By Reg Jones
FERS disability retirement at age 62
March 31st, 2010 | Benefits Disability retirement
Q. I had to retire from FERS on disability with 26 years and 9 months at the age of 53. The first year I got around $2,650 monthly from OPM. A year later I did get my Social Security at $1,788 per month and $1,195 monthly from OPM . Could you tell me what I will get at age 62? My average high 3 years were $59,755.00. Minimum retirement age was 56. Could you break this down for me?
A. I can’t tell you what the breakdown will be. I can give you the formula used. Here it is. During the first 12 months as a FERS disability retiree, you would receive 60 percent of your high-3 minus 100 percent of any Social Security disability benefit. After the first 12 months, you’d receive 40 percent of your high-3, minus 60 percent of any Social Security disability benefit. When you reach age 62, your FERS disability benefit will be recalculated as if you had actually worked to age 62. To do that, time spent on the annuity roll is added to your actual service. Your new annuity is calculated as follows:
0.01 x your high-3 at the onset of your disability increased by all FERS cost-of-living increases paid to you from that point to age 62 x your total service time (actual and disability).
Tags: disability, OPM
Sick leave at retirement
March 31st, 2010 | Sick leave
Q. I’m in CSRS with the Postal Service. At retirement, will my annuity be credited at 174 hours of sick leave per month or is my total sick leave balance added to my actual service time and rounded down to the month?
A. As a CSRS employee, when you retire, your hours of unused sick leave will be added to your actual service time. Any combination of actual hours and sick leave hours that add up to 174 will increase your final service time by one month. Any leftover days will be dropped.
Tags: Postal Service, sick leave
FERS redeposit
March 31st, 2010 | Creditable service: FERS
Q. Have you heard when OPM might come up with some guidelines regarding FERS redeposit? When I try to contact OPM, they just say there are no guidelines yet and to contact your agency’s retirement section. When I contact my agency’s retirement section, they say OPM doesn’t have any guidelines yet. So my question is, any idea when we might hear something?
A. I don’t have a firm date. However, effective immediately, OPM is accepting the current FERS Application to Make a Deposit, SF 3108, from employees wanting to make a FERS redeposit. You must indicate on the application that the period of service was refunded. They don’t want you to submit a payment with your application because if you do that before OPM calculates the deposit amount and establishes an account , they won’t have any way of identifying the payment and applying it correctly.
Tags: FERS
Retired widower and marriage
March 31st, 2010 | Survivor annuities
Q. Please help. My boyfriend, who is a widower, and I would like to get married. He is a retired federal employee for five years under CSRS and I am under the CSRS system but have not retired. He is concerned because someone has told him he has to pay “catch up” so that I can have the 55 percent death benefit as his spouse. What does “catchup” mean? Please give me the regulation that covers this as we are both concerned about our future. In addition, he is 80 years old and I am 63, and we are both under the Department of Health and Human Services.
A. If he wants to elect a survivor annuity for you, he must do so within two years after your marriage. There will be two reductions in his annuity to pay for it. First will be the standard reduction of approximately 10 percent. Second will be a permanent actuarial reduction to pay the survivor benefit reduction. The deposit equals the difference between the new annuity rate and the annuity paid to him for each month since he retired, plus 6 percent interest. The reduction will be calculated by dividing the amount of the deposit by an actuarial factor for his age on the date his annuity is reduced to provide the survivor benefit. You can learn more about survivor annuity elections at http://opm.gov/retire/pubs/handbook/C052.pdf.
Tags: CSRS, RETIREMENT
Gauging retirement benefits
March 31st, 2010 | Government pension offset Windfall elimination provision
Q. The windfall elimination provision and government pension offset are so difficult to understand. Can you help? My husband will soon be retiring at age 62 after 21 years under FERS. I am 52, but hope to leave service ahead of retirement. I currently have the following:
* 52 quarters of substantial Social Security contributions, including three years under CSRS Offset.
* Three years under CSRS Offset (2007-2009).
* 12 years under FSPS (Pre-1983 Foreign Service Retirement system) (1982-1994).
* Seven years under an international employer where I did not pay Social Security (1994-1999; 2005-2007)
Can you help me determine what the impacts will be regarding my own pension and Social Security benefits, spousal benefits for me from my husband’s FERS and Social Security (he will elect to cover me under both, unless it provides no coverage), and spousal benefits for my husband under my government pension and/or Social Security should I predecease him.
I am planning to return to school, but given the difficult economy, want to understand the impacts on my longer-term retirement. Do I need five years in CSRS Offset to eliminate the GPO for spousal benefits from my husband’s Social Security? Will having 30 years of substantial Social Security earnings (with contributions in my post-PHD period) help? What will be the impact of the offset on my government pension? How do I calculate this amount?
A. The best source of information about the windfall elimination provision and the government pension offset is on the Social Security Administration’s Web site at www.ssa.gov/gpo-wep. Although they offer online calculators, a better way to figure out the effects of each is to use the user friendly software at www.FEDbens.us.
CSRS vs. FERS
March 30th, 2010 | Creditable service: CSRS Creditable service: FERS
Q. I entered into federal service in 1983 under CSRS and left in 1986 after three years in order to go into graduate school. I was told I could leave my retirement money in the CSRS system and come back in later and I would be able to continue as before with that system. When I came back into federal service in 1991 I was presented with a refund check and told essentially
“sorry, but you’re in FERS now”. Is this correct? Didn’t they change the rules while I was gone?
A. What you were told at the time was correct. However, when the Federal Employees Retirement System became effective on Jan. 1, 1987, the rules changed. From that day forward, any employee with fewer than five years of service under CSRS — whether current or returning — has been automatically converted to FERS.
CSRS survivor annuity
March 30th, 2010 | Survivor annuities
Q. My father passed away in 2001 and he retired under the CSRS plan in April 1983. My mother has been receiving a CSRS survivor annuity. This year the tax preparer is saying that her annuity is tax-free based on the contribution my father made into the CSRS. I’m a little confused because since her 2001 tax record no one has ever said her annuity was tax-free. Why are they saying it now? Her 1099 reflect the employee contribution amount, but also shows the taxable amount as unknown. I have tried to research the IRS pubs, but the formulas to use don’t reflect a retirement date of 1983 or sooner.
Any help would be appreciated so I can ensure her taxes are prepared correctly and will be a continued benefit to her.
A. Your tax preparer is mistaken. Because your father retired before July 2, 1986, it’s likely that he was covered by the “three-year rule.” In other words, his annuity payments were tax-free until he recovered the full amount of his retirement deductions, which would have happened within that three-year window. Thereafter, his annuity was 100 percent taxable. Therefore, your mother’s survivor annuity would be 100 percent taxable. If, on the other hand, he elected to be covered under the “general rule,” a small portion of each monthly annuity payment would have been tax-free regardless of how much he contributed. If that were the case, the same dollar amount would be tax-exempt on your mother’s survivor annuity. The only way to see which way he went is to look at his prior tax filings to see if the taxable amount of his annuity was less than the actual amount he received.
Tags: CSRS, RETIREMENT
New health care law
March 30th, 2010 | DENTAL, VISION CARE Eligibility
Q. Does the new health care law that allows for dependents up to 26 years of age to remain covered under certain conditions apply to the dental and vision plans offered to federal employees?
A. The answer to this and many other questions relating to the new health care law have yet to be worked out between now and when the law becomes effective for the Federal Employees Health Benefits program on Jan. 1, 2011. In the meantime, we’ll all have to be patient.
Tags: FEHB
Medicare Part B
March 30th, 2010 | FEHBP and Medicare Medicare
Q. Why does Medicare become one’s primary insurer when they reach 65? I am a retired federal employee with FEHB, which becomes secondary at that age. Is Medicare better?
A. Medicare becomes primary because the law requires it. The law applies to anyone who is retired and enrolled in Medicare. It does not apply to those age 65 or older who are still employed. In their case, any private or public health insurance they have remains primary and Medicare secondary. Note: While you have already paid for Medicare Part A (Hospital Insurance) through payroll deduction, whether or not you enroll in Part B (Medical Insurance) is optional. In you don’t enroll in Part B, your FEHB plan will provide your medical coverage. Check your FEHB plan brochure to see how your claims will be handled in either case.
Retirement benefits
March 30th, 2010 | Benefits Creditable service: FERS FERS annuity computation
Q. I am a FERS employee, age 51 with 12 years civilian service. I have never been in the military. I currently receive from PERS my late husband’s nontaxable disability retirement. When I do retire, will this affect my FERS and/or Social Security? Does this count against me? Can I have PERS, FERS, Social Security and TSP annuity in retirement?
A. I can tell you that you will be entitled to the FERS annuity you earned, any Social Security benefit based on your own record, and your TSP account, without any modification. What I don’t know is if any of this will affect the PERS benefit you receive. Because PERS is not a federal benefit, I don’t now how it will be affected by your federal benefits. You’ll have to check with whomever provides that benefit to you.
Tags: FERS, SOCIAL SECURITY, TSP