This is the second of a series of columns discussing how certain life events can affect a federal retiree’s benefits. This column will present how divorce during retirement can affect a federal retiree’s retirement benefits.
SEE ALSO: OPM’s Guides to Life Events (including death of an employee/annuitant or spouse, reemployment, designation of beneficiaries, and moving to a new address
When a married federal retiree receiving a CSRS or a FERS annuity and providing a survivor annuity to a current spouse gets divorced, the retiree needs to notify the Office of Personnel Management (OPM) of the divorce. The reduction to the retiree’s CSRS annuity or FERS annuity will be eliminated unless there is a divorce decree (court order) that states the retiree must continue to provide a survivor annuity to the soon-to-be-retiree’s former spouse. In that case, the retiree must mail a certified copy of the court order and all supporting documentation to OPM at the following address:
Retirement Operations Center
U.S. Office of Personnel Management
Post Office Box 45
Boyers, PA 16017
Changes in FEHB Program Health Benefits Enrollment
When a federal retiree divorces, the retiree’s now former spouse is no longer considered a family member and cannot be covered under the retiree’s self and family (or self and one) Federal Health and Benefits (FEHB) health insurance benefit enrollment. The retiree’s eligible children (generally children under the age of 26) for FEHB enrollment can continue to be covered. If there are no eligible children for FEHB program enrollment, then the federal retiree should change FEHB enrollment to a self-only plan.
A court order may instruct the federal retiree to provide health benefits for a former spouse. The federal retiree should contact OPM’s Retirement Operations Center to find out how to provide FEHB health benefits for a former spouse. If a court order does not instruct the federal retiree to continue to provide health benefits coverage, then the retiree’s former spouse may qualify for temporary continuation of coverage for up to 36 months. If this temporary coverage is requested, then the federal retiree or former spouse must contact OPM within 60 days after the divorce.
A court order may instruct the federal retiree to provide health benefits coverage to the retiree’s children. If a retiree is the subject of such an order, then the retiree cannot change FEHB enrollment to self-only coverage. The retiree must enroll in a self and family FEHB health plan that provides full benefits for the children in the area of the country where they live. This applies while the federal court order is in effect.
SEE ALSO: OPM’s Guide to Court-Ordered Benefits for Former Spouses (PDF)
Changes to Designations of Beneficiary for Life Insurance and Retirement
Divorcing federal retirees are advised to change their designation of beneficiary for life insurance and retirement if their former spouse has been named as beneficiary. The following is a list of beneficiary forms.
‧ Life insurance: Federal Employees Group Life Insurance (FEGLI) program. Standard Form 2823 that may be downloaded at www.opm.gov/forms. If the retiree owns an individual life insurance policy, the retiree should contact the private life insurance company that issued the policy. The retiree should request a new beneficiary form to be filled out and submitted.
‧ Retirement:
(1) Standard Form 2808 (Designation of Beneficiary Civil Service Retirement System); or
(2) Standard Form 3102 (Designation of Beneficiary Federal Employees Retirement System);
(3)TSP: Form TSP-3 (Designation of Beneficiary Thrift Savings Plan); and
(4) Individually owned IRAs(both traditional and Roth) (Beneficiary forms should be obtained from the traditional IRA and Roth IRA custodians). [see also: How To Avoid These Eight Mistakes When Naming IRA Beneficiaries]
The purpose of forms Standard Form 2808 and Standard Form 3102 is to name a beneficiary for any money in either retirement system remaining upon the federal retiree’s death and any unpaid CSRS annuity or FERS annuity.
SEE ALSO: How to Avoid the Biggest Mistakes in Making Beneficiary Designations
Providing a Survivor Annuity Benefit to a Former Spouse
If a federal retiree’s marriage ends during retirement, then the retiree can elect a reduced annuity to provide a survivor benefit to the retiree’s former spouse.
To make this election, the retiree must notify OPM’s Retirement Operations Center within two years of the date the marriage ended. The retiree should include a court-certified copy of the decree effecting the dissolution of the marriage, and any property or marital settlement agreement. This information should be sent to:
Retirement Operations Center
U.S. Office of Personnel Management
Post Office Box 45
Boyers, PA 16017
SEE ALSO: Electing FERS Spousal Survivor Benefits When Retiring
Note the following:
(1) Not withstanding what a court order may require, the federal retiree has choices as to how much of a survivor benefit they can give a former spouse;
(2) There will be reductions to the federal retiree’s CSRS or FERS annuity in order to provide a survivor annuity to a former spouse; and
(3) If the federal retiree was married to the former spouse when the retiree retired from federal service and the former spouse originally consented to an election of less than the maximum survivor benefit, then the federal retiree cannot provide a survivor annuity that is larger in amount than the original survivor annuity election.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER®, Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019