Will Your TSP and FEGLI Go to the Right Person? Here’s What Federal Employees Need to Know

Most federal employees spend years building their retirement savings and maintaining valuable life insurance coverage. Far fewer spend time making sure those benefits will actually end up in the right hands.

That’s because your Thrift Savings Plan (TSP) and Federal Employees’ Group Life Insurance (FEGLI) don’t automatically follow your wishes unless your beneficiary designations are current. Even more important, these two benefits operate under entirely separate rules.

Your Will Isn’t the Final Word

Many people assume that whatever is written in their will determines who receives all of their assets.

That’s not how TSP works.

If you’ve completed a valid TSP beneficiary designation, the account will generally be distributed according to that form, regardless of what your will says. Only when there is no valid beneficiary designation does the TSP follow its statutory order of precedence.

The order is:

• Surviving spouse
• Children (with descendants of a deceased child receiving that child’s share)
• Parents
• Executor or administrator of your estate
• Next of kin under state law

Because of this, beneficiary forms deserve a second look anytime your family changes through marriage, divorce, the birth of a child, or the death of someone you’ve previously named.

What Your Beneficiaries Can Do With a TSP Account

The choices available after your death depend on who inherits the account.

A surviving spouse generally has the greatest flexibility and may be able to maintain the assets in a TSP Beneficiary Participant Account or move the funds under applicable retirement account rules.

Non-spouse beneficiaries face different requirements. They typically cannot leave the money in the TSP the same way a spouse can, and distribution options may have different tax consequences depending on the beneficiary’s circumstances and current IRS rules.

FEGLI Follows Its Own Set of Rules

Your FEGLI coverage is handled completely separately.

Submitting a TSP beneficiary designation does not update your FEGLI records, and updating your FEGLI paperwork does not affect your TSP account.

FEGLI uses Standard Form 2823 to identify beneficiaries. If a valid designation is on file, proceeds are paid according to that form.

If no beneficiary has been designated, FEGLI pays benefits according to its own order of precedence:

• Designated beneficiary (if one exists)
• Surviving spouse
• Children
• Parents
• Executor or administrator of the estate
• Next of kin

Although the order looks similar to TSP’s, the paperwork is entirely separate.

One of the Easiest Retirement Tasks You’ll Ever Complete

Updating beneficiary forms is one of the few retirement planning tasks that takes only a few minutes but can have lasting consequences for your family.

It’s a good idea to review both your TSP and FEGLI beneficiary designations after:

• Marriage or remarriage
• Divorce
• Birth or adoption of a child
• Death of a listed beneficiary
• Any significant change in your family or estate plans

Many federal employees carefully monitor their TSP investments and retirement dates while overlooking the documents that determine who ultimately receives those benefits.

The Bottom Line

Your retirement plan doesn’t end when you stop working. It also includes making sure the benefits you’ve earned are transferred according to your wishes.

Reviewing your TSP and FEGLI beneficiary designations every few years—and after major life events—can help prevent confusion, delays, and unintended outcomes for the people you care about most.

If you’re unsure whether your beneficiary designations still reflect your wishes or fit within your broader retirement plan, a Federal Retirement Consultant (FRC®) can help you review the big picture.

Frequently Asked Questions

Does my will determine who receives my TSP?

Generally, no. A valid TSP beneficiary designation controls who receives your account. If no designation exists, TSP follows its statutory order of precedence.

Do TSP and FEGLI share the same beneficiary form?

No. Each program requires its own beneficiary designation, and updating one does not update the other.

Should I review my beneficiary forms after retirement?

Yes. Retirement itself doesn’t change your designations. You should review them whenever your personal or family circumstances change.

When should I update my beneficiary information?

Consider reviewing both your TSP and FEGLI designations after marriage, divorce, the birth or adoption of a child, the death of a beneficiary, or any major life event that affects your estate plans.