by George Ray

Most Federal employees that I talk with during benefits briefings are aware that their spouse has a right to receive a survivor annuity from their pension after they’ve passed away. This is a very valuable benefit which most Feds choose to accept at the time they retire. But fewer know that their spouses also have rights to the money in their Thrift Savings Plan (TSP) account. Let’s clarify your spouse’s rights to the money in your TSP.

When the Federal Employees’ Retirement System Act of 1986 was passed, it established the Thrift Savings Plan which provides similar types of savings and tax benefits that many private corporations offer their employees under 401(k) plans. Because you are earning compensation from your job during your marriage, and deferring the receipt of a portion of it into the TSP, your spouse has an ownership right in your contributions, earnings, and any money contributed by your agency. It’s considered ‘marital property’ since it was earned during your marriage. By the way, the TSP recognizes same-sex spouses and common law marriages that were made in a jurisdiction that recognized those types of marriages. And, for TSP purposes, a spouse includes a separated spouse as well.

So, if you want to take a distribution of your funds inside of the TSP, the law says that your spouse needs to know about it – and may even need to agree that it’s OK since a portion of those funds also belong to him or her. The law provides that if you’re married and have a total account balance in your TSP of more than $3,500, your spouse is entitled to a ’prescribed’ survivor annuity based on the balance in your account. The prescribed annuity is a joint life annuity with a 50% survivor benefit, level payments for life, and no cash refund feature. If you choose any other withdrawal option or any combination of options, so that your entire account balance is not used to purchase the prescribed survivor annuity, your spouse must sign a statement waiving his or her right to that annuity – and it must be notarized.

The TSP offers many different distribution options for employees who are still working (including hardship withdrawals, loans, and age-based in-service withdrawals) and several options to access your money after retirement (including a full- or partial-withdrawal, monthly payments, or an annuity option.) But, if you are receiving any type of in-service distribution or any post-separation distribution other than turning your full account balance into an annuity, you will likely be dealing with the waiver requirements.

Are waiver requirements different for CSRS-covered and FERS-covered TSP participants?

Yes. Although the requirements are similar, FERS-covered participants must receive consent from their spouse in writing to take a loan or an in-service withdrawal while working, or a partial withdrawal after separating from service.

For those who are covered under the Civil Service Retirement System, the TSP has the responsibility of notifying your spouse of your withdrawal, but your spouse’s signature is not required. The notice simply informs your spouse that you’ve applied for a withdrawal or a loan from your TSP account. It doesn’t give your spouse a right to the money in your account, or reveal any personal information about you at the time you make the request. The table below summarizes these requirements.

Are there exceptions to a spouse’s rights?

Yes, as mentioned in the table above, under certain circumstances there are exceptions made to the spouse’s waiver requirements. This occurs if the whereabouts of your spouse are unknown (for FERS and CSRS participants), or if exceptional circumstances make it inappropriate for you to get your spouse’s signature (this is applicable to FERS participants and uniformed-services participants only).

If you are a married FERS participant and exceptional circumstances make it inappropriate to obtain your spouse’s signature, you must attach either a court order or a governmental agency determination issued by the appropriate department or division head explaining the exceptional circumstances. For example, a court order could indicate that you and your spouse have been maintaining separate residences with no financial relationship for three or more years; or indicate that your spouse abandoned you, but for religious or other compelling reasons, you chose not to divorce; or state that you may borrow money from or withdraw all or a portion of your TSP account notwithstanding the absence of your spouse’s signature. But, understand that just because you have a separation agreement, prenuptial agreement, a protective order, or a divorce petition doesn’t by itself support a claim of exceptional circumstances.

To get an exception approved for ‘unknown whereabouts’ you’ll need to attach appropriate documentation to your distribution request. This could mean that you’ll need:

a court order which states that the whereabouts of your spouse are unknown, OR
a police or governmental agency determination issued by the appropriate department or division head which states that the whereabouts of your spouse are unknown, OR
three statements, one from you and two from persons supporting your claim. Your statement must provide:

the full name(s) of your spouse;
clearly state that you are unable to locate your spouse;
state the last time you knew your spouse’s location;
explain why your spouse’s location is not known; and
describe in detail the efforts you have made to locate your spouse in the 90 days preceding your submission of the request and the results of those efforts.

The statements from the other persons must support your statement that you do not know your spouse’s location and describe the person’s knowledge of your efforts within the last 90 days to locate your spouse. Each statement must be signed and dated and must contain the following statement: I understand that a false statement or willful misrepresentation in this form is a violation of law that is punishable by a fine or imprisonment for as long as 5 years, or both (18 U.S.C. §1001).

How likely is it that you’ll get an exception due to ‘unknown whereabouts’? Not that likely actually. These days there are lots of ways to track down someone’s whereabouts using lots of different methods and databases that are available (Social Security, travel records, phone records, etc.) so unless they’re in the witness protection program, you (or someone you hire) will probably be able to find them. As Form TSP-16 explains, you’ll need to make every effort to locate them.

Have I ever had a question during a seminar from someone who wanted to know if they could get money from their account without their spouse knowing about it? Well, yes, it may have come up during a break:

“George, I have a question for you (speaking in a low voice and looking from side to side). I had a little problem at the casino, and I need to take a loan out of my TSP without the wife knowing about it, but a guy I work with said that the wife has to sign a form. Is that true?”

“Yes.”

“Is there any way around that? Maybe I could just sign the form for her.”

“The form has to be notarized. She’ll have to sign it in front of the notary and provide ID. And, you could be fined and put in prison for trying to get around the rules.”

“Oh. (silence for a moment.) Do you have any ideas that would help?”

“Yes. Maybe you should stay out of the casino.”