Ask The Experts: Retirement

By Reg Jones

Federal disability and Social Security

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Q: My husband was federal technician and served in the Air National Guard. The military discharged him because of health reasons. So he lost his federal technician job. He now receives Civil Service Retirement System disability benefits. He applied for Social Security disability. Social Security counts his CSRS disability as a public disability, so his benefit is offset and his payment is reduced to $31.00 a month. Now that he is over age 55, can he change his CSRS retirement to a CSRS annuity or discontinued service retirement? Social Security stated that if he is receiving a CSRS annuity or discontinued service retirement he will not have that offset and receive $583.00 per month.

A: If his disability annuity is terminated because he has recovered from his disability or is restored to earnings capacity and hasn’t been reemployed in a position covered by a federal retirement system, he would be eligible for an immediate annuity if he met one of the following age and service requirements: age 62 with five years of service, 60 with 20, or 55 with 30. He would be eligible for a discontinued service annuity if he has reached age 50 and has at least 20 years of creditable service or is any age with at least 25 years. If his disability annuity terminates and he doesn’t meet any of these requirements, he would be eligible for a deferred annuity at age 62.

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When to give notice

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Q: How many weeks’ notice is a federal employee retired to give prior to retirement?

A: There is no minimum notice requirement in law or regulation. However, courtesy and prudence suggest a minimum of a few weeks. I mentioned courtesy because a supervisor needs to know that you are leaving so he can plan a redistribution of work among those who are left and, where possible, begin the search for a replacement. I mentioned prudence because failure to take the time to shepherd your retirement application through you agency before leaving could result in long delays before you receive your first annuity payment.

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Use sick-leave benefits appropriately

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Recently a reader who is approaching retirement sent the following question to the Federal Times website: “What will get me the most bang for the buck, start using a lot of sick leave or going straight for the annuity?”

I answered: “This is mother speaking: ‘Son, it’s attitudes like yours that give federal employees a bad name.’ Sick leave may only be used for approved purposes. Using it just because you want to is a violation of law.”

Tough words, but true. Sick leave is a benefit that may only be used when appropriate.

I think one reason employees consider inappropriate ways to use sick leave is that it accumulates. While being credited with four hours of sick leave each and every pay period doesn’t sound like much, if you never used any in a 30-year career, you’d end up with 3,120 hours of it.

Time for a history lesson. At one time, you could only use sick leave when you were sick and, as a result, were unable to perform your duties because of physical or mental illness, injury, pregnancy or childbirth. Other than that, unused sick leave had no value. It was lost when you retired.

With so few opportunities to use sick leave, the temptation to burn it off at the end of a career was extreme and its misuse was rampant, with supervisors turning a blind eye to those who used as many hours as they could. So bad did this misuse become that in 1969, Congress enacted Public Law 91-93 to permit employees to receive service credit for unused sick leave in the computation of their Civil Service Retirement System annuities.

When the Federal Employees Retirement System was established in 1987, it put those employees in the same position that CSRS employees were in before the law was changed. As they approached retirement, FERS employees started burning up their sick leave with the same enthusiasm that their forbearers had shown. Once again Congress had to step in and allow retirement credit for unused sick leave.

The FERS credit is being phased in: Employees retiring between now and Dec. 31, 2013, receive half credit; those retiring thereafter receive full credit.

In addition to retirement credit for unused sick leave, a wide variety of additional, legitimate uses of sick leave are now allowed. Personal illness or incapacity are still the main reasons employees take sick leave, and the limitations on its use are few. Your agency may require you to provide a medical certificate or other acceptable evidence that you are, in fact, ill. And, in some cases, your agency may require such evidence for absence of fewer than three days.

However, you can now use up to 104 hours of sick leave to provide care for a family member who is incapacitated or needs medical, dental or optical examination or treatment. Sick leave may also be used to make arrangements required by the death of a family member or to attend that family member’s funeral.

In addition, sick leave can be used to care for a family member with a serious health condition. Most employees may use up to 12 workweeks of sick leave each year for this purpose. However, if you used any portion of your 104 hours of sick leave for general family care or bereavement, that amount would have to be subtracted from the 12-week entitlement. Likewise, if you use the 12 workweeks of sick leave to care for a family member, you could not use the 104 hours in the same leave year for general family care or bereavement.

Even with the restrictions I’ve cited, there are a lot of legitimate uses for sick leave. And one of them isn’t a choice you can make about whether to illegitimately burn off your sick leave or, when you are eligible to retire, legitimately have the hours added to your period of employment and used in your annuity computation. Burning the time off isn’t an option.

Time for one last word from mother: “Use your benefits appropriately. Don’t try to game them, either for personal convenience or profit. There are too many people, including members of Congress, who think federal employee pay and benefits are excessive. Don’t give them another reason to point the finger at you.”

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Social Security benefit calculator

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Q: What percentage of my benefits are lost if I miss paying into Social Security for two years?

A: Unknown and possibly unknowable. Social Security benefits are calculated like federal retirement benefits. They are based on the total number of years of Social Security-covered employment, not to exceed 35. The dollar amount of your actual earnings during those years, stated in constant dollars, is then used to determine your average indexed monthly earnings, or AIME, which is then plugged into the Social Security formula. The Social Security Administration has a number of benefits calculators here that you can plug your own numbers into.

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Understanding the WEP

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Q: After reading all the horror stories about the windfall elimination provision and Social Security demanding payback of erroneous payments, I’m writing to verify my Civil Service Retirement System Offset and WEP reductions. I have 22 years of CSRS service, from 1973 to 1995, put in 13-plus years of nonfederal work, and then was re-employed with the federal government as a CSRS Offset employee in 2008. I plan to retire at 62 with 27 years, 8 months of federal service, with about five years of that under CSRS offset.

My personnel office says that I am not subject to the government pension offset, but it can’t seem to explain whether I’m subject to WEP. They listed a Social Security deduction amount of $40 on my retirement estimate, but I’m still waiting to understand if this is a WEP deduction. I was under the impression that the WEP would cut my Social Security benefit in half. If the formula for CSRS Offset employees is time of CSRS Offset service multiplied by Social Security benefit amount divided by 40, then the reduction will not be so severe.

A: Anyone who is receiving an annuity, in whole or part, from a retirement system in which he didn’t pay Social Security taxes is subject to the windfall elimination provision if he has fewer than 30 years of substantial earnings under Social Security. While application of the WEP doesn’t normally reduce the Social Security portion of the benefit due to those receiving a CSRS Offset annuity, in rare instances it might. For more information about the WEP and how it is applied, go to this Social Security Administration fact sheet.

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Losing “use or lose” leave

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Q: I plan to retire Jan. 3. At the end of this year, I will still have 40 hours of “use or lose” leave. Will I be paid for that leave in my final lump-sum annual leave payment, or will I forfeit this leave?

A: In 2011, the leave year end date is Jan. 1. If you retire after that date, any unused annual leave in excess of 240 hours would be lost. You would receive a lump-sum payment for those 240 hours.

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MRA benefit breakdown

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Q: I am a 39-year-old federal employee. I have nine years of Federal Employees Retirement System-covered federal service. I also bought back eight years of Army service time two years ago. I am thinking of resigning my position and starting a small business. Would it benefit me to wait three years and reach 20 years of creditable service? And if so, what benefits will I be eligible for at my minimum retirement age?

A: You wouldn’t be eligible for any benefits when you reached your minimum retirement age.  With fewer than 20 years of service, you’d be eligible for a deferred annuity at age 62. With at least 20, you’d be eligible for the annuity at age 60.

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FERS supplement specifics

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Q: Is the Federal Employees Retirement System supplement (Social Security) sent to retirees as a separate payment, or is it combined with the annuity?
 
A: The special retirement supplement is included in a retiree’s monthly annuity payment.

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Defining “high-3″

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Q: My “high-3″ years are not my last three years. I am thinking of retiring in June, and I have read that your last three consecutive years are your high-3 years. My highest three years, salary-wise, were 2003 to 2005. Will they use those years or my last three?

A: An employee’s high-3 is always the highest three consecutive years of average salary, no matter when they occur in a career.

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Health care coverage and retirement

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Q: I have been opting out of health care coverage because I am covered by my wife’s plan, but I plan to retire under the Federal Employees Retirement System in 2016 and want to take advantage of the post-retirement health care benefits. I will enroll during the upcoming open season, but I would like to know whether I need to enroll in self and family coverage in order to have coverage for my family after I retire, or if I can enroll in self coverage now and add family members after I retire.

A: You can switch from self-only coverage to self and family coverage during any health benefits open season.

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CSRS, Social Security and the WEP

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Q: I am 65 years old and will be 66 in January. I am contemplating retirement from the federal government. I worked in the private sector for more than 20 years and switched over to the government in 1985. I am under the Civil Service Retirement system. I was informed by a co-worker that my Social Security benefits, which I am counting on heavily to support my family, will be reduced substantially because I am under CSRS. Is this true?

A: Your Social Security benefit would only be affected if you have fewer than 30 years of Social Security-covered employment. If that’s the case, your Social Security benefit would be reduced, but not eliminated. To better understand how the windfall elimination provision works, read the Social Security Administration’s fact sheet.

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Returning to federal work

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Q: I retired from the Navy Department and am now looking to apply as a rehired annuitant. where can I submit my resume? 

A: Start be asking the folks in your former activity’s personnel office. If they don’t have the answer, they can ask someone higher up. Concurrently, you can search for job openings posted at www.usajobs.gov.

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TVA retirement

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Q: Who do I contact to buy back my time spent working with the Tennessee Valley Authority for retirement credit? I need an address and phone number.

A: To get credit for your period of service with TVA, you’ll need to ask them for a refund of your retirement contributions and then deposit that refund into your current retirement system. Your local personnel office can help you do that.

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Deposits for nondeduction service

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Q: I’m under the Civil Service Retirement System and have a period of about one year of nondeduction service immediately prior to Oct. 1, 1982. I also have about a year of nondeduction service starting Oct. 1, 1982. Which would it make more sense to make a deposit for, the year prior to Oct. 1, 1982, or the year commencing on that date?

A: For nondeduction service performed before Oct. 1, 1982, you have the option of making a deposit and having your annuity reduced by 10 percent of the amount that would have been deducted from your salary plus accumulated interest. For service performed on or after Oct. 1, 1982, you must make a deposit. Which would be the better option for you is something you’ll have to decide for yourself. Regardless of which you choose, you’ll still get credit for all that nondeduction time in determining your length of service.

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CSRS Offset and Social Security limits

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Q: I retired at age 57 as a Civil Service Retirement System Offset employee. I’ve enjoyed a private industry position but have learned that at age 62, my CSRS annuity will be reduced. I can retire through the Social Security Administration to recoup the reduced amount, but will be subject to an earnings limit which wipes out the entire SSA pension. Am I missing something? Are offset retirees subject to the SSA earnings limits?

A: Yes, they are. The earnings test will reduce your Social Security benefit by $1 for every $2 you earn above the limit, which is $14,160 in 2010. In the year you reach full retirement age, the reduction will $1 for every $3 over a different limit, which is $37,680 in 2011. The limit no longer applies in the month in which you reach full retirement age.

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FERS sick leave credit

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Q: From Oct. 28, 2009, to Dec. 31, 2013, half of of sick leave may be credited toward retirement time. Is that correct? If so, does a Federal Employees Retirement System employee who retires in that window receive payment for the other half of the unused sick leave, or is it just lost? Do FERS retirees receive full payment for unused vacation time?

A: Any FERS employee retiring between now and Dec. 31, 2013, will only receive credit for half of his unused sick leave. The rest is lost. After that date, full credit will be given. All employees, whether covered by FERS or the Civil Service Retirement System, receive a lump-sum payment for their unused annual leave.

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Maximum service time and ‘high-3′

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Q: I understand that under the Civil Service Retirement System, we can use unused sick leave toward federal service time that is used to determine the amount of time considered under the CSRS retirement pay formula.  Also, I understand that under CSRS, the maximum time allowed is 42 years, which translates to 80 percent of the average salary in a worker’s “high-3″ years.

My questions are, if someone is covered by CSRS, if they add up their military and civil service time and get 42 years, can unused sick leave be added to the 42 years to get more than 42 years, and thus more than 80 percent of the high-3? And, assuming someone’s salary for their 43rd, 44th and 45th years of service would make up the high-3, would they still be eligible for that amount even though they’ve passed 42 years of service?

A: The maximum earned annuity that a CSRS employee can receive is 80 percent of his highest three consecutive years of average salary, regardless of when those three years occur in a career. That 80 percent limit is reached when an employee has 41 years and 11 months of creditable service (actual service and service for which a deposit has been made). After reaching that point, retirement deductions will continue to be taken from his salary. At retirement, he will be offered a choice: He can either receive a refund of those excess deductions or use the money to purchase additional annuity. That additional annuity, just like unused sick leave, isn’t subject to the 80 percent limit.

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USPS and disability retirement

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Q: My husband has been working for the U.S. Postal Service for 26 years. He is 53 years old. He is entitled to Federal Employees Retirement System benefits at age 56, but he wants to retire now due to health issues. Can he do that?

A: The only way he could retire before reaching his minimum retirement age would be if he was approved for disability retirement. To find out if he is eligible, he’d have to file for disability retirement and, at the same time, file for Social Security disability benefits. His personnel office can help him do that.

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FERS and Social Security

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Q: I have been working for the government for the past seven years under the Federal Employees Retirement System and expect to retire in 13 years at age 67. Prior to my government service, I worked in the private sector and paid into the Social Security system for 35 years. Am I to assume that I will be receiving both a full FERS and Social Security benefit when I retire?

A: Yes. You will receive your FERS annuity based on your years of FERS-covered employment and a Social Security benefit based on all your Social Security-covered employment, not just that under FERS.

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Disability retirement seminars?

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Q: Do you know of any retirement seminars specifically geared to Federal Employees Retirement Service disability retirement?

A: No, I don’t. However, if any of our readers are aware of any, please let me know and I’ll pass the information along.

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