TSP – children must remove all of their TSP from their account which was just created in 2024 by 7/1/2024?
My manager and I attended your workshop last summer in Boston.
We have a very critical and time sensitive question.
Deceased Father had TSP – his date of death was 3/17/2024 and his dob was 6/28/1964 – so he was only 59 when he passed.
He left his TSP to his children: 455k to his daughter and 83k to his son.
TSP created two separate accounts for both children and confirmed the benefit asset transfer. TSP is stating they both have to get their money out of TSP by 7/1…
Missing is the year, but we are assuming it’s this year – why would TSP require this?
We were under the impression that non-edb’s had to start taking some money from an account and had 10 years from date of death to do this (10 years to deplete the account).
Do you know why TSP would require the beneficiary accounts to be liquidated in full by this year on July 1 in the year in which the original owner passed?
Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2024-05-21 23:44
The TSP prefers not to deal with non spouse beneficiaries, other than for this limited 60 day period to complete a direct rollover to an inherited IRA. Their deadline is 7/1/2024. It’s not clear when the 60 days starts, but in this case it was apparently 5/2.
Once the direct rollover is completed, the inherited IRA will be subject to the 10 year rule, but annual RMDs will not be required in years 1-9 because the participant passed prior to RBD.
TSP verbiage is confusing – the plan will create a “beneficiary distribution account” but that’s limited to spouses only.
Note that these beneficiaries have an option for the direct rollover to go to either an inherited IRA or an inherited Roth IRA, but that does not affect the 10 year rule.
If father had a Roth TSP account, that should likewise be directly rolled into an inherited Roth IRA.
Permalink Submitted by aison-fedgroupllc-com on Wed, 2024-05-22 12:40
Thank you!