1. If payments to a beneficiary pursuant to NRS 286.671 to 286.679, inclusive, cease before the total contributions of a deceased member have been paid in benefits, and there is no person entitled to receive such benefits pursuant to any provision of this chapter, the surplus of such contributions over the benefits actually received may be paid in a lump sum to:
(a) The beneficiary whom the deceased member designated for this purpose in writing on a form approved by the System.
(b) If no such designation was made or the person designated is deceased, the beneficiary who previously received the payments.
(c) If no payment may be made pursuant to paragraphs (a) and (b), the persons entitled as heirs or residuary legatees to the estate of the deceased member.
2. A lump-sum payment made pursuant to this section fully discharges the obligations of the System.