Any good retirement or estate plan includes some consideration of what will happen to your loved ones after you are gone. In this article, we will discuss what happens to your OPERS retirement upon your passing.
The importance of keeping your beneficiary designation current cannot be overstated. Doing so allows OPERS to pay out your retirement benefit or contributions to those you designate in the event of your death. Remember, you may update your beneficiary at any time by completing a new form. OPERS will go by the most recent form accepted.
A change in marital status, the death of a beneficiary, a new address, or if you can’t remember the last time you updated your beneficiaries are all good reasons to complete and submit a new Beneficiary Designation form. OPERS recommends that you designate both primary and contingent beneficiaries.
What happens if I pass away before I retire?
OPERS provides for one of two types of death benefits upon the death of an active or vested (non-retired) member:
- Survivor Benefit
If you are vested, eligible to vest, or eligible to retire at the time of your death, your legal surviving spouse is entitled to a survivor benefit. Your spouse will be offered a lifetime survivor benefit under Option B (100% joint and survivor annuity). Benefits shall be payable no earlier than the date you would have met the requirements for a normal or early retirement. If your spouse elects to receive the survivor benefit, there will be no benefit payments to your other beneficiaries.
- Accumulated Contributions
If no surviving spouse benefit is to be paid at your death, a one-time lump-sum payment equal to your accumulated contributions, less taxes, will be distributed among your beneficiaries.
What happens if I pass away after I retire?
When you pass away as a retired member, your monthly retirement benefit may continue, change, or end depending on the type of benefit you chose at retirement. In addition, certain death benefits will be distributed among your primary beneficiaries.
The Beneficiary Designation form is to be used to designate beneficiaries to receive one or more of the following death benefits:
- $5,000 Death Benefit
Your beneficiary is entitled to a lump-sum $5,000 cash payment upon your death. This death benefit is not insurance and is taxable to the beneficiary. This benefit is only payable upon the death of a retiree.
- Excess Accumulated Contributions
Occasionally upon the death of a retired member, the amount of member contributions paid into OPERS is more than the total received in monthly retirement benefits. If you chose the Maximum Retirement Benefit Option at retirement and pass away before receiving the balance of contributions you paid in to OPERS, the difference between your accumulated contributions and the cumulative monthly retirement benefits will be paid according to your beneficiary designation.
- Final Monthly Benefit Payment
If applicable, your final monthly benefit payment may be paid according to your beneficiary designation.
What happens if my joint-annuitant passes away before I do in retirement?
Typically, your retirement option may not be changed on or after the effective date of retirement for any reason. However, there is an exception to this if you retire under Options A or B and your joint-annuitant passes away first. In this event, you may not choose a new joint-annuitant, but you may change your benefit option to the Maximum benefit (i.e., no reduction in benefits and no survivor benefit).
The request to change to a Maximum benefit must be made in writing and include a certified death certificate of the joint annuitant. The increased benefit becomes effective the first day of the month following the death of the joint-annuitant if OPERS receives your written request and the death certificate in a timely manner. OPERS cannot pay more than six months in arrears.
Applying for Member Death Benefits
Upon the death of a member (or joint-annuitant in retirement), the beneficiary or your next of kin should contact OPERS as soon as possible by calling (405) 858-6737 or (800) 733-9008. OPERS will guide beneficiaries through the process, informing them of options, mailing appropriate forms, and requesting required documents.
This article was first published in the Summer 2016 edition of the Retiring Right newsletter. Click here to view other newsletters. Not receiving your newsletter, update your address by completing the Change of Address form.
Posted on Mon, October 3, 2016
by Matthew Kesser