Ask The Experts: Retirement

By Reg Jones

Buyback and VA

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Q. I retired from the Army with 20 years of active duty and am receiving retired pay. Additionally, I am receiving VA compensation for being rated as 50 percent disabled. I am considering buying  back my military time and forfeiting  my military retirement upon retirement from the federal government to combine it with my civilian FERS retirement. Will I also forfeit my VA compensation?

A. No, you won’t have to forfeit your VA compensation.

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Military buyback

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Q. I work for the federal government and I’m retired Army National Guard but won’t receive military retirement pay until age 60. I can retire at age 57 from my federal job. I’m 50 now. I have bought back my active-duty time through the buyback program. It was only two  years worth of active duty. I’m wondering if I did the right thing because I didn’t know about losing my military retirement because I bought the time back. I would not like to lose my 21 years of service and make less in my retirement because I bought back this time. Is that how it works? Also, this is Army National Guard/reserves. Does it work the same as regular military? Read the rest of this entry »

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Service computation

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Q. Back in 1997 I was granted LWOP at the Veterans Affairs Department and was on that status for approximately 90 days before I was picked up again by the same agency, however, in a different city.  What effect, if any, does my use of LWOP have on my retirement calculations?

A. Assuming that there was no break between your approved LWOP and your being picked up again, that time would be fully creditable in determining your length of service and used in the computation of your annuity.

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Possible re-employment

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Q. Can a GS retired employee work for a Morale, Welfare and Recreation organization or other government agency?

A. There is nothing that would prevent a retired government employee from working again, either in or out of government. However, if you return to work for the federal government, as a rule the salary of your new position would be reduced by the amount of your annuity. You’d need to check with your potential employer to learn if that rule would affect you.

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Early retirement penalty

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Q. I understand there is a penalty for retiring under the age of 62 within FERS. Is that penalty permanent upon early retirement or does it revert to full retirement once the age of 62 is reached? I was born in 1964 and have 18 years of service. I would not have 30 years at the Minimum Retirement Age.

A. If you retired at your MRA with fewer than 30 years of service, your annuity would be reduced by 5 percent for every year you are under age 62. However, since you will have at least 20 years of service when you reach age 60, you could retire then and receive an unreduced annuity.

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Retirement pension

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Q. I would like to retire as soon as possible. I have 34 years of service and I am 60-1/2. Since  I am under the FERS system, in order to maximize my pension I would have to stay until I turn 62 to get the additional  .1 percent added to my pension. Is there any other way I can retire before I turn 62 for me to get the additional .1 percent?

A. No, there isn’t.

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Service Computation Date

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Q. My Service Computation Date for leave is March 2, 1985. I recently made a deposit for federal temporary service that I held prior to Jan. 1, 1989 (2 months, 28 days). There was also a period of federal temporary service that was held after that date which I was not able to make a deposit for (6 months, 17 days). Will the six months, 17 days, now be added to my SCD, therefore, making my RSCD Sept. 19, 1985? Read the rest of this entry »

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Re-employment ramifications

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Q. I retired three years ago under FERS. I am considering applying for another position with the federal government. Will I forfeit any pay or retirement if I am rehired?

A. As a rule, the salary of your new position would be offset by the amount of your annuity.

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Unused annual leave

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Q. As a FERS letter carrier, if I retire and have 600 hours of unused annual leave, will I get a check for the 600 hours or is 440 the most I can get payed at retirement?

A. Because you are a postal service letter carrier, your lump-sum payment for unused annual leave is limited to 440 hours.

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Best date to retire

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Q. I have 24 years of service in federal law enforcement. Nov. 25 will make 25 years government service. I am 52 and will retire this year. I have heard and read the best dates for FERS to retire in 2014 are May 31, June 28, Nov. 29 and Dec. 28. I’ve read no matter which day in the month a FERS employee retires, the employee’s retirement becomes effective the first day of the following month. The first annuity check will then be dated the first day of the following month. If I retire on Oct. 18, the end of pay period 21, will I be minus 13 days of retirement pay, Oct. 19 through 31, when I receive my pension?

A. There is no one best date to retire. There are too many factors involved for that. However, as a FERS employee, you are mistaken if you think you can retire any time after the last day of a month and be on the annuity roll in the following month. If you retired on October 18, you wouldn’t be on the annuity roll until November, with your first annuity payment due on December 1.

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Buyback age limit

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Q. I am 65 and still working but at this time, I have not or did not buy back my military time, is there an age limit where I do not have to buy it back, or yes, if I want the extra money, I will have to buy it back?

A. There isn’t an age limit on when you may make a deposit to get credit for your active-duty service. The only requirement is that you make that deposit before you retire. Note: If you are a CSRS employee who doesn’t make a deposit, you’ll still get credit for the time in determining your eligibility to retire; it just won’t be used in the computation of your annuity. If you are a FERS employee, you won’t get any credit for it unless you make a deposit.

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Child turning 26

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Q. I am a federal retiree and my wife is a federal employee. I pay for family coverage under FEP Blue. When our only child turns 26, should we both go to individual coverage?

A. That’s entirely up to you. You’ll need to compare the premium costs with the co-pays, deductibles and catastrophic limits which will apply to both enrollments.

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Years to be vested

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Q. I’m in the FERS program. Do you know how many years of service are required in order to be vested? If I leave government service after almost eight years, will I be vested in my TSP and annuity? Will I receive a pension?

A. You’ll be vested in the retirement system when you have five years of full-time service. If you leave your contributions in the retirement fund and leave government, you’ll be entitled to a deferred annuity at age 62.

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Vested employee

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Q. Once I get vested after five years of being in the federal system, and perhaps I leave the job a month later. Where can I find, or how can I calculate, how much I’ll get when I retire?

A. If you leave you contributions in the retirement system, you’d be entitled to a deferred annuity at age 62. That annuity would be computed using this formula: .01 x your high-3 x your years and full months of service.

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Earning limits

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Q. I plan to retire under CSRS offset well before I turn 62. I know at 62 my retirement will be recalculated and my annuity check will be split between OPM and the Social Security Administration. When I turn 62 and start receiving my retirement pay from both OPM and the SSA, am I bound by the earning limits set by Social Security (currently $15,480.00 annually)?

A. Yes, you are bound by the Social Security earnings limit. That limit applies to anyone who is under full Social Security retirement age and has earnings from wages or self employment that exceed the annual limit.

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VERA/VSIP

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Q. I am 53 years  and eight months old, I have 28 years and eight months civil service. I am in FERS. My agency is offering the VERA/VSIP. If I submit an application and I am accepted for either of these would this affect my Social Security supplement? My MRA is 56. Does the MRA change with the VERA/VSIP?

A. No, your MRA doesn’t change nor does the amount of the SRS you’re entitled to. They remain the same.

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Health coverage for spouse

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Q. I am 48 and will be eligible to retire in two years as I will have over 20 years in federal law enforcement. I am signed up for a family plan under FEHB which covers my 42-year old wife and a three-year-old daughter.  My wife just started a Federal job that will also give her access to FEHB. As I understand it, we will continue to be covered under my FEHB for life, and my wife would just decline enrollment when she starts her job. Does this make financial or prudent sense? We don’t believe she will work long enough to be officially retired so her benefits would not last into her retirement, only under mine. Read the rest of this entry »

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Finding Your High-3

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The “high-3” is an essential element in the formula used to calculate your annuity. But what does the term high-3 mean? And how do you figure out what yours is?

The high-3 defined

Your high-3 is the average of your highest rates of basic pay over any three consecutive years of creditable civilian service, no matter when they occur in your career, with each pay rate weighted by the length of time it was received.

That three-year period starts and ends on the dates that produce the highest average pay. It starts on the first day that leads to the highest three-year average, not on Jan. 1, the first day of the month, or the date of a pay change.

Basic pay

Basic pay is the amount of salary from which retirement deductions are taken. It includes the salary you receive for your position and level as shown on an official pay table, including locality pay for the 48 contiguous states. In some cases, it may include such things as night and/or environmental differentials, premium pay, and special pay rates for recruiting and retention purposes.

However, it doesn’t include such things as bonuses, military pay, cash awards, holiday pay, travel pay outside the regular tour of duty, non-foreign area cost-of-living adjustments or lump-sum payments covering unused hours of annual leave. Nor does it include any salary supplements provided to employees who are covered by workers’ compensation.

Finding the start date

Your highest three consecutive years of average pay usually will usually be the ones that immediately precede the day you retire. If that’s the case, all you need to do to find the starting date for your high-3 calculation is to subtract three years from the date you plan to retire plus one day.

For example, if you want to retire on Jan. 3, 2015, your calculation would start with Jan. 4, 2015: Jan. 4, 2015 minus three years = Jan. 4, 2012.

One day is added because every year ends on the day before the next one begins. For example, the new year begins on Jan.1, but the old year ends on Dec. 31. So, if your birthday is Oct. 17, then Oct. 16 is the final day of the preceding year.

However, if your high-3 occurred earlier in your career, you’ll have to identify the last date on which your pay was at its highest then follow the process above to find the beginning date for your high-3.

Breaks in service

The three years used to calculate your high-3 don’t have to be continuous; however, they do have to be consecutive. For example, if your highest salary years were interrupted by a break in service, your high-3 could be made up of one period of service, a break of any length, and a second period of service. As long as your periods of service are consecutive, it doesn’t matter how many breaks in service you have.

Leave without pay

If you’ve been on LWOP for no more than six months in any calendar year, that period will be included in your high-3 calculation. Any period of LWOP beyond six months in a calendar year will not be included, and will be treated as a break in service.

Military leave

Unlike LWOP, if you were called to active duty in the armed forces, the six-month limit doesn’t apply. However, as a rule, you would have to make a deposit to the retirement fund to get credit for any period of LWOP.

Non-deduction or refunded service

A deposit also may be required if you have any periods of non-deduction or refunded service that fall within your highest three years of average salary. As a rule, this situation only arises if your high-3 occurred earlier in your career and likely when you were covered by CSRS.

Putting a dollar sign on your high-3

To find your high-3 average salary, you’ll have to go back through your pay slips or Standard Form 50s to locate each pay change and how long you received it. Each pay rate must then be weighted by the length of time it was received. So, for example, if you received $75,000 for three months in a year and $78,000 in the remaining nine, your average pay for that 12-month period would be $77,250 ($75,000 ÷ 12 = $6,250 x 3 = $18,750 + $78,000 ÷ 12 = $6,500 x 9 = $58,500, and $18,750 + $58,000 = $77,250).

Disability retirement

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Q. I am a GS-1811 with just over 16 years of federal service. I was grandfathered into federal service at 42 and will have to retire at 62 (I am 59). Additionally, I have bought back 12 years of Army active-duty time. My Agency has proposed my removal for performance reasons, which I can directly attribute to my worsening Adult ADD. They are leaning toward an involuntary disability retirement vice removal. If I am disability retired, will my 12 years of bought-back Army time be included in the annuity calculation? Will it also be included in the subsequent calculation when my disability retirement is converted to a regular retirement at age 62? Read the rest of this entry »

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Minimum retirement age

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Q. My wife is under CSRS with 31 years of service, but we are concerned that she may be moved into CSRS Offset upon retirement. What is the minimum retirement age for someone in this position?

A. CSRS Offset applies only to employees who had a break in service that exceeded a year and ended after 1983, and had five years of service as of Jan. 1, 1987. If that doesn’t describe your wife’s situation, then she is a pure CSRS employee. Like any CSRS or CSRS Offset employee, she can retire at age 55 with 30 years of service.

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