Federal Employee Estate Planning
- Update your beneficiary forms – They override your will and ensure your assets go to the right people.
- Designate beneficiaries for your TSP account to avoid probate and streamline the inheritance process.
- Weigh the benefits of partial or full survivor annuities to provide secure income for your spouse.
- Keep organized records of your federal benefits to simplify the estate process for your heirs.
Protect Your Federal Benefits for Future Generations
As a federal employee, you’ve likely devoted years to carefully building your financial security. As you prepare to leave public service, you’re wondering how to seamlessly pass on your assets to your loved ones.
Federal employee estate planning can be more complex due to unique benefit structures. A well-thought out plan is crucial to ensuring your hard-earned benefits—such as your Thrift Savings Plan (TSP), Federal Employee Retirement System (FERS) pension, and life insurance—are passed on efficiently to your loved ones.
Beneficiary Designations: Avoid Common Mistakes
Beneficiary designations override instructions in a will, even for federal benefits like TSP accounts, life insurance, and survivor annuities. As such, one of the simplest yet most essential steps you can take is to regularly review your beneficiary designations. It’s crucial to ensure your beneficiary designations are up-to-date and reflect your current wishes after life events, such as marriage, divorce, or the birth of a child. Otherwise, you should plan to review all of your beneficiary designations at least every three years.
How to Handle a Thrift Savings Plan (TSP) Account After Death
Your TSP account is a vital retirement resource and a significant part of your estate. Federal employees have unique rules for handling TSP accounts after death, and it’s important to plan for various scenarios in advance. Designating a primary and contingent beneficiary helps streamline the inheritance process and bypass probate, reducing the burden on loved ones. For spouses inheriting TSP funds, the option to retain the account in the TSP can provide tax deferral benefits, while non-spouse beneficiaries must generally transfer the funds to an inherited IRA, which has different tax implications. Talk with your tax preparer and financial advisor when making these decisions.
Maximize FERS Survivor Benefits
FERS survivor benefits offer valuable income protection for spouses and eligible family members. However, designating and planning survivor benefits requires thoughtful consideration. Be sure you understand options for partial or full survivor annuities when you elect survivor benefits and consider balancing the reduced retirement income during your lifetime versus the long-term financial security provided to your beneficiaries. You should also carefully coordinate these decisions with Social Security benefits and other retirement income sources to optimize the survivor benefit’s value.
Stay Organized to Streamline Federal Assets in Estate Plans
Simplify the inheritance process for your federal benefits by ensuring beneficiary designations, retirement accounts, and insurance benefits are well-organized will help your loved ones manage the estate. Consider consolidating information into a secure document that includes account details, benefit statements, and contact information for advisors or attorneys. This preparation can reduce stress for your family during difficult times and ensure that each benefit reaches your intended beneficiaries.
Why Work with a Chartered Federal Employee Benefits ConsultantSM?
Federal retirement benefits are exceptionally complicated, with multiple programs each governed by complex rules. Working with someone who knows the specifics of federal employee benefits can have a dramatic impact on your future.
Two of Cornerstone’s Wealth Advisors hold the Chartered Federal Employee Benefits ConsultantSM designation – Gordon Wollman, Cornerstone Founder and Raymond James Wealth Advisor, and Jill Mollner, Branch Manager and Raymond James Wealth Advisor. Their insight and specialized knowledge help ensure our team manages the unique needs of federal employees accurately and effectively.
How to Schedule a Consultation
Recent market movements remind us how uncertainty can impact financial security, not just in investments but in everyday life. Right now, many of our neighbors and friends in federal positions are facing unexpected job losses.
We know how overwhelming it can be to suddenly face a major financial decision about your benefits, pension, and future. You don’t have to figure this out alone.
If you or someone you know is a federal employee impacted by recent cuts, we’re offering complimentary, no-obligation financial consultations to help navigate this transition with confidence.
We’re here to listen, answer questions, and help you build a plan that provides clarity and stability.
📞 Call: 605-357-8553
📧 Email: cfsteam@mycfsgroup.com