There is one type of death benefit, a residual payment, for which insured status is not required. This payment is being phased out because it is based on taxable earnings from 1937 - 1974. This payment is a refund of an employee's RR taxes plus an allowance for interest. The amount is reduced for any retirement benefits paid on the basis of the employee's RR service and for any survivor benefits paid by either RRB or SSA. If an employee was retired for 3 or more years, there is little chance that a residual would be payable.

The residual payment is made to the employee's widow(er), children, grandchildren, parents, brothers, sisters, or estate, in that order. A surviving divorced spouse cannot receive the residual payment. If the employee wishes the payment to be made differently, they can file a designation of beneficiary with RRB. Once a designation is made, the employee must make a new one if they want to change the beneficiary. (See RS 01602.225.)

A change in the law can create current eligibility for benefits that did not exist before, e.g., insured status requirements are lowered or a new class of beneficiary now exists. If the new claimant is the same person that previously received the residual payment, an overpayment exists. If the new claimant is not the person who received the residual, no overpayment exists. If the residual was paid in error, RRB earnings will be reinstated for RR or SS survivor benefit purposes. The amount of the erroneous residual lump sum paid is an overpayment subject to recovery by RRB unless the current claimant is not the person who received the residual payment.

A residual cannot be paid if there are immediate monthly survivor benefits payable. However, a widow(er) who would be eligible for future benefits can, before attaining age 60, elect to waive future rights to a monthly annuity and Medicare (based on the deceased's RR compensation) in order to receive the residual payment. Prior to such an election, a widow should consult personnel in a RRB district office since future monthly benefits are generally more valuable than the lump-sum payment. If a residual is paid, no future benefits payable by SSA or RRB can include credit for RR earnings. However, future SS survivor benefits based only on the covered earnings of the deceased are not barred.