Q: I am a Civil Service Retirement System retiree. What happens to my Thrift Savings Plan account after my death? My notes from a retirement seminar 10 years ago say that if my spouse is listed as my beneficiary, she may move my TSP funds into her individual retirement account with no tax or penalty. If my children are listed as beneficiaries they do not have the same option, and in most cases the TSP funds are fully taxable. Is this still correct?
A: Your spouse may transfer the balance to an IRA and avoid current taxation or may, under certain circumstances, convert the balance to a Roth IRA. Your child-beneficiary may transfer their share of the balance to an Inherited IRA to defer tax under special rules. You can learn more by reading the booklet here.