Many federal employees are aware of the survivor annuity benefit elected at retirement and understand that it allows them to leave a portion of their FERS pension to a beneficiary upon their death. But few are aware of the child survivor annuity benefit. Although both may sound similar, the survivor annuity elected at retirement and the child survivor annuity are separate benefits with different eligibility requirements, costs, and benefit amounts. So, in this article, we’ll review the details of this little-known benefit.
What Is The Child Survivor Benefit?
The Child Survivor Benefit provides a fixed monthly benefit to your eligible dependent children when you die as an active federal employee or retiree. This benefit is automatically provided, so no election is required at retirement. Additionally, there is no reduction in your FERS monthly pension to provide the survivor benefit, meaning it doesn’t cost you anything.
For your child to be eligible, you must have completed at least 18 months of creditable civilian service at the time of your death, and your child must meet the following criteria: be an unmarried dependent under 18 years of age (age 22 if a full-time student) or must be incapable of self-support due to a physical or mental disability that began before age 18. Your child will be entitled to the monthly benefits until they marry, die, or recover from the disability and become capable of self-support.
The child survivor benefit is a flat dollar amount established by law and not tied to the FERS pension of the federal employee/retiree or any survivor benefit paid to a spouse. The amount of the benefit increases at the rate of the CSRS COLAs, and the specific benefit received depends on the circumstances of the family as described below:
For instance, in 2020, If the surviving child has a living parent who was married to the deceased employee or annuitant, the benefit payable is the lesser of: (1) $545 per child or (2) $1,636 divided by the number of eligible children.
If the child has no living parent, the benefit payable is the lesser of: (1) approximately $664 per child, or (2) $1,993 divided by the number of eligible children.
Note: The benefit amount can be recalculated as the family’s situation changes. For example, if there are four children and one becomes ineligible due to aging out, the benefit will be recalculated for the remaining three children.
The Social Security Offset
If you thought that a free survivor benefit sounded too good to be true, you’re partially right. Here’s the catch, any benefit payable to the surviving children is offset dollar for dollar by any Social Security benefits payable to them.
What does this mean? It means that for the majority of surviving children, their FERS annuity will be offset by their Social Security benefits since their Social Security benefits will likely be much more.
As disappointing as this offset is, remember that the child survivor benefits continue until the child is 22 if a full-time student. In contrast, Social Security benefits for children are only payable until age 18 (age 19 if in high school). Hence, surviving children may still benefit from this program.
Note: Although an election does not need to be made for the child survivor benefit, an application must be submitted along with a copy of the Social Security Administration award or denial letter to OPM.
Although the child survivor benefit will provide little to no income for most surviving children, it may be an essential income stream for survivors over the age of 18 who are a full-time student. Hence, this no-cost benefit is one of the many federal benefits you should understand and incorporate in your financial plan. As always, if you are not confident about building your financial plan, consult a qualified financial planner.
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