§8434 Annuities: methods of payment; election; purchase

Summary

The Board must set the ways annuity payments can be made. Those ways must include a monthly payment just for the annuitant, a joint monthly payment for the annuitant and spouse with a survivor payment to whoever lives longer, versions of those two that can rise but never fall year-to-year, and a joint option where the other person can be a former spouse or someone who has an insurable interest in the annuitant. Anyone (an employee, Member, former employee, or former Member) who chooses an annuity must pick one of these payment methods by the time the annuity contract is bought, under rules set by the Executive Director. If a method is dropped, a person whose annuity starts less than 5 years after that drop can still choose the old method. No earlier than 90 days (or a shorter time the Executive Director allows) before payments start, the Executive Director must use the annuitant’s account balance to buy an annuity contract from a company that sells annuities. The contract must follow the law’s rules and include protections the Executive Director requires. The issuer must provide a bond or proof of financial responsibility. States, the District of Columbia, Puerto Rico, and their local governments cannot tax the money used to buy the annuity. A company that sells the annuity can still be taxed on its profits if that tax applies broadly to business activity.