Death benefits
Awarding military service credits
Under current law, members leaving IPERS-covered employment for active military duty receive free service credits for the time they are gone only if they return to a job with IPERS coverage. The new law creates a way to credit the accounts of members who die because of their military service. Since service credits are part of the formula used to figure death benefits, this change could increase payments to beneficiaries.
Under the new law, IPERS can award free service credit for active duty when a member:
- Serves in a combat zone or hazardous duty area,
- Sustains a service-related injury or disease that prevents the member from returning to IPERS-covered employment, and
- Dies of a service-related injury or disease within two years after suffering the injury or disease.
Effective July 1, 2008
Iowa Code Section Amended: 97B.1A(20)
Paying death benefits to minors
This change allows IPERS to pay up to $25,000 in death benefits to an adult custodian of a minor named as the beneficiary without court oversight. This raises IPERS’ $10,000 limit to the limit set in Iowa Code Chapter 565B, Transfers to Minors.
Lawyers helping families suggested the change because legal fees associated with court intervention were disproportionate to the value of the death benefits, resulting in a financial hardship.
Effective July 1, 2008
Iowa Code Section Amended: 97B.34A
Transferring death benefits to other retirement accounts
These changes are consistent with changes made by the Internal Revenue Service. IPERS can now transfer (roll over) a deceased member’s account to a traditional or Roth IRA selected by a beneficiary who is not the deceased member’s spouse. In the past, only a spouse named as the beneficiary of a deceased IPERS member had rollover rights.
Effective: Traditional IRA retroactive to January 1, 2007
Roth IRA retroactive to January 1, 2008
Iowa Code Section Amended: 97B.53B
Death benefits after retirement
Although all IPERS members have death benefits before retirement, retirees decide whether they will have death benefits after retirement.
When you applied for IPERS benefits, you chose from up to six benefit options. Your choice determines the death benefits available to your beneficiaries, and affects how much you receive each month. In general, as death benefits increase, the monthly pension decreases.
Retirees who selected Option 3 receive the highest monthly pension but have no death benefits. Other options have decreased monthly pensions but allow for various death benefits. Options 4 and 6 which allow for lifetime monthly payments to a beneficiary, lower the pension amount the most.
|
