Q. I have designated my two daughters as beneficiaries with 50/50 split to my TSP account. One of them works for the federal government and has her own TSP account. The other daughter works in private industry. If I pass away, would they be able to inherit my TSP savings right away and roll over to their own 401(k) or IRA accounts? Would my other daughter be able to roll the payment into her own TSP account ? Do they have to pay any upfront tax when they roll over the payments to their 401(k) or IRA account?
A. Your daughters may either take the funds outright and pay any income tax that the income will generate, or they may roll the funds into a Beneficiary IRA account. Since the rules that apply to this money are unique, the inherited funds may not be combined with their TSP, IRA or 401(k) account balances.