Being a beneficiary participant
Are you one of the following?
- Spouse beneficiary of a civilian employee
- Spouse beneficiary of a military employee
- Tax professional
- Estate planner
If you’re the spouse beneficiary of a deceased participant’s TSP account and your share of the balance is $200 or more, we will establish a beneficiary participant account (BPA) in your name.
You cannot make contributions to, borrow from, or transfer money into your beneficiary participant account.
As a beneficiary participant, you’ll enjoy many of the same TSP benefits as employee participants including:
- Low administrative expenses that can increase your savings potential
- Tax-deferred growth of earnings on traditional and Roth contributions
- Easy-to-understand investment options
- Staying in the TSP and choosing from several withdrawal options
Roth money in your account?
Get the most out of the TSP. Read Managing Your Account for Beneficiary Participants and Your TSP Account: A Guide for Beneficiary Participants for more in-depth information about your benefits and investment options.
You’ll need these items to manage your account
Learn how to move your beneficiary participant account into your existing TSP account
You can move your beneficiary participant account (BPA) into your existing employee or uniformed services TSP account by completing Form TSP-99, Withdrawal Request for Separated and Beneficiary Participants. The money you move will be treated as an employee contribution, but it will not be subject to the Internal Revenue Code (IRC) annual elective deferral limit. (See the instructions on Form TSP-90 for more information on combining accounts.)
In general, once you combine your BPA with your existing TSP account, your BPA money will be subject to the rules that govern the account to which it was moved.
If both accounts contain Roth contributions, the Roth Initiation Date of small to medium-sized U.S. companies not included in the C Fund
that will apply to your combined account is the earlier of the two. If only one of the accounts contains Roth money, the Roth Initiation Date associated with that account becomes the date for your combined account.
Note: You cannot move an existing TSP account into your beneficiary participant account. And if you have more than one beneficiary participant account, you cannot combine them. Also, if you have an IRA or other retirement plan, you will not be able to transfer or roll over those funds into your beneficiary participant account.
You may have two types of money in your Beneficiary Participant Account — each has its own tax advantages.
Traditional (pre-tax) money grows in your account tax-deferred until you withdraw it. However, when you withdraw this money, you have to pay taxes on both the contributions and their earnings (although you will not owe taxes on any tax-exempt contributions in your account).
If you have Roth (after-tax) money in your account, the contributions are tax-free at withdrawal because taxes have already been paid on them. The earnings on those contributions will also be tax-free at withdrawal as long as 5 years have passed since January 1 of the calendar year in which your deceased spouse first made a TSP Roth contribution.
If your BPA resulted from a uniformed services TSP account and the account contains tax-exempt money from combat pay, those funds cannot be transferred into your civilian TSP account. In this case, the tax-exempt funds will be distributed directly to you. Check your quarterly or annual statements to see whether your BPA account contains tax-exempt money.
Learn two approaches to investing the money in your beneficiary participant account.
When your beneficiary participant account is first established, the entire balance is invested in the Lifecycle (L) Fund targeted most closely to the year you turn 63 (or the L Income Fund if you’re age 62 or older). This investment remains in place unless you make an interfund transfer.
The L Funds — These are “lifecycle” funds that are invested according to a professionally designed mix of stocks, bonds, and Government securities. You select your L Fund based on your “time horizon,” the future date at which you plan to start withdrawing your money. Depending on your plans, this may be right away or some time in the future.
Individual Funds — You can make your own decisions about your investment mix by choosing from any or all of the individual TSP investment funds (G, F, C, S, and I Funds).
Choosing how to invest your account is completely up to you. You may invest in any fund or combination of funds. Note: Because the L Funds are already made up of the five individual funds, you may be duplicating your investments if you invest simultaneously in an L Fund and the individual TSP funds.
Learn how to move the money in your Beneficiary Participant Account among the TSP investment funds.
An interfund transfer (IFT) allows you to change the way money already in your account is invested. When you make an IFT, you choose the new percentage you want invested in each of our fund options. You cannot move specific dollar amounts or specific types of money (from traditional, tax-exempt and Roth balances) in your account.
You are allowed two IFTs in a calendar month. After that, you can only move money into the G Fund.
You may request an IFT by visiting My Account: Online Transactions. You can also call the ThriftLine at 1-877-968-3778 and follow the automated prompts. You will need your BPA account number (or customized user ID) and password to log into My Account or the Personal Identification Number (PIN) for the ThriftLine.
You don’t have to withdraw your money—you can keep it in the TSP until you need it (and until the IRS says you have to start withdrawing).
You are allowed to keep your beneficiary participant account as long as you like. With the exception of required minimum distributions you can keep your money invested in this account without making withdrawals. But if you do decide to take money out, you have a number of options.
There are three basic methods of withdrawing money from your beneficiary participant account:
- TSP installment payments (a fixed dollar amount or one based on life expectancy)
- single withdrawals ($1,000 minimum)
- annuities (purchased for you from our annuity vendor; $3,500 minimum)
You can choose any of these options or any combination of them.
In addition, if you have both Roth and traditional money in your account, you can choose to have your payment come from your traditional balance only, from your Roth balance only, or pro rata (proportionally) from both balances. Pro rata from both balances is the default option. Note that if you choose traditional only or Roth only for installments, your payments will continue after your chosen balance runs out. At that point your payments will begin coming from the balance you did not choose.
For single withdrawals and fixed-dollar-amount TSP installment payments expected to last less than 10 years, you can also transfer payments to an IRA or eligible employer plan.
Learn what you’ll need to do to request a withdrawal from your beneficiary participant account.
To request a withdrawal, complete Form TSP-99, Withdrawal Request for Separated and Beneficiary Participants. You would’ve received a copy of this form with your welcome letter, but you can also find it under Forms and resources. Be sure to read the instructions carefully to ensure that you make an informed decision and provide all of the necessary information so that we can process your request.
If you’re considering monthly payments or an annuity, you should compare these benefits to see which one best suits your situation. You can get help by using the TSP installment payment calculator and the TSP payment and annuity calculator.
Receiving Your Withdrawal
You should allow at least several weeks from the time you submit your completed withdrawal request until the time that payment is sent. We will notify you in writing when your payment has been disbursed. You can check the website or call the ThriftLine to find out the status of your request. Your withdrawal will take longer if you submit forms that are not completed properly.
Learn the rules that require you to begin receiving annual distributions from your beneficiary participant account.
The Internal Revenue Code (IRC) requires that you begin receiving distributions from your beneficiary participant account based on your life expectancy. The rules for when you must take Required Minimum Distributions depend in part on the deceased participant’s age on the date of his or her death.
Because the rules are complex, more specific information about the IRS required minimum distribution rules can be found in the tax notice Tax Information About TSP Withdrawals and Required Minimum Distributions for Beneficiary Participants.
For more detailed information about the rules associated with death benefit payments, read the TSP tax notice “Important Tax Information About Thrift Savings Plan Death Benefit Payments.” You may also want to consult a tax advisor.
Find out what happens to the money in your TSP in the event of your death.
Upon your death, the remaining money in your TSP account will be distributed this way:
- To your spouse
- If none, to your child or children equally, with the share for any deceased child divided equally among that child’s descendants
- If none, to your parents equally or to your surviving parent
- If none, to the appointed executor or administrator of your estate
- If none, to your next of kin who is entitled to your estate under the laws of the state you lived in at the time of your death
For most people, this is often the best option because it accounts for changes like births, deaths, divorce, or marriage that may happen long after you open your account.
If you’d like to make an exception, you may complete Form TSP-3, Designation of Beneficiary. The easiest way to do this is to use the online “wizard,” which you’ll find by logging into My Account and selecting “Beneficiaries” on the left.
A will or any other document is not valid for the disposition of your beneficiary participant account. It is not a substitute for a Designation of Beneficiary form.
Learn how to inform us of a participant’s death
For your beneficiaries to receive your account balance after your death, they (or their representatives) must complete Form TSP-17, Information Relating to Deceased Participant,, and submit it with a copy of the certified death certificate. Once we process the information and determine the beneficiaries for your account, we’ll contact them with additional information and instructions.
Your beneficiary(ies) will receive death benefit payments directly from your beneficiary participant account. These payments cannot be transferred or rolled over into an IRA or eligible employer plan, and will be fully taxable in the year your beneficiary(ies) receive it. Your beneficiaries will not owe taxes on Roth contributions, qualified earnings on Roth contributions, and tax-exempt contributions in the account.