For federal employees and retirees wondering what happens to your TSP and FEGLI when you die, the answer depends on your beneficiary designations. Your Thrift Savings Plan (TSP) account and Federal Employees’ Group Life Insurance (FEGLI) coverage are valuable benefits, but they follow different rules and require separate beneficiary forms. If those designations are outdated or missing, your benefits may not go to the person you intended.
Key Takeaways
- TSP and FEGLI have separate beneficiary designation forms and separate rules.
- A valid TSP beneficiary designation generally controls who receives your account after death, regardless of what your will says.
- FEGLI does not use your TSP beneficiary designation and has its own beneficiary rules.
- Major life events such as marriage, divorce, the birth of a child, or the death of a beneficiary are good reasons to review your designations.
- Keeping your beneficiary information updated is one of the simplest ways to help protect the people you intend to receive your benefits.
Your TSP Beneficiary Designation Determines Who Receives Your Account
Your TSP beneficiary designation is one of the most important documents connected to your retirement savings. If you have a valid TSP beneficiary designation on file, your account is distributed according to that designation.
Your will does not override your TSP beneficiary designation. If you do not have a valid TSP beneficiary designation, your account follows the TSP order of precedence:
- Spouse
- Children in equal shares, with descendants of deceased children receiving their share
- Parents
- Executor or administrator of your estate
- Next of kin under applicable state law
This is why reviewing your beneficiary information after major life events is so important. A divorce, remarriage, new child, or the death of a beneficiary can change whether your current designation still reflects your wishes.
What Happens to TSP Money After Death?
The options available to beneficiaries depend on who inherits the account.
A spouse beneficiary generally has more flexibility, including the ability to maintain assets in a TSP Beneficiary Participant Account or move the funds according to applicable retirement account rules.
Non-spouse beneficiaries have different rules and generally cannot keep assets in the TSP in the same way a spouse beneficiary can. Their options and tax treatment depend on the circumstances and applicable IRS rules.
FEGLI Has Its Own Separate Beneficiary Rules
Your FEGLI coverage does not follow your TSP beneficiary designation, and it does not automatically follow your will.
FEGLI uses its own beneficiary designation process through Standard Form 2823. If you have a valid FEGLI beneficiary designation on file, the insurance proceeds are paid according to that designation.
If there is no valid FEGLI designation, the benefit follows FEGLI’s order of precedence:
- Designated beneficiary
- Spouse
- Child or children
- Parent or parents
- Executor or administrator of the estate
- Next of kin
Updating your TSP beneficiary information does not update your FEGLI coverage. These are separate benefits that require separate reviews.
Why Beneficiary Reviews Matter
Many federal employees spend years carefully planning their retirement but overlook one of the simplest steps: making sure beneficiary forms are current.
Beneficiary designations should be reviewed after major life events, including:
- Marriage
- Divorce
- Birth or adoption of a child
- Death of a beneficiary
- Changes in family circumstances
A retirement plan is not just about how much money you accumulate. It is also about making sure those benefits transfer the way you intend.
The Bottom Line
Your TSP and FEGLI benefits represent years of work and service. Taking a few minutes to review your beneficiary designations can help prevent unintended outcomes and give your family clearer direction during a difficult time.
Frequently Asked Questions
Does my will override my TSP beneficiary designation?
No. Your TSP beneficiary designation generally controls who receives your TSP account after your death. If you do not have a valid designation, TSP follows its order of precedence.
Do TSP and FEGLI use the same beneficiary form?
No. TSP and FEGLI use separate beneficiary designation forms. Updating one does not update the other.
What happens to my TSP if I die without a beneficiary?
If you do not have a valid TSP beneficiary designation, your account is distributed according to the TSP order of precedence, starting with your spouse, followed by children, parents, estate, and next of kin.
What happens to my FEGLI if I die without a beneficiary?
If you do not have a valid FEGLI beneficiary designation, the benefit is paid according to FEGLI’s order of precedence, beginning with a spouse, followed by children, parents, executor or administrator of the estate, and next of kin.
How often should I update my TSP and FEGLI beneficiary forms?
You should review your beneficiary designations after major life events, including marriage, divorce, the birth or adoption of a child, or the death of a listed beneficiary.
Does retiring change my TSP or FEGLI beneficiary designations?
Retirement does not automatically update your beneficiary designations. Federal employees and retirees should review their beneficiary information whenever their personal circumstances change.
