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While continuing payments to survivors upon the death of a retiree receive the majority of attention, survivorship benefits are also available if a current employee passes away. However, there are several additional eligibility requirements.
Your spouse would be eligible for a survivor annuity if you were an employee who was married at the time of your death and had at least 18 months of creditable civilian service. That annuity will be paid to you based on a portion of the annuity you were eligible for on the day of your death. This is 55% for CSRS survivors and 50% for Federal Employee Retirement System (FERS).
Note: A FERS employee’s eligible surviving spouse is entitled to a basic death benefit and 50% of the employee’s final salary (or high-3 if that amount is higher). That death benefit is around $37,000 in 2022.
The beneficiary(s) on your enrollment could continue your coverage if you were enrolled in the self plus one or self and family choices of the Federal Employees Health Benefits program at the time of your death. Any eligible survivors would be out of luck if you weren’t enrolled in the program (or if you were, but solely in the self-only option).
Benefits for FERS Survivors
A pension is given out upon retirement as part of the FERS defined benefit. This annuity, based on your age and the number of years you’ve worked for the federal government, offers a yearly payment equal to a set proportion of your most recent wage.
Your FERS account offers three types of survivor benefits, each with distinct rules.
Fundamental Death Benefit: When a FERS employee passes away, the surviving spouse is entitled to a lump-sum death benefit equivalent to $34,991 plus 50% of the deceased’s final income. (Note that while this is the approved sum for 2021, inflation is considered yearly.)
To be eligible, your surviving spouse must have been married to you for at least nine months or be the parent of a child born during your marriage.
Insurer Annuity: The surviving spouse is also qualified for an annual payout based on the deceased’s pension schedule if they match the qualifying criteria listed above and the deceased federal employee had ten years of creditable service. This benefit would equal 50% of their annual pension, with no age-related reductions if the federal employee passed away before retirement. Each year, this sum is adjusted for inflation.
The benefits and government portion of the contributions are the same for an FEHB eligible survivor as they are for a current or retired employee participating in the same plan. The premiums would typically be subtracted from your survivor’s annuity payment, and they can also pay the premiums directly to OPM if the annuity is insufficient to cover them.
Any FEGLI benefits will be given to the person or people you designated on the Standard Form 2823, Designation of Beneficiary, if you enrolled in the Federal Employees’ Group Life Insurance program and have one on file. If you don’t, the money will be dispersed following the usual hierarchy of importance:
• First to a living spouse;
• Second, if there is no spouse, to your children, with the share of any deceased child being split among that child’s descendants, if any;
• Third, if none of the aforementioned apply, to your parents equally or in full to the lone survivor;
• Fourth, if none of the aforementioned, to your estate’s executor or administrator; and
• Sixth, if none of the aforementioned apply to your relatives as decided by the state’s legal system where you resided.
When you pass away, the Federal Long-Term Care Insurance Program will continue to cover your spouse or any other qualified family members as long as the premiums are paid. However, a family member who is receiving a survivor annuity is the only one who can sign up for the FLTCIP program for the first time.
• Any member of your family who previously had coverage via your Federal Dental and Vision Insurance Program enrollment is eligible to keep it. Similarly, anyone receiving a survivor annuity is also eligible to enroll.
• Any money in your TSP account at the time of your death will be distributed according to the above-mentioned standard order of priority unless you submitted a valid TSP-3, Beneficiary Election form.
• The beneficiary, if it’s your surviving spouse, can maintain the account and enjoy the same administration and withdrawal privileges as you did. Any other beneficiaries, however, are required to close the account.
• They can do that by either taking a withdrawal or transferring the funds to an IRA or another type of eligible retirement savings vehicle.
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementiong a sound plan for your retirement. We are commited to helping you achieve your goals. Visit us at M. Dutton and Assoiciates.COM. Tel. 212-951-7376: email: [email protected]