FERS Lump Sum Payment Order of Precedence Upon the Death of a Current Employee
If an employee dies and no survivor annuity is payable based on his/her death, the retirement contributions remaining to the deceased persons credit in the Civil Service Retirement and Disability Fund, plus applicable interest, are payable.
You do not need to make a designation if you are satisfied with the order of precedence that the law provides. That order of precedence follows:
- To your widow or widower.
- If your widow(er) is deceased, to your child or children, with the share of any deceased child distributed among the descendants of that child.
- If none of the above, to your parents in equal shares or the entire amount to the surviving parent.
- If none of the above, to the executor or administrator of your estate.
- If none of the above, to your other next of kin under the laws of the State in which you live at the time of your death.
Payment of a lump sum will be made to the first person or persons listed above who are alive on the day you die.
I'm an expert in federal employee benefits and retirement systems, particularly well-versed in the Federal Employees Retirement System (FERS). My knowledge is grounded in a comprehensive understanding of the intricate details and legal nuances surrounding retirement plans and benefits for federal employees. To demonstrate my expertise, I've provided a breakdown of the concepts embedded in the given article regarding the FERS Lump Sum Payment Order of Precedence upon the death of a current employee.
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Survivor Annuity and Death Benefit:
The article mentions that if an employee dies and no survivor annuity is payable based on their death, the retirement contributions remaining to the deceased person's credit in the Civil Service Retirement and Disability Fund, along with applicable interest, become payable.
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Order of Precedence:
The order of precedence, as outlined by law, dictates the sequence in which the lump sum payment will be distributed in the absence of a designated beneficiary. It follows a hierarchical structure:
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Widow or Widower:
The first in line to receive the lump sum payment is the surviving spouse.
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Child or Children:
In the absence of a surviving spouse, the payment goes to the employee's child or children. If a child is deceased, their share is distributed among their descendants.
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Parents:
If neither a surviving spouse nor children are present, the next in line are the parents, who share the amount equally or entirely to the surviving parent.
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Executor or Administrator of the Estate:
If there are no surviving family members, the payment goes to the executor or administrator of the deceased employee's estate.
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Other Next of Kin:
If none of the above categories apply, the payment is directed to the other next of kin, as determined by the laws of the State in which the employee lived at the time of their death.
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Designation of Beneficiary:
The article emphasizes that federal employees have the option to designate a beneficiary. However, if they are content with the order of precedence established by law, there is no obligation to make a specific designation.
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Timing of Lump Sum Payment:
The lump sum payment will be disbursed to the first eligible person or persons listed in the order of precedence who are alive on the day the employee passes away.
In conclusion, the FERS Lump Sum Payment Order of Precedence ensures a systematic and legally defined distribution of retirement contributions in the unfortunate event of a federal employee's death, offering financial support to surviving family members or designated beneficiaries.
FAQs
Write the names of the main individual(s), entity (such as a charity, business, religious organization, funeral home, etc.), trust, or estate. You may name more than one. All secondary beneficiaries listed will receive EQUAL SHARES (equal amounts) of your benefit if ALL of the primary beneficiaries are deceased.
What is the order of precedence for beneficiary? ›
It is only necessary to designate a beneficiary if you want payment to be made in a way other than the following order of precedence: To your widow or widower. If none, to your child or children equally, and descendants of deceased children by representation. If none, to your parents equally or to the surviving parent.
Does beneficiary designation override a will? ›
Typically, there's peace of mind that comes with knowing that your estate will be distributed according to plan. However, don't be too quick to relax. Typically, a beneficiary designation overrides a Will.
Which of the following is the proper sequence of beneficiaries? ›
Your primary beneficiary is first in line to receive your death benefit. If the primary beneficiary dies before you, a secondary or contingent beneficiary is the next in line. Some people also designate a final beneficiary in the event the primary and secondary beneficiaries die before they do.
What is an example of beneficiary designation? ›
For example, if you name your three cousins as your primary beneficiaries, you can name the children of each cousin as alternate primary beneficiaries. Then, if one cousin dies before you do, their share will be divided between their children who are named as alternate primary beneficiaries.
Do I have to fill out beneficiary designation form? ›
You do not need to designate a beneficiary unless you want to name some person or persons not listed above or you want the payment to be made in a different order.
How does order of precedence work? ›
An order of precedence is a sequential hierarchy of nominal importance and can be applied to individuals, groups, or organizations. Most often it is used in the context of people by many organizations and governments, for very formal and state occasions, especially where diplomats are present.
What does order of precedence mean in death benefits? ›
If there isn't a valid designation on file when you die, benefits are payable in this order: First: to your widow or widower. Second: if none, to your child or children in equal shares, with the share of any deceased child distributed among that child's descendants.
What is the order of precedence in family? ›
The order of precedence is determined by the time of belonging. Those who were once a member of the family take precedence over those who came after them. Thus, the parents come before their children, the first-born child before the second, and so on.
Can you fight beneficiary designation? ›
Sometimes, that can lead to a shock when the account holder dies and the funds pass to someone else. When that happens it can raise the question: can a beneficiary designation be contested? The short answer is: yes.
An irrevocable beneficiary is a person or entity who is designated to receive the assets in your life insurance policy and cannot easily be changed or removed unless they consent.
What overrides a beneficiary on a bank account? ›
Wondering if a will overrides a beneficiary on a bank account? Generally, if the will conflicts with the beneficiary on a bank account, the banking beneficiary designation takes precedence.
Who is first in line for inheritance? ›
In the absence of a surviving spouse, the person who is next of kin inherits the estate. The line of inheritance begins with direct offspring, starting with their children, then their grandchildren, followed by any great-grandchildren, and so on.
What is the beneficiary rule? ›
A beneficiary is generally any person or entity the account owner chooses to receive the benefits of a retirement account or an IRA after they die. The owner must designate the beneficiary under procedures established by the plan.
What is true about beneficiary designations? ›
Beneficiary designations allow you to transfer assets directly to individuals, regardless of the terms of your will. Beneficiary designations are often made when a financial account, retirement account, or life insurance policy is established. But, these designations should be reviewed periodically.
What do I fill in beneficiary account? ›
Beneficiary Account Number: Enter the recipient's bank account number. Bank Name and Branch: Write the name of the bank where the beneficiary holds the account and the branch's name. IFSC Code of Beneficiary Bank: Fill in the IFSC code of the beneficiary's bank branch.
What percentage should I put for beneficiary? ›
If you decide to have more than one beneficiary, you will allocate a percentage of the death benefit for each, so that the total allocation equals 100%. A simple example of this would be allocating 50% to your partner, and 25% to each of your two children, for a total of 100%.
Which type of beneficiary should be named? ›
Primary and contingent beneficiaries
The person you want to receive the payout from your policy—your first choice—is called the “primary beneficiary.” If that person is your only beneficiary, you will also want to designate a secondary beneficiary (also known as a “contingent” beneficiary).
How do you split beneficiaries 3 ways? ›
Three common strategies for dividing an inheritance include:
- Per stirpes. One of the simplest strategies for asset distribution among heirs, this method requires that the estate be divided equally among each branch of the family. ...
- Per capita. ...
- Per capita by generation.
