What you need to know about beneficiaries
Whether retirement is right around the corner or you have many years to go, it’s a great time to review and update your beneficiaries. You can do this quickly online by logging in and selecting My Account. Here you can view and update your beneficiaries for your DRS plans, including DCP. If you are already retired, contact DRS to update your beneficiaries, because you could have a survivor as well.
Your beneficiary information tells DRS who receives your remaining benefit, if any, after your death. When you retire, your account could have a named survivor in addition to beneficiaries. Beneficiary and survivor are easy to mix up, but it’s important to know the difference.
About 1/3 of DRS customers do not have a beneficiary on file.
Log in to update yours today!
Beneficiary vs Survivor
If you haven’t retired from your plan, you only have beneficiaries. If you are retired, you could have both.
Beneficiary: Receives a lump-sum payment. When you die, your beneficiary receives a single one-time payment of any remaining contributions you made to your account. You can name as many beneficiaries as you want. If you’re retired, the beneficiary will only receive money if your original account balance has not been exhausted from pension payments AND if you have no survivor (or your survivor also dies).
Survivor: Receives a lifetime monthly payment. When you retire, you will have the option to choose a survivor. You can only name one survivor, and, in most cases, your selection is permanent. Instead of a lump-sum payment, your survivor receives lifetime monthly payments upon your death. Selecting a survivor is optional and will reduce your monthly payments.
No matter what, your original account balance is paid out
When you retire with a pension account, the money you’ve contributed during your career is invested to help fund your pension. No matter what, the original funds you paid into your retirement account will be paid out — either in the form of lifetime monthly payments to you (or your survivor if you name one) OR as a lump-sum payment to your beneficiaries if you (and any survivor) die. It takes an average of 3-5 years for customers to exhaust their original contribution amount balances. But because this is a lifetime pension, your payments continue beyond this point for as long as you live.
More about beneficiaries
All retirement plans can have beneficiaries. You can designate as many beneficiaries as you want and choose the percentage of your account balance you want them to receive. Change your beneficiaries at any time before and after retirement. When you die, your beneficiary receives a lump-sum payment of any remaining contributions you made to your account. However, if you are retired and your account has a named survivor, your beneficiaries will not receive any money unless your survivor also dies and the original account contribution balance still hasn’t been paid out in monthly payments.
You can select different beneficiaries for your pension and investment accounts. You can enter two types of beneficiaries: primary and contingent. Your contingent beneficiary would receive the payment if all primary beneficiaries are deceased.
If you are naming multiple beneficiaries, the total percentage distributed to them must equal 100%. You can name a child as a beneficiary, but you will also need to designate a custodian for them. You will have beneficiaries throughout your career and into retirement. It’s important to check-in on your selections and update as needed.
More about survivors
Adding a survivor is optional and only takes place when you are retiring (or sometimes after retirement in select circumstances). The survivor and the related benefit options you choose are permanent in most cases. Having a survivor option means you will receive a reduced monthly benefit. You can only name one survivor per retirement plan. If you don’t name a survivor, you will choose the option called single-life, which gives you the highest monthly benefit amount, but excludes survivor payments upon your death. Having a survivor reduces your monthly retirement income because the benefit (or a portion of it) continues beyond your death, even if your original contribution amount was already paid out to you.
If you die before your survivor, your survivor will continue to receive monthly benefit payments for their lifetime. If your survivor dies before you do, you can contact DRS to remove the survivor and increase your monthly benefit payments back to the single amount. If both you and your survivor die before your original contribution amount is paid out, your designated beneficiaries would receive the remaining balance.
Your named survivor can be anyone (yourself excluded). If you have a spouse, they might need to consent to your choice by cosigning your retirement application (the application will tell you). Washington is a community property state, and rules vary by plan.
Plan 3 customers: At retirement, you could select a survivor for your pension account and the same or different recipients as beneficiaries for your investment account. If you use your investment account to purchase a TAP Annuity, you have the option of selecting a survivor for this as well.
What happens if you don’t name any beneficiaries?
When you die, any benefits due will be paid to your surviving spouse or minor child. If you don’t have a surviving spouse or minor child, we will pay your estate. Review your beneficiary designation periodically, and update it in your online retirement account. If you marry, divorce or have another significant change in your life, review your beneficiary designations, because these life events might invalidate your previous choices.
- Log into your online account to view or update your beneficiary information. You can update your pension or investment account beneficiaries here.
- If you are retired, contact DRS to update your beneficiary information. You can also update your beneficiaries using this paper beneficiary form.
- Get to know the survivor benefit options you’ll have in retirement, including more information about the circumstances where a survivor could be changed. See a live or recorded benefit options webinar.
TRS and LEOFF members in Plan 1: Your plan rules for beneficiaries and survivors could vary from the content in this article. See your plan page or contact us for more information.