TSA to Inherited IRA?

Submitted by Charlie Pesiridis on Mon, 2023-04-17 23:36

Good evening. A client inherited her portion of her father’s TSP. What type of qualified account could be created to process a qualified rollover? Or would that remain as a TSP? The TSP statement reflects her name, not inherited, and there is no reference to the deceased. Can a TSP roll into an inherited IRA or a standard rollover IRA ? There is no reference to the deceased; it seems to be solely in the beneficiary’s name.

The Thrift Savings Plan (TSP) is a retirement savings plan for federal employees and members of the uniformed services, including the Army, Navy, Air Force, Marine Corps, Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration. The TSP offers participants investment options, low fees, and tax advantages. The plan is similar to private employers’ 401(k) plan.

Best, CS



Submitted by David Mertz on Tue, 2023-04-18 00:59

  • After notifying the federal TSP of the death of the participant and providing them with the names of potential beneficiaries, the TSP sends the potential beneficiaries Forms TSP-81 for the beneficiaries to complete.  This form provides the options for a distribution paid to the beneficiary and for rollovers to inherited traditional and Roth IRAs.  The beneficiary has 90 days to respond before the TSP defaults to a full distribution paid to the beneficiary.  Account information for rollovers requires a section to be completed by an officer of the IRA custodian certifying the receiving account information.  Once the TSP receives the completed form, it appears that the processing by the TSP takes about two weeks.
  • A non-spouse beneficiary is not permitted to roll the funds over to their own IRA.
  • Only a surviving spouse is permitted can maintain a beneficiary participant account in the TSP.  Non-spouse beneficiaries must receive a distribution or roll the funds over directly to an inherited traditional IRA or an inherited Roth IRA in some combination.   Rollover to a Roth IRA will be taxable.
  • I’ve heard that some beneficiaries have had problems dealing with the TSP due to difficulties that the TSP had in 2022 transitioning to a new internal system.  Hopefully that’s not the case here.

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