Inherited IRA versus TSP

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Shouldn’t the surviving spouse roll all their TSP funds into an IRA prior to their death in order for their beneficiaries to place their inheritance into an Inherited IRA without being taxed at the full rate on the lump sum? From my understanding of current TSP regulations, transfers from a beneficiary participant account to an inherited IRA are not tax-deferred.

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Posted by (Questions: 1, Answers: 0)
Asked on October 31, 2018 3:03 pm
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You’re correct about current TSP rules. If tax deferral for the beneficiaries of the TSP Beneficiary Participant is an important consideration, then rolling the TSP into an IRA would make sense.
Generally, IRA rules are more flexible that those of the TSP. This will still be the case after the implementation of the TSP Modernization Act in October 2019.

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Posted by (Questions: 0, Answers: 61)
Answered on November 1, 2018 9:39 pm