TSP

Spouse and inheritance rules for the TSP rules are simpler and easier to understand than those that apply to IRAs. If you die with money in the TSP, the balance of your TSP account will be distributed according to your wishes as listed in form TSP-3 (designation of beneficiary). The TSP will pay no attention to wishes that you have expressed in a will or a trust.

If your beneficiary is 1) Your federally employed or retired spouse, he/she may roll your TSP account into his/hers, elect an inherited IRA or take the money out; 2) Your non-federally employed or retired spouse, he/she may take ownership of your TSP account, elect an inherited IRA or take the money out.

If your spouse elects to take ownership of your account, the TSP will create a beneficiary participant account for him or her. The initial allocation in a beneficiary participant account is in the age appropriate L fund; or 3) A non-spouse, he/she may elect an inherited IRA or take the money out.

What happens if you have no beneficiary form, or if the person or persons listed on your TSP-3 have pre-deceased you? There is a standard order of precedence that applies to all federal benefits. It is: 1) Spouse; 2) Child or children (equally); 3) Parents; 4) The executor or administrator of your estate; and 5) Next of kin based on the law of intestacy of the state that was your legal residence as of the date of your death.

This is one area of the TSP where there are no upcoming changes due to the TSP Modernization Act.

More on TSP Spouse and Survivor Rights at ask.FEDweek.com