Estate planning professionals report that an amazing number of people still have former spouses or deceased relatives listed as beneficiaries on their retirement accounts and life insurance policies. If you can’t recall who you designated as the beneficiary for your Thrift Savings Plan (TSP), and other federal programs that provide a death benefit, it’s time for a beneficiary update.
Beneficiary Forms Override Wills, Trusts & Pre-Nuptial Agreements
You may be surprised to learn that beneficiary designations always override a Last Will & Testament, a Trust and even a pre-nuptial agreement. That’s why it’s important to update beneficiaries after significant life events like divorce, remarriage, or when a spouse beneficiary passes away before you. Otherwise death benefits may go to the wrong person like an ex-spouse or a distant relative. As a federal employee, your designated beneficiary is paid a death benefit for:
- Lump sum payments from CSRS or FERS
- Unpaid compensation including any unpaid annual leave
- Thrift Savings Plan (TSP)
- Federal Employee’s Group Life Insurance
“If you designate your spouse, it’s important to choose a secondary beneficiary should your spouse pass away before you.”
How To Update Your Designated TSP Beneficiary
It’s easier than ever before. You can log into “My Account” on the TSP website and complete the beneficiary designation process electronically. If you designate your spouse, it’s important to choose a secondary beneficiary should your spouse pass away before you. You also have the option of designating one or more people, a trust, a corporation, your estate, or a legal entity like a foundation or charity, as your primary TSP beneficiary.
If you haven’t designated a beneficiary, or indicated a secondary beneficiary for when the first predeceases you, the TSP follows this order of precedence:
- To your spouse
- If none, to your child or children equally, with the share due 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 in which you resided at the time of your death
Other financial accounts that may require a beneficiary update include Credit Union Membership, Checking and Savings Accounts, plus IRAs and 401(k)s from jobs you or your spouse may have held in the private sector. It’s also important to review and update estate documents like your Will, Power of Attorney and Advance Healthcare Directives. Connect with an FRC® trained advisor who can help you get you started.
