Edward A. Zurndorfer, CFP

There are two kinds of death benefits paid to children upon the death of a federal employee or an annuitant. One type is a children's monthly survivor annuity and the other is a lump sum payment. This column discusses the monthly survivor annuity.

A child's monthly survivor annuity is provided by law. An employee or annuitant does not need to formally elect it. A retiring employee who is in good health may also elect an insurable interest survivor annuity for a child. But unlike a child's monthly survivor annuity which does not cost the employee or annuitant, an annuitant must pay for giving an insurable interest annuity for a child in the form of a sizable reduction in the annuitant's CSRS or FERS annuity. Also for a non-disabled child, the child's monthly survivor annuity will stop when the child reaches a certain age or gets married, whatever is earlier. On the other hand, the insurable interest annuity continues throughout the child's life.

To qualify for a monthly survivor annuity a child - including a legally adopted child - of a deceased employee or annuitant must:

1. have been a dependent of the employee or annuitant at the time of death;
2. be unmarried; and
3. be under age 18; or age 18 to 22 and a full time student or over age 18 and incapable of self-support due to a disability incurred before age 18.

If a child meets the above criteria, then monthly survivor annuity benefits are automatically payable upon the death of an employee or an annuitant. It makes no difference if the employee or annuitant is covered under CSRS or FERS. But an employee must have completed at least 18 months of creditable civilian service.

The Office of Personnel Management (OPM) considers a child under age 18 to have been dependent upon the deceased employee or annuitant if the child is a legitimate, adopted,  stepchild child or a child born out of wedlock.  No additional documentation is required if a child of the deceased is listed on form SF 2809, Employee Health Benefit Registration Form and there is no discrepancy regarding the child's date of birth. If the child is not listed on SF 2809 or the child was adopted, born out of wedlock or a stepchild of the deceased, a copy of the child's birth certificate must be submitted with the application for death benefits. If the child was adopted, a copy of the formal decree of adoption must also be submitted.

A stepchild may be entitled to survivor annuity benefits if the child lived with the employee or annuitant in a standard parent-child relationship at the time of the employee's or annuitant's death. The individual who is applying on behalf of the child must submit an affidavit from himself or herself and two affidavits from disinterested parties, such as neighbors or friends, in a position to know the situation. The affidavits should show the following details:

1. whether the child lived with the deceased in a standard parent-child relationship;
2. the length of time the parent-child relationship existed;
3. whether the deceased exercised parental responsibility and control over the child; and
4. a statement explaining how the affiant is in a position to know the facts of the case.

A "recognized" child - a child born out of wedlock - is considered a dependent child if:

1. the child lived with the employee or annuitant in a standard parent-child relationship at the time of the employee's or annuitant's death and the individual applying on behalf of the child submits affidavits as described above, attesting that a parent-child relationship existed;
2. the child did not live with the employee or annuitant in a standard parent-child relationship, but a judicial determination of support was obtained for the child:
3. the Social Security Administration (SSA) awarded benefits to the child based on the earnings record of the deceased as documented by a copy of SSA's award letter; or
4. evidence shows that the child was supported by the employee or annuitant with regular and substantial contributions such as proof of inclusion of the child as a dependent on the decedent's income tax return for the year immediately prior to the employee's death.

To be eligible for continuation of the survivor annuity beyond age 18, the child must be unmarried or a full-time student at a recognized educational or training institution. Full-time course of study requires school attendance at the rate of at least 36 weeks per academic year and carrying the minimum of credit hours to be considered a "full-time" student. In order for a child to be identified as a student on form SF 2800, Application for Death Benefits (CSRS) or form SF 3104, Application for Death Benefits (FERS), OPM will request certification of the child's school attendance from the child's student bursar office and the appropriate school official. OPM will determine the child's eligibility for benefits after receipt of the certification form RI 25-41, Initial Certification of Full-Time School Attendance.

A recognized educational institution is a school that is accredited, has a faculty and requires study or training to be done at the school. This includes:

1. high school;
2. trade school;
3. technical or vocational institutions;
4. business school;
5. junior college and
6. colleges, universities or comparably recognized educational institutions.

The following types of educational institutions do not qualify:

1. correspondence school;
2. elementary school;
3. government service academies such as the U.S. Military Academy; and
4. any training program where the trainee receives pay primarily as an employee, such as an apprenticeship program.

A child who is age 18 or older and who is incapable of self-support due to a physical or mental disability may be entitled to a monthly survivor annuity if OPM determines that the child is incapable of self-support because of a physical or mental disability incurred before he or she reached age 18. The medical conditions that qualify as disabling for annuity purposes generally also qualify for continuation of federal employee health benefits program (FEHBP) benefits.

Information must be provided to OPM from the child's parent or guardian in order for a disabled child over the age of 18 to be provided with survivor annuity and health benefits. This information includes the child's education, any employment and residence. In addition, the child's doctor must provide information about the child's medical condition. This information is submitted on OPM form RI 25-43, Documentation in Support of Claim for CSRS or FERS Benefits as Disabled Dependent Child or a copy of the letter from the SSA awarding benefits to the child based on SSA's findings that the child is incapable of self-support because of a physical or mental disability incurred before age 18.

In addition to FEHBP benefits, the child's monthly survivor benefit is a specific dollar amount that increases each year by the amount of CSRS COLAs. This benefit is payable in addition to any survivor annuity payable to a surviving spouse of the deceased employee or annuitant.

Since the monthly survivor benefit amounts vary by year, the following amounts apply if an employee or annuitant were to die during 2009 and to be survived by eligible children.

• Child has a living parent who was married to the employee or annuitant, either at death or any time prior to the date of death. The benefit payable to that child is the lesser of:

$470 per month per child; or
$1,409 per month divided by the number of eligible children

• Child has no living parent who was married to the employee or annuitant. The benefit payable to that child is the lesser of:

$564 per month per child; or
$1,691 per month divided by the number of eligible children

In cases where the employee or annuitant worked part-time or had a low salary job, the above monthly payments may be less.

While the above monthly survivor annuity payments applied to children of both deceased CSRS or FERS employees or annuitants, children of deceased FERS employees and annuitants have their benefits reduced (offset) by the total amount of any Social Security survivor benefit payable to all children based on the Social Security earnings of the deceased. In many cases, the FERS monthly benefit is reduced to $0. There is no offset or reduction in any month for which the child is not entitled to benefits from Social Security. For example, if Social Security benefits end because the child is no longer in high school, then FERS survivor benefits will "kick in" until the child is age 22 provided the child is enrolled full-time in a post high school educational program.

For children of deceased FERS employees or annuitants, OPM requires evidence of Social Security entitlement or non-entitlement before making any payments. OPM presumes that there will be no FERS survivor benefit payable to children under age 19.

OPM pays a child's annuity to:

1. the parent or custodian of the child if there is no court appointed guardian;
2. the guardian, if appointed by the court; or
3. a child over the age of 18 upon request by the child or other payee on the claim.

The children's survivor benefits are included in the monthly payments of the surviving parent when he or she is also a beneficiary and has care and custody of the children.

The monthly premium cost of the FEHBP insurance will be deducted from the child's monthly payment in case there is no survivor annuity being paid to an eligible widow or widower. The federal government continues to contribute on average 72 percent of the FEHBP premium cost with the surviving child paying the remaining 28 percent premium cost.

A child's survivor annuity benefits begin on the day following an employee's or an annuitant's death, or on the day following the date of birth of a child born after the employee or annuitant's death.

A survivor annuity to a child under age 18 ends on the last day of the month preceding the month in which he or she:

1. marries;
2. dies; or
3. becomes age 18.

The following example illustrates.

Joseph, age 17, is receiving monthly survivor benefits as a result of his father's, a CSRS annuitant, death in 2006. Joseph will become 18 on Sept. 3, 2009. After graduating from high school in June 2009, Joseph intends to take a year off and work before starting community college. Joseph's last check for 2009 will be in August 2009 because he will become ineligible for the monthly survivor check as of Aug 31, 2009, the last day of the month preceding his 18th birthday.

The annuity of a child over age 18 and attending school full-time ends the last day of the month preceding the month in which he or she:

1. marries;
2. dies;
3. ceases to be a full-time student:
4. transfers to a non-recognized school;
5. fails to submit proof upon request that he or she is attending school full-time;
6. enters military service or a government service academy; or
7. becomes age 22. A child whose 22nd birthday falls during the school year (September 1 through June 30) is considered not to have attained age 22 until July 1.

Any child's annuity that ended because the child was over age 18 and ceased to be a student may resume, or be authorized for the first time, if he or she becomes a full-time student before age 22 and if any lump-sum benefit that was paid upon the termination of the annuity is returned to OPM.

The annuity of a disabled child over the age of 18 terminates on the last day of the month preceding the month in which the child;

• marries;
• recovers from the disability;
• becomes capable of self-support; or
• dies.

At the death of an employee or annuitant, the surviving parent, legal guardian or person with care and custody of the child should:

• Complete form SF 2800, Application for Death Benefits, for a deceased CSRS or CSRS-Offset employee or annuitant,
• For a deceased FERS employee or annuitant, first apply for the child's Social Security surviving benefits and complete form SF 3104, Application for Death Benefits and form SF 3104B. These forms, together with the Social Security award/determination letter must be submitted to OPM.

A surviving spouse or former spouse who is entitled to a survivor annuity benefit in his or her own right and also on behalf of the child, need only file one application.

If the deceased employee's agency has not yet forwarded the deceased employee's record to OPM, the applicant for survivor benefits sends the completed application to the employing agency office. In all other cases, the applicant sends the completed application to:

Office of Personnel Management
Retirement Operations Center
Boyars, PA 16017

OPM determines what benefits are payable and depending on the type of benefit and other circumstances in a particular case, may request the applicant to submit additional evidence.

About the Author

Edward A. Zurndorfer is a Certified Financial Planner and Enrolled Agent in Silver Spring, Maryland. He is also a registered representative with Multi-Financial Securities Corporation (Branch A9X), member FINRA/SIPC, also located in Silver Spring, Maryland

Forms mentioned in this article can be found on the OPM website at: http://www.opm.gov/forms/html/SF.asp

Related Articles & Resources

·  Guide to Insurable Interest Survivor Benefits and Lump-Sum Payments (CSRS and FERS) ·  Guide to FERS Spousal Survivor Benefits Upon the Death of an Employee or an Annuitant ·  Guide to CSRS Spousal Survivor Benefits at the Death of an Employee or an Annuitant