Ask The Experts: Retirement

By Reg Jones

Annual leave credit

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Q: You answered a question with the following: “A: According to OPM, you only need to complete your 80-hour work week to get credit for any annual and sick leave earned during that pay period.”
I cannot find this clarification at the OPM website. The “popular” opinion amongst co-workers is that you must be employed for the entire pay/leave period if you have a standard Monday-Friday work week in order to receive annual leave credit for that period. Specifically, if I retire on Dec. 31, 2010, with 80 hours worked, will I receive credit for pay period 26, or must I retire on the last day of that pay period (Jan 1, 2011) to receive the credit?

A: I have checked this out with OPM on more than one occasion and the answer is always the same. You only need to have completed your 80-hour work week to get credit for any annual or sick leave you earned during that pay period. Therefore, if your 80-hour work week ends at 5 p.m. on a Friday, you may retire at the close of business.

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Retirement and insurance

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Q: I will retire under FERS in 2015 at age 56 with 33 years of service. I will continue to carry my Federal Health Insurance. I am told that the government will not pay anything toward it like they currently do as a federal worker. Is that true?

A: No. When you retire, you’ll pay the same premiums you would as an employee, unless you work for the Postal Service. Postal Service employees have a higher percentage of their premiums paid by the Postal Service. When they retire, they pay the same premiums as all other federal employees and retirees.

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OPM and Social Security

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Q: From 1968 through September 1978 I worked in the private sector and paid Social Security. My taxed Social Security earnings for those 11 years were $40,520. According to the Social Security Administration, seven of those years were “substantial earnings years.” Beginning in October 1978, I entered federal civil service as a federal law enforcement officer and paid no Social Security. In June of 1983, I left federal service and re-entered the private sector. From June 1983 through August 1985, I remained in the private sector. My total taxed Social Security earnings for those three years were $74,650. According to the Social Security Administration, all three of those years were “substantial earnings years.”
Beginning in September 1985, I re-entered federal civil service as a federal law enforcement officer and remained until my retirement in August of 2006. From January 1, 1986, through December 31, 2006, (my CSRS Offset years) my total taxed Social Security earnings were $1,355,031. According to the Social Security Administration, all 21of those years were “substantial earnings years.” Hence, according to the Social Security Administration, I have31“substantial earnings years,” and there will be no windfall elimination provision applied to me. However, I am still subject to the CSRS Offset.
From March 1988 through June 2004, I was a member of the military reserve. As such, Social Security taxes were withheld from my military drill paychecks. ALSO, beginning in 1989, I was granted permission to maintain outside employment as an attorney. As such, I maintained a solo practice during the entire time of my CSRS Offset service (starting in April 1989 and continuing through my retirement date in August 2006). SO, during 19 of the 21 years under CSRS Offset, I was paying Social Security taxes on my federal salary, my military salary, and my sole proprietorship, all of which are reported on my annual Social Security statement. I am not sure if it makes a difference, but I did make a deposit for my post 1956 military service.
Having said all of this, here are my questions. When I reach age 62 and become eligible for Social Security, how will OPM be able to determine what amounts of my taxable Social Security income relate to my CSRS Offset salary? Will OPM only apply its formula to those amounts, or will it take all amounts into consideration in its formula? Is there any way for me to determine what the offset amount will be?

A: Only the Social Security benefit you earned while covered by CSRS Offset will be used in adjusting the amount of your CSRS annuity. The net result will be that you get the same amount of money, but from two difference places: OPM and Social Security. Any additional Social Security benefit you are entitled to based on other Social Security-covered work won’t be affected by this. For a quick and dirty estimate of what the offset will be, take the Social Security benefit amount provided by the Social Security Administration, multiply it by your number of years covered by CSRS Offset rounded up to the next higher number, and divide the product by 40. You can get a more precise estimate by using the software found at www.FEDbens.us.

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Substitute work

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Q: I worked six years as rural mail-carrier substitute. There is no retirement plan for subs. After that, I have worked 21 years as a regular rural mail carrier. Have you heard of any new deal where those six years as a sub could be included in my retirement plan?

A: I haven’t heard of any change being made or even contemplated.

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Two annuities

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Q: I’m about to receive my pension from the Navy because I’m about to turn 60. I’m also a FERS retiree. Would I be able to receive both annuities? What would happen to my FERS annuity supplement?

A: You’ll be able to receive both annuities. Further, your special retirement supplement won’t be affected because it would only be reduced if your earnings from wages or self employment exceeded the annual limit. An annuity, regardless of who pays it, is not considered to be earnings.

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Retirement offsets?

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Q: I retired from the Army in 1993 with 20 years of service. I retired as warrant officer, no disability, and began collecting retired pay in 1993. In 2000, I began employment has a civilian with the Army Corps of Engineers. I have paid into Social Security since joining the military in 1973, including private-sector jobs. When I stop working, will I be able to receive my full military retirement pay, full Social Security and full civilian retirement pay, or are these connected in some way that means I would receive less.

A: Yes, you will be able to recieve your reserve retired pay, a FERS annuity based solely on your civilian service, and a Social Security benefit based on all your years of Social Security-covered employment.

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Statute cited

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Q: Regarding your May 24 post, “Credit for Military Service,” your last paragraph states, in part, “If you are approved for regular LWOP, you make take up to six months leave within a calendar year and get credit for that time without having to make a deposit.” Could you please identify the statute that you draw that from?

A: Title II – Leave, Civilian Personnel Law Manual, Chapter 5, Part F – Leave Without Pay authorizes agencies, at their sole discretion, to grant leave without pay to its employees. While a separate authority exists to protect the rights of members of the military who are called to active duty, nothing would prevent an agency head from granting LWOP to an employee whose military assignment was short term and exceeded the standard two-weeks of annual active duty for training.

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Federal insurance policy

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Q: My husband payed into a civilian federal employee insurance policy for 28 years. He was riffed and retired in July 2001, but the insurance was still taken out of his retirement check on a monthly basis. He was notified by the federal insurance plan that he was no longer on the insurance plan as of age 65. He is now 67. What happened to the insurance policy and/or it’s value?

A: At age 65, his premiums stopped and the value of his Basic insurance began to decline at the rate of 2 percent per month. It will continue to do that until it reaches 25 percent of its face value.

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CSRS and Social Security

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Q: My ex-husband is a CSRS employee and is eligible to retire. I know that I am entitled to a survivor annuity whether he dies before or after he retires. Will my survivor annuity be reduced by any Social Security that I receive?

A: Your survivor annuity would not be reduced, and you would be able to receive the full amount of any Social Security to which you are entitled based on your own work record.

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CSRS credit for state service

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Q: I worked for a state university for more than a year before becoming a federal employee, covered by CSRS, in 1978. I believe retirement contributions were taken from my pay, but they were a state retirement system ( Hawaii ), not Social Security. Can I buy this time for my CSRS benefit now?

A: No, you cannot.

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Supplement calculation

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Q: I am a FERS employee, and I would like to know how OPM calculates the Supplement annuity (this is in addition to the FERS amount) for someone who retires with more than 20 years of service before their 62nd birthday. Do they base it on one’s salary or years of service?

A: The special retirement supplement approximates the Social Security benefit you earned as a FERS employee. It is paid to those who retire after their minimum retirement age with 30 years of service, at age 60 or later with 20 years of service, and to those who are are voluntarily or involuntarily retired when they reach their MRA. Here’s the formula you can use to get a rough estimate of what your SRS will be: Take your Social Security benefit estimate provided by the Social Security Administration, multiply it by your total years of FERS service rounded up to the next higher year, and divide the product by 40. Or you can use the more accurate software found at www.FEDbens.us.

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Locality pay

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Q: I have a question regarding locality pay determination. I have been accepted to attend the Army War College starting in July. I will be there for 10 months. Since I am at Fort Monroe and will be reassigned to the Pentagon but will be TDY to Carlisle Barracks to attend the War College, shouldn’t my locality pay be determined by where I am assigned?

A: While I don’t know what your official duty station should be, I can give you some information that may be helpful. Certain location-based pay entitlements, such as locality pay, are based on the location of your official work site and position of record. The official work site generally is the location where you regularly performs your duties. If your work involves recurring travel or the work location varies on a recurring basis, the official work site is the location where the work activities of your position of record are based, as determined by your agency. Of course, your work location may change on a temporary basis. If you are in temporary duty travel status away from the official work site for your position of record, your official work site and associated pay entitlements are not affected. The same is true if you are temporarily detailed to a position in a different location.

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Credit for Peace Corps service

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Q: I read post on credit for military service with great interest. As a former Peace Corps volunteer, what is the current status of that service relative to my current Federal service.

A: If you are covered by CSRS and your Peace Corps or VISTA service was performed before October 1, 1982, you’ll receive credit for that time (excluding training time) for both eligibility and annuity purposes. Whether you make a deposit for that time is optional. However, if it isn’t paid, your annuity would be reduced by 10 percent of the amount due, including accrued interest. On the other hand, if the service was performed on or after October 1, 1982, you have to make a deposit to get credit for that time. If you are covered by FERS, there isn’t an option. To get credit for your Peace Corps or VISTA service (excluding training time), you must make a deposit.

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Reduced Social Security

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Q: I retired from the Foreign Service in 1995 after 27 years of service. Prior to that, I worked for 15 years as a merchant mariner, as a miner, and in the Navy. I paid into Social Security during all of this time. My Foreign Service pension derived from the “old” Foreign Service Disability and Retirement System (FSDRS). Why is it that my Social Security benefit was reduced by two-thirds, when my covered private sector and Navy employment had no relationship with my later career as a Foreign Service Officer?

A: The law is clear. Anyone who receives a pension in whole or part from a retirement system where he didn’t pay Social Security taxes will have his Social Security benefit reduced if he has fewer than 30 years of substantial earnings under Social Security. The underlying reason for the WEP is the fact that Social Security benefits are designed to provide a higher level of benefit to those who are the lowest wage earners. Treating those with earnings not covered by Social Security as if they were low-wage earners would create an unintended windfall.

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Correcting retirement annuity

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Q: I learned in 2008 that my disability retirement annuity is wrong because my Preliminary and Final SF 2806 forms were prepared by a state-funded agency rather than my former employer. I was an Army Department employee. I have provided extensive evidence to OPM, however, they have refused to correct my annuity or explain why a state-funded agency prepared my separation documents, why they don’t match the personnel action forms prepared by my former employer, and why my last day in pay status was provided to OPM by the state-funded agency two months after I was separated. I have been unable to find any government agency with oversight over OPM.

A: There is no agency that has oversight over OPM. That oversight is provided by the Administration and Congress, either through its committees or the Government Accountability Office. You might want to direct your concerns to them.

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Credit for work study

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Q: I spent two years (2004-2006) working for the Veterans Administration at a work-study position in Buffalo, N.Y. Does this time count toward FERS retirement eligibility and annuity computation purposes?

A: Not to my knowledge. However, I suggest that you raise this question with your local personnel office, which, if necessary, can check with OPM.

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Credit for military service

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Is military service creditable for civilian retirement purposes? Both current employees and military members who are considering working for the federal government e-mail me looking for answers to that question.

Creditable military service is:
* Active duty in the Army, Navy, Air Force, Marine Corps or Coast Guard; after June 30, 1960, in the Public Health Service commissioned corps; or, after June 30, 1961, in the National Oceanographic and Atmospheric Administration commissioned corps.

* Time as a cadet in the Army, Air Force or Coast Guard academies or as a midshipman at the U.S. Naval Academy.

* Active duty or active duty for training while in the Army Reserve Officers Training Corps or the Naval or Marine Corps Reserve Officers Training Corps.
Service in the Merchant Marine is not considered military service; nor, in most cases, is service in the National Guard or reserves, unless you were called to active duty.
Through Dec. 31, 1956, active-duty military service was fully creditable when determining a civilian employee’s eligibility to retire and in calculating his annuity. After this date, when military members first were covered by Social Security, military service credit is handled in one of two ways to avoid dual compensation under Social Security and the federal retirement systems:

* If you were first hired before Oct. 1, 1982, you will get credit for your military service time in determining your eligibility to retire. You’ll also have the option of making a deposit to the civilian retirement system to get credit for that post-1956 service in the computation of your annuity.

If you are eligible for Social Security and do not make a deposit to the civilian retirement system, your years of military service will be deducted from your combined total of military and civilian service and your annuity will be reduced accordingly. This occurs at age 62 if you are already retired or at your older age if you retire after 62.
If you won’t be eligible for a Social Security benefit at either of those two points in time and haven’t made a deposit, your annuity won’t be reduced.

* If you were hired on or after Oct. 1, 1982, you will get credit for your military service only if you make a deposit to the civilian retirement system for that time. If you don’t, your military time won’t be used to determine your eligibility to retire or in your annuity computation. As a result, when you do retire, your annuity will be based solely on your years of civilian employment.

Other rules
If you are receiving military retired pay when you are hired as a civilian, you’ll have to make a deposit to the civilian retirement system to get credit for your military service and, with one exception, waive your military retired pay before you retire.

Here’s the exception. You may keep your military retired pay if you were awarded it because of a service-connected disability either incurred in combat or caused by an instrumentality of war.

On the other hand, if you are receiving — or will be receiving — retired pay from a reserve component, you won’t have to waive that pay. However, you will need to review the rules spelled out above to determine if you need to make a deposit to get credit for any periods of active-duty reserve service.

If you are called to active duty during federal service and are placed on leave without pay-uniformed service (LWOP-US), that period will be governed by the same rules that apply to all employees who want to get credit for periods of active duty. You’ll have to make a deposit for the LWOP-US period to get credit for that time.

However, there are situations where a deposit won’t be required: For example, if you take annual leave or if you are approved for regular leave without pay. If you are approved for regular LWOP, you may take up to six months’ leave within a calendar year and get credit for that time without having to make a deposit. However, any period of absence beyond that can’t be credited for any purpose nor can a deposit be made to get credit for it.

What counts as creditable service?

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Q: I have an appointment letter with specific dates listed for a qualifying nonappropriated-funds employment from the U.S. Army at the Army Youth Activities camp in 1964. I have confirming information from microfiche records that have been officially certified that list the same employer (U.S. Army AYA Camp) for the same quarter as the specific dates listed in the appointment letter, and at the same pay specified in that letter. What else is required by regulation for verifying this service? These two documents taken together seem sufficient.

A: The only requirement is that you provide convincing evidence that you performed a period of potentially creditable service. Usually that’s done with a copy or copies of official documents. The documents you’ve gathered would meet that criterion.

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Rehired under CSRS

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Q: I am a Civil Service Retirement System optionally retired rehired annuitant. Because I am under CSRS for retirement, is my salary as a rehired annuitant subject to Social Security withholding?

A: As a pure CSRS rehire, you aren’t subject to Social Security deductions unless you were hired as a senior official. If you were, you’d be covered by CSRS Offset, and Social Security deductions would be mandatory.

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Survivor annuity calculations

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Q: My father retired from federal civil service in 1974. At that time, he elected a survivor annuity for my mother with a base of $1,300. Initially, the Office of Personnel Management took out about $175 a month from his annuity for the survivor annuity, and of course this went up annually via cost-of-living adjustments, the same way his regular annuity did.

He passed away in 2009. The OPM has calculated the survivor annuity for my mother, and she is receiving $789 a month net, reduced by $153 for insurance, which leaves $636 a month. Over the 35 years of my father’s retirement, the OPM held out thousands of dollars for the survivor annuity he elected. If he had not elected that survivor annuity, he would have kept those thousands in his pocket. It would have meant more money for them to live on, etc. With thousands held out for the survivor annuity, how can it be that my mother is only ending up with $636 a month net?

A: If your father had not elected a survivor annuity for your mother, they would have had more money to live on, etc. However, unless he invested some of it effectively and beat the odds, your mother would have been left with little or nothing when he died and would have been barred from coverage under the Federal Employees Health Benefits program. As it is, she is receiving an annuity of $9,468 a year and continues to be covered by the FEHB program. And she will continue to receive an annuity for the rest of her life. With rare exception, such as this year, that annuity will be increased by annual cost-of-living adjustments.

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