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Articles | Married FERS Employees Should Beware of Basic Employee Death Benefit
Married FERS Employees Should Beware of Basic Employee Death Benefit
The basic employee death benefit (BEDB) is a benefit payable to the spouse or
former spouse of a deceased FERS-covered employee who met certain eligibility
requirements on the date of death. In order for the BEDB to be payable, the
deceased employee must have completed at least 18 months of creditable civilian
service and died while subject to FERS deductions.
An eligible employee includes a deceased FERS employee who had applied for
retirement but had not been separated from federal service prior to his or her
death, even if the individual's retirement would have been retroactive effective
In determining whether an employee completed 18 months of potentially
creditable service, the following types of service are included:
- service in a CSRS component, included "refunded" CSRS service (service time
in which an employee's CSRS contributions were refunded when the employee left
- CSRS Offset service for which an employee received a refund of CSRS
contributions before becoming covered by FERS;
- FERS service for which FERS retirement contributions remain to an employee's
- temporary or seasonal service - also known as "nondeduction" service
performed prior to Jan 1, 1989, regardless of whether a deposit for such service
has been made.
The following types of service are not included for purposes of the 18 months
- "refunded" FERS service. Note that under a new law that took effect on Oct.
28, 2009, a FERS employee who withdrew previously made FERS contributions upon
leaving federal service may now upon reentering federal service redeposit - with
interest - withdrawn funds. If a redeposit is made, a FERS-covered employee will
receive credit for those "refunded" years:
- temporary or seasonal service on or after Jan. 1, 1989; and
- service performed on or after Jan.1, 1989 under another retirement system
for federal employees.
Amount of BEDB
The BEDB is equal to:
- $15,000, increased annually by all CSRS COLAs beginning Dec. 1, 1987 plus:
- 50 percent of the employee's final salary (or high-three average salary if
The $15,000 has increased - as a result of CSRS COLAs 1987 through 2011 - to
$29,722.95 during 2011. To determine 50 percent of the decreased employee's
final salary; the employee's basic pay (including locality pay adjustment) shown
on the deceased employee's most recent SF 50 (Notice of Personnel Action)
as of the date of death should be used.
The following example illustrates:
Calvin, a FERS-covered employee earning $100,000 a year and married to
Cynthia, died suddenly on Feb. 15, 2011 at the age of 49. Calvin had 16.5 years
of federal service. Cynthia is therefore entitled to the BEDB and will receive:
(1) half of $100,000, or $50,000 plus (2) $29,722.9,5 for a total BEDB of
For part-time employees, the final salary will be prorated according to the
tour of duty that was in effect immediately before death. For intermittent
employees, the final hourly rate is multiplied by the number of weeks worked in
the last 52 weeks immediately preceding the end of the last pay period the
employee was in a pay status.
The high-three average salary for BEDB purposes is computed the same way as
for CSRS or FERS annuity computation purposes. If an employee has less
than three years of service, then the salary is simply averaged over the total
period of service.
If the employee has temporary or seasonal service prior to Jan.1, 1989, for
which no retirement deductions were taken and the deposit must be made to meet
the 18 month minimum service requirement for a death benefit, then OPM will
withhold that deposit from the BEDB in the event it is not paid back in full.
Payment of the BEDB
A surviving spouse must elect to receive the BEDB in either one payment (but
see rollover information below) or 36 monthly installments. The survivor's
election of one payment or 36 monthly installments is made on form SF 3104B
after the deceased employee's employing agency inserts the amount payable.
For those surviving spouses who elect the 36 monthly payments, the amount of
each monthly payment is determined by multiplying the total amount of the BEDB
by 0.0306921. For example, in the above example with a BEDB of $79,722.95, the
amount of each monthly payment is equal to:
0.0306921 times $79,722.95, or $2,446.86 per month
Note that the total amount paid in 36 installments is larger than a single
lump sum payment because it includes the 36 monthly payments include interest.
The surviving spouse may at anytime elect to stop receiving the BEDB in
installments and to receive a lump sum payment of the unexpended balance. The
amount of the lump-sum payment will be less than the sum of the remaining
payments because the interest stops on the date of the last payment.
Also, if the surviving spouse elects installment payments but dies before the
completion of these payments, then any unexpended lump sum payment to a
beneficiary will also be less than the sum of the remaining payments because the
interest stops on the date of the last payment.
Rollover of BEDB
A surviving spouse or former spouse has the option of directly rolling over
the BEDB to a traditional Individual Retirement Arrangement (IRA). If not rolled
over, a lump sum payment made to the surviving spouse is subject to mandatory 20
percent withholding for federal income taxes. If the surviving spouse lives in a
state with a state/local income tax, then the lump sum payment is subject to
state and local income taxes.
The rollover election can be submitted with the BEDB application (Form SF
3104B, section 5). If no election is made with form SF 3104B, then OPM will send
the surviving spouse or former spouse of a deceased FERS-covered employee the
rollover election information and election form. This takes 30 to 60 days after
OPM receives the application and supporting documentation.
About the Author
Edward A. Zurndorfer is a Certified Financial Planner, Registered Health
Underwriter, Registered Employee Benefits Consultant and Enrolled Agent in
Silver Spring, MD and the owner of EZ Accounting and Financial Services, an
accounting, tax preparation and financial planning firm also located in Silver
Spring, MD. He is an instructor at federal employee retirement
seminars throughout the country and writes numerous columns and books on federal