Ask The Experts: Retirement

By Reg Jones

CSRS to FERS

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Q. I am considering retirement from the Postal Service after 35 years (includes military time) and am would like to become a TSA agent. Would I be able to collect my CSRS pension and work FERS if hired?

A. You’d need to check with the Transportation Security Administration to confirm that you would be able to receive both, without a reduction in either.

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Increase in Medicare Part B for current retirees

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Q. Why is Medicare Part B premiums increasing for retirees who currently have Part B? I thought only “new” enrollees would be paying the higher rate in 2010.

A. Most Medicare beneficiaries will not see a Part B monthly premium increase as a result of a “hold harmless” provision in the current law. This allows for 73 percent of beneficiaries to be protected from an increase raising the 2010 Part B monthly premiums. Approximately 27 percent of beneficiaries are not subject to the hold-harmless provision because they are new enrollees during the year (3 percent), they are subject to the income-related additional premium amount (5 percent), or they do not have their Part B premiums withheld from social security benefit payments (19 percent), including those who qualify for both Medicare and Medicaid and have their Part B premiums paid on their behalf by Medicaid (17 percent).

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WEP for FERS Special Supplement

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Q. I have never been able to find the formula for calculating the FERS Special Supplement for those employees who retire at their minimum retirement age under FERS. As I transferred from CSRS to FERS during a previous open season, I would like to know if the Windfall Eliminations Provision is applied when calculating the Special Supplement. I will have less than 20 years of substantial earnings under Social Security. So will the 40 percent multiplier (rather than 90 percent) be applied to the first component of my Social Security calculation?

A. The WEP doesn’t apply to the special retirement supplement. You can estimate the amount of the SRS using the following formula: take the Social Security benefit estimate provided to you by the Social Security Administration, multiply it by your total years of service covered by FERS (rounded up to the next higher year), and divide by 40. For a more accurate estimate go to www.FEDbens.us and use the convenient software program found there.

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CSRS disability retirement earnings

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Q. I am on CSRS disability from the Postal Service. In June 2010, I turn 60 years of age. Am I obligated to report any earnings I make in 2010 in the private sector for the whole or part of the year? Or will I still be under earnings and medical restrictions as I am now in 2009? I am under the impression that when I turn 60 some things change. Is this true?

A. Up to age 60, the Office of Personnel Management says you are subject to periodic medical re-evaluation to determine if you are still disabled, and to an annual review of your earnings to determine if you are restored to earning capacity. After you reach age 60 those are no longer required.

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Part-time work for CSRS annuitant

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Q. I retired from DoD in 2007 under Civil Service Retirement System at age 56 with 31 years of service. In 2008, I went back to work for DoD as a part-time employee working 16 hours per week (832 hours per year). I was hired to fulfill functions critical to the mission of my agency. My SF 50 lists me as a permanent employee and my Annuitant Indicator is CS-No Reduction. My question is: Assuming my employer wants me to continue working, how long can I work on my current part-time job? I have read that an appointment cannot last for more than 2,087 hours (e.g., 1 year full time or 2 years part time) to mentor less-experienced employees and/or to provide continuity during critical organizational transitions.
However, on a Social Security site discussing the National Defense Authorization Act for Fiscal Year 2010 (www.ssa.gov/legislation/legis_bulletin_102809.html) it mentions that a waiver to the dual compensation rules for CSRS annuitants who are re-employed in order to fulfill functions critical to the mission of the agency cannot be applied to annuitants working more than 520 hours in a six-month period, 1,040 hours in a 12-month period, or for more than a total of 3,120 hours. The waiver authority terminates after five years. That would indicate that at a rate of 832 hours worked per year, I could work part time for a total of 3.75 years instead of two years. Which number is correct?

A. You were hired under a special authority granted to DoD. You’ll need to go to your personnel office and ask them how long you can remain on the rolls. The other authority to which you referred was prospective and applies to all other agencies of government.

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Voluntary early out

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Q. The U.S. Postal Service has given employees retiring voluntarily on Oct. 31, 2009 an amount of $15,000. Will the first check of $10,000 have everything taken out for federal and state taxes, Medicare, Social Security, health benefits, etc? When would my first annuity check start? I am a Civil Service offset employee with 12 years under FERS. I had a total of 30 years of both civil service and FERS but I left and came back to the USPS in 1997 (7 years). I took out the money in the retirement fund and so lost 20 years credit to use for seniority purposes, I think. Do I have to wait until I am 62 years to start collecting Social Security? I was born in 1956, so my MRA is 56.

A. All federal payments, including taxes, Medicare and Social Security, will be deducted from each payment. Other payments, such as health benefits, will not. As a FERS employee, you will be eligible to receive the special retirement supplement when you reach your MRA. It will continue until age 62 when you will be eligible for a Social Security benefit. Whether you apply for one at that time is up to you. If you retired on Oct. 31, you would have been on the annuity roll on Nov. 1.

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Federal employees retirement

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Q. I am reading the article, “It is not too late to retire in 2009 or plan for 2010 or 2011.” I understand that federal employees should retire by the last day of the month to get their annuity starting from the first of the following month. Example: Federal system employee can retire on Dec. 31, 2009. The annuity will start from Jan. 1, 2010. However, the pay period ends on Jan. 2. The employee will lose annual leave for Friday and paid leave on Saturday and Sundays? Though those days will be paid much less under the annuity. Is that right? What is the best situation in this case?

A. For FERS employees, it’s a matter of trade-offs. If you retire by the last day in a month, you’ll be on the annuity roll in the following month, e.g., retire no later than Dec. 31 and you’ll be on the annuity roll Jan. 1. If you retire after the last day, you won’t be on the annuity roll until the month following the month in which you retired, e.g. retire on Jan. 2 and you won’t be on the annuity roll until February. Retiring employees have to balance the gains to be made by completing a pay period (particularly any sick or annual leave they would earn) with any delay in receiving their first annuity payment.

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Service time

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Q. I was an active-duty firefighter in the Air Force. Does that time count towards the special computation for retirement of LE/FF/ATC? I am currently not a FF in the federal system but am a federal employee.

A: No, it does not. It would only count if you were a firefighter who was called to active duty and then returned to your firefighter position.

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Civil Service Retirees COLA for 2010

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Q. Can anyone explain why retirees are not included in the 2 percent cost-of-living allowance for 2010? Is it because the President is pro union and retirees are not covered by the union? As far as I know, this is the first time retirees were excluded from annual COLAs. It would seem to me that retirees are more in need of the COLA than currently employed full-time employees.

A: There are two pieces of law involved here. The salaries of employees are governed by the pay comparability act, which compares the salaries of federal jobs with those in the private sector. Employees never receive COLAs. Only retirees and survivors are eligible for COLAs, which, like Social Security benefits, are controlled by changes in the consumer price index.

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It’s not too late to retire in 2009, or plan for 2010 or 2011

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It’s not too late to retire in 2009, and it’s not too soon to at least begin planning to retire in 2010 or 2011. For this year and the next two years, the calendar is working in favor of many of you. Let me explain.

As my regular readers know, my position is that there is no one best date to retire. However, each of you can pick the best one for you if you know how.

First, you must figure out if you are ready to retire. To do that, you have to answer three questions: Do you meet the age and service requirements to retire? Are you financially able to retire? Are you emotionally prepared to retire?

The first question is an easy one to answer. You either meet the requirements spelled out in law or you don’t. However, the other two questions are ones that only you can answer. The first requires the computer-age equivalent of paper and pencil; the next two require a good deal of soul searching and reflection.

If you’ve decided that you are ready to retire, here are the tools you’ll need to pick your date:

* Know when your annuity begins. Ideally, you’ll want to retire on a date that affords a seamless break between work and retirement. To come as close as possible to achieving that, you need to know the law.

If you are a Federal Employees Retirement System employee, you must retire no later than the last day of a month to be on the annuity roll in the following month.

If you are a Civil Service Retirement System employee, you have more flexibility. You can retire up to the third day of a month and be on the annuity roll in the same month; however, your annuity for that month will be reduced by 1/30th for each of those three days that you are still on the payroll.

* Get credit for unused leave. If you retire before the end of a pay period, you won’t get credit for any annual or sick leave you would otherwise have earned. Gaining additional hours of annual leave is important because they are paid to you in a lump sum at your hourly rate of basic pay.

* Get credit for “use or lose” leave. If you have accumulated more annual leave than you can carry forward into the next leave year, you’ll want to retire no later than the day before the new leave year begins. Otherwise, that excess leave will be lost along with the dollars you would have received in your lump sum payment.

Therefore, if you are leaning toward retiring at the end of a year, it’s important to know when the leave year ends. In 2008, it ended on Jan. 3, 2009, and many CSRS employees took advantage of that fact, giving up three days of their January annuity payment in order to gain the annual and sick leave they earned in that final pay period.

In 2009, the first-month annuity reduction will be even less, because the leave year ends on Jan. 2, 2010. The same is true in 2010, when the leave year ends on Jan. 1, 2011. (And yes, you can retire on a holiday.)

Dec. 31, 2011, the end of the leave year in 2011, is a magic date for both FERS and CSRS employees.

FERS employees can walk off the payroll and onto the annuity roll without losing a day of pay, and any CSRS employee can do the same without losing a day of annuity.

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Social Security and disability

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Q: Can you apply for Social Security disability after you have retired under the Federal Employees Retirement System from the Postal Service, or should you have applied for disability under Social Security before your retired? Also, does Social Security request your medical information from your doctors, or do you have to get this information to them yourself?

A: If you are applying for disability retirement under FERS, you have to apply for Social Security disability benefits. If you don’t, the Office of Personnel Management won’t process your application. If you are retiring on a nondisability annuity, you may apply for Social Security disability benefits at any time. The provision of medical documentation is always the responsibility of the individual who is applying for a disability annuity or benefits.

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Sick leave and retirement

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Q: What would happen if someone wants to retire on Aug. 31, 2010 (service date), but his sick leave will give him three months’ credit. Can he retire three months early with the same annuity?

A: No. Unused sick leave never qualifies anyone to retire. It’s only credited after you meet the age and service requirements to retire.

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BRAC leave and taxes

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Q: Is Base Closure and Realignment restored leave taxable when distributed? My CPO is telling me yes but cannot cite any regulation. I recall from an earier question you answered that you said that BRAC leave had already been taxed when earned and therefore no withholding would be imposed on the payout. Can someone give me the chapter and verse? Our installation closes in 2011, and many of us have built up large BRAC balances.

A: I think your memory is playing tricks on you. Annual leave isn’t taxable when it’s earned, nor is it taxable when restored. Annual leave is only taxable if it is paid out in a lump sum because, according to the IRS, it is then considered to be regular income.

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Counting service academy time

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Q: Is the time spent at a service academy creditable for civilian retirement if the employee did not graduate? There has always been an assumption that if the individual did not graduate from the academy that the time was not creditable for civilian retirement purposes. Nowhere can a reference be located with a mention of graduating.

I’ve exhausted just about every reference possible and the closest thing that I can find is Section 1115 of the National Defense Authorization Act for Fiscal Year 2008, which authorizes federal employees to receive retirement “credit for service as a cadet or midshipman at a military service academy.”

I understand that the Office of Personnel Management has always interpreted “military service” as including service as a cadet or midshipman at the Air Force Academy, Coast Guard Academy, Naval Academy and U.S. Military Academy, but Section 1115 provides statue to this long-held practice.

A: Yes, time spent at one of the military academies is creditable, even if you didn’t graduate. The only exception to that rule is for foreign nationals who are receiving training under the auspices of an agreement with a foreign government.

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Military service time and retirement

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Q: I am a GS-1811 law enforcement officer covered under the early retirement provisions of 6(c) and a Civil Service Retirement System employee. Can my four years of active-duty military service, for which I have made a redeposit into CSRS, be used to reach the 35 years (or 80 percent max annuity under CSRS) of total credited federal service (i.e., 31 years of actual federal LEO civilian service plus 4 years of military service equal 35 years of service annuity)?

A: Your first 20 years of law enforcement service will be calculated using the enhanced formula: 0.25 x your high-3 x 20 years of service. Any additional years, including active-duty service for which you paid a deposit, will be calculated as follows: 0.02 x your high-3 x all remaining service.

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Part-time employment continuation

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Q: I’m currently 62 years old with 29 years in federal civil service (Civil Service Retirement System), three years of prior military service and a service computation date of March 28, 1977. I plan to retire in 2010 and may have the opportunity to continue as a part-time employee. If I am re-employed by the federal government (possibly on the same job), would I be in the CSRS or the Federal Employees Retirement System? In addition, I have 25 credit hours with Social Security and need 15 more hours to make up for the 40 credit hours requirement to be able to qualify for Social Security compensation. How many hours should I work or earn within federal government to earn additional credit hours if re-employed part time and if Social Security Tax is being withheld?

A: If you went back to work for the federal government after retiring, you would be covered by CSRS and, as a rule, the salary of your new job would be offset by the amount of your annuity. If that job was part-time, it’s likely that you wouldn’t receive any salary at all. However, if your agency could make a strong case that your skills were essential to the accomplishment off its mission, the offset could be waived. If that were to happen, you would be able to keep both your full annuity and your salary. To earn additional Social Security credits, you’d need to have earnings from wages in a position subject to Social Security or be self-employed. Credits aren’t based on hours; they are based on earnings. In 2009, you’d need to earn $1,090 to earn one credit, $4,360 to earn a year’s worth.

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Federal firefighter retirement, military service

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Q: I am a Federal Firefighter. I was hired in 1986 and will retire under the Federal Employees Retirement System. My question revolves around my active-duty military service deposit to the federal retirement fund. Since I have made this deposit and am in good standing to receive compensation for this time; my question is; can I apply it to help determine the length of my service in order to fulfill the 25-year requirement?

As a federal firefighter, I am subject to the special retirement for law enforcement officers, firefighters and air traffic control personnel. I cannot get a consistent or clear answer to my question: Can I count my military time (which I have bought back) into my “credible service”? I have asked for a decision on this matter in writing several times to several different “experts” and have yet to receive an answer which any of them could substantiate with anything more than personal opinion. They have all assured me that I can’t.

At this point I have accepted the idea that I will not be able to count my active-duty military time into my “credible service.” However, I would truly appreciate omeone who can articulate a viable explanation on this matter and may be able to provide me with a sense of closure and peace of mind. I would like to be assured that I am being treated fairly and consistently in regards to the actual FERS intent.

A: The only way you could get credit for your active-duty military service as covered firefighter service is if it interrupted that firefighter service. For example, if you were in a covered positiion, were called to active duty and then returned to a covered position, you would receive credit. If your military service preceded or followed your covered service, then it can’t be used to qualify you to retire under more generous firefighter retirement rules.

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Spousal benefits at age 66

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Q: I am 63 and under Federal Employees Retirement System as a 1998 FERS transfer. My wife is 65 and collecting Social Security as of age 62. When I turn 66, my full retirement age, am I allowed to collect a full spousal benefit of half of her monthly benefit without penalty? If this is possible, I could then delay taking my own benefit until age 70 and collect the maximum under my own earnings (less the Windfall Elimination Provision penalty) which is substantially more than my full benefit at age 66.

A: Here are the rules. As a spouse, you are entitled to half of the retired worker’s full Social Security benefit unless you begin collecting benefits before reaching full Social Security retirement age. The reduction in that case is proportional to the number of months you are under full retirement age. When you begin collecting your own Social Security benefit, the Social Security Administration will first pay your benefit; then, if your benefit as a spouse is higher than your retirement benefit, you’ll get a combination of benefits equaling the higher spouse benefit. If your benefit is higher than the spouse benefit, you’ll only get that.

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Retirement and a second federal career

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Q: I am a Civil Service Retirement System Offset employee who has about 28 years of civil-service time with the Navy. I have about $19,000 to pay back for retirement money I withdrew. I have already paid back my military portion. Under a deferred retirement, I would be allowed to continue paying back my civil retirement debt up to six months before my 62nd birthday, which is when I’m suppose to file for retirement with the Office of Personnel Management.

My divorce decree states once I retire from the civil service, the alimony ceases. Since a deferred retirement is one of the legal ways of retiring from the federal civil service, I would like to elect a deferred retirement, leave the Navy civil service and then begin a new job with the Army, four days afterward.

If I officially retire from the federal civil-service (i.e., under a deferred retirement), as far as I’m concerned, without being a lawyer, a deferred retirement meets the “retired from civil service” stipulated in my divorce decree. Whomever I work for afterwards is none of anyone’s business, even though in this case, it happens to be with the Defense Department again.

Can I do this? In other words, if I officially get out on a deferred retirement on Dec. 5, could I start a new civil-service career after the four-day separation requirement, say Dec. 10?

A: Your understanding of deferred retirement is incorrect. A deferred retirement is only available to employees who leave government before being eligible to retire and have at least five years of creditable service. If you leave government, you would neither be retired nor would you be able to redeposit any money to get credit for your refunded service. Only employees can do that.

If you were to leave government and apply for a position in another agency of government, you would simply be picking up where you left off. All your years of creditable service would be taken into account; and, if you hadn’t repaid the refund you took with accumulated interest, that debt would still be outstanding. Within the government there isn’t any way that you could keep your two periods of employment separate.

Even if you met the age and service requirements to retire on an immediate annuity, your prior service would still be a matter of record if you were hired by another agency. In most cases, the salary of your new position would be offset by the amount of your annuity.

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Law enforcement retirement

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Q: I was told that in October, regulations on the maximum age for law enforcement pay were changed to read that if you are over 37 years old with a DD 214, you may apply for law enforcement jobs (prison guard, fedearal marshal, etc.). Is this correct information?

A: No, it isn’t. However, Section 1086 of Public Law 111-84 did increase the maximum age limit for an original law enforcement or firefighter appointment to 47 for anyone receiving retired or retainer pay for military service or premium or compensation from the Veterans Affairs Department instead of retired or retainer pay. Anyone appointed under this provision still will be subject to mandatory retirement at age 57; however, he may retire at that age with 10 years of covered service.

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