Designating Beneficiaries for Thrift Savings Plan Accounts
If you die before your TSP account is completely withdrawn, the balance in your
account will be distributed according to your most recent designation of
beneficiary, if you completed one If you did not file this form, your
account will be distributed according to the order of precedence required by
law.
To designate beneficiaries to receive your Thrift Savings Plan account in the
event of your death, use Form TSP-3,
Designation of Beneficiary, from this Web site, or ask your personnel
office for it.
Mention of your TSP account in your will (or another document, such as a
prenuptial agreement) has no effect on the disposition of your account after
your death. A will is not a substitute for Form TSP-3. However, you
can use Form TSP-3 to designate your estate or a trust to receive your TSP
account.
You should review your designation of beneficiary whenever your personal
situation changes (for example, as a result of marriage, birth or adoption of a
child, or divorce). Your participant statement will show whether you have
a designation on file and the date of your most recent designation. To
cancel or change your designation of beneficiary, submit another Form TSP-3 to
the TSP.
In order for your account balance to be distributed after your death, Form TSP-17, Information Relating to Deceased
Participant, must be submitted to the TSP along with a copy of your
certified death certificate.
If you are a FERS participant and you die before you separate from service,
your beneficiaries are entitled to your entire account balance, whether or not
you have met the vesting requirement for your Agency Automatic (1%)
Contribution. If you die after the TSP purchases an annuity for you, your
benefits will be provided according to the annuity option that you
selected. If you die while you are receiving your account balance in a
series of monthly payments, your beneficiaries will receive the balance of your
account in a final single payment.
Payments made directly to spouses of deceased participants are subject to 20
percent mandatory Federal income tax withholding. However, spouses of
deceased participants can avoid the mandatory withholding and defer paying taxes
on all or part of their payments by having the TSP transfer the payment to a
traditional IRA or eligible employer plan (including the spouse beneficiary's
existing TSP account).
Payments to beneficiaries other than a spouse are subject to 10 percent
withholding; this withholding is optional. Non-spouse TSP beneficiaries
can also defer paying taxes by transferring their death benefit payments to an
"inherited" IRA and, in most cases, taking required minimum payments based on
their own life expectancy. This eliminates the tax hit that many non-spouse
beneficiaries were subject to before the Pension Protection Act of 2006 was
passed. However, the rules governing "inherited" IRAs are complicated,
particularly if the deceased participant was over age 70½. We suggest you
discuss this benefit with your tax advisor or IRA provider.
| 
Overview - CSRS
