Summary

Explains SDRS death benefits available when an active member passes away, including family benefits for dependent children, surviving spouse benefits, early spouse benefit options, eligibility rules, payment calculations, and the importance of keeping beneficiary information updated.

 

 

Death Benefits If You Die While Still Employed (Active Member)

Eligibility for Death Benefits (While Employed)

Your spouse and dependent children are eligible if:

• You were a contributing member with at least 3 years of credited service, or
• You died while performing your usual job duties

and

• Your death occurred before reaching normal retirement age or retiring.

 

Definition of Child

For SDRS purposes, a child is:

• An unmarried dependent child of the member who is under age 19
• An unmarried dependent child, who is totally and permanently disabled, either physically or mentally, regardless of the child's age, if the disability occurred before age 19
• A stepchild or foster child who depends on you for financial support and lives in your household in a regular parent-child relationship
• A child of the member conceived during your lifetime and born after your death

 

Definition of Spouse

For SDRS purposes, a spouse is an individual who was:

• Married to you at the time of your death, and
• Married to you for more than 12 months before your death

 

 

Family Benefit

Payable on behalf of your eligible dependent children under age 19.

 

The family benefit equals the greater of:

• 25% of your Final Average Compensation (FAC), or
• Your unreduced accrued retirement benefit at the time of your death.

 

Additional details:

• The total benefit is divided equally among eligible dependent children.
• Payments are issued to each child’s conservator or custodian.
• As each child reaches age 19, the benefit is reallocated among remaining eligible children.
• Payments end when all dependent children reach age 19.

 

SDRS cannot make payments directly to minors! 

Payments on behalf of a minor child must be issued to the child's custodian or conservator. IMPORTANT: Your spouse and/or child's other parent is not a custodian by default!

 

Option 1: Custodian (Recommended Method)

Under the Uniform Transfers to Minors Act (UTMA), a custodian is a responsible adult designated to manage the child's SDRS funds until the child reaches age 18.

• To appoint a custodian for SDRS purposes, you must complete an SDRS Transfer to Minor Form. This form is available through your SDRS account online or by contacting the SDRS office. This form should be completed even if the intended custodian is the surviving parent or your spouse!

Option 2: Court-Appointed Conservator

If no custodian is designated (as described above), SDRS cannot disburse any funds until a conservator is appointed by the court, a process that can be costly and time-consuming.

 

Surviving Spouse Benefit

Becomes payable when your eligible surviving spouse reaches:

• Age 65 for Foundation members
• Age 67 for Generational members

 

The benefit amount is calculated as follows:

• If a family benefit was paid:
  • Your spouse receives 60% of the family benefit amount in effect when the family benefit ended, increased by the annual cost-of-living adjustment.
• If a family benefit was not paid:
  • Your spouse receives 60% of whichever of the following is greater:
    • 25% of your Final Average Compensation (FAC), with annual cost-of-living adjustments; or
    • Your unreduced accrued retirement benefit, with annual cost-of-living adjustments)
  • Payments continue for the lifetime of your spouse.

 

Early Surviving Spouse Benefit

Your spouse may elect benefits early:

• Foundation: As early as age 55
• Generational: As early as age 57

 

The benefit is reduced by 5% for each year (prorated for partial years) before age 65 (Foundation)/67 (Generational).

 

Benefits for Other Beneficiaries

• If there is no eligible spouse or eligible dependent children, SDRS will pay a lump-sum refund to your designated beneficiaries.
• If no beneficiary is listed, payments will be made to all surviving children. If there are no surviving children, payment will be made to your estate.

 

 

Why Keeping Beneficiaries Updated Matters

• Ensures the correct person receives lump-sum beneficiary refund payments, if applicable
• Reduces delays in benefit payments
• Prevents disputes or legal complications after a member’s death