Ask The Experts: Retirement

By Reg Jones

‘Second reduction’ and survivor annuity

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Q. My wife died and I remarried. I took out a survivor annuity for her when I remarried. What is the “second reduction”? I just received a letter from the Office of Personnel Management telling me that if I want the survivor annuity, there would be a second reduction for three years. If I should die before that time, would she still receive the annuity?

A. When you elect a survivor annuity after retirement, there are two reductions in your annuity. The first is the standard deduction to provide a survivor annuity. The second is a permanent actuarial reduction to pay for the survivor benefit deposit. It equals the difference between the new annuity rate and the annuity paid to you for each month since retirement, plus 6 percent interest. The amount of the deposit is determined by dividing the amount of the deposit by an actuarial factor for your age on the date your annuity is reduced. As long as you were married for at least nine months before your death, your spouse would be entitled to the survivor annuity.

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