Delivered on: Thursday, April 14, 2022
What If You Die While Employed?
What happens when the unexpected happens
- PENSION: Who can be protected to receive your pension and what eligibility requirements must be met
- LUMP-SUM: Which benefits are paid out lump-sum and how they are calculated
- ACTION STEPS: What to do now to prepare your family if this happens to you
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Prefer to read instead? Below is a transcript from the video:
Hello, and welcome to today’s webinar on a seemingly unconventional topic, or at least an unpopular one, which is, “What happens if you die while you’re employed,”? You don’t make it all the way to retirement. Most of the topics that we talk about on our webinars and our podcasts, all are focused on retirement. But today’s session is going to talk about, what happens if you don’t quite make it there. So, while everyone’s getting started, I’ll cover a few housekeeping items, of course, about today’s topic. This is maybe not a super exciting one to talk about, but one that’s super, super important, so that you and any of your family members know what things look like, if you don’t quite make it all the way to that retirement finish line.
Now, of course, our audience today, we’ve got lots of you on here. So, all walks of life. You’re in different stages of your career. So, all of you have your own questions on this particular topic, and I’m sure many others. And we want to do our very best to answer those questions for you today. So, while I’m going to stay focused on the training material, our support team is standing by in the Q & A area here in the webinar portal to be able to answer any of those questions. All that I ask is that the questions that you submit in the Q & A area are about today’s topic. Just simply because there are so many of you. It’s hard to get to everybody’s questions, and we want to make sure that we’re as focused on today’s topic as possible.
Now, handouts for today. They are available for download right here in the webinar portal, right next to that Q & A area. Or if you look to the very bottom of your screen, you’ll see an area there as well with a link to the handouts. And like we do every time we record this session, and we will send out a link to the replay, we’ll show you exactly when that’s going to happen here at the end of today’s session. Now, I always say, stay till the end, right? I’ve always got something to say here, but there are some wallops that your family members can stomach in the event of your death that I want you to be very careful of and aware of, so that you can help them to anticipate any of this that happens.
Of course, my name is Chris Kowalik. I’m the founder of ProFeds here. Love the work that we do to be able to help federal employees make good decisions about their retirement planning, and in this case, what happens if you don’t quite make it. So, we’re delighted to be able to do this.
Of course, we do these webinars every month. We also have our podcast. So, if you’re a podcast listener, you can find us on iTunes and all the other popular podcasting platforms. So, subscribe there and you will never, ever miss an episode. So, today’s topic, what if you die while you’re employed? So, what happens when the unexpected happens? This session was prompted by a webinar that we did a little while back on the survivor benefit plan. And the entire topic that we covered in that webinar was all about if you retire and then you die, what happens to your pension from that point forward? But we were really, really surprised to hear from so many people that didn’t think they were going to make it that long, like that they weren’t going to make it all the way until retirement. So, the chat and the Q & A was just blow it up on that webinar on this particular topic.
We put our heads together and made today’s session, so that we could answer that question. So, today, we’re going to talk about dying while employed, and I want to make sure that you understand why we’re using that very specific language. We don’t want to say that you “die while you’re working,” because we don’t want it to appear as though you have to be on the job to get these benefits. This is simply you being employed by the federal government. You do not have to die while you are at work to be able to get the benefits we are going to talk about today. Now, in my line of work, of course, we do a lot of training for federal employees. We work a lot of cases on feds that really need a lot of help, but my most humbling work is the work we do to help widows make sense of all of these benefits. All the forms, the lingo, the acronyms, and the timelines, and ultimately what to expect.
Sometimes those widows of feds are feds who were still employed and never got the chance to retire. I’ve worked with several, unfortunately this year, that this has happened to, and it’s never a great conversation, but one that I know is really, really important for them to get what they need out of this process and make sure that they’re not missing out on any of these important benefits.
Today’s agenda, we’re going to focus really on the pension and the pension related topics. Of course, you have other benefits too. You have health insurance and TSP and all this other stuff swimming around out there and those things are super important. This session will be way, way too long if we include all of those benefits. We’re going to stay laser-focused on the pension itself and any of those pieces that surround that pension.
For the pension itself, who can be protected to receive your pension, and what are eligibility requirements that must be met? Next, are there lump sum benefits that are paid out? Which ones are they and how are they calculated? And then we’ll do some action steps. So, what should you be doing now to prepare your family, if this should happen to you? We don’t like to see families or survivors lost in this process. It’s already hard enough when they’ve lost somebody that they love and care about. It’s really hard when they have been completely locked out of any of the knowledge of how this stuff works. We want to arm you, as the federal employee, to make sure that you know how to help your family as well.
What we won’t cover today
But I want to specifically talk about what this webinar will not cover. I think these things are equally as important as the things we’re going to cover in today’s session. So, the first is, we are not going to talk about, what happens to your pension if you retire and then die. That was the webinar that we did a while back on the survivor… The strategy of the survivor benefit. So, if you’re curious how that part works, please, please, go watch that webinar. We’re also not going to focus on you dying on the job or “in the line of duty”. That has other offshoots of this topic that will get us down rabbit holes that will make it very difficult for anybody to make sense of anything we’re talking about. So, we’re simply not going to talk about the death on the job. Next is we’re not here to give tax advice, but we do want to make some tax awareness possible for everybody to understand the effects of some of these benefits that your beneficiaries are going to receive.
And then last, I should really have this bullet on all of the webinars that we do, but we’re not going to cover all of the nooks and crannies of all of the exceptions. When we decide on these topics to cover in our webinars or our podcasts, we’re thinking, what is the easiest way to be able to describe how these things work, so that the vast majority of federal employees in normal circumstances can apply them and know what to do. But remember, our Congress wrote these benefits, and they are wildly complicated and many layers of complexity in each of these. It’s worth digging into the details that apply to you and making sure that you understand how those work as well. So, we’re going to stay a little higher level today, so that we can understand all of the pieces that go into what your spouse and/or other beneficiaries may receive, if you should pass while you’re still employed.
So, as far as the benefits that we’re going to cover today, we’re going to talk about if you die while employed, what happens to your last paycheck, your annual leave balance, and your federal pension. So that’s your CSRS or your FERS pension. And then we’re also going to talk about if there are any special payments that your spouse or your children may receive on top of the benefits we already discussed. Let’s go ahead and jump in to our first main topic, and its unpaid compensation.
Essentially unpaid compensation is your final paycheck and the value of your unused annual leave balance. That is going to go to somebody and that someone hopefully is designated on your beneficiary form. So, whomever you name will receive your final paycheck and your annual leave balance. So, we’ve done plenty of sessions on annual leave, how that’s calculated, all that good stuff, but essentially, it’s your hourly rate times the number of hours that you had on the balance sheet for the annual leave on your final paycheck and that amount would be paid.
You can designate that beneficiary or beneficiaries, plural, on that form. So, the SF-1152 is both for CSRS and FERS employees, and it is to designate who is to receive that final paycheck and your annual leave balance. You can name anybody that you wish. It can even be, not a living person, right? It can be a trust. It can be a church or a charity, whatever it is, that you want to have happen to that money. This designation of beneficiary is your way to tell OPM what you want to happen to it.
CSRS & FERS Pensions
Next up is your CSRS and FERS pension. Now here we’re going to get a little squirrely because there’s all these little offshoots and different versions of this material. And so, we want to start out a little slow where we’re covering some of the basics and then we’ll dive into some of the details.
Let’s start with first an understanding of retirement contributions. So, while you are working, you contribute to either the CSRS or the FERS program. A few select of you have contributed to both throughout your career at different times, but the majority of you are contributing to one or the other. So, the amount that you put in that you’re required to contribute varies. Depends on what type of employee you are. So which system you’re in. And in some cases, when you’re hired. So, if we take a peek at the table to the right, this lays out exactly what I’m referring to. For instance, if you’re a regular CSRS employee, you’re contributing 7% of your pay. If you’re a regular FERS employee, you’re contributing 0.8% of your pay. If you happen to be a FERS employee who was hired or rehired in 2013, you’re contributing a considerable amount higher of a contribution into FERS than your regular FERS counterparts. You’re at 3.1%. And likewise, for FERS, FRAE employees. Those are employees who were hired or rehired in 2014 or later. 4.4% is that base contribution amount.
Of course, layer on top of that, some special category employees like law enforcement officers, firefighters, and air traffic controllers, they’re going to contribute an extra half a percent on top of the figures that we see above. I do want to make a special point to make certain that we’re not confusing anybody. And that is that these contributions that we’re talking about you making to your retirement system are separate from what you may choose to contribute into the Thrift Savings Plan. They’re two completely different programs. This is you funding your pension.
Over an entire career, you could imagine you could have contributed quite a large number into the CSRS or FERS program. So, when you retire, the idea is that those contributions that you personally made along with your agency’s contributions and the interest, that all of that is used to fund the lifetime pension that you’ll ultimately receive either from CSRS or FERS. But what happens if you were to die before having a chance to draw that pension? In order to really understand how it works, we have to define a few things first, because of course the government doesn’t just make things simple. We have to have special definitions for things. But it’s worth covering because we would hate to believe that you met a certain criteria when in fact there were some special rules.
What qualifies as being “married”
So, let’s start with the definition of ‘married.’ I didn’t think I would have to define this one, but in order to be considered married for this purpose, you had to have been married at the time of death and had been married for at least nine months, or there was a child born of your marriage or the employee’s death, in this case, your death, was accidental. So, in all three of these scenarios, you had to have been married. The question is, do you have to be married for nine months? If you weren’t, but there was still a child born of the marriage, then it counts, or if your death was accidental, it counts as well.
So, you have to meet the married requirement and one of these qualifications; been married for at least nine months, there was a child born of the marriage, or your death was accidental.
Common Law States
Now, in the event that you live in one of the few states that recognize common law marriage, the Office of Personnel Management does recognize common law marriages for employees who are in common law states. So, you have to reside in one of those states and you have to meet the state’s common law rules. If you believe that you meet the common law rules for your state, I encourage you to go look them up and make sure.
I would hate for there to be a belief that your spouse is going to… your common law spouse is going to receive these benefits that we’re going to talk about today only to find out that you didn’t actually meet your state’s requirements.
I would be remiss if I didn’t talk about what a former spouse is with a court order and how they can wreak havoc on otherwise well-laid plants. So, for a court order, a former spouse can be awarded certain benefits under that court order. That spouse, that former spouse can lose entitlement to those court-ordered benefits if they either die or they remarry before the age of 55. The exception to that is if you were married to one another for at least 30 years, your former spouse is allowed to remarry prior to 55 and keep any of the benefits that were awarded by the court. Former spouse, unfortunately, we have to talk about, and I’m covering spouses in the order in which they appear here. So, we have the former spouse, so naturally we will cover the current spouse.
A current spouse must meet certain rules to be eligible to receive benefits. So that’s what we’re going to talk about today. But that current spouse’s benefit can be reduced sometimes all the way. So, it’s completely eliminated, if that former spouse has a court order awarding the former spouse benefits. If an entire benefit was awarded to a former spouse, their current spouse would simply have nothing to get. That’s always an interesting conversation that we have with former spouse or with current spouses when there’s a former spouse in the picture. Never fun, but still important to cover. And just like with a former spouse, a current spouse can lose entitlement to benefits if they die or they remarry prior to the age of 55. And the same exception, is here, if you are married to one another for 30 or more years, then your current spouse can remarry prior to the age of 55 and not lose the benefits we’re going to talk about today.
How are beneficiaries determined
So, how are beneficiaries determined? I think this is an important topic to talk about before we jump into what we’re divvying up, so that we understand how we arrive at these beneficiaries. The first way that these beneficiaries are determined is OPM is going to look to the designated beneficiary on file. So, you can designate a beneficiary or multiple beneficiaries. You can also designate contingent beneficiaries. So, if one of your primaries were to pass, you can name who gets their share. So, those beneficiary designations, we’ll talk about those a little bit today, but very, very important that we recognize how important these documents are.
Now, in the event that there is no beneficiary named, this is the order in which OPM will look to distribute these benefits. At least certain benefits that we’re going to talk about today. The first is, they’re going to try to find your spouse. That will be either your widow or widower, then your child or your children equally. Now, I’m going to elaborate on this point a little bit. We tend to get questions about this language here in point number two. So, it says, “your child or children equally and descendants of deceased children by representation.”
Well, what the heck does that mean? So, for those of you who are a little bit more familiar with the legal terminology, this would be called per stirpes, meaning that it’s following your bloodline. So if you have three children and it is your intention for all three children to receive a third of whatever benefit you’re leaving to them, and one of them were to pass away, do you want now the money to be split between those two children, or do you also want, perhaps your grandchild of that third child who passed to get their share?
In this case, the way that this beneficiary designation is written, it will go all the way to your grandchild. So, the other two children will get their thirds and the child who passed, their child or children would receive their portion. Point number three. Is your parents equally or a surviving parent (if you only have one, they’re going to get the whole thing). Then the appointed executor of your estate, and then to your next of kin. So, I suspect the further down this list you go, the less likely it is the person you want to get your money is actually getting your money. I have a lot to say on beneficiary designations.
I’m not going to go into great detail today. If you’ve been around reading articles, podcasts, webinars, you know that I have a lot to say on this topic, but very, very important that you get these named and that you are sure that they are updated. We’re working on a case right now where we have a spouse who swears that she is the beneficiary, and the mother was actually still named. We had a fed die. Mom of the fed gets the money. Current spouse gets nothing because we had an outdated beneficiary designation. Very, very important. All right.
So, let’s talk about the different scenarios that we need to consider when we’re thinking about the pension and pension related benefits. So, there are really four categories. We would have someone who’s not married at the time of death (or they simply don’t meet that married definition that we covered a few minutes ago). The second scenario would be someone who’s married with less than 18 months of federal service. Next, is someone who’s married with between 18 months and 10 years of service, just under 10 years of service. And then someone who is married with 10 or more years of service. So, you need to figure out where you fall right now in this list, because that will tell you what to pay attention to in the section that I’m about ready to review.
Not married or married with less than 18 months of federal service
So, let’s talk about the first two scenarios, that is someone who is not married or doesn’t meet the married requirements or someone who is married, but has less than 18 months of federal service. What happens to their pension and their pension related benefits? So, the beneficiary will receive a refund of all of those contributions that the employee made into either the CSRS or FERS systems, plus interest. As long as there are no survivors, that would be a spouse, a former spouse or a child entitled to a monthly survivor annuity.
It’s an important distinction. You might not be married, but if you have a former spouse with a court order that grants them a monthly survivor annuity, then your beneficiary is not going to get a refund of what you put in. That has been reserved, so that it funds the benefit that your former spouse is going to receive (in that example). I know that’s salt on a wound, if you have a former spouse. I’ve got one too, so I get it.
Let’s talk about those beneficiary forms. So, they are different between CSRS and FERS. The SF-2808 is what our CSRS employees are going to use, and the SF-3102 is what our FERS employees will use. You can name anybody that you wish on these documents to receive this benefit. You’ll notice there’s not a pension payable here. It is simply there being a refund of what you put into the system. Plus interest. So that covers those first two bullets that we had a couple of slides ago. And if you’re in one of these scenarios, then you can close up shop and go ahead and move on with your day. But for those of you who fall into the last two bullets, those of you who are married with between 18 months and less than 10 years of service, or those with 10 years of service, you definitely want to stick around because things get interesting right about now
Married with 18 months to less than 10 years of federal service
If you are married and you meet that married definition that we talked about before and you have between 18 months but less than 10 years of service, this slide is for you. Before I go into the detail between CSRS and FERS, I want to make a special note that 18 of these months must be actual federal service, not military service, but actual federal service.
Let’s start with our CSRS employees. It would be very unusual to have a CSRS employee that actually falls into this category right now. I’ll go ahead and cover what it looks like. We’re not going to spend a whole lot of time on it. So, in this case, an employee in this situation, if they were to pass, a beneficiary will receive a refund of all of the contributions that they made into the CSRS program (with interest), as long as there are no survivors, that are going to get that monthly survivor annuity. So, this is the exact same rule that we saw in the previous example.
So, in this case under CSRS, if you don’t have at least 10 years of service, all your beneficiaries are going to get is a refund. Now you’ll notice that I’m referring to a beneficiary, I’m not saying a spouse here because you can name anybody that you please to get a refund of your CSRS or FERS contributions. But let’s focus on the FERS side. Like I said, this is where things get a little bit interesting. There’s a lot going on here, so stick with me here. So, for FERS, there are two different parts of this.
A beneficiary would receive a refund of all of those contributions from FERS, plus the interest, as long as there are no survivors who are entitled to a monthly survivor annuity. Again, same rule that we saw in the previous examples. And the spouse would receive what’s called the Basic Employee Death Benefit that consists of two lump sum payments. The first lump sum is the higher of two numbers. [See, it’s complicated. Why did Congress make it this complicated?] The first lump sum is the higher of either half of the high three or half of the final salary.
Whichever one is better for you or your spouse, they’re going to get. The next lump sum payment is kind of an odd number. It’s currently $37,055. The reason it’s an odd number is because it changes with the cost-of-living adjustment each year. So next year we’re going to see that change and so forth and so on. So that is not a set number like the other two are. There is no backup person who can receive the Basic Employee Death Benefit. The only people that can receive it are your spouse, that’s it. So that covers that. And now you’re wondering, well, what happens if I have at least 10 years of service?
Married with at least 10 years of service
So, let’s take a look. So, if you are married with at least 10 years of service, now we have to see what happens. So, for CSRS employees, your spouse will receive a survivor annuity. So, these are ongoing monthly payments for the duration of their lifetime. They would be equal to 55% of the pension had it been calculated on the day that you died. So, it’s going to take your years of service (and your months, of course), and your high-3, throw all that into the pension formula. It spits out a number. The spouse is going to get 55% of that number.
Pretty simple for CSRS. For FERS, of course, they had to make things more complicated. So, the first part of what you see on the right-hand side of the screen is exactly what we just covered. The Basic Employee Death Benefit, all of those numbers are exactly the same. You either get half of your high three or half of your final salary and the lump sum payment of about $37,000 and some change. And the spouse receives a survivor annuity, which again, are those ongoing monthly payments equal to 50% of what your pension would have been had it been calculated on the day that you died. Again, the service years that you had at that point and the high-3 at your time of death.
So that’s it in a nutshell of what’s happening to your pension and these pension related items, like the Basic Employee Death Benefit, but very, very important that you recognize what can happen with these benefits, who’s supposed to get what, who can get what so that at you’re sure you have those beneficiary designations set up appropriately.
Now I would be remiss if I didn’t talk about tax implications. Just remember, we’re not here to give tax advice, but I do think having some tax awareness helps to open folks’ eyes to really what is coming down the track for yourself and for your spouse or beneficiaries who are receiving some of this money. So, let’s start all the way back at the top where we started, which was looking at your final check and your annual leave balance that’s paid out.
So, when that money comes out, it is taxable to your beneficiary (whomever that might be, it might be a spouse, your children, nieces, nephews, parents, church, charity, wherever that might go), and they will pay tax on that. And we have really no other option to avoid the tax or spread it out. It is simply taxed in the tax year in which it is received. Next up, are CSRS and FERS contributions? So, this is what you personally put into CSRS or FERS. And when that money is refunded back to your beneficiaries, it is tax-free. The reason it’s tax-free is because you already paid the tax on the money when it went into the account. So, when it gets paid back out, there’s no more tax due. But remember, it’s not just your contributions that are in that account, those contributions earn money. So, the interest that is accrued on those contributions, when it is paid out to your beneficiaries, it is taxable.
Next up is the basic employee death benefit. Remember this was the two lump sum payments. So, either half of your high three or half of your salary, and then that odd $37,000 number that changes each year. So, a couple of options here. If your spouse receives that immediately, then it is going to be taxable in one tax year. The other option is, especially if they’re worried about the taxes, they can spread out their payments over 36 months. So, we’re at least spreading that into three tax years, maybe more, depending on what month this all begins. They also have another option is to actually roll over that money into an IRA. So, if they do that, they’ll still eventually owe tax on that money when the money comes out of the IRA, but at least they’re avoiding the immediate tax burden of all of that money coming to them at one time.
Last step on the list was survivor annuities. So, these are the monthly checks that your spouse will receive. This is taxable to the spouse at whatever tax rate they are when they’re receiving it. There will be a small, small part of that money that is tax-free because it represents your contribution coming back to them in the form of the pension. And remember, you already paid tax on the contribution that you made to CSRS or FERS. So, when it is paid back, either to you as a living retiree or to your surviving spouse (if you’ve already passed), there will be a small part of that, that they will not owe any tax on. And again, there’s no other option for a survivor annuity as far as completely avoiding the tax ramifications here.
So, let’s do a quick case study so we can put some numbers to all of what we talked about today.
So, in our case study, we’re going to review a FERS employee who is age 50 at the time of their death. They are a regular employee, so they are not law enforcement, firefighters, air traffic controllers. They have 20 years of service. They’ve been married for 15 years. They have 215 hours of annual leave when they die, and their final salary is $104,000. So as of the moment of their death, that high-3e is $102,000. So, how’s all the math shake out for what a spouse is going to receive? Well, let’s take these one by one. They would receive the last paycheck, which is about $1,300 after deductions. I made some assumptions that we obviously have tax withheld. We have the Thrift Savings Plan contributions. We have social security and Medicare and FEHB premiums and all of those things.
So, at the end of the day, $1,300 gets paid to the spouse. For annual leave, remember we had 215 hours. So based on the hourly rate for this employee, it’s going to be a little over $10,000. Then we have the two lump sum benefits of the Basic Employee Death Benefit. So, the first lump sum of $37,055, and then the higher of the two calculations, half of the salary ends up being the highest one. So, half of $104,000 is $52,000. So, all in all we have about $100,000 of lump sum benefit that your spouse is going to receive. And then on a monthly basis, they will begin to receive that survivor benefit, which based on the high-3 and the years of service, we’re looking at about $1,700 per month, or just over $20,000 per year. But something we cannot overlook is that all of these things are taxable.
Now there’s some of these things we can’t do anything about, your last paycheck, annual leave payout, the monthly pension, all that’s going to be taxable and there’s nothing we can do. But that Basic Employee Death Benefit, there are some options to spread out the tax obligation, perhaps over three or four years, or perhaps over even a longer period of time, if the money’s moved to an IRA. So, believe me, if you need the money, if your spouse needs the money right at that moment, then of course they’re going to take it and pay the tax all in one tax year. But if they have some flexibility to be able to meter out that money a little bit and spread it over multiple tax years, that may put them at a tax advantage. Because as it stands right now, there’s just over $100,000 of lump sum benefit that’s all taxable.
If that puts them up into a higher tax bracket, than what they would naturally be in (because it’s going to look like they made another $100,000 on top of what they already do), maybe they’re working normal job kind of consideration, now it appears as though they make an extra $100,000. So, if that puts them into an unfavorable tax bracket, then they’re going to pay more tax than is absolutely necessary. And we want to avoid that. We’re all patriots, but we have no patriotic duty to pay more taxes than the government tells us we actually have to. And so, we want to help you to manage this and, absent information about taxes, your spouse is simply going to take the money because they don’t know any better.
And in the heat of the moment, when all of this is happening and they’re trying to process everything with your untimely death, this is something that they probably won’t have a lot of head space to think about if it hasn’t been discussed prior.
Children’s survivor benefits
So, this is it on the spouses, but I’d be crazy if I didn’t talk about the kids, right? Because many of you are wondering, but can’t my kid get my pension? The answer is no, your kid can’t get any of that. That’s not the way any of these laws were written. But many of you have heard that there’s a children’s survivor benefit. And I mostly want to cover this because I want to dispel what it’s not.
So, the children’s survivor benefit is not your child receiving your pension. It’s not your child receiving your pension. It’s your child potentially receiving another type of payment that they probably won’t actually get. So let me share how it works. So, for a children’s survivor benefit, they will receive this survivor benefit at no cost to you or to them, but they need to be unmarried, dependent children under the age of 18 (or 22, if they’re a full-time student) and it can be paid beyond the age of 22, if they are disabled prior to the age of 18. Those are the rules. You’re going to see the benefit here on the next slide. So, children will receive the exact same survivor benefits that we’re about ready to cover regardless if the federal parent is still employed, or if they’re already retired. And the benefit is the exact same, regardless if the parent is under CSRS or under FERS.
So, here’s how it works. The children survivor benefit. These figures are for 2022, we’ll start on the left-hand side. If there’s still one living parent who is married to the deceased, that child would receive $587 per month. And each child (up to three) would receive that dollar amount. It’s going to cap at three. So, if there are more than three children, they simply split the bucket of $1,759 per month. Now on the right-hand side, if there’s no living parent or there’s a living parent, but they were never married to the deceased (so this is the government’s way of saying you got a child out of wedlock, so let’s just cut through it), that child would receive $702 per month and three or more children would split $2,106.
But like I mentioned a moment ago, this is the benefit that your child probably won’t get. And here’s why, because this benefit coordinates with Social Security, meaning that every dollar that your child receives of Social Security benefit, it will reduce a dollar from this benefit that we’re talking about right now. And social security benefits are simply richer than the numbers that are on the screen. So, on paper, it looks like a great program, but in reality, it gets wiped away because of all the Social Security benefits that child will receive. So, I wanted to clarify the children’s survivor benefit because we hear way too often people genuinely believing that because it’s called the “children’s survivor benefit” that it means that it operates just like the spouse’s survivor benefit, as far as paying your pension. And you’ll see these numbers have nothing to do with your pension at all. So, I couldn’t get out of this topic without about children’s survivor benefit for that very reason.
Wrap-up and next steps
Let’s talk about wrap up the next steps. When it comes to action items from today’s webinar, the very first thing is make sure that your beneficiaries are updated. You can download them right from our website. We made it really easy, pull them all in (it’ll link out directly to OPM where the forms live), but that way you don’t have any trouble finding them. You can go to fedimpact.com/beneficiaries and there will be a total of four forms there. Two of them are the ones we talked about in today’s session. Feel free to use the other two as well for FEGLI and TSP, but of course, we haven’t talked about those today. Now do yourself a favor. When you have completed these documents, please save a copy of the confirmation receipts that you receive from HR or OPM.
So, anything you are getting back, any correspondence, like, “Hey, we got your beneficiary designation. Thanks!” Keep a copy of all of that. And I don’t mean keep it in your email. I mean, print it out and put it with these forms. In a safe spot that your family knows to look. That might be a fire box, that might be a safety deposit box, if you’re a little bit more tech savvy, you may scan these items and put them on a thumb drive and keep that thumb drive in a safe spot. Wherever that might be, make sure that your family knows how to advocate for what you intended to happen to this money. Get those beneficiaries nice and clear. Please don’t leave former spouses on there (or other people you have fallen out of love with), if it is your intention for your family to receive these benefits.
And this last bullet, I say this with a grin on my face, but I hope you actually do it and that is have your spouse or your kids watch this webinar. You’ll have a link to the replay. I would love to know that we were able to empower a surviving spouse or surviving children to have a better sense of what happens if this happens to you, and that they had an opportunity to fully understand how these benefits work long after you’re gone.
Now, like we always do, we have to talk about the rest of the story, right? So, the pension, and what happens to that in the event that you were to die is one little, small subsection of everything you really need to know when it comes to leaving federal service and hopefully going on to have a long fruitful retirement.
I encourage you to get the rest of the story. You’ve got to get all those pieces together to make sense of all of this. So, you can attend one of our retirement workshops. We have in-person training. We have community-based sessions around the country. So hopefully we’re close to one where you are. There is no cost to attend these sessions and we’re going to cover all of the federal benefits topics, and all of those bizarre decisions that you have to make when you retire from federal service. So that becomes a great jumping off point to really get clarity on your benefits and make sure that not only you, but your spouse or your children are on board with how all of this works. So, you can find all of those workshops throughout the country that are available for registration at fedimpact.com/attend. Now, like I mentioned at the very beginning, we always record these sessions and of course we have handouts as well.
So, we will email you a link to both the handouts and the replay for today’s session. Once we get the recording up, the transcript, all that good stuff, we will get that out to all of you. And certainly, I’d be grateful if, you have a coworker that maybe needs to hear this message as well, if you’ll share that link so that they’re able to have the benefit of listening to the replay.
Next webinar topic
So, this next webinar that we’re going to do on May 12th, is a little bit more of a lighthearted webinar than the one that we talked about today, which are new options offered by the TSP. So, most of you have heard that the TSP is rolling out these mutual fund options, and there’s lots of buzz out there about what it’s going to look like, what it’s going to cost, how it’s going to be structured, what your choices are.
And so, we are going to cover all of that in our next webinar on May 12th. But spoiler alert, the latest “upgrade” that the TSP has made might surprise you. It’s not quite what it was cracked up to be, and we’re going to share all the juicy bits in the next webinar. So, you can sign up for that, just like you signed up for today’s session at fedimpact.com/webinar. It is open for registration right now. All right. So that’s it for today’s session. I try my darndest to keep these things to 30 minutes, but God love me, I just can’t make it happen. So, I feel compelled to share so much of what we see on a day-to-day basis with widows and family members who are trying to navigate all of these things.
And so, I knew today’s topic was a really important one and one that unfortunately just couldn’t be any shorter than it was. So, thanks for joining us today. And remember to find a workshop nearby, you can go to fedimpact.com/attend and to find the next webinar and register for the new options offered by the TSP, you can go to fedimpact.com/webinar. All right, thanks so much for joining us. We’ll see you next month.
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