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Informed Investor: Understanding the federal government’s survivor benefits - Part VII

This seventh in a series of columns discussing survivor benefits examines survivor annuity benefits for spouses of deceased FERS annuitants. Topics discussed include eligibility requirements for a spousal survivor annuity, the cost to the annuitant for giving a survivor annuity, and the requirements for and calculation of the FERS annuity supplement survivor benefit.

This seventh in a series of columns discussing survivor benefits for families of deceased federal employees and annuitants examines survivor annuity benefits for surviving spouses of deceased FERS annuitants.

An individual is considered a FERS annuitant if he or she had been separated from federal service at the time of death and met all requirements to receive a FERS annuity. This includes FERS-covered employees who filed, or “deemed” to have filed, a retirement application prior to their death. Former employees who were entitled to an immediate “minimum retirement age plus 10” (MRA + 10) or “postponed” retirement at the time of separation from federal service are “deemed” to have filed an application for retirement and fulfill the definition of an annuitant.

A survivor annuity is payable to the spouse of a deceased FERS annuitant only if the annuitant elected a reduced annuity to provide a survivor benefit. To qualify as a surviving spouse of a deceased annuitant, the individual must have been married to the annuitant at the time of the annuitant’s death and meet one of the following requirements: (1) the surviving spouse and the annuitant must have been married for at least nine months while the annuitant was in federal service; or (2) a child was born from the marriage.

A court order awarding a former spouse a FERS survivor annuity prevents the Office of Personnel Management from paying the surviving spouse the portion of the survivor annuity awarded by the court order. But the surviving spouse remains eligible for the full survivor annuity if and when the former spouse loses eligibility for a survivor annuity.

The maximum survivor annuity is equal to 50 percent of the deceased FERS annuitant’s annuity before it is reduced by the cost of the survivor annuity. The survivor annuity may be 25 percent of the FERS annuitant’s unreduced annuity if the annuitant elected to provide a reduced survivor annuity. The following two examples illustrate:

Example 1. Michael, a FERS annuitant, retired from federal service in 2014. Michael elected a full survivor annuity for his wife Beth. At the time of his retirement, Michael’s FERS annuity was equal to $40,000. To give Beth a full survivor annuity, Michael’s FERS annuity is reduced by 10 percent of $40,000, or $4,000, to $36,000. When Michael died in 2016, Beth received a starting survivor annuity of 50 percent of $40,000, or $20,000.

Example 2. Same facts as Example 1 except that Michael gives Beth a partial survivor annuity of 25 percent. In that case, Michael’s FERS annuity is reduced by 5 percent of $40,000, or $2,000, to $38,000. Upon Michael’s death in 2016, Beth receives a starting survivor annuity of 25 percent of $40,000, or $10,000.

Cost-of-living adjustments given to FERS annuitants age 62 and older increase the spousal survivor annuity by the same percentage. Upon the death of the FERS annuitant, the survivor annuity will be eligible for future COLAs, even if the spouse is younger than age 62.

Spousal Annuity Supplement. To be eligible for the spousal FERS annuity supplement, the surviving spouse must be: (1) entitled to a spousal FERS survivor annuity; (2) under age 60; and (3) entitled to Social Security survivor benefits based on the deceased annuitant’s Social Security employment. Note that the surviving spouse’s own earned Social Security benefit is not considered in determining if the surviving spouse is eligible for the spousal annuity supplement. The deceased FERS annuitant must also have had at least five years of civilian service creditable under FERS.

The amount of the spousal annuity supplement is equal to the lesser of: (1) The amount by which the “assumed” CSRS survivor annuity exceeds the FERS survivor annuity; or (2) the amount of the hypothetical Social Security spousal survivor benefit. The assumed CSRS survivor annuity is the maximum amount of a survivor annuity to which the surviving spouse would be entitled under CSRS based on the service of the deceased annuitant.

Three items should be noted regarding the surviving spousal annuity supplement. The supplement: (1) is not subject to the Social Security “earnings test”; (2) is increased by FERS COLAs; and (3) terminates at the beginning of the month in which the surviving spouse reaches age 60.

Spousal Survivor Benefits Application Process. Upon the death of the FERS annuitant, the surviving spouse should notify OPM as soon as possible. Upon notification of the death of the FERS annuitant, OPM provides an application for death benefits to the surviving spouse. OPM may be contacted at 1-888-767-6738 or TTY 1-855-887-4957. A surviving spouse can also report the death of an annuitant online at www.servicesonline.opm.gov/RSR/AnnuitantDeath. In reporting an annuitant’s death, a surviving spouse needs to provide the decedent’s full name, retirement claim number, date of death, date of birth, Social Security number, and if available, a certified copy of the death certificate. OPM will also need the complete address of the surviving spouse to which all claim forms will be sent.

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