The System allows a member to select a survivor to receive their monthly retirement benefits. However, IRS rules for the selection of a survivor to receive an annuity option must be followed. Annuity options are limited if the member chooses a survivor who is not their legal spouse if there is more than a 10 year age gap between the member and their designated survivor.
The options that include benefits to a survivor are figured according to the ages of both the member and their survivor. The member's benefit is permanently reduced if an option is chosen that provides survivor benefits. This reduction is applied to the member's basic benefit relative to the option they choose. The reduction of their benefits is necessary to pay for the continued benefits the survivor is expected to receive.
If a member selects the Life Annuity, the monthly benefit stops at their death. At that time, an amount equal to the excess, if any, of their accumulated deposits over the amount of payments made to them in retirement will be paid in a lump sum to the their designated beneficiaries or estate.
If a member chooses an option providing benefits to a survivor, then at their death the benefit specified in the option will be paid to the designated survivor for life. If the designee does not survive the member, monthly benefits cease upon their death. The amount equal to the excess, if any, of their accumulated deposits over the amount of payments which have been made to both the member and the member's survivor combined will be paid in a lump sum to other designated beneficiaries, or to the estate of the deceased member.