Survivorship Rules for Federal Retirees
Survivorship Rules for Federal Retirees
As you prepare for retirement, it’s important to understand all the amazing benefits that federal retirees receive. But what happens to those benefits when you die? Though this may be a difficult subject to think about, if you plan carefully now, your family will be left with seamless security. The Federal Educators team looks at how survivorship rules work for federal retirees below.
FEGLI benefits
The Federal Employee Group Life Insurance benefit is an added benefit that provides life insurance to federal employees. These funds are distributed to a designated beneficiary upon the employee’s death. If there is no named beneficiary, the funds are given to the surviving spouse, then children, then grandchildren, and finally, to the surviving parents of the deceased.
FEHB benefits
A federal employee and their family can enroll in a health insurance plan under the Federal Employees Health Benefits program. When the 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. Under the Self Plus One plan, only a designated family member can continue coverage. If you carried the Self Only FEHB plan, then there are no survivor benefits available. However, your spouse and children may qualify for a Temporary Continuation of Coverage (TCC).
Thrift Savings Plan (TSP) benefits
Federal employees use the Thrift Savings Plan (TSP) as a defined contribution retirement account. It has similar basic tax advantages to the 401(k) in the private sector, but federal employees are also eligible to receive matching funds from the agency they are working for at the time. Upon death, your TSP account will be passed to a designated beneficiary, which must be noted on a TSP-3 Beneficiary Election form. If you choose to name your spouse, they may keep the account open and use it for retirement just as you would have. If you name children or grandchildren, the account must be closed and transferred into an IRA. If no beneficiary is named, the account will be closed, and the funds will be given to the first person in the order of precedence.
FERS benefits
Designed to pay out as a pension upon retirement, the Federal Employee Retirement System (FERS) is a defined benefit plan. There are three types of survivorship benefits connected to your FERS account: Basic Death benefit, Survivor Annuity, and Lump Sum benefit. Each has its own guidelines and eligibility requirements.
Feeling overwhelmed? Federal Educators can help you prepare for retirement with the perfect combination of educational resources and a knowledgeable team. Call our Tampa office at (813) 755-7037 or request a complimentary benefit analysis today.