4/2001 BENEFIT. beneficiary's. death. You may. Naming. should be

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1 Publication /2001 BENEFIT and BENEFICIARY When do I nominate or when may I change my beneficiary or survivor annuitant? When you retire, you name a beneficiary or survivor annuitant, the person(s) you wish to receive your retirement benefits upon your death. Maximum Single Life Annuity and Option 1 You may name one or more principal beneficiaries andd one or more contingent (secondary) beneficiaries. You may change your beneficiary at anyy time. Option 2, 3, or Special option 4 You may name only one survivor annuitant. If your designated survivor annuitant dies before you, or if you divorce or remarry after electing one of these options, you may name a new survivor annuitant/ beneficiary and/ /or elect a different option. If you do, your monthly benefit will be recalculated based on your new survivor annuitant or beneficiary's age and your age at the time of the change. It is likelyy that your monthly benefit will be reduced in such a recalculation. Contact PSERS for an estimate before making your change. Naming a minor as a beneficiary or a survivor annuitant If your beneficiary or survivor annuitant is under 18 years of age, a guardian should be designated for each minor named. A guardian is the person designated to handle financial affairs associated with PSERS benefits. Note: If your beneficiary predeceases you and a new election is not received at PSERS prior to your death, your benefits will be paid to your estate. Keeping your beneficiary designation up to date will ensure that benefits are paid promptly and properly.

2 What does my beneficiary need to do in the event of my death? In the event of your death, your beneficiary should contact PSERS by calling us toll free at Please have the member's name, social security number and date of death available upon calling. What important papers will PSERS require? Your beneficiary will need to supply a copy of your death certificate and the name of a person PSERS can contact in the event your documentation is not current. Please have available the contact's name, address and telephone number. Should my beneficiary return my retirement checks received after my death? Yes. PSERS will re-issue any monies due you prior to your death to your designated survivor annuitant/beneficiary. Where does my beneficiary send my death certificate and retirement check(s)? Public School Employees' Retirement System PO Box 125 Harrisburg PA How long will it take PSERS to pay my death benefit to my beneficiary? After PSERS receives a copy of your death certificate, we will write to the person who contacted us regarding your death to assist PSERS in securing all documents needed to process your benefit. Upon receipt of this information, PSERS will pay your death benefit promptly. PSERS is aware of the many difficulties your survivor annuitant/beneficiary may face at the time of your death. We strive to pay the death benefit as quickly as possible. PAYMENT What is the value of my death benefit? The value of your death benefit is determined by the option you selected at retirement and PSERS pays your death benefits accordingly. Your survivor annuitant/beneficiary will receive a prorated check for any benefits to which you were entitled for the month in which your death occurred. Maximum Single Life Annuity The maximum single life annuity provides the highest check amount for your lifetime. If at the time of your death, you have not received an amount equal to your contributions and interest, the balance will be paid to your beneficiary. Option 1 Under this option, your monthly benefit is reduced. The reduction is based on your sex and age at the time of retirement. A value, called the Total Value, is placed on your account at the time of your retirement. If at the time of your death, you have not received an amount equal to the total value of your account, the balance will be paid to your beneficiary.

3 Option 2 Under this option, your monthly benefit is reduced. This reduction is based on your sex and age and the sex and age of your designated survivor annuitant. You may name only one survivor annuitant. At the time of your death, your designated survivor annuitant will receive for their lifetime, the same monthly benefit that was being paid to you. Option 3 Under this option, your monthly benefit is reduced. This reduction is based on your sex and age and the sex and age of your designated survivor annuitant. You may name only one survivor annuitant. At the time of your death, your designated survivor will receive for their lifetime, one-half of the benefit that was being paid to you. Special Option 4 This option is used if none of the other retirement options fits your needs and allows you to customize your benefit by electing a specific percentage. The death benefit is designed at the time of your retirement. Contact PSERS directly for details of your selection. How do my Cost-of-Living Adjustments (COLAs) affect the benefit paid to my survivor? At the time of your death, if you had elected to receive a retirement benefit under Option 2, 3, or Special Option 4, your survivor annuitant will receive the appropriate percentage of your gross monthly benefit based on the option you selected at retirement. In the future, if the General Assembly enacts a cost-of-living increase and elects not to pass the member's increase on to the survivor annuitant, the survivor's monthly benefit may not reflect all past cost-of-living increases. Will my beneficiary receive future COLAs after my death? The Pennsylvania Constitution states that beneficiaries are not eligible for COLAs. It would require a change in the Pennsylvania Constitution to allow survivor annuitants to receive cost-of-living increases. Does my account accrue interest after my death? Upon your death, interest ceases to accrue on any remaining balance of the total value of your account. It is important for the proper paperwork to be submitted in a timely manner. TAXES What taxes will my beneficiary be responsible for after receiving my death benefit? The death benefit paid to your beneficiary is subject to federal income tax. While we do provide the tax information, we are not tax experts. We strongly recommend you seek professional tax advice.

4 How will my beneficiary report to the Internal Revenue Service the death benefit received from PSERS? At the end of each January, PSERS mails to its retirees, survivor annuitants and beneficiaries a 1099-R. This document is used to report any monies paid by PSERS to your beneficiary for the preceding calendar year. The 1099-R will provide your beneficiary or their tax preparer with the information needed to complete the U.S. Individual Income Tax Return (1040). If eligible, it may be to the recipient's advantage to use five-year or ten-year averaging for reporting a lump sum distribution. Any questions or concerns about taxes should be discussed with a tax consultant or the IRS. HEALTH INSURANCE Is my beneficiary entitled to a group health insurance plan? Not all beneficiaries are entitled to group health insurance coverage through PSERS. Spouses or survivor annuitants of a retired PSERS member may elect within 90 days of the death of the member or a qualifying event occurs, to be covered under one of the PSERS group health insurance plans. A qualifying event for a spouse or survivor annuitant would be: losing health care coverage due to termination of employment or losing coverage under and employer's plan reaching age 65 or becoming eligible for Medicare Coverage under either the Health Option Program's (HOP's) 65-Special Plan or Traditional Plan is based on whether a person is receiving Medicare benefits. Whether eligible for coverage under the 65-Special Plan or the Traditional Plan, your dependent(s) may choose either High Option or Standard Option Blue Cross/Blue Shield/Major Medical coverage, or coverage under a Point-of-Service (POS) Option or Health Maintenance Organization (HMO) Option if one is offered in your area. If your surviving spouse or dependent is receiving a monthly benefit, the premium is deducted from that benefit. Direct payment of premiums applies to beneficiaries who receive a lump sum payment or whose monthly benefit is less than the insurance premiums. Note: If the beneficiary dies and they are covered under one of the PSERS group health insurance plans, but not receiving a monthly benefit from PSERS, the death certificate needs to be sent directly to the Health Administration Unit, Health Administration Unit, PO Box 1764, Lancaster, PA Is my beneficiary entitled to receive premium assistance? Premium assistance is a tax-free benefit for PSERS eligible members and not available to the surviving spouse or dependents.

5 QUESTIONS If I have more questions about my PSERS benefits, whom shall I call? You may contact PSERS about any benefit questions. If your beneficiary has any questions concerning the completion of the death benefit paperwork, they may contact PSERS with their questions. We have nine locations across the Commonwealth to assist you. We have nine locations across the Commonwealth to assist you.