Death
Benefits
Information for Participants
and Beneficiaries
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Table of Contents
ThriLine Service Center ...........................................ii
TSP Death Benefits: The Participant ...............................1
Your Beneficiary Designation ...........................................1
Other Information .....................................................3
Death Benefit Payments Aer
Request for Annuity .................................................5
TSP Death Benefits: The Beneficiary(ies) .........................7
Notifying the TSP ......................................................7
Determining Beneficiaries ..............................................7
Death Benefits ........................................................8
Taxes .................................................................9
Other Information ....................................................11
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ThriftLine Service Center
Phone:
1-877-968-3778 (United States, toll-free)
+
1-404-233-4400 (outside the United States, not toll-free)
7 a.m. – 9 p.m. eastern time, Monday through Friday
Fax:
1-276-926-8948
Mail:
ThriLine Service Center
c/o Broadridge Processing
PO Box 1600
Newark, NJ 07101-1600
1
TSP Death Benefits:
The Participant
As a participant in the Thri Savings Plan (TSP), you will likely accumulate a
sizeable amount of money in your TSP account over the years. One of the things
you need to think about now is, “Who will receive the money in my account when
I die?” This may be an uncomfortable question, but it is very important not to put
o decisions regarding who should receive your money. You need to take the time
to ensure that your money goes where you want. You cannot rely on your will,
prenuptial agreement, separation agreement, property settlement agreement,
or court order to specify who will inherit your TSP account because we do not use
any of these documents to distribute death benefit payments.
With that in mind, let’s start by figuring out what you need to do right now. First,
who do you want to receive the money in your TSP account?
Your Beneficiary Designation
Order of Precedence. If you die with a balance in your TSP account and you
did not designate beneficiaries for that account, the account will be distributed
according to the following order of precedence required by law:
1. To your spouse
2. If none, to your child or children equally, with the share due any
deceased child divided equally among that child’s descendants
1
3. If none, to your parents equally or to your surviving parent
2
4. If none, to the appointed executor or administrator of your estate
5. If none, to your next of kin who is entitled to your estate under the laws
of the state in which you resided at the time of your death
1
As used here, “child” means either a biological child or a child adopted by the participant. It does not
include your stepchild unless you have adopted the child. Nor does it include your biological child if that
child has been adopted by someone other than your spouse.
2
“Parents” does not include stepparents who have not adopted you.
2
Designating a Beneficiary. Designating a beneficiary gives you flexibility
and control over who will receive the money in your TSP account aer your
death. You can designate up to twenty beneficiaries of your account including
persons, a trust, a corporation, your estate, or another legal entity (including a
foundation or charity). You cannot designate tertiary beneficiaries (i.e., “third-
in-line” beneficiaries who would be entitled to a share of your account if the
primary and contingent beneficiaries die before you do) for a TSP account.
To designate a beneficiary or beneficiaries, log in to My Account on tsp.gov or
use one of the ThriLine Service Center options listed at the beginning of this
booklet. Keep in mind that once you select a beneficiary(ies), you cannot cancel
and go back to the order of precedence. You will only be able to designate a
new beneficiary.
For us to honor it, your beneficiary designation must be on file with us at
the time of your death. We cannot honor a will or any other document.
If you have both civilian and uniformed services TSP
accounts and want to identify the same beneficiaries for
both accounts, you only need to enter the beneficiary
information one time. However, in your secondary account,
you will need to assign either “primary” or “contingent” to
each beneficiary.
In the event of your death, if your spouse is entitled to a share of your account,
we will establish a beneficiary participant account in your spouse’s name.
The money in the beneficiary participant account will be invested just as it
was in your account except for any money you had invested in the mutual
fund window. Money from the mutual fund window will be reinvested in TSP
funds according to your investment election on file. If your spouse’s share is
less than $200, your spouse can request payment within the 90 days prior to
automatic force-out, and provide direct deposit information if needed.
Reviewing Your Beneficiaries. It is a good idea to review how you have
designated your beneficiaries annually. By law, the TSP must pay your properly
designated beneficiary(ies) under all circumstances. For example, if you
designate your spouse as a beneficiary, that spouse will still be entitled to
death benefits if you separate or divorce from that spouse or remarry and do
not change your beneficiary designation. This is true even if the spouse you
designated gave up all rights to your TSP account.
If your life situation changes, or if any of your beneficiaries change their
addresses or other identifying information, you may want to file a new
beneficiary designation that changes your current one.
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Taxes on Death Benefit Payments. When you designate beneficiaries for your
TSP account, you should be aware of the tax consequences to them in the event
of your death. We suggest you read the booklet Tax Rules about TSP Payments.
This information may be helpful in developing instructions so that your spouse,
executor, or other person knows what to expect.
Other Information
Disbursement. We will disburse all death benefit payments proportionally
from any traditional (non-Roth) and Roth balances in your account. Similarly,
if you are a uniformed services member with tax-exempt contributions in your
traditional balance, death benefit payments will contain a proportional amount
of tax-exempt contributions as well.
Agency/Service Automatic (1%) Contributions. If you are a FERS employee
or a member of the uniformed services covered by the Blended Retirement
System (BRS) and you die before separating from service, any non-vested
Agency/Service Automatic (1%) Contributions in your account will immediately
become vested.
Loans. If you die with a TSP loan or loans outstanding, death benefit payments
from your account cannot be distributed until the outstanding amount has
been declared a loan foreclosure. The loan will be declared as taxable income
to your estate, not to your beneficiaries. Your estate or survivors cannot repay
the loan.
Court Order. If there is a court order against your TSP account when you die,
the court order must be resolved before any death benefit payments can be
made to your beneficiaries.
Withdrawal / Loan Requests. If you die aer submitting a loan, withdrawal, or
distribution request, we will not process the request if we learn of your death
before the payment is processed. Instead, we will distribute death benefit
payments from your account according to your beneficiary designation or
the order of precedence outlined on page 1. (See the special rule in “Annuity
Purchase” in the next paragraph.) If the request has already been processed,
the payment will stand, and the money cannot be returned.
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Annuity Purchase. If you separate from service and submit a distribution
request that includes an annuity purchase, and you die before annuity
payments begin, the amount used to purchase the annuity will be returned
to the TSP. We will, if applicable, distribute this money consistent with your
annuity beneficiary designation.
See the chart on page 5 for more information regarding these rules.
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Death Benefit Payments Aer
Request for Annuity
If the participant dies
aer requesting but
before receiving a:
The funds will be paid:
single life annuity with no cash refund or
10-year certain feature,
according to your beneficiary designation
or the order of precedence, as applicable.
single life annuity with a cash refund or
10-year certain feature,
to the beneficiary named on the annuity
portion of the distribution request.
single life annuity with a cash refund or
10-year certain feature, but the beneficiary
to the annuity portion of the distribution
dies before the participant,
according to your beneficiary designation
or the order of precedence, as applicable.
joint life annuity, and the participant dies
before the joint life annuitant,
to the joint life annuitant.
joint life annuity, but the joint life
annuitant dies before the participant,
according to your beneficiary designation
or the order of precedence, as applicable.
joint life annuity with cash refund, and
the participant dies before the joint
life annuitant,
to the joint life annuitant.
joint life annuity with cash refund,
and the joint life annuitant dies before
the participant,
to the beneficiary named on the annuity
portion of the distribution request.
joint life annuity with cash refund and the
joint life annuitant and the beneficiary
both die before the participant,
according to your beneficiary designation
or the order of precedence, as applicable.
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TSP Death Benefits:
The Beneficiary(ies)
If you are the survivor of a deceased TSP participant, this is no doubt a very
diicult time for you. We have written this part of the booklet to explain TSP
death benefits and to make the process of applying for them as easy as possible.
Notifying the TSP
When a TSP participant dies while still actively employed in federal service, the
employing agency informs the TSP. If a participant dies aer separating from
federal service or is the account holder of a beneficiary participant account,
the participant’s survivors should contact us using one of the ThriLine Service
Center options listed at the beginning of this booklet.
Determining Beneficiaries
If there was a beneficiary designation on file with us on the date of the participant’s
death, the TSP account will be distributed according to that designation.
Otherwise, the participant’s account will be paid according to the order of
precedence required by law. (In the case of an annuity, see page 5.)
Order of Precedence. If there is no beneficiary designation on file, the
participant’s entire TSP account will be distributed as follows:
1. To the participant’s spouse
2. If none, to the participant’s child or children equally, with the share due
any deceased child divided equally among that child’s descendants
3
3. If none, to the participant’s parents equally or to the surviving parent
4
4. If none, to the appointed executor or administrator of the
participant’s estate
3 As used here, “child” means either a biological child or a child adopted by the participant. It does not
include a stepchild unless the participant has adopted the child. Nor does it include a biological child if
that child has been adopted by someone other than the participant’s spouse.
4 “Parents” does not include stepparents who have not adopted the participant.
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5. If none, to the participant’s next of kin who is entitled to the participant’s
estate under the laws of the state in which he or she resided at the time
of death
A will, prenuptial agreement, separation agreement,
property settlement agreement, or court order will not
override either a beneficiary designation or the order
of precedence.
Once we have determined the identity of the beneficiaries, we will mail each
beneficiary a notice of their beneficiary status. We will establish a TSP account
for each beneficiary.
Beneficiaries will also receive the TSP Payment Rights Notice, which explains
the beneficiaries’ tax obligations.
Death Benefits
Spouse Beneficiary. If a spouse is determined to be a beneficiary of part or
all of a civilian or uniformed services account, we will establish a beneficiary
participant account
in the spouse’s name. The money in the beneficiary
participant account will be invested just as it was in the deceased participant’s
account except for any money the participant had invested in the mutual
fund window. Money from the mutual fund window will be reinvested in TSP
funds according to the deceased participant’s investment election on file. The
money in a beneficiary participant account is not subject to federal income
tax withholding until it is withdrawn. For more detailed information about
beneficiary participant accounts, read the booklet Your TSP Account: A Guide for
Beneficiary Participants
.
Note: This provision is not available for a spouse beneficiary of a beneficiary
participant account (i.e., the spouse of a remarried beneficiary participant).
Non-spouse Beneficiary. A beneficiary who is not a surviving spouse cannot
retain a TSP account. We will establish a temporary TSP account for the non-
spouse beneficiary. Payment from this account will be made directly to a non-
spouse beneficiary or to an “inherited IRA.” (See page 10 for more information.)
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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.
Timing. Non-spouse beneficiaries have 90 days to request payment from their
temporary TSP account. If a non-spouse beneficiary does not initiate payment
within 90 days, we will automatically send the payment on the 90th day or
the next business day. Spouse beneficiaries can keep their balance in their
TSP beneficiary participant account. Beneficiaries must first be identified and
located, their Social Security numbers (or Employer Identification Numbers for
estates or trusts) must be obtained and verified, and their addresses and dates of
birth must be confirmed.
Beneficiaries can initiate an accelerated payment online or through the ThriLine
Service Center.
Change of Address. If you are notified that you are a beneficiary, make sure
to keep us informed about any change in your address. Once your account
is established, you will be able to change your address by logging in to My
Account on tsp.gov.
Taxes
The tax consequences of receiving a TSP death benefit payment are determined
based on the source of money that is included in the payment (traditional or
Roth); the type of account from which the payment is made (civilian, uniformed
services, or beneficiary participant); and the type of beneficiary (spouse or
non-spouse).
Source of Money in Payment. The participant’s TSP account may contain
funds from traditional (pre-tax), Roth (aer-tax), tax-exempt (if uniformed
services), or rollover contributions (from an IRA or an employer plan). All death
benefit payments will be disbursed proportionally from any traditional and
Roth money in the participant’s account.
Any traditional money that is disbursed will be subject to mandatory federal
income tax withholding. Note: If the participant was a uniformed services
member with tax-exempt payroll contributions in a traditional balance, those
contributions will not be subject to tax, but the earnings on those contributions
will be subject to tax.
10
Any Roth payroll contribution
s that may be a part of a death benefit payment
are not subject to federal income tax. Earnings on Roth contributions may also
be paid tax-free if 5 years have passed since January 1 of the year the deceased
participant made his or her first Roth contribution.
Type of Account. The taxable amount of any death benefits paid directly to the
beneficiaries of a civilian or uniformed services TSP account may be subject to
20% mandatory federal income tax withholding.
The taxable amount of any death benefit payments made to beneficiaries (both
spouse and non-spouse) of a beneficiary participant account is subject to 10%
federal income tax withholding and is fully taxable in the year distributed.
These payments are made directly to the beneficiaries and cannot be rolled
over in to any type of IRA or plan.
Type of Beneficiary. Spouse beneficiaries of civilian and uniformed services
accounts have different options from non-spouse beneficiaries.
A spouse beneficiary whose inherited share is $200 or more will automatically
avoid the mandatory withholding and defer tax liability by keeping the funds in
the established beneficiary participant account, or by having the TSP roll over all
or part of the eligible funds directly to an individual retirement account (IRA) or
an eligible employer plan (including the spouse’s own pre-
existing TSP
ac
count). Note: Roth IRAs only accept after-tax dollars. As a result, a spouse
beneficiary will have to pay taxes on any money that is rolled over from a
traditional balance to a Roth IRA. (See the TSP booklet Tax Rules about TSP
Payments for the definition, rules, and restrictions for a Roth IRA. You may also
want to seek the counsel of a tax advisor.)
A non-spouse beneficiary can avoid mandatory withholding and defer the tax
liability by requesting that the TSP roll over all or part of the payment directly
to an “inherited IRA.” An inherited IRA is established specifically for the purpose
of rolling over money inherited from a plan such as the TSP. However, the rules
governing inherited IRAs are complicated, and there are restrictions. So before
making a decision to roll over money from the
TSP in to such an IRA, we strongly
r
ecommend that a beneficiary discuss the details of the rollover with a tax advisor
or IRA provider. A temporary account will be set up for non-spouse beneficiaries
and they will be able to access My Account on tsp.gov to roll over a death benefit
payment to an inherited IRA, or to request that a disbursement be made via check
or deposited directly into a checking or savings account within 90 days. If the
beneficiary does not make a payment election aer receiving the determination
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package, the account will be cashed out via check. A TSP death benefit paid
directly to a non-spouse beneficiary may not be rolled over in to an IRA or plan.
For more information, see the TSP booklet Tax Rules about TSP Payments.
Other Information
Court Orders. If there was a court order against the participant’s TSP account
at the time of death, the court order must be resolved before any death benefit
payments can be made to beneficiaries or, in some cases, before a beneficiary
determination can be made.
Outstanding Loans. If the participant had a TSP loan outstanding at the time
of death, no payment will be made to any beneficiary until the outstanding loan
has been declared a loan foreclosure and closed. The outstanding principal
plus any accrued interest will be reported to the IRS as taxable income to the
participant’s estate. It will not be reported as income to the beneficiaries. The
outstanding loan balance cannot be repaid.
Withdrawal / Loan Requests. If the participant requested a loan or withdrawal,
we will not process that request if we learn, before the payment is made, that
the participant has died. Instead, we will distribute the account according to
the participant’s beneficiary designation or the order of precedence outlined on
page 7. (See the special rule in “Annuity Purchase” in the next paragraph.)
Annuity Purchase. If the participant separated from service and submitted
a distribution request that included an annuity purchase, but died before the
annuity payments began, the money used to purchase the annuity will be
returned to the TSP. We will distribute it according to the chart on page 5.
TSPBK31 (3/2024)
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