TSP Beneficiary Designation: Inherited TSP Rules for Spouses and Non-Spouse Heirs

Your will has no effect on your TSP account. The only document that controls who inherits your TSP balance is Form TSP-3, filed directly with the Thrift Savings Plan. If you've never filed one — or haven't updated it since a marriage, divorce, or the death of a named beneficiary — your TSP may go to the wrong person when you die.

TSP-3: the form that overrides your will

Your TSP account passes outside your estate. It is not subject to probate and is not governed by your will. Federal law requires TSP to distribute your account balance in accordance with your TSP-3 designation or, if none exists, the statutory order of precedence — regardless of what your will says.¹

Key mechanics:

• You can file or update a TSP-3 at any time by logging in at tsp.gov
• The form must be received by TSP — not just mailed or signed — before the date of death to be valid
• A more recent TSP-3 replaces all prior designations in full; there is no partial update
• You can name any person, trust, charity, or estate as a beneficiary — and you can name multiple beneficiaries with percentage splits
• If a named beneficiary predeceases you and you haven't updated the form, their share passes under the statutory order — not to their descendants unless you selected per stirpes

The statutory order of precedence (no TSP-3 on file)

If you die without a valid TSP-3 on file, TSP distributes your account in this order, stopping at the first category with a living member:²

1. Your widow or widower
2. Your children equally; descendants of deceased children by representation
3. Your parents equally, or the surviving parent
4. The appointed executor or administrator of your estate
5. Your next of kin entitled to your estate under the laws of your state of residence

For most married federal employees, the statutory order produces the correct result — the spouse inherits. The risk appears in less common scenarios: unmarried employees, blended families where stepchildren aren't adopted, estranged relatives in the parent or sibling tier, or employees who want to leave their TSP to a trust or charity rather than the default heir. In all of these, a filed TSP-3 is essential.

Note: a stepchild you have not adopted is not a "child" for TSP statutory order purposes. A stepparent who did not adopt you is not a "parent." If your intent is to benefit these individuals, you must name them explicitly on a TSP-3.

Spouse beneficiary: the Beneficiary Participant Account (BPA)

When a surviving spouse is the named beneficiary (or the statutory heir), they have an option that no other beneficiary type receives: they can keep the inherited TSP in the TSP system as a Beneficiary Participant Account (BPA).

What a BPA allows

• Access to all 5 core TSP funds (G, F, C, S, I) and all Lifecycle funds — same investment universe as any TSP account
• The same ultra-low expense ratios (~0.034–0.042%)
• Withdrawal at any time; no early-withdrawal penalty restriction based on the original participant's age (the BPA follows the beneficiary's own age for the 10% penalty exception)
• Rollover to the beneficiary's own traditional IRA or Roth IRA at any time — since a surviving spouse can treat inherited retirement assets as their own

What a BPA cannot do

• No new contributions — a BPA cannot accept deposits
• No in-plan Roth conversion — the TSP in-plan Roth conversion feature launched January 2026 is not available to BPA holders³
• No successor beneficiary rollover — if the beneficiary participant (surviving spouse) dies, their heirs cannot continue the BPA in TSP; TSP distributes directly to them with no rollover option

BPA RMD rules — and the Roth TSP trap

The BPA is subject to required minimum distributions. The RMD schedule depends on when the original participant died:⁴

• Participant died before their Required Beginning Date (RBD): The beneficiary participant's first RMD is due December 31 of the year following the participant's death. RMDs are calculated using the beneficiary's age and the IRS Single Life Expectancy Table each year.
• Participant died on or after their RBD: If the participant already satisfied the RMD for the year of death, the beneficiary's first RMD is due December 31 of the following year, again based on the beneficiary's age. TSP will automatically send the required amount in December if the beneficiary has not withdrawn enough.

Non-spouse beneficiary rules: the 90-day window

Non-spouse beneficiaries — adult children, siblings, parents, other named individuals — cannot keep money in the TSP. TSP creates a temporary account for each non-spouse beneficiary and gives them 90 days to request payment or a rollover. If the beneficiary takes no action, TSP automatically distributes their share on the 90th day.

Non-spouse beneficiaries have two choices:⁵

• Direct distribution: TSP distributes the taxable (traditional) portion; the beneficiary includes it in income for that year. Roth TSP distributions are tax-free if the account met the 5-year holding period.
• Rollover to an inherited IRA: The non-spouse beneficiary can request TSP make a direct rollover to an inherited traditional IRA or inherited Roth IRA. This defers taxes on the traditional portion and preserves investment flexibility beyond TSP's 5 fund choices. The inherited IRA is then subject to the SECURE Act rules described below.

Non-spouse beneficiaries cannot roll the inherited TSP into their own IRA (only surviving spouses can treat inherited retirement assets as their own). The inherited IRA designation is mandatory, and the account cannot be commingled with the beneficiary's personal retirement accounts.

SECURE Act 10-year rule for inherited IRAs

When a non-spouse beneficiary rolls inherited TSP to an inherited IRA, the account is governed by the SECURE Act (2019) and the IRS final regulations under T.D. 10001 (July 2024). The basic rule: non-eligible designated beneficiaries must empty the inherited IRA by December 31 of the 10th year following the original account owner's death.⁶

Annual RMD requirement within the 10-year window: If the original TSP participant died after their Required Beginning Date (RBD — April 1 of the year after turning 73 or 75, depending on birth year), non-eligible designated beneficiaries must also take annual RMDs in years 1–9 of the 10-year window, not just empty the account by year 10. Failing to take these annual RMDs triggers a 25% IRS penalty (reduced to 10% if corrected timely). This rule caught many beneficiaries off-guard when T.D. 10001 finalized it in 2024.

Eligible Designated Beneficiaries (EDBs) — who get a lifetime stretch instead of the 10-year rule:

• Surviving spouse
• Minor children of the participant (stretch ends when the child reaches age of majority, then 10-year rule kicks in)
• Disabled or chronically ill individuals
• Individuals not more than 10 years younger than the deceased participant

Adult children, grandchildren, siblings, and most other non-spouse beneficiaries are non-eligible designated beneficiaries subject to the 10-year rule.

Roth TSP inheritance: the tax-free advantage

Non-spouse beneficiaries who inherit Roth TSP and roll it to an inherited Roth IRA receive qualified distributions tax-free — even during the 10-year distribution window. The decedent's Roth contributions were already made with after-tax dollars, and compounding inside the inherited Roth IRA continues tax-free until distribution. For a high-balance Roth TSP passed to an adult child in the 32–37% bracket, the tax-free compounding during the 10-year window can be worth tens of thousands of dollars compared to the same balance in an inherited traditional IRA.

Trust as TSP beneficiary: proceed with caution

You can name a trust as your TSP beneficiary. The most common reason: to control distributions to beneficiaries who are minors, spendthrift, or have special needs; to provide creditor protection; or to keep TSP assets out of a beneficiary's estate for their own estate planning purposes.

The complication: when a trust is named as TSP beneficiary, TSP distributes the entire account to the trust shortly after death — the trust is not permitted to stay in the TSP. The trust then holds the cash or reinvests it. Under the SECURE Act, whether the trust can use inherited IRA rules (the 10-year stretch) depends on whether it is a "see-through" or "qualified" trust with identifiable human beneficiaries. Getting this wrong — naming a non-qualified trust — forfeits the inherited IRA rules entirely and triggers immediate taxation of the full distribution to the trust. If you are considering a trust as TSP beneficiary, work with an estate planning attorney who understands both the TSP distribution rules and SECURE Act trust qualification requirements before proceeding.

Three things to do before you retire

1. Log in to tsp.gov and verify your TSP-3. TSP shows your current designation. If it's blank, outdated (pre-divorce ex-spouse), or inconsistent with your estate plan, update it now. It takes 5 minutes.
2. Coordinate with your other beneficiary designations. Your FERS survivor annuity election (OPM form), FEGLI beneficiary designation (Form SF-2823), and TSP-3 are three separate documents with three separate administrators. Each controls different assets. Review all three together — not in isolation.
3. Tell your intended heirs what they'll inherit and how. A surviving spouse who doesn't know the BPA rollover option exists may miss the chance to move Roth TSP to a Roth IRA and eliminate RMDs. A non-spouse beneficiary who doesn't know about the 90-day window may trigger an automatic lump-sum distribution. The best beneficiary designation also includes a brief "this is how to handle it" conversation.

1. TSP-3 form requirements and statutory order of precedence — TSP Form TSP-3 governs beneficiary distribution and overrides all wills and trusts; statutory order per federal law: spouse → children (descendants of deceased children by representation) → parents → executor → next of kin: TSP.gov — Designating Beneficiaries; OPM — TSP Order of Precedence.
2. Beneficiary Participant Account RMD rules — entire BPA balance (including Roth TSP) subject to RMDs; first RMD year based on participant death date relative to RBD; calculated using beneficiary's age and Single Life Expectancy Table: TSP Publication TSPBK33 — Your TSP Account: A Guide for Beneficiary Participants.
3. TSP in-plan Roth conversion launched January 28, 2026, available to active participants only (not BPA holders): TSP Bulletin 25-4 — Launch of Roth In-Plan Conversion Feature.
4. Non-spouse beneficiary 90-day window and rollover options: TSP.gov — Beneficiary Distributions; TSP Fact Sheet — Rollovers from TSP to Eligible Retirement Plans.
5. SECURE Act 10-year rule for non-eligible designated beneficiaries; annual RMD requirement when decedent past RBD under T.D. 10001 (July 2024): IRS — Retirement Topics: Required Minimum Distributions; T.D. 10001 — Final Regulations, Required Minimum Distributions (July 2024).
6. SECURE 2.0 § 325 — elimination of lifetime RMDs for Roth TSP for original account owner, effective 2024; does not extend to Beneficiary Participant Accounts: SECURE 2.0 Act of 2022, Pub. L. 117-328.

Values verified as of May 2026. TSP statutory order of precedence and form requirements per federal law. SECURE Act inherited IRA rules per T.D. 10001 (final regulations, July 2024). Confirm your specific situation with a fee-only federal benefits specialist before retirement.