustee is responsible for any state tax obligations on future distributions.
Conclusion
Your statement is mostly true but requires some clarification:
  • A trust can be a beneficiary of a TSP account, either directly or as a successor beneficiary after a spouse’s death.
  • The 90-day period applies to requesting payment or a rollover, not specifically to notifying the TSP of the death. Notification should occur promptly via Form TSP-17.
  • A properly structured trust can roll over the TSP death benefit into an inherited IRA within the 90-day period, provided it meets IRS requirements (e.g., a see-through trust).
  • A direct rollover is not a direct payout and defers taxation at the time of transfer, though future distributions from the inherited IRA may be taxable.
  • Caveat: If the trust is a successor beneficiary after a spouse beneficiary participant’s death, the TSP does not allow a rollover to an inherited IRA; the payment is a taxable distribution.
Recommendation: Consult a qualified tax professional or estate planning attorney to ensure the trust is properly drafted to qualify for an inherited IRA rollover and to navigate the complex IRS rules, especially under the SECURE Act. For further details, refer to the TSP website (www.tsp.gov) (www.tsp.gov) or IRS Publication 590-B.
If you have additional details about your situation (e.g., the type of TSP account, the trust’s structure, or specific estate planning goals), I can provide a more tailored response. Would you like me to clarify any specific aspect?
Let’s break down your question about the Thrift Savings Plan (TSP) beneficiary rules, specifically regarding a trust as a beneficiary, the 90-day notification period, the ability to roll over funds into an inherited IRA, and the tax implications. I’ll address each part of your statement systematically, using the relevant information from the provided references and general knowledge about TSP and IRS rules, while critically examining the details to ensure accuracy.

Statement Analysis

Your statement: “If I die, or my spouse beneficiary dies, either together or in succession and a Trust is the next beneficiary, the Trustee will have 90 days to notify TSP. If the Trustee does this within the 90-day time frame, the full amount of the TSP can be rolled over into an inherited IRA. This action would not be considered a direct payout. The funds would not be subjected to any mandatory taxation at that point.”
Let’s evaluate each component:
  1. If I die, or my spouse beneficiary dies, either together or in succession, and a Trust is the next beneficiary:
    • TSP Beneficiary Rules: A TSP participant can designate a trust as a beneficiary using Form TSP-3 (Designation of Beneficiary). If you die and your spouse is the designated beneficiary, the TSP establishes a beneficiary participant account in their name, assuming the balance is at least $200. This account allows the spouse to maintain the funds in the TSP with certain restrictions. If the spouse then dies, the successor beneficiary (in this case, the trust) would receive the death benefit. Alternatively, if you designate a trust directly as the beneficiary (e.g., bypassing a spouse), the trust would receive the death benefit upon your death.

    • Succession Scenario: If both you and your spouse die together (simultaneously) or in succession, and a trust is the next designated beneficiary, the trust would be entitled to the TSP account balance, provided the beneficiary designation is properly filed with the TSP. The TSP honors Form TSP-3 designations over wills or other estate documents.

    • Evaluation: This part of the statement is correct. A trust can be named as a beneficiary, either directly by the TSP participant or as a successor beneficiary after the spouse’s death.
  2. The Trustee will have 90 days to notify TSP:
    • Notification Process: When a TSP participant or beneficiary participant dies, the TSP requires notification to process the death benefit. Form TSP-17 (Information Relating to Deceased Participant) must be submitted, typically with a certified death certificate, to identify and locate beneficiaries, including trusts. The TSP uses this form to verify details such as the trust’s Taxpayer Identification Number (TIN).

    • 90-Day Rule: The 90-day period is relevant for non-spouse beneficiaries, including trusts. If a non-spouse beneficiary (like a trust) does not initiate a payment election within 90 days of receiving the TSP’s determination election package, the TSP will automatically cash out the account and send a check to the beneficiary. This automatic payout occurs on the 90th day or the next business day. However, the references do not explicitly state that the trustee has 90 days to notify the TSP of the death; rather, the 90-day period applies to requesting payment or initiating a rollover after the TSP sends the election package. Notification of death (via Form TSP-17) should occur as soon as possible to start the process, but no strict 90-day notification deadline is specified in the provided references.


    • Evaluation: This part is partially incorrect. The 90-day period applies to the trustee’s action to request payment or a rollover, not specifically to notifying the TSP of the death. Notification should be prompt to initiate the process, but the references don’t impose a 90-day deadline for notification itself.
  3. If the Trustee does this within the 90-day time frame, the full amount of the TSP can be rolled over into an inherited IRA:
    • Rollover Eligibility for Trusts: A trust, as a non-spouse beneficiary, can request a direct rollover of the TSP death benefit into an inherited IRA, provided the IRA is properly titled as an inherited IRA (in the name of the deceased participant for the benefit of the trust). This option is available to avoid immediate taxation and allow tax-deferred growth for traditional TSP balances or tax-free growth for Roth TSP balances (subject to Roth rules).


    • 90-Day Time Frame: As noted, non-spouse beneficiaries, including trusts, have 90 days to request payment or a rollover after receiving the TSP’s determination election package. If the trustee acts within this period to request a direct rollover to an inherited IRA, the full amount can be transferred, assuming the trust meets IRS requirements for a valid beneficiary.


    • Trust Requirements: For a trust to roll over TSP funds into an inherited IRA, it must be a “see-through” trust under IRS rules, meaning the trust’s beneficiaries are treated as the designated beneficiaries of the IRA. This requires careful drafting by an experienced attorney to ensure compliance, as improper trust provisions can trigger accelerated distribution rules or disqualify the rollover.


    • Evaluation: This part is mostly correct, provided the trust is properly structured as a see-through trust and the trustee requests the rollover within the 90-day period. However, the ability to roll over the full amount depends on the trust meeting IRS eligibility criteria, which is not guaranteed without proper legal setup.
  4. This action would not be considered a direct payout:
    • Direct Rollover vs. Direct Payout: A direct rollover to an inherited IRA involves transferring the TSP funds directly from the TSP to the IRA custodian, without the beneficiary (trust) taking possession of the funds. This is distinct from a direct payout, where the TSP sends a check to the beneficiary, triggering immediate tax consequences. A direct rollover avoids immediate taxation, as the funds remain in a tax-advantaged account.


    • Evaluation: This part is correct. A direct rollover to an inherited IRA is not considered a direct payout, as the funds are transferred directly to the IRA custodian.
  5. The funds would not be subjected to any mandatory taxation at that point:
    • Tax Implications of a Rollover: A direct rollover to an inherited IRA defers taxation on the TSP funds. For a traditional TSP, distributions from the inherited IRA are taxable as ordinary income when withdrawn. For a Roth TSP, distributions of contributions are tax-free, and earnings are tax-free if the Roth account was held for at least five years at the time of withdrawal; otherwise, earnings may be taxable. No mandatory federal income tax withholding applies to a direct rollover, as the funds are not distributed to the beneficiary.



    • SECURE Act Considerations: Under the SECURE Act (2019), non-spouse beneficiaries, including trusts, must generally withdraw all funds from an inherited IRA within 10 years of the account owner’s death. If the original TSP participant had reached their required beginning date (RBD, typically age 73 for deaths after 2022), the trust may also need to take annual required minimum distributions (RMDs) during the 10-year period, which would be taxable for traditional TSP funds.


    • Evaluation: This part is correct. A direct rollover to an inherited IRA defers mandatory taxation at the time of the rollover, as the funds remain in a tax-advantaged account. However, future distributions from the inherited IRA will be subject to taxation based on the type of TSP (traditional or Roth) and IRS rules.
Additional Considerations
  • Successor Beneficiary Restrictions: If a spouse beneficiary participant dies and a trust is the successor beneficiary, the TSP does not allow the trust to maintain a beneficiary participant account or roll over the funds into an inherited IRA. Instead, the death benefit is paid directly to the trust as a taxable distribution. This is a critical distinction from the scenario where a trust is the primary beneficiary after the TSP participant’s death.


  • Tax Planning: Trusts face high tax rates on undistributed income, so careful planning with a qualified tax professional or estate attorney is essential to minimize tax liabilities. For example, a trust may distribute funds to its beneficiaries to shift the tax burden to their potentially lower tax brackets.

  • State Taxes: The TSP does not withhold state income taxes, so the trustee is responsible for any state tax obligations on future distributions.
Conclusion
Your statement is mostly true but requires some clarification:
  • A trust can be a beneficiary of a TSP account, either directly or as a successor beneficiary after a spouse’s death.
  • The 90-day period applies to requesting payment or a rollover, not specifically to notifying the TSP of the death. Notification should occur promptly via Form TSP-17.
  • A properly structured trust can roll over the TSP death benefit into an inherited IRA within the 90-day period, provided it meets IRS requirements (e.g., a see-through trust).
  • A direct rollover is not a direct payout and defers taxation at the time of transfer, though future distributions from the inherited IRA may be taxable.
  • Caveat: If the trust is a successor beneficiary after a spouse beneficiary participant’s death, the TSP does not allow a rollover to an inherited IRA; the payment is a taxable distribution.
Recommendation: Consult a qualified tax professional or estate planning attorney to ensure the trust is properly drafted to qualify for an inherited IRA rollover and to navigate the complex IRS rules, especially under the SECURE Act. For further details, refer to the TSP website (www.tsp.gov) (www.tsp.gov) or IRS Publication 590-B.

If you have additional details about your situation (e.g., the type of TSP account, the trust’s structure, or specific estate planning goals), I can provide a more tailored response. Would you like me to clarify any specific aspect?
 
Remember, if you transfer any funds out of your TSP account into a financial institution that information has to be in the TSP system 7 days prior to transferring any funds.
 
This part “below” from Groks reply is in conflict with what both TSP associates at the Thriftline said to me. They said the Trustee of the Trust could roll the TSP into an inherited IRA


  • Caveat: If the trust is a successor beneficiary after a spouse beneficiary participant’s death, the TSP does not allow a rollover to an inherited IRA; the payment is a taxable distribution.
 
JD1964 said:
This part “below” from Groks reply is in conflict with what both TSP associates at the Thriftline said to me. They said the Trustee of the Trust could roll the TSP into an inherited IRA


  • Caveat: If the trust is a successor beneficiary after a spouse beneficiary participant’s death, the TSP does not allow a rollover to an inherited IRA; the payment is a taxable distribution.
Click to expand...
Grok is getting that statement from page 9 of https://www.tsp.gov/publications/tspbk31.pdf

If you get Thriftline on the phone or email again, ask them for a reference in writing to the 90-day window for inherited IRAs rollovers.
 
Interesting thing is I asked a CFP this very question. In fact, it was a CFP on a list recommended by my Trust law firm. I gave them reference to the TSP 14-4 bulletin as well and first had a phone call, then followed up by submitting the question in writing via email. It took them two weeks to respond. To my surprise, that CFP punted the question without an answer and recommended that I contact Thriftline for the answer. Crazy huh? Why wouldn’t a CFP be able to answer that question confidently?

While I continue to seek confident clarification, watch this CFP in this video. From what he says, I’m thinking a non-spouse could effectively manage a rollover but only if the non-spouse is listed as the primary beneficiary. If a Trust can be considered as a non-spouse beneficiary, then the Trust should be able to manage the rollover if listed as primary beneficiary and it’s executed in a timely manner.

However, if any non-spouse, which could be a Trust is listed as a secondary or contingent beneficiary, they cannot do the rollover and must take the full taxable payout all at once.

Watch the video

 
nasa1974 said:
JD1964, do you have a 401k outside of your TSP?
Click to expand...
I have two separate rollover Ira’s, each with a different entity that I have setup in case I need them roll into.

I also have two separate individual “non-retirement” investment accounts with the same entities.

I’ve been moving my TSP funds into the individual investment accounts as fast as I can while still keeping myself in the 12% tax filing bracket. My goal is to move as much as I can while paying the tax now at 12%. I m currently able to move 35-40k per year and remain in the 12% bracket. This effort is to help my heirs by keeping them out of a critical decision process regarding tax liability after I die.

Come hell or high water, if I run out of time I can always sidestep the remaining TSP balance into the rollover IRA’s and let my heirs decide how to manage the tax liability.

I’ve got my ducks in a row I believe. My main goal for continuing this conversation and attempting to gain clarity on TSP rules is that an elderly family member of mine has $1m TSP balance to deal with. I’m trying to convince them they need to take action to avoid unnecessary tax liability.
 
You must log in or register to reply here.

Similar threads

Skramy
Beneficiary updating
Replies
5
Views
1K
exnavyew
exnavyew
B
TSP vs IRA - Contribution Prioritization
Replies
5
Views
393
evilanne
evilanne
D
Missing Beneficiaries
Replies
8
Views
4K
evilanne
evilanne
quabit
Retiring/TSP process questions
Replies
4
Views
235
quabit
quabit
J
Why continue with TSP vs IRA rollover?
Replies
9
Views
4K
evilanne
evilanne
Back
Top