Federal employee and railroad survivor benefits

Start by finding out which system applied

Almost every mistake families make here is made in the first week, by assuming that a federal or railroad job was covered by Social Security in the ordinary way. Before filing anything, establish which of these three descriptions fits.

• A federal civilian employee or retiree — covered by the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). The claim goes to the Office of Personnel Management. Which of the two systems applied decides which form you file, and CSRS generally covers people first hired before 1984.
• A railroad worker or railroad retiree — covered by the Railroad Retirement Act. The claim goes to the Railroad Retirement Board, unless the insured-status test below is not met, in which case it goes to Social Security instead.
• Military service — a different system again, covered in the veterans benefits topic. Military and federal civilian service can both be present in one working life.

The evidence to look for is in the paperwork the family already has: an OPM annuity statement, a CSA or CSF claim number, a Railroad Retirement Board annuity letter, or a payslip showing a retirement deduction other than FICA. A pay record with no Social Security withholding is a strong signal that one of these systems applied.

The federal civilian claim: where it goes and on what form

OPM handles death claims for federal civilian employees and annuitants centrally, at one address, and the form depends on the retirement system rather than on the circumstances of the death.^{Source 1}

One application covers a widow or widower claiming for themselves and on behalf of children. This is not obvious from the forms, and families sometimes file several.^{Source 1}

Reporting the death and applying for benefits are two separate steps. The death should be reported as soon as it is known — an annuity paid after death has to be returned, and the longer it runs the more disruptive that becomes for the person who inherits the account it was paid into.

Under FERS, two different service thresholds decide what is payable

This is the part that most often surprises a family, and the part worth checking before anyone concludes there is nothing to claim. A death in service can produce a lump sum, an annuity, both, or neither, and which one depends on how long the person had worked.^{Source 2Source 3}

• At least 18 months of creditable civilian service: the surviving spouse is entitled to the Basic Employee Death Benefit — half the final annual rate of basic pay, plus a statutory amount that is adjusted for inflation. It can be taken as a lump sum or spread over three years.
• At least 10 years of service: in addition, a survivor annuity of 50 percent of the annuity the employee had earned.
• Under 18 months: neither is payable. A spouse in this position should still ask about life insurance and the Thrift Savings Plan, which are separate and are not governed by these thresholds.^{Source 2Source 3}

The statutory part of the lump sum is stated in the U.S. Code as a 1986 figure that rises with the same cost-of-living adjustment applied to annuities. The amount actually paid today is substantially larger than the figure in the statute. Ask OPM for the current amount rather than reading the number in the law as the number you will receive.^{Source 2}

Under CSRS, the annuity is larger — and remarriage can end it

The older system pays a survivor annuity computed at a higher percentage, starting immediately, with a rule about remarriage that survivors are frequently not told.^{Source 4}

A CSRS survivor annuity ends if the survivor remarries before turning 55. Remarrying at 54 ends it; remarrying at 55 does not. There are exceptions, but the age is the rule, and it is a fact worth knowing years before it becomes relevant.^{Source 4}

Federal health insurance can continue — including for a survivor with no annuity

Federal Employees Health Benefits eligibility for a survivor runs on the statutory definition of "annuitant", and that definition reaches further than it appears to.^{Source 5}

A surviving spouse of a FERS employee who died with more than 18 months but fewer than 10 years of service receives the lump-sum death benefit and no annuity — and is still within the definition of annuitant for health-insurance purposes. That is precisely the survivor most likely to be told there is nothing for them.^{Source 5}

Continued coverage also depends on the enrollment that was in force before the death: a self-only enrollment does not carry a survivor. This makes the choice between self-only and family enrollment a decision with consequences long after it is made, and it is worth checking while the employee is alive rather than discovering it afterwards.

The Thrift Savings Plan, which the will cannot reach

The TSP is claimed separately from anything OPM pays, and it is decided by a form rather than by a will. The order of precedence starts with whoever the participant designated, then the spouse, then the children and their descendants by representation, then the parents, then the executor or administrator of the estate, and finally next of kin under the law of the participant's domicile.^{Source 9}

The estate is fifth of six. In most cases the TSP is not an estate asset at all, does not pass under the will, and an executor has no authority over it. The regulation says so twice and in the plainest language the C.F.R. uses: a participant cannot use a will to designate a TSP beneficiary, and cannot use one to change a designation either.^{Source 10}

The only instrument that works is a TSP designation received before the death, signed by the participant and one witness aged 21 or over. It then stands until it is properly replaced — nothing prompts a review, and it can be filed or changed without the knowledge or consent of anyone, including the spouse. So the familiar failure has a federal version: a form filed in the first year of a career, a marriage, a divorce and a new will since, and an account that still belongs to the person named at the start.^{Source 10}

Where the order of precedence reaches the spouse, separation does not count. The spouse is whoever the participant was married to on the date of death, and a couple who have lived apart for years are still married unless a decree of divorce or annulment has been entered. An estranged spouse therefore takes the account ahead of the children.^{Source 11}

Who the beneficiary is also decides what happens to the money. A surviving spouse's benefit is transferred automatically into a beneficiary participant account in their own name and stays invested; nobody has to elect it. Every other beneficiary is paid out instead. Below a $200 balance even a spouse simply receives a check.^{Source 12}

To claim, a potential beneficiary contacts the ThriftLine for instructions and provides a certified copy of the death certificate. Where a death is a homicide, a beneficiary under investigation as a suspect is not paid while that continues, and one who would be barred from inheriting under the law of the participant's domicile is treated as having predeceased them.^{Source 9}

Federal life insurance, and the four-year clock on it

Federal group life insurance follows the same shape as the TSP and carries the same warning in blunter words. It is paid first to whoever the employee designated in a signed and witnessed writing received before death in the employing office — or, for an annuitant, at OPM — and a designation, change or cancellation made in a will or in any other document not executed and filed that way has no force or effect.^{Source 13}

After the designated beneficiary the order runs to the widow or widower, then the children and descendants of deceased children by representation, then the parents, then the executor or administrator, then other next of kin under the law of the employee's domicile. So the first question is not what the will said. It is whether a designation was ever filed, and with which office.^{Source 13}

This is one of the few death benefits a family can lose outright by not asking. If no claim is filed within a year, the money may be paid as though the entitled person had predeceased the employee — and that payment bars anyone else from recovering it. At two years it may go to whoever OPM judges equitably entitled. At four years, with no payment made and no claim pending, it escheats to the Employees' Life Insurance Fund and is gone.^{Source 14}

That is the reverse of what most people expect from unclaimed money. A state unclaimed-property program holds a balance for decades; this one extinguishes the entitlement. If there is any chance the person was covered, ask the employing agency or OPM early rather than waiting for the estate to settle.^{Source 14}

A divorce decree can override the designation, but only if it was received by the employing agency — or by OPM, if the employee had separated from service — before the death. A decree that obliged an ex-spouse to keep the children insured is worth nothing against the policy unless somebody sent it to the right office while the employee was alive. If you hold such a decree and the employee is living, send it now; if you are a survivor, ask whether one was ever filed before accepting the designation on record.^{Source 15}

If the death was caused by the job

A death that results from an injury sustained in the performance of duty is compensated under a different statute again, administered by the Department of Labor rather than by OPM, and it pays a share of the employee's pay rather than an annuity.^{Source 16}

A widow or widower with no child receives 50 per cent of the employee's monthly pay. With a child it is 45 per cent plus 15 per cent for each child, to a ceiling of 75 per cent between them. Children with no surviving spouse take 40 per cent for one and 15 per cent for each additional child, again capped at 75. Dependent parents, and then dependent brothers, sisters, grandparents and grandchildren, take defined shares where no closer survivor exists.^{Source 16}

Payment to a widow or widower ends on remarriage before reaching age 55 — the same threshold the CSRS survivor annuity uses, in an entirely separate benefit. A child's payment ends on death, marriage or turning 18, with an extension where the child is incapable of self-support. When one survivor's entitlement ends the others are re-rated as though they had been the only claimants from the start.^{Source 16}

Read the funeral figure before planning around it. The federal funeral and burial allowance for a death in the performance of duty is capped at $800, a 1966 figure that has never been raised. There is a separate flat $200 to the personal representative for the cost of terminating the person's status as a federal employee.^{Source 17}

The more valuable entitlement in the same section is logistical rather than financial. Where the employee died away from home or official station, or outside the United States, the body may be embalmed and transported home in a sealed casket at the Employees' Compensation Fund's expense — but only if the relatives ask for it. That is a request the family has to make.^{Source 17}

The $100,000 federal death gratuity is much narrower than its reputation. It is payable where the employee died of injuries incurred in connection with service with an Armed Force in a contingency operation, is reduced by any comparable gratuity paid under another law for the same death, and goes to the highest living survivor on its own statutory list — spouse, then children in equal shares, then designated parents or siblings — rather than through the estate.^{Source 18}

Railroad: which agency pays depends on an insured-status test

Railroad workers are covered by their own retirement system rather than by Social Security in the ordinary way, and the first question after a death is not what is payable but who pays it.^{Source 6}

If the employee was insured under the Railroad Retirement Act — broadly, 10 years of railroad service, or 5 years after 1995, with a current connection to the industry — survivor benefits are paid by the Railroad Retirement Board. If not, jurisdiction transfers to the Social Security Administration and SSA pays instead. Either way the railroad and Social Security credits are combined, so nothing is lost by the transfer; but the claim has to be made at the agency that has jurisdiction.^{Source 6}

Monthly annuities come first. A lump-sum death benefit is payable only where no survivor qualifies for a monthly annuity immediately on the death — it does not sit alongside an annuity, it stands in for one.^{Source 7}

There is also a benefit with no Social Security equivalent, and it is the one most likely to be missed because nothing in the process prompts the request: a residual lump sum that returns to the family at least what the employee paid in railroad retirement taxes before 1975, less benefits already paid on that service.^{Source 8}