Inheriting TSP from spouse

[Midway]

My spouse and I each have a TSP account. We have it set up that when one of us dies, the other inherits. It is my understanding that we will be able to combine the accounts at that point. Does anyone know if the RMD requirements will be based on the survivors numbers, the deceased, or a combination?

[Aitrus]

It's based on whomever has ownership of the money. If both you reach your RMD before your spouse (and you're both still alive), then you have to start pulling. Same in reverse if the spouse hits RMD first before you.

If one dies, the accounts become the property of the survivor, and distributions are based on that person's RMD. If that person is already in RMD years, the newly acquired account starts getting withdrawn just like the primary account (not sure if it starts immediately, on the next payment schedule selected by the new owner, or on the next birthday).

If the survivor is not yet in RMD years but the other person already was when they passed, then the payments stop because the new owner is no longer in RMD years yet.

Some strategy: I'm not sure if the two accounts can be kept separate, but I believe they can. The owner's own account, and the account that's classified as the survivor's account.

Example: The owner might be able to set monthly withdrawals, and the survivor account to yearly payments. This would make one account the monthly paycheck, and the other gets pulled to meet IRS rules regarding RMD, and serves as a yearly injection of funds into the bank account.

[alpe9942]

RMD’s only apply to traditional TSP funds, not Roth TSP funds.

[snaffu]

Speaking of RMD's, how often are the disbursements? Monthly, Quarterly? or depends on election.. Thx

[jdeacon]

Essentially it is up to you to decide the amounts and frequency. Keep in mind processing times and your annual RMD date restrictions

[evilanne]

I think it is usually most beneficial to you take the option to treat it as your own and it would be based on the spouse's age. If you treat it as an inherited IRA, you have the new 10 year rule to consider...it might be beneficial in cases when spouse is under 59.5 and needs the income sooner but if the decedent is already taking RMDs their might also be an RMD each year (shouldn't be an issue if you withdraw more each year.)