Current Pension Topics: Death-Benefit Provisions And Beneficiary-Picking

Current Pension Topics
Death-Benefit Provisions And Beneficiary-Picking


Following are some more questions and answers as published by the Teachers' Retirement System of the City of New York.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by telephone at (732) 536-9472, or via e-mail at rollover@optonline.net.

Q.: If I should die while I am an in-service member, will my beneficiary receive anything?

A.: When an in-service member dies, TRS may provide a death benefit to the member's beneficiary. Tier I members have one standard death benefit plan. Before January 1, 2001, Tier II, III, and IV members were required to choose from two death benefit plans when they enrolled in TRS; if they did not make this election within 90 days, they were deemed to have chosen Death Benefit #2.

October 1, 2000 was the effective date of a law that made two important changes to TRS' death benefits program. Under this law, for beneficiaries of members who elected Death Benefit #1, the greater of either Death Benefit #1 or Death Benefit #2 would be payable after the member's death. The law also eliminates the Death Benefit #1 option for members enrolling in TRS after January 1, 2001.

For members not covered by a collective bargaining agreement, the implementation date of this law was October 1, 2000. For members who are covered by a collective bargaining agreement, the implementation date is contingent on the ratification of a new collective bargaining agreement. However, implementation of the law would be retroactive to October 1, 2000.

Q.: How may I choose or change a beneficiary?

A.: New members receive a "Designation of QPP Beneficiary Form" with their enrollment application and should file both forms together. In-service members may change their beneficiary by filing a new "Designation of QPP Beneficiary Form" (code EN6) at any time. Participants in the TDA Program may designate a beneficiary for their TDA funds by filing a "Designation of TDA Beneficiary Form" (code EN8). You may obtain these forms through the "Publications/Forms" section on our Web site, or by calling TRS at 1 (888) 8-NYC-TRS and selecting Option 3 on the TRS Service Line's main menu.

Q.: Are married members required to designate their spouse as their beneficiary?

A.: No. They may designate someone else if they choose.

Q.: What should I do if I want to leave my death benefit to my estate or to a trust?

A.: In order to designate your estate as a beneficiary, simply write "estate" in the name section of your beneficiary form. If you would like to designate a trust, you must indicate this on the beneficiary form, attach a copy of the will or trust, and file TRS' "Verification of Trust Instrument Legality" form (code EN4) with your beneficiary designations. You may order this form through the "Publications/Forms" section on our Web site, or by calling TRS at 1 (888) 8-NYC-TRS and selecting Option 3 on the TRS Service Line's main menu.

Q.: What is a "Benefits Letter"?

A.: A Benefits Letter, which TRS sends each retiree, shows the member's monthly and annual retirement allowance amounts. In addition, it provides the specific information used to calculate the member's retirement allowance.

Q.: When will I receive my Benefits Letter?

A.: You will most likely receive your Benefits Letter from TRS several weeks after receiving your first retirement check. The letter is sent out after the processing of your retirement is completed.

Q.: Why does my retirement allowance differ from the amount that my union representative calculated?

A.: The figures used by your union representative were estimates. Several factors included in the actual retirement allowance calculation may not have been known to your union representative when he or she made the estimate. These factors may have included changes in unit value, your recent investment elections, the payment option you chose, your Final Average Salary, your total service credit, and whether you took a loan or made an excess withdrawal at retirement.

Q.: What should I do if I disagree with information in the Benefits Letter?

A.: You should file a "Benefits Letter Inquiry Form" (code RC1), along with a copy of the page of your Benefits Letter. Please highlight the information that you believe needs to be corrected, explain the discrepancy, and include supporting documentation. You may obtain this form through the "Publications/Forms" section on our Web site or by calling TRS at 1 (888) 8-NYC-TRS and selecting Option 3 on the TRS Service Line's main menu.