A Limitation of the TSP | Your FERS Federal Retirement Book | #shorts | Christy Capital Management

What are you going to do with TSP at your federal retirement? There are some limitations with the TSP, and a big one is a drawback for the beneficiaries.

Let’s say you’re married and you die and your TSP goes to your spouse. Your spouse can open up a beneficiary participant account and everything will be fine. No taxes yet- everything‘s normal. But if your spouse dies with the money still in the TSP, no longer can the secondary beneficiary get that money and postpone taxes. They have to take the money out of the TSP and it will be 100% taxable upon that distribution. The key point here is that the beneficiary participant account holder, meaning your spouse, cannot die with a TSP account without putting the new beneficiary at risk for higher taxes. This could be devastating having your entire TSP balance taxed all in one year, possibly putting your beneficiary up into the highest tax bracket. There are ways to ensure this doesn’t happen. Get the book for more details. To talk to us, go to christycapital.com

The information provided is not intended as tax or legal advice. Figures shown are for illustrative purposes only furthermore, the information or the illustrations provided may not be used to avoid any tax penalties. This content represents the general views of Christy Capital Management and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice. Retirement Benefits Institute, Inc., and a portion of its contents merged with Christy Capital Management Inc. Brandon Christy, former President of Retirement Benefits Institute, is also the current President of Christy Capital Management, Inc., a registered investment adviser.

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