Changes could come for TSP beneficiaries

Benefits

Changes could come for TSP beneficiaries

The TSP\'s Employee Thrift Advisory Council has proposed allowing surviving spouses of TSP participants to inherit accounts.

Federal News Network Staff

March 30, 2009 6:04 pm

1 min read

By Dorothy Ramienski
Internet Editor
FederalNewsRadio

There could be changes coming to your Thrift Savings Plan benefits.

The TSP’s Employee Thrift Advisory Council has proposed allowing surviving spouses of TSP participants to inherit accounts.

Currently, the beneficiary or spouse has to transfer the money out of the TSP and set up their own IRA in order to get the money.

“This proposal,” says TSP Director of External Relations Tom Traubucco, “would allow them to just stay in place and to become a TSP participant.”

Trabucco says changes would have to be made to the TSP system, but the hope is that, after awhile, the program would be less confusing for beneficiaries.

In addition, Congress would have to approve the new measures.

Participation in the TSP continues to grow gradually.

Trabucco says there are about 4,050,000 accounts.

“The Uniformed Services continues to grow. The FERS participation rate stays in a very narrow range — between 84 and 87 percent is where it’s been for the last 10 or 11 years now. Currently, we’re at 84.4 percent [so] we’re at the lower end of that range.”

Overall, the TSP has taken in $1.7 billion in new contributions, which means participants are buying low at the moment.

Trabucco says, despite the dip in the market today, the TSP has been doing very well for the past three weeks and thinks the funds might have a positive month overall.