B-70003, OCTOBER 16, 1947, 27 COMP. GEN. 214

B-70003: Oct 16, 1947

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1947: I HAVE YOUR LETTER OF OCTOBER 2. YOU STATE THAT THE FUNDAMENTAL PURPOSE IN MAKING RETIREMENT DEDUCTIONS IS TO PROVIDE A FUND WHICH WILL BE AVAILABLE TO PAY PART OF THE COSTS OF RETIREMENT ANNUITY AND THAT THE SPIRIT OF THE LAW IS NOT SERVED BY MAKING RETIREMENT DEDUCTIONS FROM THE FINAL SALARY OF DECEASED EMPLOYEES WHO WILL NOT RETIRE AND RECEIVE ANNUITY. IT IS FURTHER STATED THAT THE AVERAGE AMOUNT OF THE RETIREMENT DEDUCTIONS INVOLVED IS SO SMALL AS NOT TO JUSTIFY THE ADDITIONAL TIME AND EFFORTS EXPENDED. THE ATTENTION OF THIS OFFICE WAS CALLED TO THE PROVISIONS OF THE ACT OF JUNE 22. IT WAS THEREIN SUGGESTED THAT THE PRACTICE OF MAKING PAYMENT OF COMPENSATION DUE DECEASED EMPLOYEES IN THE GROSS AMOUNT BE CHANGED AND DEDUCTIONS BE MADE FROM SUCH PAYMENTS FOR CREDIT TO THE CIVIL SERVICE RETIREMENT FUND.

B-70003, OCTOBER 16, 1947, 27 COMP. GEN. 214

DECEDENTS' ESTATES - RETIREMENT DEDUCTIONS - FINAL SALARY PAYMENTS THERE MAY NOT BE DISCONTINUED THE PRESENT PRACTICE OF DEDUCTING THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND PERCENTAGE FROM THE FINAL SALARY PAYMENT OF A DECEASED EMPLOYEE, IN VIEW OF THE PROVISIONS OF THE ACT OF JUNE 22, 1934, DIRECTING PAYMENT OF CIVILIAN RETIREMENT DEDUCTIONS OF A DECEASED EMPLOYEE TO HIS DESIGNATED BENEFICIARY AND PRESCRIBING A LINE OF DESCENT, IF THERE BE NO SUCH BENEFICIARY, WHICH DOES NOT COINCIDE WITH THAT CONTROLLING THE PAYMENT OF FINAL SALARY UNDER THE LAWS OF DESCENT AND DISTRIBUTION OF THE DECEDENT'S DOMICILE.

COMPTROLLER GENERAL WARREN TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, OCTOBER 16, 1947:

I HAVE YOUR LETTER OF OCTOBER 2, 1947, REQUESTING THAT CONSIDERATION BE GIVEN TO THE QUESTION OF THE ADVISABILITY OF CONTINUING THE PRACTICE OF DEDUCTING FIVE PERCENT FROM THE FINAL SALARY OF A DECEASED EMPLOYEE FOR DEPOSIT TO THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND. YOU STATE THAT THE FUNDAMENTAL PURPOSE IN MAKING RETIREMENT DEDUCTIONS IS TO PROVIDE A FUND WHICH WILL BE AVAILABLE TO PAY PART OF THE COSTS OF RETIREMENT ANNUITY AND THAT THE SPIRIT OF THE LAW IS NOT SERVED BY MAKING RETIREMENT DEDUCTIONS FROM THE FINAL SALARY OF DECEASED EMPLOYEES WHO WILL NOT RETIRE AND RECEIVE ANNUITY. IT IS FURTHER STATED THAT THE AVERAGE AMOUNT OF THE RETIREMENT DEDUCTIONS INVOLVED IS SO SMALL AS NOT TO JUSTIFY THE ADDITIONAL TIME AND EFFORTS EXPENDED.

SECTION 724 (D), TITLE 5, U.S. CODE, PROVIDES:

(D) IN CASE AN EMPLOYEE SHALL DIE WITHOUT HAVING ATTAINED ELIGIBILITY FOR RETIREMENT OR WITHOUT HAVING ESTABLISHED A VALID CLAIM FOR ANNUITY, THE TOTAL AMOUNT OF HIS DEDUCTIONS WITH INTEREST THEREON SHALL BE PAID, UPON THE ESTABLISHMENT OF A VALID CLAIM THEREFOR, IN THE FOLLOWING ORDER OF PRECEDENCE:

FIRST, TO THE BENEFICIARY OR BENEFICIARIES DESIGNATED IN WRITING BY SUCH EMPLOYEE AND RECORDED ON HIS INDIVIDUAL ACCOUNT;

SECOND, IF THERE BE NO SUCH BENEFICIARY, TO THE DULY APPOINTED EXECUTOR OR ADMINISTRATOR OF THE ESTATE OF SUCH EMPLOYEE;

THIRD, IF THERE BE NO SUCH BENEFICIARY OR EXECUTOR OR ADMINISTRATOR, PAYMENT MAY BE MADE, AFTER THE EXPIRATION OF THIRTY DAYS FROM THE DATE OF THE DEATH OF THE EMPLOYEE, TO SUCH PERSON OR PERSONS AS MAY APPEAR IN THE JUDGMENT OF THE CIVIL SERVICE COMMISSION TO BE LEGALLY ENTITLED THERETO, AND SUCH PAYMENT SHALL BE A BAR TO RECOVERY BY ANY OTHER PERSON.

BY LETTER OF AUGUST 14, 1935, FROM THE CIVIL SERVICE COMMISSION, THE ATTENTION OF THIS OFFICE WAS CALLED TO THE PROVISIONS OF THE ACT OF JUNE 22, 1934, 48 STAT. 1202, NOW INCORPORATED IN THE ABOVE-QUOTED SECTION OF THE CODE, AND IT WAS THEREIN SUGGESTED THAT THE PRACTICE OF MAKING PAYMENT OF COMPENSATION DUE DECEASED EMPLOYEES IN THE GROSS AMOUNT BE CHANGED AND DEDUCTIONS BE MADE FROM SUCH PAYMENTS FOR CREDIT TO THE CIVIL SERVICE RETIREMENT FUND. IN DECISION OF MARCH 23, 1936, A 61507, 15 COMP. GEN. 829, THIS OFFICE ACQUIESCED THEREIN AND PROMULGATED REGULATIONS ACCORDINGLY--- SECTION 10 OF THE CURRENT REGULATIONS ( GENERAL REGULATION 106, OCTOBER 9, 1946, 26 COMP. GEN. 975) PROVIDING, AS FOLLOWS:

10. CLAIMS FOR PAYMENTS OF BASIC COMPENSATION AND ALLOWANCES ON ACCOUNT OF PERSONAL SERVICE RENDERED PRIOR TO THEIR DEATH BY FORMER EMPLOYEES, WHICH ARE REQUIRED TO BE SETTLED IN THE GENERAL ACCOUNTING OFFICE, WILL, IN THOSE CASES WHERE THE EMPLOYEES WERE SUBJECT TO THE CIVIL SERVICE RETIREMENT ACT, BE SUBMITTED AND SETTLED IN THE AMOUNT OF 95 PERCENT OF THE GROSS AMOUNT EARNED, AND THE RETIREMENT DEDUCTION OF 5 PERCENT WILL BE STATED ON THE REGULAR PAY ROLL OF THE ORGANIZATION TO WHICH THE EMPLOYEES WERE LAST ATTACHED AND INCLUDED IN THE TOTAL OF RETIREMENT FUND DEDUCTIONS DEPOSITED BY THE DISBURSING OFFICER, AND THE CLAIMS SUBMITTED TO THE GENERAL ACCOUNTING OFFICER SHALL CLEARLY INDICATE THE PAY ROLL ON WHICH THE SAID RETIREMENT DEDUCTIONS WERE INCLUDED. CLAIMS OF COMPENSATION DUE DECREASED EMPLOYEES OF THE POSTAL SERVICE WILL BE SETTLED BY THE GENERAL ACCOUNTING OFFICE ON A NET BASIS, AS HERETOFORE.

IN VIEW OF THE STATUTORY PROVISION FOR THE PAYMENT OF CIVILIAN RETIREMENT DEDUCTIONS REMAINING TO THE CREDIT OF A DECEASED EMPLOYEE TO THE DESIGNATED BENEFICIARY AND PRESCRIBING A LINE OF DESCENT WHICH DOES NOT COINCIDE WITH THE REQUIRED PAYMENT OF UNPAID COMPENSATION IN ACCORDANCE WITH THE LAWS OF DESCENT AND DISTRIBUTION OF THE STATE OR COUNTRY IN WHICH THE DECEASED EMPLOYEE IS DOMICILED, IT IS VERY EVIDENT THAT THE PAYMENT OF THE GROSS AMOUNT OF COMPENSATION WITHOUT DEDUCTING THE CIVIL SERVICE RETIREMENT PERCENTAGE WOULD REQUIRE DUPLICATE PAYMENT FOR THE INVOLVED DEDUCTION SHOULD A CLAIM BE FILED BY A DESIGNATED BENEFICIARY. THE FACT THAT SUCH AMOUNTS MAY BE VERY SMALL WOULD NOT JUSTIFY THIS OFFICE IN DISREGARDING THE STATUTORY PROVISIONS APPLICABLE THERETO. IN THE CIRCUMSTANCES, THIS OFFICE DOES NOT FEEL WARRANTED IN MAKING ANY CHANGE IN THE PRACTICE NOW ESTABLISHED BY PARAGRAPH 10 OF GENERAL REGULATION 106, WHICH APPEARS TO BE REQUIRED BY THE LAW APPLICABLE THERETO.