Rolling Inherited TSP Account to Spouse’ IRA
New client of mine inherited her husband’s Thrift Savings Plan (TSP) account several years ago and the funds were moved into a “beneficiary participant” account with TSP. The deceased husband will soon reach his RBD while my client still has several years to go. We are looking to roll the money from TSP into my client’s own IRA account, to avoid RMDs for the next several years, but I want to make sure we do everything correctly. Do we just request a direct rollover from the TSP beneficiary participant account to the client’s IRA held by her custodian? Want to avoid any unintended tax consequences. Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2020-10-16 15:52
Actually, the client should have done this direct rollover (to inherited or own IRA) right after she inherited the TSP, the reason being that there are no beneficiary participant accounts for other than spouses, so if client were to pass her beneficiary would have 60 days to do a direct rollover or would receive a lump sum check from the TSP. The TSP may have special forms to be completed for client’s direct rollover, it may not be as simple as just establishing an IRA account with her preferred custodian and having the custodian pull over the TSP funds. This rollover will have to be done this year if husband would have been 72 next year in order to avoid a 2021 beneficiary RMD from the TSP.
Permalink Submitted by Justin Howard on Fri, 2020-10-16 17:08
Thank you