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Your TSP account when you die
- Thread starter PessOptimist
- Start date
TommyIV
Administrator
There is an interesting article written by the Wall Street Journal Editorial Board about the new Secure Act that passed through the House of Rep this summer. The Secure Act updates the nation's retirement rules. So far the bill has advantages such as eliminating the contribution age limit, allowing distributions to be delayed until 72 instead of 70.5 years, and allowing $5000 early withdrawal when a child is born or adopted.
The articles main objective is to point to the 'hangup' of the new bill. To pay for the new proposed leniencies without raising taxes, retirement assets passed down to children, grandchildren, and other non-spousal heirs would be required to emptied from requirement accounts within 10 years.
This may be something to look into for those who have really summed up a good amount of savings sitting in retirement accounts that they plan to pass down.
https://www.wsj.com/articles/iras-in-political-sights-11563318661
The articles main objective is to point to the 'hangup' of the new bill. To pay for the new proposed leniencies without raising taxes, retirement assets passed down to children, grandchildren, and other non-spousal heirs would be required to emptied from requirement accounts within 10 years.
This may be something to look into for those who have really summed up a good amount of savings sitting in retirement accounts that they plan to pass down.
https://www.wsj.com/articles/iras-in-political-sights-11563318661
Hallatauer
Member
I submitted a TSP-3 many years ago... designated a portion, 25%, goes to my sister and the rest to my wife, which she whole heartedly supports. I should put together information for them on how to handle/submit forms to TSP in the unlikely event of an early demise.
RazorCat
Well-known member
My wife and I discussed this shortly after I retired. I took it upon myself to assemble some steps she should take in the event of my death that helps her out since TSP can be a little daunting for non-participants. During the processing of my retirement paperwork in 2013 I spoke with my retirement counselor, and with a TSP representative specifically regarding designation of a TSP beneficiary. They both told me the same thing as the website. Distribution of TSP funds to beneficiaries are automatic in the order stipulated on the website under your account. No further action was needed on my part unless I wanted to specific another order of distribution. I've also made arrangements for my financial adviser to assist her with moving it out of TSP to an IRA account in her name, or my son's name if she is deceased, in the event of my death and once TSP has established the Beneficiary participant account. She'll simply initiate a one-time withdrawal (IRA transfer) to an outside account. That, to me, is a much simpler, more manageable option for them. Your situation may be different, and you may want to leave the funds in TSP. That's just not my preference.
I also put together a document with TSP account information, account number, and password, and specific forms she may need to complete, and detailed information, along with contact persons for each of my other investment accounts. I did the same for my son.
I update it as any information changes. If you're retired, be sure to include login (claim number) and password information so they can access your Services Online account. The more information the better.
I also put together a document with TSP account information, account number, and password, and specific forms she may need to complete, and detailed information, along with contact persons for each of my other investment accounts. I did the same for my son.
I update it as any information changes. If you're retired, be sure to include login (claim number) and password information so they can access your Services Online account. The more information the better.
Last edited:
PessOptimist
Well-known member
I had never looked in to what happens to my TSP when I die. I just figured it would magically pass to my spouse. It does sort of. Not without pain on her part.
First, the form TSP-3, Designation of Beneficiary. The web site tells me:
“You do not have a valid Form TSP-3, Designation of Beneficiary, on file. Your account will be distributed according to the statutory order of precedence required by law. ONLY complete Form TSP-3 (bold and italic mine), Designation of Beneficiary, if you want distribution to be made in a way other than the following order of precedence:
To your spouse
If none, to your child or children equally, with the share due any deceased child divided equally among that child's descendants
If none, to your parents equally or to the surviving parent
If none, to the appointed executor or administrator of your estate
If none, to your next of kin who would be entitled to your estate under the laws of the state in which you resided at the time of your death”
The site tells me not to fill one out. My spouse is disturbed by that.
She or someone must submit a form TSP-17, Information Relating to Deceased Participant.
“the participant’s survivor(s) must submit Form TSP-17, Information Relating to Deceased Participant, to the TSP, along with a copy of the participant’s certified death certificate citing the final cause of death. All sections of Form TSP-17 should be completed. This will inform the TSP (or confirm to the TSP) that the participant is deceased, and will provide information that will help the TSP locate the participant’s potential beneficiaries.”
It appears that any monthly payment withdrawals I have going on at the time will stop and my account will be transferred to an account in her name.
“In the event of your death, if your spouse is entitled to a share of your account, a beneficiary participant account will be established for your spouse in his or her own name. If your spouse’s share is $200 or more, the TSP will maintain this beneficiary participant account, and the entire share will be invested in the Lifecycle (L) Fund most appropriate for your spouse's age unless he or she makes a different investment choice or chooses to withdraw the money as a single payment, monthly payments, annuity, or a combination of these options.”
That would be L Income fund. She will have to learn to deal with TSP.gov. It looks as if the normal withdrawal options and tax liabilities will apply to her account.
PO
First, the form TSP-3, Designation of Beneficiary. The web site tells me:
“You do not have a valid Form TSP-3, Designation of Beneficiary, on file. Your account will be distributed according to the statutory order of precedence required by law. ONLY complete Form TSP-3 (bold and italic mine), Designation of Beneficiary, if you want distribution to be made in a way other than the following order of precedence:
To your spouse
If none, to your child or children equally, with the share due any deceased child divided equally among that child's descendants
If none, to your parents equally or to the surviving parent
If none, to the appointed executor or administrator of your estate
If none, to your next of kin who would be entitled to your estate under the laws of the state in which you resided at the time of your death”
The site tells me not to fill one out. My spouse is disturbed by that.
She or someone must submit a form TSP-17, Information Relating to Deceased Participant.
“the participant’s survivor(s) must submit Form TSP-17, Information Relating to Deceased Participant, to the TSP, along with a copy of the participant’s certified death certificate citing the final cause of death. All sections of Form TSP-17 should be completed. This will inform the TSP (or confirm to the TSP) that the participant is deceased, and will provide information that will help the TSP locate the participant’s potential beneficiaries.”
It appears that any monthly payment withdrawals I have going on at the time will stop and my account will be transferred to an account in her name.
“In the event of your death, if your spouse is entitled to a share of your account, a beneficiary participant account will be established for your spouse in his or her own name. If your spouse’s share is $200 or more, the TSP will maintain this beneficiary participant account, and the entire share will be invested in the Lifecycle (L) Fund most appropriate for your spouse's age unless he or she makes a different investment choice or chooses to withdraw the money as a single payment, monthly payments, annuity, or a combination of these options.”
That would be L Income fund. She will have to learn to deal with TSP.gov. It looks as if the normal withdrawal options and tax liabilities will apply to her account.
PO
