Retirement Option 2 and 4 Beneficiary Continuance Percentage Limits
If you choose Retirement Option 2 which leaves a 100% continuance to a beneficiary, or if you choose Retirement Option 4 and want to designate a 100% (or similar high percentage) continuance to one or more beneficiaries, the IRS may limit the continuance percentage that we can pay to your beneficiary(ies).
Your beneficiary’s benefit will be limited based on the IRS Limit for Non-Spouse Beneficiaries if both of the following are true:
- Your beneficiary is more than 10 years younger than you, AND
- They are not your spouse, state-registered domestic partner, or Alameda County domestic partner.
What Maximum Percentage Can You Leave Your Non-Spouse Beneficiary?
The IRS provides a formula and a table that helps you find the maximum percentage you can provide for your non-spouse (and non-domestic partner) beneficiary. Simply calculate the Adjusted Employee/Beneficiary Age Difference, then find the percentage in the table.
Formula
A = Retiring ACERA Member’s Age on Their Birthday in the Calendar Year That They Retire
B = Beneficiary’s Age on Beneficiary’s Birthday in the Calendar Year That ACERA Member Retires (use the youngest beneficiary if naming more than one for Option 4)
(A – B) – (70 – A) = Adjusted Employee/Beneficiary Age Difference
Table
| Adjusted Employee/Beneficiary Age Difference | Maximum Percentage Continuance Beneficiary Can Receive With Retirement Options 2 and 4 |
|---|---|
| 10 years or less | 100% |
| 11 | 96% |
| 12 | 93% |
| 13 | 90% |
| 14 | 87% |
| 15 | 84% |
| 16 | 82% |
| 17 | 79% |
| 18 | 77% |
| 19 | 75% |
| 20 | 73% |
| 21 | 72% |
| 22 | 70% |
| 23 | 68% |
| 24 | 67% |
| 25 | 66% |
| 26 | 64% |
| 27 | 63% |
| 28 | 62% |
| 29 | 61% |
| 30 | 60% |
| 31 | 59% |
| 32 | 59% |
| 33 | 58% |
| 34 | 57% |
| 35 | 56% |
| 36 | 56% |
| 37 | 55% |
| 38 | 55% |
| 39 | 54% |
| 40 | 54% |
| 41 | 53% |
| 42 | 53% |
| 43 | 53% |
| 44 and greater | 52% |
More Information
Complete information about the the IRS Limit for Non-Spouse Beneficiaries can be found under the “Joint and survivor annuity, non-spouse beneficiary” section starting on page 24 of this IRS memo.