Federal Employee Survivor Benefits – FAQ
As a federal employee, you’ll enjoy numerous benefits that include retirement savings and pensions as well as health, life, and long-term care insurance. It’s important to also plan for how your benefits will be allocated to your surviving spouse or children upon your death. If you plan wisely, you can leave your loved ones the gift of security. Below, we answer some of the most frequently asked questions about Federal Employee Survivor Benefits.
How does my Thrift Savings Plan benefit survivors?
When you die, your Thrift Savings Plan (TSP) account will pass to your designated beneficiary. You will need to name any beneficiary on a TSP-3 Beneficiary Election form. Your spouse will need to keep the account open for use in retirement with the same rules and benefits you originally had. Other beneficiaries like children or grandchildren will have to close the account and transfer those funds into an IRA. Adult children must deplete the IRA by the end of the 10th year following the passing of their parent. That 10-year clock doesn’t start until children turn 18. If a beneficiary is not identified, the TSP account will be closed and any funds will be given to the first person in line in the standard order of precedence: first is the surviving spouse followed by children and then parents.
What are my FERS Survivor Benefits?
The Federal Employee Retirement System (FERS) pays out a pension upon retirement. This annuity provides an annual payment of a specified percentage of your most recent salary, dependent on your age and years of service in a federal job. Three types of survivor benefits are connected to your FERS account, and each come with different guidelines:
- Basic Death Benefit
The surviving spouse of a FERS employee is eligible to receive a lump-sum death benefit of 50% of the deceased’s current salary plus a one-time payment of $34,991 (this is the approved amount for 2021.) To qualify for this benefit, you must have a minimum 18 months of eligible service and 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 (even if the child is born after your death.) These requirements are waived if your death is the result of an accident.
- Survivor Annuity
The surviving spouse is eligible for an annual benefit based on the deceased’s pension schedule if he or she meets the requirements above and the deceased federal employee has at least 10 years of creditable service. This benefit is 50% of the federal employee’s annual pension with no reduction for age made if the employee died before retiring. The amount is adjusted for inflation every year. The survivor annuity can also be paid to children of the deceased if the federal employee had 18 months of creditable service. To qualify, any eligible children must meet the following criteria: they are not married, they are claimed as dependents, and they are under age 18 or under age 22 if attending college full time. The age requirement is waived for unmarried, disabled dependents if the certified disability occurred before age 18. Children’s benefits, however, are reduced by the amount of Social Security survivor’s benefits and in many cases cancels out the FERS benefits.
- Lump-Sum Benefit
If no one is eligible for survivor annuity based on the criteria above, survivors are entitled to a refund of all funds that were contributed to FERS during the deceased’s service in addition to interest. In this case, the lump-sum benefit is paid to the designated beneficiary. If no beneficiary is designated, the money is paid to the surviving spouse, then to children if there is no surviving spouse.
How do my FEGLI Benefits work?
Federal Employee Group Life Insurance (FEGLI) is an additional benefit that offers life insurance to federal employees. These are straightforward benefits designed for payout when a federal employee dies. All funds are distributed to the designated beneficiary upon your death. If no beneficiary is named, funds are given first to the surviving spouse, next to surviving children, then to surviving grandchildren, and finally to surviving parents of the deceased.
Can my survivors receive FEHB Benefits?
The Federal Employees Health Benefits (FEHB) program is the health insurance plan for federal employees and their family members. After a federal employee dies, surviving family members covered under the Self and Family Plan can continue their coverage as long as they are eligible for a FERS Survivor Annuity. If you have a Self Plus One Plan, your designated family member can continue coverage if they meet the same requirements. If you have a Self Only FEHB Plan, then there are no survivor benefits for healthcare, however, your spouse and children may qualify for a Temporary Continuation of Coverage (TCC).
What does Social Security provide to survivors?
To be eligible for Social Security survivor benefits, you will need to have earned a specified number of work credits based on your age at the time of your death. A surviving spouse may be eligible for reduced benefits as early as age 60 and for full benefits if they have reached their full retirement age. They can also switch to their own Social Security retirement benefits when they reach retirement age, but the survivor benefits would stop. If your surviving spouse cares for children under 18, he or she does not have to wait for the survivor benefits. Your children are also eligible for survivor benefits if they are under 18 (or under 19 if still in high school). Disabled children may receive benefits until age 22. It’s important to note that these benefits will reduce or even eliminate FERS survivor annuities for children.
At Federal Educators, we can help you better understand your federal benefits and make a plan that best supports you. Give us a call and request your free analysis at 866-226-8160.
