Q. I’m a CSRS postal worker considering retirement. What happens to the money I’ve contributed to my pension when I retire or die while retired?
A. Because you would have already paid taxes on the amount you contributed to the retirement system, a portion of your annuity will be nontaxable, following the rules published by the Internal Revenue Service. Therefore, if you have a spouse who is entitled to a survivor annuity, any contributions that haven’t been paid out to you would transfer over to his or her annuity and continue to be nontaxable until they ran out. If you have no spouse who is eligible for a survivor benefit, the remaining money would be distributed according to the standard order of precedent, which begins with you child or children and continues through your relations until it ends being decided by the laws if the state where you lived.
