By law, a Thrift Savings Plan (TSP) participant’s spouse has certain rights to the participant’s TSP account. These rules apply to withdrawals even if the TSP participant is separated from but still legally married to the participant’s spouse.
The Federal Employees Retirement System Act of 1986 (which created the TSP) provides certain rights to spouses of participants. Spouses’ rights apply to a TSP participant’s withdrawals made during and after federal employment. These rules do not apply to nonspousal beneficiary participants.
The following are the specific rules that apply to married TSP participants:
- Married CSRS TSP participant requesting a partial withdrawal. The TSP Service Office must notify the participant’s spouse in writing, regardless of the TSP account balance or the amount of the withdrawal. The spouse is not required to give written consent.
- Married FERS TSP participants requesting a partial withdrawal. The participant’s spouse must give written consent on the withdrawal, regardless of the TSP account balance or the amount of the withdrawal. The spouse’s written consent must be notarized.
- Married CSRS TSP participant with a TSP account balance of more than $3,500 and who is requesting total withdrawal or distribution. The TSP Service Office must notify the participant’s spouse in writing of the TSP participant’s withdrawal or distribution election. The spouse is not required to give written consent.
- Married FERS TSP participant with a TSP account balance of more than $3,500 and who is requesting total withdrawal or distribution. The participant’s spouse is entitled to a joint life annuity with: (1) A 50 percent survivor benefit; (2) Level payments; and (3) No cash refund features.
If a married FERS TSP participant chooses any other withdrawal or distribution options, or combinations of options in which the participant’s entire account balance is not used to purchase this particular type of TSP annuity, the participant must sign the statement on the participant’s TSP withdrawal form that waives the spouse’s right to that type of TSP annuity. The spouse’s written consent must be notarized.
For a married FERS TSP participant who and who is requesting a total withdrawal from his or her traditional TSP account, the choice of a joint TSP annuity with a 50 percent survivor benefit, level payments and no cash refund feature may not be a financially wise choice, particularly for married FERS TSP participants in which both spouses are not in good health. To understand why, consider the following example:
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Howard, aged 62, is a married FERS employee who retired on March 31, 2025. His traditional TSP account balance is $1.25 million. Howard’s wife Catherine is age 59. Howard elects to withdraw his entire $1.25 million traditional TSP using a TSP annuity with a 50 percent survivor annuity, level payments and no cash refund option. Since Catherine is entitled to this type of joint life TSP annuity, her written and notarized consent is not required.
Using the TSP annuity calculator (https://www.tsp.gov/calculators/tsp-annuity-calculator/#panel-1), Howard finds out that his monthly TSP annuity amount is $7,908.28. This means that while Howard and Catherine are both alive, Howard will receive $7,908.28 per month, or $94,899.36 per year. There are no annual increases in the annuity payments. Consider the following “scenarios”:
Scenario #1: After three years of receiving monthly annuity payments of $7,908.28, Howard dies. Starting the month after Howard dies, Catherine receives a 50 percent TSP annuity equal to 50 percent of $7,908.28, or $3,954.14 per month ($47,449.68 per year). Howard died at age 65. Catherine is aged 62. Catherine dies twelve years later at the age of 74. No more annuity payments are made. How much of the original $1.25 million is left?
| Annuitant/Joint Annuitant |
Payments Received |
|
| Howard/Catherine | 3 years x $94,899.36 per year = $284,698.08 | |
| Catherine | +12 years x $47,449.68 per year = $569,396.16 | |
| Total Payments Received $854,094.24 | ||
Amount invested in TSP annuity = $1.25 million
$1,250,000 invested less $854,094.24 (payments received) equals $395,905.76 remaining.
What are the conclusions from the two scenarios?
Scenario #2: After ten years of receiving monthly annuity payments of $7,908.28, Catherine dies. Howard continues to receive a monthly payment equal to 50 percent of $7,908.28, or $3,954.14. Howard is aged 72. He dies ten years later at age 82. No more annuity payments are made. How much of the original $1.25 million is left?
| Annuitant/Joint Annuitant |
Payments Received |
| Howard/Catherine | 10 years x $94,899.36 per year = $946,993.60 |
| Howard | + 10 years x $47,449.68 per year = $474,496.80 |
| Total Payments Received $1,421,490.40 | |
Amount invested in TSP annuity = $1.25 million
$1,250,000 invested less $1,421,490.40 (payments received) equals $0 remaining.
- Under the terms of a TSP joint annuity with a 50 percent survivor benefit, it makes no difference who dies first – the TSP participant or the TSP participant’s spouse - the surviving spouse receives a 50 percent survivor annuity.
- Any funds remaining in the annuity at the death of the second annuitant will be kept by the annuity company. This is because there is no “cash refund” option. In the first “scenario”, at the time of Catherine’s death (second spouse to die), a total of $854,094.24 in TSP annuity payments were made. That means that with the initial investment of $1.25 million (that is the amount Howard used to purchase the TSP annuity), $1.250,000 less $854,094.24 or $395,905.76 was not paid. Since there is no “cash refund” (beneficiary) option associated with this type of TSP annuity, the insurance company (the annuity provider) keeps the $395,905.76.
- If one or both annuitants live long enough, and the full original amount invested in the annuity (in this case, $1.25 million) has been paid out, annuity payments will continue. In this example, $94,899.36 per year will be paid annually to Howard and Catherine are alive if both are alive. If either Howard or Catherine dies, then $47,449.68 per year will be paid to the survivor annuitant until that spouse dies.
- Married FERS TSP participants are advised to be fully aware of the consequences resulting of electing a 50 percent joint annuity, no cash refund, level payment, default option. This is especially important for those married TSP participants in which both spouses are not in the best of health and have shorter than average life expectancies.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
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Ed Zurndorfer, EA, ATA, CFP®, CLU®, ChFC®, CEBS®, ChFEBC℠: Federal Employee Benefits Expert
A former career Federal employee, Ed has published a staggering 1,200+ separate articles on Federal Benefits and Retirement!
Just “Google” his name, and you are likely to find a plethora of sites that contain his writings. Drawn to its mission to reach, teach
and serve Feds, Serving Those Who Serve is the only financial planning practice with which Ed has chosen to affiliate in over
20 years teaching. In addition to conducting Federal Benefits seminars for Serving Those Who Serve, you can find Ed’s
writings here on our blog in the FedZone, and on Fed-Soup, MyFederalRetirement, FederalNews Radio and NITP.
He is a member of the Maryland Society of Accountants, the National Association of Enrolled Agents, the International Society of Certified Employee Benefits Specialists, the Financial Planning Association, the National Association of Health Underwriters,
and the Society of Financial Service Professionals. Since 1999, Ed has taught many thousands of Federal employees about
their benefits, in person and at Federal agencies all over the country. Ed is a true national treasure.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.