Q. I retired from the Post Office in 1996 after 31 years. My retirement was under CSRS. My wife was covered all that time under the Survivors Benefit Program. She passed away in 2006. I suspended her SBP coverage in January 2007. I remarried in 2009. I have been trying to enroll my wife in the SBP since July 2010. Recently, I received a letter from OPM saying that would have to pay around $45,000 in penalties to enroll her. I believe they are wrong. Can you help?
A. You didn’t “suspend” your late wife’s eligibility for a survivor annuity. It was canceled when you notified OPM of her death, and your own annuity was prospectively restored to what it would have been had you not elected a survivor annuity. While I can’t tell you if the amount OPM has asked you to pay to provide a new survivor annuity right to your new spouse is correct, I can tell you how the amount is calculated. There will be two reductions in your own annuity. The first one is to provide the survivor benefit. The amount depends on whether you have elected to provide a full or a reduced benefit. The second one is a permanent actuarial reduction to pay the survivor benefit deposit. The deposit equals the difference between the new annuity rate and the annuity you were paid for each month since you retired, plus 6 percent interest.