(a) This section applies to the surviving spouse or a child of a retiree in receipt of a service retirement allowance or a disability retirement allowance.
(b) On the death of a retiree, the Board of Trustees shall pay 50% of the retiree’s retirement allowance to:
(1) the surviving spouse; or
(2) if there is no surviving spouse or if the surviving spouse dies, to any children of the deceased retiree who are under 26 years old or disabled, as defined under § 72(m)(7) of the Internal Revenue Code.
(c) (1) Except as provided in paragraphs (2) and (3) of this subsection, if the Board of Trustees pays an allowance to more than one child, the Board of Trustees shall divide the allowance among the children in a manner that provides for payments to continue until:
(i) each child has died; or
(ii) each child becomes 26 years old.
(2) Notwithstanding paragraph (1)(ii) of this subsection, a surviving child who is disabled shall continue to receive an allowance under paragraph (1) of this subsection past the age of 26 years, if the child continues to be disabled.
(3) (i) If a surviving child receiving an allowance under paragraph (1) of this subsection is disabled, as defined under § 72(m)(7) of the Internal Revenue Code, the Board of Trustees shall pay to the disabled surviving child an allowance equal to the total of the allowances paid under paragraph (1) of this subsection after:
1. all other nondisabled surviving children have died; or
2. the youngest nondisabled surviving child becomes 26 years old.
(ii) If more than one surviving child is disabled, as defined under § 72(m)(7) of the Internal Revenue Code, the allowance payable under this paragraph shall be divided equally among the disabled children.