If you can’t remember who you chose as your TSP or FEGLI beneficiary, it’s time for a beneficiary check-up. This includes updating beneficiaries on all of your retirement accounts and life insurance policies — including any from your years working in the private sector.
Why Updating Your Beneficiaries Is Important
It’s crucial to update your beneficiaries after a significant life event like divorce, remarriage, or when a spouse you’ve named as a beneficiary passes away before you. Otherwise funds from your TSP, life insurance, or other programs with a death benefit, may go to the wrong person or end up in probate court. In fact, beneficiary designations always override a Last Will & Testament, a Trust and even a pre-nuptial agreement.
“Don’t make the mistake of waiting too long to make changes – we never know which day will be our last.”
Federal Programs With A Death Benefit
Your designated beneficiary will be paid a death benefit for the following federal programs:
- Lump sum payments from CSRS or FERS
- Unpaid compensation including any unpaid annual leave
- Thrift Savings Plan
- Federal Employee’s Group Life Insurance
What Happens When There Is No Designated Beneficiary
If you haven’t designated a beneficiary for any or all of these programs, the federal government typically follows this Order of Precedence:
First: payment is made to your widow or widower.
Second: if none, payment is made to your child or children in equal shares, with the share of any deceased child distributed among that child’s descendants.
Third: if none, payment is made to your parents in equal shares or the entire amount to your surviving parent
Fourth: if none, payment is made to the executor or administrator of your estate
Fifth: if none, payment is made to your next of kin under the laws of the State where you lived at the time of your death.
According to the Office of Personnel Management (OPM), the order of precedence includes an adopted child, but it doesn’t include a stepchild you haven’t adopted or a stepparent who never adopted you.
Other Accounts That May Require A Beneficiary Update
Credit Union Membership
Checking & Savings Accounts
IRAs, 401(k)s & Private Sector Life Insurance
While you’re at it, it’s a good idea to review and update your Last Will & Testament, Trusts, real estate titles, and estate documents like Power of Attorney and Advance Healthcare Directives that enable you to choose representatives when you’re incapacitated and can’t make decisions for yourself. Don’t make the mistake of waiting too long to make changes – we never know which day will be our last.
