Federal Employees News Digest
Informed Investor: Understanding the federal government’s survivor benefits - Part II
- By Edward A. Zurndorfer
- Jun 13, 2016
This second in a series of columns discussing survivor benefits for families of deceased federal employees and annuitants examines survivor benefits for surviving spouses of deceased employees covered by CSRS Offset. Note that CSRS Offset employees contribute both to the CSRS Retirement and Disability Fund and to Social Security. CSRS Offset employees contribute 0.8 percent of their salary to the CSRS Retirement and Disability Fund, and 6.2 percent to Social Security (FICA tax).
The survivor benefits to the spouse of a deceased CSRS Offset employee are in general the same as the benefits payable upon the death of an employee with full CSRS coverage. This is the case until the surviving spouse becomes eligible for Social Security survivor benefits. Before discussing what happens at that point, it is important to review the survivor annuity benefit for a surviving spouse of a deceased CSRS employee.
In order for a CSRS survivor annuity to be paid, a deceased CSRS Offset employee must have: (1) completed at least 18 months of creditable federal (civilian) service; and (2) died while subject to CSRS deductions. “Death in service’ means the employee dies before the commencing date of the CSRS annuity.
For a CSRS survivor annuity to be paid to a spouse, whether a same-sex spouse or an opposite-sex spouse of a deceased CSRS Offset employee, the surviving spouse and the employee must have been married for at least nine months, or a child was born of the marriage.
Also, there can be no court order awarding the entire CSRS survivor annuity to a former spouse. If a former spouse was awarded a portion of the survivor annuity, then the surviving spouse could receive the remainder. If the former spouse loses entitlement to the survivor annuity due to death or remarriage before age 55, then the surviving spouse is eligible to receive the full survivor annuity.
Amount of CSRS survivor annuity benefits to a spouse. A spousal survivor CSRS annuity is equal to 55 percent of the annuity computed as if the employee had retired on a CSRS disability retirement as of the date of death. In particular, a surviving spouse receives 55 percent of the higher of a guaranteed minimum, equal to the lesser of:
• 40 percent of the deceased employee’s high-three average salary; and
• the regular CSRS annuity obtained after increasing the deceased employee’s length of service and the date he or she would have been age 60.
The aforementioned survivor annuity calculation is applicable until the surviving spouse becomes eligible for Social Security survivor benefits.
When Social Security spousal survivor benefits are payable, then:
• The surviving spouse receives a full CSRS survivor annuity until he or she becomes eligible for Social Security benefits. This normally occurs at age 60 unless the surviving spouse is disabled and age 50 or has a child younger than age 16 in care; and
• When the surviving spouse becomes entitled to Social Security widow/widower benefits, the CSRS survivor annuity is reduced (offset) by the amount of the survivor’s Social Security benefit attributable to the period the deceased employee was under CSRS Offset.
The CSRS annuity reduction (offset) begins on the first day of the month during which a survivor annuitant is entitled to: (1) a CSRS survivor annuity under CSRS Offset; and (2) is entitled to Social Security survivor benefits upon proper application.
The reduction to a CSRS survivor annuity will cease on the date that a surviving spouse loses Social Security survivor benefits for any of the following reasons: (1) the surviving spouse became eligible for his or her own Social Security benefit and that benefit exceeds the Social Security survivor benefit; (2) the surviving spouse remarries before age 60; or (3) the Social Security survivor benefit stops because a minor child reaches age 16 and the surviving spouse is under age 60.
The following example illustrates a CSRS Offset survivor annuity:
Joanna, a CSRS Offset employee, dies at age 58. Her widower, Michael, is age 59. Joanna’s computed CSRS annuity is $72,000 per year, or $6,000 per month. Michael is entitled to a full survivor annuity equal to 55% of $72,000, or $39,600 per year, or $3,300 per month. When Michael, with no children under 16, becomes age 60, his $3,300 monthly survivor annuity will be reduced (offset) by $750, the amount of Social Security widower benefit that Joanna earned as a CSRS Offset employee. When Michael becomes age 66, his full retirement age, he is entitled to his own Social Security benefit of $2,000 per month, based on his Social Security earnings during his working career. Once Michael starts receiving his Social Security monthly benefit of $2,000, the $750 Social Security offset amount will cease. Michael will then revert back to a full CSRS survivor annuity of $3,300 per month, as adjusted by cost-of-living adjustments.