A Take on TSP Accounts

(This article by Retirees Department Director Judy Beard was prepared for the March/April 2009 issue of The American Postal Worker magazine.)

Retired postal workers who voluntarily contributed to a TSP while employed did so to accumulate tax-deferred savings: During retirement, there is no federal income tax on these savings as long as account-holders comply with TSP Withdrawal Rules.

No one envisioned the current economic crisis, however, which has hit retirees’ accumulated funds along with everyone else’s.

One attempt to address the nation’s financial woes was the passage of H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008, which includes a suspension for 2009 of the rule that requires retirees at age 70 and six months to make a withdrawal from their TSP account. (The withdrawals would have been taxed.) The bill became law on Dec. 23, but it should be viewed as nothing more than temporary relief.

Taking Into Account

All TSP account-holders should review their paperwork and consider how best to distribute their funds. Begin a TSP review by having your account number ready and calling 800-968-3477, or by logging in at www.tsp.gov. Your assigned TSP account number is permanent, but you can customize your Web-site user-ID and change your Personal Identification Number (PIN) once you have signed up online.

With the stock market fluctuation likely to continue, it is wise to check your TSP account balance to determine whether you need to diversify your account. You may want to consult a financial advisor to help you consider both risk and return.

The TSP Web site offers details about market performances, and accounts are updated at the end of each business day. Again, this information is available over the phone or online. TSP also will provide quarterly statements upon request, as well as additional information concerning your account.

Every TSP account needs a beneficiary. If you cannot remember the name(s) you submitted, you can find the name of your primary beneficiary on the annual statement mailed to you at the beginning of the year. Update this information as necessary. Remember, a designation in a will or trust is not a substitute for the designation of a beneficiary for a TSP account.