Widows, widowers and TSP


One of the changes accompanying the major Thrift Savings Plan overhaul Congress passed earlier this year granted the surviving spouses of deceased federal employees the right to keep those employees’ TSP accounts. (Widows and widowers previously had to liquidate those accounts within 60 days of the death of a spouse.)

But the board governing the Thrift Savings Plan won’t be finished setting up a system to do this until 2010. And the Office of Personnel Management just released a statement outlining the TSP’s interim procedures that will be in place until the system is finalized next year. Here’s how it will work:

  • When a TSP account holder dies, his or her surviving spouse must fill out form TSP-17, Information Relating to Deceased Participant, and mail or fax it to TSP.
  • After TSP processes this form, it will send the surviving spouse a notice saying he or she can keep the funds in an account under his or her name. Until that account is set up, the monies will be invested in the G Fund’s government securities, which never decline in value and are widely viewed as a safe, conservative investment.
  • If the spouse wants to withdraw the money right away, he or she can request immediate payment by filling out a form the TSP will enclose in its notice. That form must be notarized.
  • If a surviving spouse wants to transfer the TSP money to an IRA or other eligible employer plan, he or she must fill out a TSP-13-S-D (Spouse’s Election of Payment Method for Death Benefit) form, which TSP will also enclose in its notice.
  • If a surviving spouse is a TSP participant, he or she can transfer the deceased’s funds to his or her account.
  • Remember to review the rules on income tax withholding and reporting, which can be found here.

About Author

Leave A Reply