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FEDERAL EMPLOYEES RETIREMENT SYSTEM (FERS)

COST OF THE FORMER SPOUSE SURVIVOR ANNUITY

PART TWO

The focus of this article:

WHO PAYS THE COST OF A FORMER SPOUSE SURVIVOR ANNUITY.

This cost is expressed by a reduction of the employee's "Basic Annuity" as explained below. [1]

Clarification and Explanation.

There are two forms of the FERS, Former Spouse Survivor Annuity.

Form # 1. Full FSSA.

The Full FSSA: 50% of the retiree's Basic Annuity

Form # 2. Half FSSA.

The Half FSSA: 25% of the retiree's Basic Annuity

Example.

Listajo Pacaro retires with a Basic Monthly Annuity of $3,000.00

FSSA Net

Basic Mo. Annuity Full (50%) Cost [2] Basic Annuity Paid to FS

$3,000.00 $1,500.00 $300.00 $2,700.00 $1,500.00

Clarification of "Paid to FS".

This is the amount to be paid upon the death of the retiree. Regarding the "living annuity benefit" paid to the Former Spouse this would be determined by her award. If this Former Spouse was to receive 50% of the Basic Annuity this would be $1,350.00 ($2,700.00 * 50% = $1,350.00).

Reminder:

The reductions do not reduce the actual FSSA. This will be either 50% or 25% of the unreduced Basic Annuity.

FSSA

Basic Mo. Annuity Half (25%) Cost Basic Annuity Paid to FS [3]

$3,000.00 $750.00 $150.00 $2,850.00 $750.00

Caveat.

The informed attorney is aware of 5 C.F.R. 838.807(c), which provides:

Unless the court order otherwise directs, OPM will collect the annuity reduction required by section 8339(j)(4) or section 8419 of title, 5, United States Code, from the employee annuity.

The above citation is the OPM default position. However, the following alternative payment options are available provided it is clearly delineated in the Marital Settlement Agreement and inserted into the ensuing COAP.

FSSA Cost Allocation Options:

# 1. Full cost allocated to Retiree

# 2. Full cost allocated to Former Spouse

# 3. Proportionate Allocation of Cost

# 4. Stated percentage to each spouse

Other than the nescient attorney representing the employee/retiree, Option #1 will be rejected. The informed attorney representing the employee/retiree will argue that the burden should follow the benefit. Since the full benefit of the FSSA inures to the Former Spouse, this spouse should assume the full cost.

The informed attorney representing the employee/retiree will also reject option #3. When a "Boyett" formula award to the Former Spouse is a part of the settlement, the employee/retiree receives the greater percentage of the benefit. [4] To allocate proportionately or "equally" is to transfer the greater cost burden to the employee/retiree.

Summary.

When Boyett is followed the Florida attorney representing the employee/retiree will argue for Option # 2 or Option # 4. Alternatively, the Florida attorney representing Former Spouse will press for Option # 1 or Option # 3.



[1] The monthly retirement benefit paid to a FERS retiree.

[2] Cost is 10% of Basic Annuity.

[3] See above clarification of "Paid to FS".

[4] Math not shown. If the total years of marriage are less that total years of service, the percent awarded to the FS will be less than 50%. Thus, the greater share of the benefit inures to the retiree. If the cost allocation is proportionate, the retiree bears the greater portion of the cost. If you remain unclear contact Troyan.