[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR1651.2]

[Page 281-282]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
         CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
 
PART 1651_DEATH BENEFITS--Table of Contents
 
Sec. 1651.2  Entitlement to funds in a deceased participant's account.

    (a) Death benefits. Except as provided in paragraph (b) of this 
section, the account balance of a deceased participant will be paid as a 
death benefit to the individual or individuals surviving the 
participant, in the following order of precedence:
    (1) To the beneficiary or beneficiaries designated by the 
participant on the TSP designation of beneficiary form that has been 
properly completed and filed in accordance with Sec. 1651.3;
    (2) If there is no designated beneficiary, to the spouse of the 
participant in accordance with Sec. 1651.5;
    (3) If there are no beneficiaries or persons as described in 
paragraphs (a)(1) and (a)(2) of this section, to the child or children 
of the participant and descendants of deceased children by 
representation in accordance with Sec. 1651.6;
    (4) If there are no beneficiaries or persons as described in 
paragraphs (a)(1) through (a)(3) of this section, to the parents of the 
participant in equal shares or entirely to the surviving parent in 
accordance with Sec. 1651.7;
    (5) If there are no beneficiaries or persons as described in 
paragraphs (a)(1) through (a)(4) of this section, to the duly appointed 
executor or administrator of the estate of the participant in accordance 
with Sec. 1651.8; or
    (6) If there are no beneficiaries or persons as described in 
paragraphs (a)(1) through (a)(5) of this section, to the next of kin of 
the participant who is or are entitled under the laws of the state of 
the participant's domicile on the date of the participant's death in 
accordance with Sec. 1651.9.
    (b) TSP withdrawals. If the TSP processes a notice that a 
participant has died, it will cancel any pending request by the 
participant to withdraw his or her account. The TSP will also cancel an 
annuity purchase made on or after the participant's date of death but 
before annuity payments have begun, and the annuity vendor will return 
the funds to the TSP. The funds designated by the participant for the 
withdrawal will be paid as a death benefit in accordance with paragraph 
(a) of this section, unless the participant elected to withdrawal his or 
her account in the form of an annuity, in which case the funds 
designated for the purchase of the annuity will be paid as described 
below:
    (1) If the participant requested a single life annuity with no cash 
refund or 10-year certain feature, the TSP will

[[Page 282]]

pay the funds as a death benefit in accordance with paragraph (a) of 
this section.
    (2) If the participant requested a single life annuity with a cash 
refund or 10-year certain feature, the TSP will pay the funds as a death 
benefit to the beneficiary or beneficiaries designated by the 
participant on the annuity portion of the TSP withdrawal request form, 
or as a death benefit in accordance with paragraph (a) of this section 
if no beneficiary designated on the withdrawal request survives the 
participant.
    (3) If the participant requested a joint life annuity without 
additional features, the TSP will pay the funds as a death benefit to 
the joint life annuitant if he or she survives the participant, or as a 
death benefit in accordance with paragraph (a) of this section if the 
joint life annuitant does not survive the participant.
    (4) If the participant requested a joint life annuity with a cash 
refund or 10-year certain feature, the TSP will pay the funds as a death 
benefit to the joint life annuitant if he or she survives the 
participant, or as a death benefit to the beneficiary or beneficiaries 
designated by the participant on the annuity portion of the TSP 
withdrawal request form if the joint life annuitant does not survive the 
participant, or as a death benefit in accordance with paragraph (a) of 
this section if neither the joint life annuitant nor any designated 
beneficiary survives the participant.
    (5) If a participant dies after annuity payments have begun, the 
annuity vendor will make or stop the payments in accordance with the 
annuity method selected.
    (c) TSP loans. If the TSP processes a notice that a participant has 
died, any pending loan disbursement will be cancelled and the funds 
designated for the loan will be distributed as a death benefit in 
accordance with paragraph (a) of this section. If a TSP loan has been 
disbursed, but the check has not been negotiated (or an electronic funds 
transfer (EFT) has been returned), the loan proceeds will be used to pay 
off the loan. If the loan check has been negotiated (or the EFT has been 
processed), the funds cannot be returned to the TSP and the TSP will 
declare the loan balance as a taxable distribution in accordance with 5 
CFR 1655.15.
    (d) Investment of a TSP account upon notice of death. If a 
participant dies with any portion of his or her TSP account in a TSP 
Fund other than the G Fund, the TSP will transfer the entire account 
into the G Fund after it processes a notice that the participant has 
died, or a death code from the participant's employing agency reporting 
the participant's death. The account will accrue earnings at the G Fund 
rate in accordance with 5 CFR part 1645 until it is paid out under this 
part.

[68 FR 35509, June 13, 2003, as amended at 70 FR 32215, June 1, 2005]