Rights for retirees spouses are built into the Thrift Savings Plan. But did you know that depending on if the former employee is under FERS or CSRS coverage, those spousal rights can vary?
Spousal annuity for FERS subscribers will be predefined by a specific amount; for example, a fifty percent survivor benefit on top of a joint life plan. That is unless the spouse decides to waive this right. MetLife, who offers the TSP, currently provides the retiree spouses with several different choices, although those choices are somewhat limiting in their appeal. With the TSP contract in dispute this year, more options may soon be presented. As it stands, annuity withdrawals are among the least popular TSP options, therefore meaning most spouses choose the waive their right to it.
But please make sure you discuss this with your spouse first, before determining what they waive and do not. There are alternatives available, and your spouse may very well choose to go with one of those.
CSRS subscribers have even fewer options in regards to spousal rights. The retiree can make all the changes for their partner in the TSP without their informed knowledge, meaning that once the retiree begins withdrawing from the CSRS, the spouse will have no more rights to determine what is to be done with the TSP account.
Why this discrepancy between these two plans? It has to do with a couple of factors. Firstly, when the rules were first put into action, everyone who worked for the federal government was placed under the CSRS system. It wasn’t until FERS was set up that spouses could have a say as to what would happen with their partner’s TSP accounts. Secondly, the TSP is a bigger percentage of income for the retiree’s under FERS. That includes total household. While CSRS workers may retire with TSP balances that are not very large, the protection that FERS offers spouses gives the retirees a greater peace of mind.