February 18, 2009

The Federal Retirement Thrift Investment Board (Board) has revised the instructions on Form TSP-3, Designation of Beneficiary. The significant changes to this form are:

• updated information in the instructions and updates in the examples used to assist participants in correctly completing the beneficiary form prior to sending it to the TSP record keeper.
• the instructions provided at the top of Form TSP-3 were revised to explicitly inform participants not to submit this form to their agencies.

Also, in addition to telling participants that the TSP will not accept Form TSP-3 received after their dates of death, the TSP has expanded the instructions for participants, encouraging them to make the appropriate beneficiary changes or to cancel a prior designation if their life situations change. If these forms are not kept up-to-date, the death benefit payments may not be made according to the participant's current wishes.

My Federal Retirement readers are also encouraged to read this article:  How (and Why) You Should Review and Update Your Beneficiary Designations

More details of the announcement from the Board on these changes is below, along with a downloadable sample of the new TSP-3 form.

I.  Purpose of Form TSP-3

A. Form TSP-3 provides active and separated participants the ability to designate a beneficiary or beneficiaries to receive their TSP accounts after their deaths. If the TSP record keeper has a valid Form TSP-3 on file on or before the date of the participant's death the TSP will use the form to identify the participant's beneficiaries and disburse the death benefit payments from his or her TSP ac¬count. Participants are not required to complete Form TSP-3. If a valid form (signed, witnessed, and received by the TSP) is not on file on or before the date of death of the participant, the TSP will disburse the account according to the statutory order of precedence found at 5 USC § 8424(d):

(1) To the participant's widow or widower;

(2) If none, to the participant's child or children equally, and descendants of deceased children by representation;

(3) If none, to the participant's parents equally or to the surviving parent; (4). If none, to the appointed executor or administrator of the participant's estate;

(5) If none, to the participant's next of kin entitled to his or her estate under the laws of the state in which the participant resided at the time of his or her death.

B. Since September 1995, the TSP has required that, in order to be considered, all completed Forms TSP-3 must be received by the TSP record keeper on or before the date of the participant's death. This includes those Forms TSP-3 which agen¬cies were instructed to purge and mail to the TSP record keeper for processing. The TSP reminds agency representatives that it will NOT honor a Form TSP-3 received after the participant's date of death, even if it was trans¬mitted from the agency. The participant must submit Form TSP-3 directly to the TSP record keeper, and agencies must ensure that all Forms TSP-3, includ¬ing those that were previously filed in the OPF, are purged and forwarded to the TSP record keeper.

II. Agency Responsibilities

A. Agencies must provide Form TSP-3 upon a participant's request. Agencies that enclose Form TSP-3 in the in-processing packets of new employees who do not have a TSP account established are advised to inform the employee who wishes to complete a designation of beneficiary form that he or she should mail or fax Form TSP-3 to the TSP record keeper after the first TSP contribu¬tion is deducted from his or her pay. If the TSP record keeper receives a bene¬ficiary form from an employee who does not yet have a TSP account, the form will be returned to the employee.
Although agencies are required to provide Form TSP-3 upon request, the agency must not accept the completed form from the participant. Instead, it must direct the participant to mail, or preferably fax, the completed form to the TSP record keeper for processing.

B. The Federal Retirement Thrift Investment Board again reminds agencies that, to comply with 5 CFR §1651.3 (c) (1), they must purge Forms TSP-3 that re¬main in the OPF or within the personnel or payroll office files and transmit them to the TSP as soon as possible. Agencies need not mail these forms; they can transmit them via fax to the TSP record keeper. The fax number agencies and participants may use is provided below. If Form TSP-3 is faxed, the agency does not have to mail the original beneficiary form to the TSP record keeper. If an agency is mailing to the TSP record keeper Forms TSP-3 which it has discovered or purged from the OPF, it should mail them to the address shown below and not the address shown on the form:

Thrift Savings Plan
P.O. Box 385021
Birmingham, AL 35238
Fax: 1-866-817-5023

C. Agency representatives should refer questions from potential beneficiaries or family members of a deceased participant to the address above or to the TSP assistance lines:

1-TSP-YOU-FRST (1-877-968-3778)
1-TSP-THRIFT5 (1-877-847-4385)
(for hearing-impaired participants

III.   Participant Responsibilities

A. The participant is responsible for ensuring that his or her Form TSP-3 is completed correctly and that it accurately reflects the beneficiaries he or she wishes to designate. The participant is also responsible for transmitting Form TSP-3 to the TSP record keeper for processing. The participant has the option of mailing Form TSP-3 to the address above, or faxing it to the fax number above. This information is also provided in the instructions on Form TSP-3.

In addition to telling participants that the TSP will not accept Form TSP-3 received after their dates of death, the TSP has expanded the instructions for participants, encouraging them to make the appropriate beneficiary changes or to cancel a prior designation if their life situations change. If these forms are not kept up-to-date, the death benefit payments may not be made according to the participant's current wishes. For example, if the participant is married at the time of his or her death but has a valid Form TSP-3 on file designat¬ing someone other than his or her spouse, the TSP will pay the death benefit based on the Form TSP-3 on file. This means that if the beneficiary designated on the Form TSP-3 is a former spouse, the TSP will pay the former spouse -- even if the former spouse relinquished rights to the participant's retirement or TSP account in a settlement or divorce decree.

B. If the participant also has a uniformed services TSP account, he or she must file Form TSP-U-3 to designate a beneficiary to receive death benefits from that ac¬count upon his or her death. The TSP will not use Form TSP-3 for a uniformed services account. If there is no Form TSP-U-3 on file for the participant's uniformed services account, the death benefit payment will be made according to the statutory order of precedence.

C. If an employee does not yet have a TSP account when a Form TSP-3 is re¬ceived for processing, the TSP record keeper will return the form to the em¬ployee with instructions to submit it once the TSP account has been estab¬lished.

IV.   TSP Responsibilities

A. The TSP record keeper is the sole receipt and processing point for all Forms TSP-3. When Form TSP-3 is processed, the TSP record keeper will mail a let¬ter to the participant confirming that it has been received and processed. Al¬though the participant is responsible for the accuracy of the information pro¬vided on the beneficiary form, the TSP record keeper will review the form to identify any errors which could invalidate or complicate the execution of the form (e.g., scratched out names of beneficiaries or percentages for primary (or contingent) beneficiaries that do not add up to 100%). The TSP record keeper will contact the participant either by phone or by mail to notify him or her of the errors and to request the submission of a correctly completed Form TSP-3.

B. In addition to sending a confirmation letter listing the designated beneficiaries, the TSP shows on the quarterly TSP participant statement whether a Form TSP-3 is on file and, if so, when it was signed. The Annual TSP participant statement mailed in February of each year also provides this information and includes the names of all primary beneficiaries and the percentages of the death benefit to which each is entitled.

C. Upon notification of the death of a participant (generally through the receipt of a Form TSP-17, Information Regarding Deceased Participant, and the par¬ticipant's death certificate), the TSP will examine the copies of all Forms TSP-3 on file to determine which of the Forms TSP-3 received is the most recent cor¬rectly completed form on file. This is the form that will be used to identify the beneficiaries to be notified regarding the death benefit payment. If the TSP does not have a valid Form TSP-3 on file, the TSP will disburse the participant's TSP account according to the statutory order of precedence. If the participant has a uniformed services TSP account, the TSP will also process a death benefit pay¬ment from that account according to a valid Form TSP-U-3 on file or the statu¬tory order of precedence.

V.  Obtaining Forms TSP-3

Agencies may obtain the most recent version of Form TSP-3 by downloading it from the TSP Web site at www.tsp.gov, or by requesting printed copies from agency central distribution points using its own agency procedures for requesting TSP forms and publications.

To download a SAMPLE copy of the recently revised Form TSP-3,  click here

Related Articles & Resources

·  How (and Why) You Should Review and Update Your Beneficiary Designations ·  Designating Beneficiaries for Thrift Savings Plan Accounts