Q. I am the account holder of my late husband’s TSP account. I’m receiving required minimum distributions due to age. My adult daughter is disabled. What is the best tax-efficient way to pass the TSP funds to her at my death? I would like for her to receive a yearly amount of $5,000 to $6,000 since that is my RMD now.
A: You should consult an estate planning attorney and a CPA to work out the best strategy for your situation. Tax-wise, every dollar that comes out of a TSP will be taxed as ordinary income. The question to consider is when it will come out and whose tax return it will affect.