Ask The Experts: Retirement

By Reg Jones

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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BC/BS and VA

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Q. I will turn 65 next May and have retired from the post office after 33 years. I have BC/BS with the post office, and I’m also with the VA. What happens with my coverage from the post office when I turn 65? Do I have to keep the coverage since I’m with the VA?

A. Your BC/BS enrollment is under the Federal Employees Health Benefits program. It doesn’t make any difference which agency you were working for when you enrolled or which one you are working for now.

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Sick leave calculation

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Q. If I retire with 27 days of unused sick leave, and I started government service on the sixth day of the month, will that mean that a month of service will be added to my years of service? I understand that anything under one month of sick leave will be dropped, but am unclear about whether the day you started affects the calculation. The chart does not seem to address this.

A. Annuities are calculated using years and full months of service. Any days that don’t add up to a full month are converted to hours and added to any hours of unused sick leave. The total is then converted to retirement months. For annuity computation purposes, approximately 174 hours equals one month. Any hours that don’t add up to a retirement month are dropped.

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Military annuity and CSRS

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Q. My husband (age 56) and I (age 53) are reaching the time when we are considering retirement and want to clarify a few things. I am covered under CSRS with 33 years of service. I have worked other jobs but I do not have enough credits to be eligible for Social Security. He is National Guard and will retire with over 30 years of service. He is also a government technician covered under FERS and will be eligible for Social Security. We are both retiring with survivor benefits. I know my husband’s Social Security would offset my CSRS. Will I be able to draw his National Guard military annuity without it affecting my CSRS retirement? What about FERS? Read the rest of this entry »

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Return after LWOP

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Q. If a person is in a voluntary LWOP for a period of time and then returns to active service, is the service time necessary to meet retirement qualifications affected? For instance, if a person went on LWOP for three months does that time need to be made up in order to meet a minimum service requirement?

A. No, it doesn’t. You can be on LWOP for up to six months in a calendar year without it affecting your creditable years of service.

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Eligibility to receive benefits

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Q. I worked for the post office for 23 years under FERS and resigned at the age of 48 to work in the private sector. I am 53 and would like to know when I would be eligible to receive retirement benefits. Also, I worked for four years with the state government. Would those years count towards retirement?

A. If you didn’t receive a refund of your retirement contributions when you left, you’d be eligible for a deferred annuity at age 62. That annuity would be based solely on your years of FERS service.

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Salary offset

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Q. Is an office closure that forces employees into a Discontinued Service Early Retirement considered voluntary or involuntary when the employee is rehired as a re-employed annuitant.  Namely, if involuntary, not subject to new Federal Salary offset.

A. If you choose to retire in the face of a reduction-of-force, your retirement is voluntary. If you are separated by a RIF, it’s involuntary. However, no matter which way you went, it would have no affect on the amount you’d have to contribute to the retirement fund if you were re-employed by the federal government. The higher contribution rate doesn’t apply to re-employed annuitants.

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Delinquency definition

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Q. Could you please explain what the term “delinquency” refers to with regards to a discontinued service retirement?

A. Delinquency is a term that includes, but is not limited to, failure to do what law or duty require, an offense or a misdemeanor, a debt or other financial obligation on which payment is overdue.

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Creditable service

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Q. I was hired in January 1991 at U.S. Army TACOM in Warren, Michigan, as a Desert Storm Temporary. I worked for full two years. I also was on active duty in the Marine Corps from 1982 to 1989. I was hired full time at TACOM in 2007. I was able to buy 7 years from my active-duty service for retirement purposes. Is there any way that I can purchase my Desert Storm Temp time as a GS09? Read the rest of this entry »

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Excess contributions

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Q. I began my civilian federal employment in May of 1974. I am a Vietnam era veteran with three years military time and paid back that time. My service comp date for retirement is May 1971. I am going to retire at the end of this year. Based on the above, will all CSRS contributions I paid after reaching 41 years, 11 months, qualify for refunding to me?

A. If you have 41 years and 11 months of service from which retirement deductions were taken (or a deposit made), any excess deductions will be refunded to you with an option to purchase additional annuity.

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Maximum earnings

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Q. You recently answered a question regarding the maximum earning amount for 2014 is $15,480 before the Social Security benefit would be reduced. Does the SSA consider military retirement, VA disability pay, along with TSP disbursements as “earnings”?

A. Those aren’t earnings. Earnings are income received from wages or self employment.

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Retirement credit

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Q. I was called to active duty in 2009 to serve in Iraq. However, when I was ordered to active duty, I used my annual leave and my military leave during my short stay. While serving on active duty, I was getting paid and retirement deductions were being deducted from my pay, along with all the other deductions. So, my question is: Shouldn’t that time be counted toward federal credit? Especially since retirement deductions were being taken and I was using leave the whole time. Read the rest of this entry »

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FERS or CSRS?

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Q. I’m under FERS, and my Service Computation Date is Nov. 26, 1983. A co-worker in my organization has an SCD of Nov. 7, 1983 and is under CSRS. What is the SCD cutoff date for FERS vs. CSRS? Read the rest of this entry »

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