As you retire and select your plan of retirement, you will also be selecting primary and secondary beneficiaries. If you choose a beneficiary who is more than ten years younger than you, who is not your spouse, your benefit may be subject to the required minimum distribution incidental benefit (MDIB) rules of the Internal Revenue Service. These rules regulate the amount of your pension that can be distributed to a non-spouse survivor. For more information, go the IRS website.
You may change the beneficiaries you selected as an active member at the time you are applying for retirement. In retirement, a secondary beneficiary is eligible to receive a refund of remaining contributions and interest, but not a monthly benefit, upon the death of the retiree and his/her primary beneficiary.
When completing the retirement application for any survivorship plan you must designate a primary and secondary beneficiary. Primary and secondary beneficiaries cannot be the same person.
If you select Plan A or Plan B – Option 1, you have selected a plan which provides for a possible lump-sum refund of any remaining funds. You may designate one or more beneficiaries and you may change your beneficiaries at any time as long as there remains money to be refunded. Should your beneficiary predecease you, you may select another. If, at your death, you do not have a beneficiary selected or your beneficiary is also deceased, TRS will refund any remaining funds to your estate.
If you select Plan B – Option 2, 2 Pop-Up, 3, 3 Pop-Up, or 4, you have selected a plan that provides a monthly benefit to your primary beneficiary(ies). In very limited cases, as described below, you can change your beneficiary, but generally your designation will not change.
When choosing one of these plans, you must select both a primary and secondary beneficiary(ies). A secondary beneficiary(ies) is provided to ensure that in the event of your death and the death of your primary beneficiary(ies) any remaining funds in your account will be refunded in a lump-sum to the secondary beneficiary. For this calculation, the total amount of your contributions and interest at the date of your retirement is reduced monthly by the gross benefit received by you and subsequently your beneficiary. If your primary beneficiary predeceases you and if any funds are remaining at your death, they will be refunded to your secondary beneficiary. If you predecease your primary beneficiary, at the death of your primary beneficiary, any remaining funds will be refunded to your secondary beneficiary.
We suggest that as long as your beneficiary is alive and monies remain in your account, you list a person or organization as your secondary beneficiary rather than your estate, as it is possible that you and your primary beneficiary could both die leaving funds to be paid to your estate, which may already be closed.