Federal Employees News Digest

Federal Benefits Q&A

Question: “If I predecease my wife, would the TSP allow me to pass the funds to her and then when she passes, transfer to my children/grandchildren and, subsequently, "stretch out" the distribution(s) over their lifetimes?”

Answer: If you predecease your wife, as your TSP beneficiary your wife can keep her inherited TSP assets in the TSP. If your wife chooses, she can name your children as beneficiaries of the TSP, and at her death, they would be the beneficiaries of whatever is left in her inherited TSP account. However, by law a nonspousal beneficiary (such as children) of a TSP account must withdraw the entire account within five years of the death of the TSP account owner. Your children could, however, tell TSP to directly transfer the inherited TSP account to a "death" or "inherited" IRA in which they have the option of withdrawing the funds over their remaining life expectancy.

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