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Thread: TSP Inheritance Rules

  1. Default TSP Inheritance Rules

    I have been working with a financial advisor who pointed out the inheritance rules with TSP. When I die, my TSP would be taken over by my wife. But, if my children inherit the balance of my TSP holdings, they'd have to take out the entire balance of my account and that would be taxable to them. If I roll over my existing TSP balance to an inherited IRA, they would only have to take a taxable minimum annual distribution? I'd much rather have my children take an annual minimum distribution than take a lump sump distribution and give a chunk of it away to the government.

    Can anyone confirm this? Thanks

  3. Default Re: TSP Inheritance Rules

    I have found the answer to this question at

  5. #3

    Default Re: TSP Inheritance Rules

    The form says:

    Inherited IRAs may provide significant tax benefits because their required distributions can generally be spread across the lifetime of the beneficiary.
    However the new SECURE Act making its way through congress right now would change that for non-spousal beneficiaries:

    For most beneficiaries going forward, the ‘stretch’ rules are eliminated and the beneficiary must withdraw the entire IRA balance within 10 years of the death of the IRA’s owner.
    Something to keep in mind if you've accumulated a good amount of retirement savings you plan on giving to children or grandchildren. The 10 year window may increase the beneficiary's tax bracket. The new rule is a disguised tax to pay for the more advantageous changes to retirement savings.

  7. #4

    Join Date
    Dec 2006

    Default Re: TSP Inheritance Rules

    I would like to put a plug in here for NARFE. National Active and Retired Employees. They have an archive of webinars that you can access for $39.95 ( which gives you a one year membership as well). Tammy Flanigan and others have put together some wonderful webinars; especially one that addresses the questions regarding your TSP account and what happens to it when you die.

    NARFE Home
    NARFE FEDcon2020 Be There or Be Square


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