Death Before Retirement

Applicable to all members

If you die before you begin receiving retirement benefits your beneficiary will be entitled to receive a death benefit as listed below:

*The denominator is 22 for Special Service Members.

If you are vested or active

If you designated only one person as your beneficiary, your beneficiary may choose between a lump-sum payment or a lifetime monthly benefit. If the monthly benefit is less than $50 per month, you will receive a lump-sum payment. See “Death Benefit Examples” later on this page for more information.

 Federal law permits a member’s spouse or former spouse to roll over the pretax portion of a lump-sum death benefit to a traditional IRA or an eligible retirement plan, which includes plans qualified under section 401(a) of the Internal Revenue Code (IRC). In some cases, after-tax amounts are also eligible for rollover transfers. Rolling over the taxable portion to another retirement plan or an IRA allows the funds to continue to grow on a tax-deferred basis until the current or former spouse retires. Non-spouse beneficiaries have the same rollover rights as spouses and former spouses, except their rollovers can only be made to IRAs that follow inherited IRA rules. 

The IRC requires that lump-sum death benefits for an IRC section 401(a) plan cannot exceed 100 times the expected monthly payout the member would have received under IPERS Option 2 if the member had been at normal retirement age at the time of death. Death benefits may be reduced to comply with this requirement.

If you are not vested by service are are inactive

Regardless of the number or type of beneficiary(ies) designated, death benefits will be paid as a lump-sum payment as explained above. If you are an inactive nonvested member, the lump-sum preretirement death benefits for your beneficiary(ies) will be calculated using a formula that includes how much you contributed to IPERS, years of service, highest salary and other factors. Your beneficiaries cannot receive a benefit based on the present value of your accrued benefits at death or a monthly benefit.

Death benefit examples

When a member dies prior to retirement, IPERS calculates the death benefit two ways and pays the higher of the two. The following table displays how it works.

IPERS will pay the highest of these two calculations. In the above example, Calculation 2 was higher, so the death benefit will be $87,606.46.

Line-of-duty death benefits

If a Special Service member’s death is the direct result of a personal injury incurred in the line of duty, as determined by IPERS, a non-taxable line-of-duty death benefit of up to $100,000 may be payable in addition to other death benefits. 

IPERS-covered volunteer emergency workers may receive this coverage under a state-sponsored benefit program with the Department of Public Safety.

Maximum death benefits

The Internal Revenue Code requires that lump-sum death benefits for an IRC section 401(a) plan cannot exceed 100 times the expected monthly payout the member would have received under Option 2 if the member had reached normal retirement age at the time of death. Line-of-duty death benefits may be reduced to comply with this requirement.

Report a death

Please notify IPERS as soon as possible after a death, as this will help ensure that benefits are paid properly and quickly. Benefits are paid according to the most recent beneficiary designation on file with IPERS.

• View the Report a Death Form.
• Contact IPERS.