It’s not a topic anyone likes to discuss, but have you ever wondered what happens if you pass away before you can take your retirement?
If you were to pass before retiring, your contributions and interest, plus your employer’s contributions and interest, plus any service purchase payments you may have made, will be paid out to your beneficiary as a survivor benefit. This payment can either be in a one-time lump sum payment or a lifetime monthly annuity if the survivor benefit is calculated to be at least $100 a month. This is one reason why it’s so important to have a named beneficiary with the ASRS!
Should you pass away before retirement without a beneficiary on record, the ASRS must follow Arizona Revised Statute § 38-762 to determine who will receive survivor benefits in the following order:
- Your surviving spouse
- Your surviving natural or adopted children in equal shares
- Your surviving parents in equal shares
- Your estate.
Following this order of priority process can take several months and require additional paperwork from the survivor(s) before the ASRS can properly pay out any survivor benefits. This can create unwanted hardship or frustration for your loved ones as they are trying to claim a survivor benefit.
Also, remember that when your beneficiary is updated with your employer, it does not get updated with the ASRS. If you updated your beneficiary with your employer, make sure to also update it directly with the ASRS.
You can easily assign or change your beneficiary(ies) in your myASRS secure account. Your beneficiary can be one or more individuals, your trust, an organization, or any combination of these options, with designated split percentages that must add up to 100%. If you are married, you are required to name your spouse for at least 50% of any survivor benefit unless your spouse consents to waive that right. To waive this requirement, your spouse must sign a notarized spousal consent form. If your spouse is your named beneficiary, but then you divorce, the divorce automatically terminates your ex-spouse as your beneficiary. To rename an ex-spouse – or anyone else – as a beneficiary, you must submit a new Beneficiary Form after the date of the divorce.
Pleae also be aware that it’s important for your surviving beneficiary to know how to contact the ASRS should you pass away. We provide the next steps on our Report a Death page, including how to contact us, what happens after we receive the report, and an explanation as to how much a beneficiary will receive in survivor benefits.
It’s essential to keep your beneficiary information updated both with your employer and the ASRS. Should you pass away mid-career, ensure the money associated with your account goes where you want it to by assigning a beneficiary and keeping the information current.
