Note: A new version of this article with more current information is available at http://www.fedsmith.com/2016/03/17/what-happens-to-your-benefits-if-you-die-after-you-retire-2/
Your spouse will be able to keep your health insurance if two conditions are met. First, you must have elected a survivor annuity. Second, your spouse must be enrolled with you on a self and family policy on the date of your death. If these conditions are met, you spouse will be able to continue your health insurance and Uncle will continue to pay his share.
Your life insurance will be paid to your designated beneficiary. Your beneficiary will be given a choice of a “Total Control Account” (a type of retained asset account) from MetLife, or of receiving payment of the death benefits by check/deposit. If your beneficiary does not make a choice, they will be given the account.
Speaking of beneficiary forms, do you know who your beneficiaries are? If you have any doubt, you may wish to check your Official Personnel Folder (OPF). The last thing you want is having your ex-spouse walking off with all you have saved over your career.
If you elected survivor benefits for your spouse at the time of retirement (or at the time of marriage, if after retirement) your spouse will begin collecting a survivor benefit after your death.
Under CSRS, survivor benefits can be as much as 55% of your annuity. You may elect lesser amounts, but spousal consent is required at the time.
Under FERS, survivor benefits can be either 50% or 25% of you annuity. Spousal consent is required for the 25% survivor benefit.
COLAs are paid on survivor benefits for CSRS and FERS. If your spouse remarries before the age of 55 they forfeit their survivor benefit.
If you did not elect a survivor benefit, your designated beneficiary is entitled to a refund of any of your contributions that have not been paid to you. OPM views you as recouping your contributions dollar-for-dollar beginning at retirement, so if you die more than a few years after retirement, there will be nothing to recoup.
Your TSP will go to your designated beneficiary. If your beneficiary is your spouse, and is also a federal employee or retiree, they may combine your TSP account with their own. If your beneficiary is your spouse who is not a federal employee or retiree, they may take ownership of your account, but may not make any deposits. Your spouse could also choose to elect an inherited IRA or withdraw the money.
If your TSP beneficiary is a non-spouse, they may elect an inherited IRA or take the money out. In all cases, the beneficiary would be responsible for any deferred taxes.
John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.