If something happens to you, what happens to your retirement savings?
Knowing who are the beneficiaries of your Thrift Savings Plan (TSP) may be morbid to think about, but it’s still very important to do. Many of us have spent years working and building our retirement funds, and you want to make sure your money goes to the intended person if something happens to you. That’s why it’s good practice to periodically review your beneficiary designations, particularly after any major life change, such as a marriage, divorce, birth of a child or death of a spouse.
If you don’t name a beneficiary, your TSP account would be paid in the following “default” way:
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
3. If none, to your parents equally or to your surviving parent
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
If you’re okay with this order, you don’t need to take any action.
But if you want your TSP account distributed another way, you must submit a Form TSP-3, Designation of Beneficiary. According to TSP, you can use this form to designate one or more persons, a corporation, trust, legal entity or your estate to receive your TSP account if you die. The form can also be completed online by visiting TSP.gov and logging into “My Account.” All forms—even those completed online—must be printed, signed by you and a witness and submitted to TSP (not your agency).
When reviewing your beneficiary designation, here’s an important reminder from TSP: if you’ve designated a spouse as your beneficiary on your TSP-3 and you later separate or divorce, that spouse would still receive your money unless you submit a new, revised form.
Can’t remember if you submitted a Form TSP-3? Look at your most recent annual statement, check online or call the ThriftLine at 1-877-968-3778.
Learn more here