Q: A CSRS retiree elects a reduced annuity to provide a spouse survival benefit at retirement. If the CSRS retiree dies, would the spouse with survival benefit continue with her scheduled allotment and would there be any additional compensation for the rest of her life in regard to the deceased CSRS retiree’s retirement fund? Secondly, with the same arrangement where the spouse predeceased the CSRS retiree, would the CSRS retiree recover that scheduled allotment and increase his annuity?
A: If you were to die, your spouse would be entitled to a survivor annuity. Any of your retirement contributions that hadn’t been returned to you in your own annuity payments would be subsumed under her survivor annuity. Just as was true in your case, that portion of her annuity would be tax free, since you had already paid taxes on that money. If your spouse died before you, your annuity would be returned to the level it would have been had you not elected a survivor annuity. You wouldn’t be entitled to any refund of what it cost you to purchase that survivor annuity benefit.