What happens to my TSP when I die is settled by one record: the beneficiary designation on file with the TSP, not a will.
When a TSP participant dies, the account goes to the beneficiaries on file with the TSP or, if none, to the spouse, children, parents, estate, and next of kin, in that order. A spouse can keep the money in a TSP beneficiary participant account; other heirs must take a payment or inherited IRA rollover within 90 days.
By Craig Wear, CFP® | Last reviewed: October 18, 2026
Key Takeaways
- Only a beneficiary designation on file at death, or the statutory order of precedence, decides who inherits; the TSP cannot honor a will or court order (TSP.gov).
- A participant can name up to 20 primary and contingent beneficiaries but cannot assign the traditional and Roth balances separately (5 CFR 1651.3).
- A spouse whose share is $200 or more gets a beneficiary participant account in the same funds the participant held (5 CFR 1651.14).
- Non-spouse beneficiaries have 90 days to choose a payment or inherited IRA rollover before the TSP pays automatically (TSP.gov).
- Direct death benefit payments may face 20% federal withholding; payments from a beneficiary participant account face 10% and cannot be rolled over (TSP Death Benefits booklet).
- Most adult non-spouse heirs must empty an inherited IRA by the end of the 10th year after death; a participant’s minor child qualifies for longer payouts only until age 21 (26 CFR 1.401(a)(9)-4).
- FERS survivor benefits are separate; the Basic Employee Death Benefit for in-service deaths after December 1, 2025 is 50% of final or average salary plus $43,800.53 (OPM).
TSP Death Benefits by the Numbers
Sources: TSP.gov and 5 CFR part 1651, current October 2026. Processing time is the TSP’s stated typical range.
For lifetime withdrawals, see TSP withdrawal rules; for private plans, see what happens to a 401(k) when you die.
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What happens to my TSP when I die?
When you die, your TSP account becomes a death benefit paid to your designated beneficiaries, or to the statutory order of precedence if none are on file. The rule comes from 5 U.S.C. 8433(e), which applies the order of precedence in 5 U.S.C. 8424(d). The sequence:
- Death is reported. The employing agency reports an in-service death; otherwise survivors report it online, by phone, or by mail.
- Pending requests are cancelled. Unpaid withdrawal or loan requests are cancelled; a pending annuity purchase returns to the account.
- Liens are cleared. Any court order must be resolved and any outstanding loan is declared a taxable loan foreclosure to the estate before beneficiaries are paid.
- Beneficiaries are identified. The TSP applies the designation on file at death, or the order of precedence, and verifies each beneficiary.
- Accounts are opened. A spouse with a share of $200 or more gets a beneficiary participant account; each non-spouse beneficiary gets a temporary account.
- Payment or rollover. Non-spouse beneficiaries choose a direct payment or an inherited IRA within 90 days; a spouse may keep the account, roll it out, or withdraw.
Every death benefit is paid pro rata from the traditional and Roth balances and every fund held, per 5 CFR 1651.14.
Who inherits a TSP: the beneficiary designation or the order of precedence?
A valid beneficiary designation on file with the TSP on the date of death always wins; the order of precedence applies only when no designation exists. If nothing is on file, the TSP pays in this order, according to TSP.gov:
- The participant’s spouse.
- If none, the participant’s children in equal shares, with a deceased child’s share split among that child’s descendants. Stepchildren count only if adopted.
- If none, the participant’s parents equally, or the surviving parent. Stepparents who did not adopt the participant are excluded.
- If none, the appointed executor or administrator of the estate.
- If none, next of kin entitled under the law of the state where the participant lived at death.
The TSP must pay the person named “under all circumstances,” so an ex-spouse named before a divorce still collects if the designation was never updated, even after waiving rights in the settlement. A separated spouse remains a spouse until a divorce decree is entered (5 CFR 1651.5).
A participant may name or change beneficiaries without the spouse’s knowledge or consent, unlike many private 401(k) plans. A witness who is also named cannot receive a share, and once a designation is filed, only a new designation replaces it.
If a named beneficiary dies first, that share goes pro rata to the other named beneficiaries (5 CFR 1651.10), not to the deceased beneficiary’s children. An old paper Form TSP-3 stays valid until changed, but updates are now made in My Account on tsp.gov.
The TSP designation is separate from the FERS (SF 3102) and FEGLI (SF 2823) designations, as OPM notes; updating one does not update the others.
What happens when a spouse inherits a TSP?
A surviving spouse whose share is $200 or more automatically receives a TSP beneficiary participant account in their own name, and the transfer is not taxable. The account starts in the same TSP funds the participant held on the date of death, with any mutual fund window money reinvested in TSP funds under the participant’s election on file, per the beneficiary participant booklet (January 2026 edition). Older guides that say the money starts in the G Fund are out of date.
A share under $200 is paid by check. The spouse cannot contribute to or borrow from the account, but can:
- Leave it invested and take installments, partial withdrawals, or an annuity.
- Roll all or part to a traditional IRA, a Roth IRA (taxable on the traditional dollars), or the spouse’s own civilian or uniformed services TSP account (5 CFR 1651.19(g)).
- Make Roth in-plan conversions inside the account.
- Withdraw at any age without the 10% early withdrawal penalty, an exception lost once money moves to the spouse’s own account or IRA.
RMDs must begin by the spouse’s required beginning date, and the TSP pays any shortfall automatically (5 CFR 1651.19(c)). Spouses weighing conversions can compare these options with Q3’s guide to a spousal rollover followed by a Roth conversion.
The second-death trap in a beneficiary participant account
When a beneficiary participant dies, the money is paid directly to the next beneficiaries. It cannot be rolled to any IRA or plan, faces 10% withholding, and is fully taxable in the year received. A large balance left there for decades can hand children a single-year tax event instead of a 10-year inherited IRA.
What happens when a child or other non-spouse inherits a TSP?
A child or any other non-spouse beneficiary cannot keep a TSP account; the TSP opens a temporary account and pays it out within 90 days. If the beneficiary does not choose a direct payment or an inherited IRA rollover, the TSP pays automatically on the 90th day or next business day.
A direct payment makes the whole taxable portion income in one year, with up to 20% withheld. An inherited IRA rollover avoids that and moves the decision into IRS beneficiary rules, covered in inherited IRA RMD rules after SECURE 2.0. Most adult non-spouse heirs must empty it by the end of the 10th year after death (IRS).
If the participant died on or after the required beginning date, final IRS regulations also require annual RMDs in years one through nine, starting with 2025 (IR-2024-190). And a minor child of the participant is an eligible designated beneficiary only until the 21st birthday, after which the 10-year clock starts.
The 90-day window is the key difference from an IRA, where heirs can take time to decide; Q3’s guide on what to do with an inherited IRA covers the next steps.
How is an inherited TSP taxed?
Traditional TSP dollars are ordinary income to the beneficiary when paid out; Roth dollars are tax-free once five years have passed since January 1 of the year the participant first made a Roth contribution or in-plan conversion. Death distributions are exempt from the 10% early withdrawal penalty under Internal Revenue Code section 72(t)(2)(A)(ii).
| Beneficiary | What the TSP does | Can it roll over? | Federal withholding on direct payment | IRS payout rule |
|---|---|---|---|---|
| Spouse, share $200 or more | Opens a beneficiary participant account | Yes, to an IRA, Roth IRA, or the spouse’s own TSP | None until withdrawn | Spouse RMD rules |
| Spouse, share under $200 | Pays by check | No direct rollover by the TSP | Varies with the amount | Paid at once |
| Child or other individual | Temporary account, 90-day window | Yes, to an inherited IRA | May be 20% of the taxable amount | Usually 10-year rule; EDB exceptions |
| Estate | Check payable to the estate | No inherited IRA; paid by check | May be 20% of the taxable amount | Paid at once; heirs receive it through the estate |
| Trust | Check payable to the trust, in care of the trustee | Depends on IRS trust rules | May be 20% of the taxable amount | Depends on trust terms |
| Beneficiary of a beneficiary participant account | Direct payment only | No | 10% | Fully taxable in the year paid |
Sources: TSPBK31, 5 CFR 1651.14 and 1651.19, IRS. Withholding is a prepayment, not the final tax.
What happens if no one is named, or the estate or a trust inherits?
With no designation and no surviving spouse, child, or parent, the TSP pays the estate by check. The money then passes through probate, the only path by which a will reaches TSP money.
A trust is paid by check in care of the trustee. Whether its beneficiaries can stretch the taxes depends on IRS see-through trust rules. A beneficiary who cannot be located after one year is treated as having died first.
An outstanding TSP loan cannot be repaid after death; it becomes a loan foreclosure taxed to the estate, not the beneficiaries, and no one is paid until it closes.
Worked example: a hypothetical $800,000 TSP in 2026
This hypothetical uses 2026 federal brackets from the IRS and ignores growth and state tax.
Dana, a retired FERS employee born in 1958, dies in March 2026 at 68 with $640,000 traditional and $160,000 Roth in the TSP (first Roth contribution 2015). Spouse Pat and adult son Alex are each named for 50%. With an RMD age of 73, Dana died before the required beginning date.
- Pat’s $400,000 share moves tax-free to a beneficiary participant account: $320,000 traditional, $80,000 Roth.
- Alex’s $400,000 share lands in a temporary account: $320,000 traditional, $80,000 Roth. The Roth part is qualified (five years since January 1, 2015) and tax-free either way.
Alex is single with $95,000 of wages. If Alex takes a direct payment in 2026, taxable income is $95,000 plus $320,000 minus the $16,100 standard deduction, or $398,900. That is in the 35% bracket, which runs from $256,225 to $640,600 for single filers, and the TSP may withhold $64,000 (20%) up front.
If Alex instead rolls the traditional share to an inherited IRA and the Roth share to an inherited Roth IRA, no annual RMDs are required in years one through nine because Dana died before the required beginning date, but both accounts must be empty by December 31, 2036. Spreading the traditional $320,000 evenly would add about $32,000 a year, for taxable income near $110,900 and a top rate of 24%, the bracket from $105,700 to $201,775.
Pat’s choice has its own long tail. If Pat later dies with the money still in the beneficiary participant account, Alex’s second inheritance arrives as a non-rollable payment taxed in one year. Had Pat rolled it to an IRA in Pat’s own name, Alex would generally inherit an IRA with the 10-year window. A financial professional can model both paths, including the penalty-free access Pat gives up by leaving the TSP before 59½.
How do survivors report a death and claim TSP death benefits?
Survivors report the death, supply a certified death certificate, and wait for the TSP to identify beneficiaries. Anyone can report through the online TSP Life Events Hub, the ThriftLine at 1-877-968-3778, or by mail or fax; the agency reports in-service deaths.
The report needs the participant’s name, dates of birth and death, address, last four Social Security digits, and marital status. The certified death certificate must show an official seal, the date, cause, and manner of death, and the registrar’s signature, per TSP.gov.
Processing typically takes 30 to 45 days, after which each beneficiary receives a Confirmation of Beneficiary Asset Transfer notice. Older guides cite claim forms such as TSP-17; the current checklist adds only an Unidentified Beneficiary Affidavit when no beneficiaries are on file.
FERS survivor benefits are claimed separately with OPM. An in-service death after 18 months of civilian service can bring an eligible spouse the Basic Employee Death Benefit; retirees’ survivors depend on the survivor election made at retirement. Q3’s FERS retirement guide explains how the annuity, TSP, and Social Security fit together.
How can Roth conversions change what TSP heirs inherit?
Roth conversions shift the mix heirs receive, because every death benefit is split pro rata and qualified Roth dollars arrive tax-free. The participant pays conversion tax at the participant’s own rate, while heirs drawing traditional money on top of peak earnings could face a higher one.
The TSP now allows in-plan Roth conversions, including in beneficiary participant accounts. Whether converting fits depends on today’s bracket, the heirs’ expected brackets, and smaller future RMDs, the trade-off covered in how Roth conversions reduce a taxable estate. Inherited Roth money still follows the 10-year rule for most non-spouse heirs; see inherited Roth IRAs and the ten-year rule.
Frequently asked questions
Will my wife get my TSP when I die?
A spouse inherits the TSP if named on the beneficiary designation, or automatically if no designation is on file, because the spouse is first in the order of precedence. If someone else is named, that person is paid instead, even without the spouse’s consent.
Can my kids inherit my TSP?
Yes. Children can be named as beneficiaries, and they are second in the order of precedence after a spouse if no designation is on file. Stepchildren are included in the order of precedence only if adopted. Children cannot keep a TSP account; they have 90 days to take a payment or roll it to an inherited IRA.
How long does it take for the TSP to pay out after death?
The TSP says a death benefits claim typically takes 30 to 45 days to process once the participant’s information is verified and beneficiaries are identified. Non-spouse beneficiaries then have 90 days to request payment before it is sent automatically. Loans, court orders, and contested claims can delay payment.
Do beneficiaries pay taxes on an inherited TSP?
Beneficiaries pay ordinary income tax on traditional TSP money when it is paid out to them, and no 10% early withdrawal penalty applies. Roth TSP money is tax-free if five years have passed since January 1 of the year the participant first contributed to Roth.
Does a TSP beneficiary have to be a spouse?
No. A participant can name any individual, trust, estate, charity, or other entity, up to 20 primary and contingent beneficiaries, without the spouse’s consent.
Does a will override a TSP beneficiary designation?
No. The TSP cannot honor a will, prenuptial agreement, or court order. Only a designation on file at death, or the order of precedence, controls. A will matters only if the TSP pays the estate.
What happens to a TSP loan when the participant dies?
It cannot be repaid. It is declared a loan foreclosure taxed to the participant’s estate, not the beneficiaries, and no death benefit is paid until the foreclosure is complete.
What happens if a TSP beneficiary dies before the participant?
The deceased beneficiary’s share is reallocated pro rata to the participant’s other named beneficiaries. It does not pass automatically to that beneficiary’s children. If no named beneficiary survives, the order of precedence applies.
Methodology: Rules come from primary sources: TSP.gov, TSP booklets TSPBK31 (March 2024) and TSPBK33 (January 2026), 5 CFR parts 1650 and 1651 (eCFR, October 15, 2026), 5 U.S.C. 8433 and 8424, 26 CFR 1.401(a)(9)-4, IRS guidance including IR-2024-190 and Rev. Proc. 2025-32, and OPM. The Dana example is hypothetical and federal only. Because this is a financial topic, anonymous forum anecdotes were excluded.
This article is for educational purposes only and is not individualized investment, tax, or legal advice. Consult a qualified professional about your specific situation.
