Ask The Experts: Retirement

By Reg Jones

FERS

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Q. Am I entitled to any annuity pay or retirement pay from the federal government? I was employed from July 1, 1989 until June 30, 2000 under FERS.

A. If you left and you didn’t take a refund of your retirement contributions when you left, you would be entitled to a deferred annuity at age 62. That annuity would be based on your years and full months of service and your highest three consecutive years of average salary on the day you left government. If you did take a refund, you wouldn’t be entitled to anything.

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Leave without pay time limits

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Q. Is there a time limit on leave without pay status, before an employee is subject to termination?

A. Leave-without- pay can only be taken with your agency’s approval. As a rule, an upper limit is set, after which date an employee is expected to return to duty. While an extension can be granted, an agency isn’t required to do so. Failure to return to work when a period of LWOP expires can trigger an adverse action, which could lead to an employee’s termination.

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Locality pay

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Q. What year was “locality pay” started and used along with “base pay” to figure FERS employees annuities, and will the annuity increase each year if locality pay increases?  Do CSRS retirees have locality pay figured in their annuities as well?

A. The Federal Employees Pay Comparability Act was signed into law in 1990 and the locality pay portion was effective thereafter for CSRS and FERS employees. Locality pay is included only in employee salaries. When an employee retires, his annuity will be computed using his three highest consecutive years of average basic pay, which includes locality pay. Once retired, any increases in his annuity will be based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). There weren’t any cost-of-living increases in 2010 and are unlikely to be any in 2011.

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FERS and reserve military retirement

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Q. I served 14 years active duty in the military and got out under Higher Tenure for which I received Involuntary Separation Pay. Now I’m receiving 40 percent disability from the VA, and in the reserves and planning on retiring from there once I reach 20 years. In addition, I just started working for the VA, and planning on buying back my military time. Can I receive retirement from both the VA and the reserves? How early can I retire from the VA? And how is the Involuntary Separation Pay and the disability affect all of this?

A. Yes, if you make a deposit for your period of active-duty service, you can receive both reserve retired pay and a FERS annuity. To be eligible for a FERS annuity, you would first have to have five years of actual FERS service. Once you’ve crossed that threshold, the following age and service combinations apply:

* 62 with 5 years
* 60 with 20
* At your minimum retirement age (MRA) with 30, or at your MRA with at least 10
In the latter case, your annuity would be reduced by 5 percent for every year you were under age 62 unless, as noted above, you retired at age 60 with at least 20 years of service. FYI: You can retire under the MRA+10 provision and defer the receipt of your annuity to a later date to reduce or eliminate the age penalty.

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Relocating while receiving workman’s compensation

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Q. I am currently on LWOP and receiving compensation through the Office of Workers; Compensation. I am employed by the Department of Labor, and am 60 years old.  I have applied for Social Security benefits for the purpose of applying for federal disability retirement, which I did approximately one month ago.  I would like to know if I can relocate while in my present status and how do I learn if my application for retirement is accepted?

A. You are free to relocate while your application for benefits is being adjudicated. However, you’ll need to make sure that your agency, OWCP, SSA and, eventually, OPM, know your current address.

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Involuntary retirement

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Q. I am currently 48 years of age with 30 years of federal service.  I am covered under the FERS retirement system.  If I am unable to meet the conditions of my employment, I will be suspended indefinitely.  Unfortunately, my organization does not offer reassignments to other positions, so I would be faced with being involuntarily separated.  If this involuntary separation occurs, would I be eligible for early retirement without penalty because I have 30 years of service?

A. Yes, if you are involuntarily separated because such things as unacceptable performance or failure to continue to meet the qualification requirements of your job, provided that your separation is nondisciplinary. However, you would not qualify for involuntary retirement if you you are separated for misconduct or delinquency, as determined by OPM.

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GPO and Social Security

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Q. I am turning 67 and planning to apply for Social Security benefits based on my own record of more than 37 years.  I currently am receiving a CSRS annuity from my deceased husband who died in February 1982 while still working.  Will the GPO affect my Social Security benefit amount?

A. No, it will not. The government pension offset applies only to the Social Security benefit of someone who is receiving an earned annuity from a retirement system where he or she didn’t pay Social Security taxes.

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Retirement incentives

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Q. I am thinking of retiring on Jan. 1. If, by chance, incentives for retirement were given at our base at the end of this year, would I still be given it if I had already sent my paperwork in?

A. Not likely. The purpose of cash incentives is to encourage people to retire who had not planned to do so, not to reward those who have already made that decision.

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LWOP in CSRS annuity computation

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Q. had two brief periods of LWOP early in my career. Each was less than six months and neither was in the same calendar year. I am now planning to retire in the next year with over 36 years of service, but am unclear whether the LWOP periods will be subtracted from my Service Computation Date. I was always under the impression these periods would count toward my annuity computation because I was never on LWOP for anything close to six months in any calendar year.  Then I read that in making the final annuity calculation, OPM deducts “any” periods of noncontribution to the retirement fund. Can you clarify?

A. While some periods of service where no retirement contributions were taken out of an employee’s pay aren’t creditable for determining length of service or used in an annuity computation, leave-without-pay that doesn’t exceed six months in a calendar year isn’t one of them. The effect of LWOP on benefits is described at http://opm.gov/oca/leave/html/LWOP_eff.asp.

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Retirement benefits

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Q. My husband is former military (active duty from 1977-1991) and is entering civil service in a GS position.  Will he be under the FERS or CSRS system?  The formula for calculating the buyback or credit is very different under the two.

A. He will be under FERS. No one who is first hired after December 31, 1983, is covered by CSRS.

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FEHB coverage for 22-year-old child

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Q. I have a daughter who is currently covered under FEHB and is 21.  She will be 22 this November and I understand she will qualify for coverage again under FEHB effective Jan. 1, 2011.  She currently works part time and is not eligible for insurance through her employer; however it is possible she may become full time/permanent within the next month.  She would not be eligible for insurance until she has been a full-time employee for 90 days, which means she could possibly qualify for insurance through her employer by Jan. 1.

My question is: Can she decline insurance through her employer and be covered solely under my FEHB coverage, or does she “have” to purchase insurance through her employer? Understanding that if this is the case, her insurance would be primary and my health insurance would be secondary.  What if she does not become eligible for insurance through her employer until after Jan 1 … does that change anything?

A. Definitive answers to your questions will be included in the open season material provided to you by your agency, if you are an employee, or OPM, if you are a retiree or survivor.

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Remarriage after retirement

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Q. When I retired five years ago I was then divorced and did not arrange for any spousal survivor benefits. If  I elect to marry or remarry, how would my pension be affected?

A. If you were to marry, you would have two years to elect a survivor annuity for your new spouse. If you did, there would be two reductions in your annuity. The first would be the standard deduction to provide a survivor annuity, the amount to be determined by whether you elected a full or a partial survivor annuity. The second would be a permanent actuarial reduction. The deposit equals the difference between the new annuity rate and the annuity paid to you for each month since retirement, plus 6 percent interest. The amount is determined by dividing the amount of the deposit by an actuarial factor for your age on the date your annuity is reduced.

If you were to remarry the same person you were married to when you retired, the rules are very different. If that person agreed to either no survivor annuity or a partial survivor annuity, you wouldn’t be able to elect a survivor annuity that was greater than the one you elected at retirement. If none was elected, then you wouldn’t be able to elect one when you remarried. On the other hand, if you were divorced before you retired, the rules stated in the first paragraph apply.

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Retirement contributions

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Q. I’m a CSRS postal worker considering retirement. What happens to the money I’ve contributed to my pension when I retire or die while retired?

A. Because you would have already paid taxes on the amount you contributed to the retirement system, a portion of your annuity will be nontaxable, following the rules published by the Internal Revenue Service. Therefore, if you have a spouse who is entitled to a survivor annuity, any contributions that haven’t been paid out to you would transfer over to his or her annuity and continue to be nontaxable until they ran out. If you have no spouse who is eligible for a survivor benefit, the remaining money would be distributed according to the standard order of precedent, which begins with you child or children and continues through your relations until it ends being decided by the laws if the state where you lived.

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FERS and (Title 32) military retirement

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Q. I was active-duty military (Title 10) from 1987 to 1999. I became a military technician in 1999 under FERS and am currently still buying back those 11 years of active duty. I recently took an AGR (Title 32) position with the National Guard after 10 years of federal service as a military technician. At age 56 I intend to retire with 20 years of active duty as an AGR. This coincides with my federal MRA+10 (age 56 years). Can I collect a FERS retirement and a military retirement? Is there a particular strategy I should employ with these two retirements? i.e. submit MRA+10 retirement after or before AD retirement?or should I terminate my military deposit now because I cannot draw both and cannot get my military deposit back?

A. You can collect both your military retired pay and your FERS annuity without a reduction in either. If you complete that deposit for your active-duty service, you’ll get credit for that time in determining your creditable service and in your FERS annuity calculation. If you don’t complete the deposit, you won’t get any credit for that time, and you won’t be able to get a refund of what you did deposit until you separate from your civilian job or retire from it.

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FERS annuity

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Q. I am 48 years old and have six years of federal service under FERS. If I were to quit my job today, would I qualify for an annuity and when is the earliest I could start collecting on it? I know my MRA is age 56.

A. Because you have at least five years of creditable service, if you resigned from the government, you could apply for a deferred annuity at age 62. That annuity would be based on your highest three consecutive years of average salary (your high-3) and your years and full months of service on the day you left.

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Initial placement in CSRS and then moved to FERS

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Q. I began Navy federal employment Dec. 6, 1986, just at the change from CSRS to FERS.  This start date, however, is before the requirement that employees be placed in FERS, which I believe is Jan. 1, 1987.  My initial appointment SF50 says I am CSRS at appointment, but I was moved at a later date into the FERS system, citing a change in retirement plan.  I just noticed this when looking through my personnel records for a re-investigation of security clearance.  I was never notified or gave approval to a change, except that this SF50, which came Jan. 8, 1987, changed my system on Jan. 1, 1987 without my really being aware.  Because of my start date, do I have any reason to believe that I should have been in the CSRS system all along?  Could this change to the FERS system be challenged at this late date?

A. There is no reason to believe that you should have been in CSRS all along. Because you were first hired after Dec. 31, 1983, you were automatically covered by CSRS and Social Security. Then, because you had fewer than five years under CSRS, when FERS became effective on Jan. 1, 1987, you were required by law to be converted to FERS.

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Spousal benefits from Social Security

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Q. I medically retired from the Postal Service in 2003 and received 100 percent total and permanent disability from the VA the same year. Post office retirement is under CSRS and I failed to do the military payback for two years, nine months of service. I have 12 years employment under Social Security and my wife has none. I will be 62 in four months and have received notice from OPM that my CSRS annuity will probably be reduced when I become eligible for Social Security benefits. I have received vast amounts of conflicting information from people that I suspect have little grasp on my situation but I am assuming that the Social Security benefit will net no financial increase by the time WEP, offsets, etc. are in place.

My biggest point of concern is my wife’s eligibility to draw Social Security on my contributions. Our HR rep at the post office told us she would not be eligible because of my CSRS annuity; my VA counselor says that she will be eligible due to the fact of my 100 percent combat-related disability through the VA but has of yet not been able to show me anything in writing. I was denied Social Security disability due to a clerical snafu and didn’t try to appeal since I hadn’t paid Social Security for over 10 years and would have only been awarded Medicare privileges if I had won. Would being declared disabled through Social Security Administration have any bearing on my wife’s eligibility?

A. Your own benefits will be affected two ways. First, the period of active-duty service for which you didn’t make a deposit will be eliminated and your annuity recomputed downward. Second, any Social Security benefit to which you’ll be entitled will be affected by the windfall elimination provision, which reduces the Social Security benefit of anyone who receives an annuity in whole or part from a retirement system like CSRS where he didn’t pay Social Security taxes and has fewer than 30 years of covered service under Social Security.

Unless your wife is receiving an annuity from a retirement system where she didn’t pay Social Security taxes and has fewer than 30 years of Social Security covered service, she’ll be able to receive a spousal Social Security benefit based on your Social Security-covered employment, but only if she is age 62 or older.

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Air traffic controller, FERS retirement

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Q  I have been an air traffic controller since November 1985. I was born in 1960. If I work until I am 56 (mandatory retirement), am I then, or at anytime, eligible for the 1.7 percent calculator for all the 30+ years I am employed?

A. If you are an ATCS with 30+ years and retire at age 56, you have the option of the regular computation, 20 years at 1.7% and remaining years at 1%, or all years at 1.7%, however, if you choose the 1.7% for all years, you would get no cost of living adjustment until you reach age 62.

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CSRS sick leave

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Q. I have a question. I have 2,300 hours of sick leave. I am under CSRS. I have been having some back problems that will require extended sick leave. I am eligible to retire with 37.5 years of service. My question is this: Is it more advantageous to take a year off on sick leave or to retire and use the sick leave as an additional year of service? I know it adds 2 percent for the sick leave.

A. You have a bigger problem than deciding which approach is the most advantageous to you. You aren’t the only player in this game. Your agency is the other one. You’d need to get its approval to take over a full year of sick leave. Since you are already eligible to retire and presumably would do so once your leave ran out, there isn’t any incentive for them to agree. They’d be paying you for not performing your job and, in all likelihood, keeping them from filling your position with someone who could.

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CSRS and FERS

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Q. I am a CSRS retiree and my wife is a FERS retiree. If we both take out a survivor annuity on our own retirements and one or the other of us passes away, can the survivor collect their own retirement and the survivor annuity from the deceased one?

A. Yes

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