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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

Ask your question here.

The Q&A forum is moderated by Ed Zurndorfer -- an expert on federal employee benefits -- and a Certified Financial Planner, chartered life underwriter and chartered financial consultant in Maryland.

Zurndorfer is also the author of several federal employee benefits guides published by Federal Employees News Digest.

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Tgbridges  
#1 Posted : Monday, April 16, 2012 6:17:13 AM(UTC)
Tgbridges

Rank: Newbie

Groups: Registered
Joined: 4/13/2012(UTC)
Posts: 2

I have four children. I originally have my TSP going to my sisters for the benefit of the children. Now, I am not sure that was the smartest thing to do. If my sisters are listed as the beneficiaries "for the benefit of the children", will the TSP funds be taxed at my sisters tax rate. Should I re-do my forms and make the children the beneficiaries, with my sisters being the executors responsible the children's money until the children reach a specified age?
 
Any advice would be greatly appreciated. 
Ed Zurndorfer  
#2 Posted : Monday, April 16, 2012 7:45:31 PM(UTC)
Ed Zurndorfer

Rank: Senior Member

Groups: Registered
Joined: 9/10/2001(UTC)
Posts: 4,414

Assuming you are not married, you should discuss your situation with a qualified estate attorney in your state. You can name your children as beneficiaries and upon your death, they would receive your TSP account and pay tax upon withdrawing the funds. By naming your sisters as beneficiaries of your TSP account, your sisters would pay tax upon withdrawing the inherited TSP funds. You should consider setting up a trust as beneficiary of your TSP account (with one of your sisters as the trustee), meaning that your children would be beneficiaries of your TSP account through the trust. The trust would be established by your estate attorney.

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