Survivor benefits are difficult to understand and frankly, may not be thought of very often. However, that could be a mistake. Not choosing a beneficiary in the case that something happens to you may cause delays in the distribution of benefits. This could cause undue hardships to loved ones that you leave behind. This guide explains which survivor benefits are available, the eligibility requirements, and the amounts your loved ones can expect to receive.
For current federal employees, survivor benefits are automatic. In the case that you die while employed, your beneficiaries will receive the benefits. On the other hand, for retirees, benefits must be elected at retirement. Children’s benefits are automatic in all cases.
Basic Employee Death Benefit
Surviving Spouse
If an employee dies with at least 18 months of creditable civilian service, a survivor annuity may be paid out if:
- The surviving spouse was married to the deceased for at least 9 months.
- The death was accidental.
- There was a child born of the marriage to the employee.
Beneficiaries will receive a Basic Employee Death Benefit equal to 50 percent of the employee’s final salary (or High-3 salary, whichever is greater) plus $32,326.58. This number is as of December 1, 2015, and is based on COLA’s.
This payment may be taken as a lump sum, monthly installments over three years, or be transferred to an IRA.
Former Spouse
The Basic Death Benefit may be payable to a former spouse, if there is a qualifying court order on file at OPM, provided that the marriage was at least 9 months in length and the surviving spouse did not remarry before the age of 55.
Survivor Annuity (Monthly Payments)
This benefit is the longest lasting of the survivor benefits and it is automatic for employees. It can be taken as either a full (50 percent of the retiree’s calculated annuity) or a partial (25 percent of the retiree’s annuity). This payment is made monthly and is increased with COLA’s annually. This benefit is required for the surviving spouse to be eligible to maintain health insurance coverage under FEHB. It is paid until the spouse dies or remarries (under the age of 55—unless the prior marriage lasted 30 years). A new spouse can be added for this benefit after retirement at an additional cost if the 9-month requirement is met.
Surviving Spouse
If a FERS employee dies, recurring monthly payments may be made to the surviving spouse if the deceased employee completed at least 10 years of creditable service, 18 months of which must be civilian. To qualify, the surviving spouse must have been married to the employee for at least 9 months. If the death occurred before that 9-month mark, benefits may still be payable if,
- The death was accidental.
- There was a child born of the marriage.
Former Spouse
Monthly payments can only be made provided there is a court order stating so and the marriage met the 9-month requirement.
When Benefits Begin
- Widow/Widower—survivor annuity begins on the day after the employee/retiree’s death
- Former Spouse—based on the court order; this begins to accrue on whichever day of the following is later: 1. The day after the employee/retiree’s death. 2. The first day of the second month after OPM receives a certified copy of the court order along with any necessary supporting documentation.
- Children—the survivor annuity begins to accrue on the day after the employee/retiree’s death.
Children’s Benefits
Any unmarried children that are dependent upon benefits may receive them until they reach age 18, marry, or die. Benefits can continue after the age of 18 so long as the child is a full-time student at a recognized school. In this case, benefits would stop at age 22. A child is considered dependent if there is proof the deceased made regular and substantial contributions to the child’s support.
This amount is reduced by the amount of Social Security paid. In most cases, the amount of the Social Security benefit will be higher and the employee benefit will not apply. The SS benefits end at the age of 18 so the employee benefit could be paid after that provided the child is in school.
FEGLI
This is potentially the highest lump sum death benefit available for beneficiaries. Depending upon the selected benefits, this could include an amount of the current salary (rounded up plus $2,000), $10,000 Option A, and a salary multiplied up to 5 for Option B. The Basic amount is increased for younger employees, and the payment is tax-free.
TSP
A surviving spouse beneficiary may choose to roll an inherited TSP balance into their own account if they are a federal employee. If they are not, they can still maintain the account by being a beneficiary participant on the TSP. In any other scenario, that person must transfer the TSP to an outside inherited account or take direct distributions. Once in this account, the beneficiaries can take the money out within five years or choose a stretch option. This option is available over their lifetime and only available to a surviving spouse. The subsequent beneficiary can’t choose this option; however, they can maintain that option.
Lump Sum Payment
If there is a lack of beneficiaries or an insufficient amount of time to earn an annuity, then that estate will receive a refund on all contributions made. A designated beneficiary will receive a prorated amount earned on either a final paycheck for that employee or a final annuity payment for a retiree.
Understanding Your Options
Obviously, there are many options to choose from. Some of these benefits need to be elected after retirement and some do not. Knowing the differences and requirements for each can help make life easier on loved ones.
Additionally, if you are a federal worker who has been injured and can no longer perform your job duties, these benefit elections may apply to you too. If you are eligible or think you may be, for a medical disability retirement, please give us a call at 877-226-2723, or fill out this inquiry form. We can schedule you for a FREE consultation and discuss your specific situation further.
