(a) Upon death of any member in service, the beneficiary nominated by the member by means of a written designation duly executed and filed with the board of trustees shall be entitled to:

(1) A cash refund of the member's contributions and interest accumulated at the date of the member's death;

(2) A monthly benefit computed in the same manner as though the member had retired as of the date of death on either a service retirement allowance as provided for in Code Section 47-3-120 or a disability retirement allowance as provided for in Code Section 47-3-122 and elected option two, whichever calculation produces the larger benefit; or

(3) A choice of electing the benefits under either paragraph (1) or (2) of this subsection.

The benefit to which the beneficiary is entitled shall depend on the beneficiary designation form on file with the retirement system and the deceased member's creditable service. In order for a beneficiary to be eligible for a monthly death benefit under paragraph (2) or (3) of this subsection, the deceased member must have had a minimum of ten years of creditable service at the time of death. The nearest year of the attained ages of both the member and the beneficiary at the time of the member's death will be used in the application of appropriate actuarial tables and in determining the monthly benefits of the beneficiary. A monthly death benefit shall commence the first day of the month following the month in which the member's death occurred.

(b) Upon the death of a member in service who has not named a beneficiary on a beneficiary designation form filed with the retirement system and who has:

(1) Less than ten years of creditable service, the death benefit shall consist of a refund to his surviving spouse of the member's accumulated contributions and, if there is no surviving spouse, to the deceased member's estate;

(2) Ten or more years of creditable service and no surviving spouse, then the death benefit shall consist of a refund to his estate of the member's accumulated contributions; or

(3) Ten or more years of creditable service and a surviving spouse, then the death benefit, at the option of the surviving spouse, shall consist of a refund to the surviving spouse of the member's accumulated contributions or the payment to the surviving spouse of the monthly benefit under paragraph (2) of subsection (a) of this Code section in accordance with the amount of creditable service of the deceased member.

(c) Upon the death of a member in service with more than ten years of creditable service and then thereafter the death of the beneficiary nominated by the member by means of a written designation duly executed and filed with the board of trustees, or where no beneficiary was so designated by the member and the member was survived by the member's spouse, the death of the member's spouse, in the event that the designated beneficiary of the member chose to receive a monthly benefit pursuant to paragraph (2) of subsection (a) of this Code section and the total monthly benefits paid to such designated beneficiary prior to his or her death did not equal or exceed the member's accumulated contributions at the time of the member's death, or where no beneficiary was designated and the surviving spouse of the member chose to receive monthly benefits pursuant to paragraph (3) of subsection (b) of this Code section and the monthly benefits paid to the member's spouse prior to his or her death did not equal or exceed the member's accumulated contributions at the time of the member's death, the difference shall be refunded to the person designated in writing by the member to receive such a refund of this difference. If no such person is designated to receive this difference or if such designated person has predeceased the member's designated beneficiary or spouse, this difference shall be paid to the estate of the designated beneficiary or where no person was designated by the member as beneficiary, to the estate of the member's spouse.