OPM FERS retirement lump sum death benefits

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If an annuitant dies before they receive the retirement contributions made into FERS, is the beneficiary entitled to the amount of the contributions plus interest, even if there is no survivor annuity payable? What is the interest rate on the death benefits? Also, what percent of the monthly FERS annuity payment would be considered the return of contributions – is it the non-taxable portion only?

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Asked on May 22, 2018 8:01 pm
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If no survivor annuity is payable upon the retiree’s death, any remaining portion, representing either the remaining annuity and/or retirement contributions not paid to the retiree, is payable to the person or persons eligible under the statutory order of precedence. If the court assigned payment under a court order, OPM will pay the lump sum in accordance with that court order. Otherwise, no interest accrues on the unpaid balance from the retirement fund. And the monies are paid out using the retiree’s contributions first, so it normally takes less than nine months for FERS retirees to exhaust their contributions into the retirement system.
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Answered on May 22, 2018 9:52 pm
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That amount is different from the amount shown on the 1099. According to the 1099 tax information , only 2% is considered a return of contributions, the rest is taxable. You indicate the entire payment from day 1 is a return of contributions; but according to the 1099 it is only 2%?

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Answered on May 24, 2018 5:15 am