Ask The Experts: Retirement

By Reg Jones

National Guard employment and fed annuity

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Q: I’m over 50 years old and in a Federal Employees Retirement System law enforcement position with more than 22 years of 6(c) covered time. I am considering retirement. I also have more than 30 years in the National Guard and will draw a reserve retirement before age 60. Once I am retired and receiving my federal annuity, can I then accept a GS-grade position with the National Guard without affecting my annuity?

A: No.

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Transferring to a non-LEO position

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Q: I am a federal law enforcement employee with 20 years covered by the Federal Employees Retirement System FERS plus five years worth of military buyback time. I have six more years before I will face mandatory retirement at my 57th birthday. I want to transfer to a non-LEO position with another federal agency so I can keep working. Please confirm that if I do transfer to a non-LEO position with another federal agency that I can keep working past 57 and not face mandatory retirement, and that my 20 years of FERS LEO service will transfer over at the 1.7 percent per year retirement rate as a part of my overall pension. Neither the Office of Personnel Management nor my human resources office have confirmed this for me.

A: If you transfer to a noncovered position, you can continue working as long as you want. When you retire, your 20 years of covered service will be computed using the special, enhanced formula. The rest of your service will be calculated using the standard multiplier of 0.01 percent, unless you retire at age 62 or later. In that case, those years would be multiplied by 0.011 percent.

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Disability retirement and nonfederal re-employment

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Q: I receive federal disability retirement from the U.S. Postal Service after 27 1/2 years of service. My disability was approved for anxiety and severe depression. During my postal career, I was a city letter carrier. I have an opportunity to take a job as a medical courier. Do you think this job will jeopardize my continuing to receive disability? The two jobs are a bit similar in nature, however the stress level of the new job would be far less. I do not want to jeopardize my disability in any way. There is no way I could ever return to the stress of the Postal Service with my mental conditions.

A: If you are under age 60 and accept a nonfederal position, your disability annuity would only be discontinued if your income from wages or self-employment was 80 percent or more of the current rate of base pay for the position you held when you went on disability retirement. If you accept a federal job, your salary will be reduced by by the amount of your disability annuity and will also be subject to the 80 percent limitation.

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Sick leave credit calculation

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Q: You recently answered a question regarding sick leave credit, outlining the formula used to determine the credit at retirement. Does the same formula apply to a worker who works a 4-10 work week?

A: Yes.

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BRAC-related leave rate

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Q: Next year, I will move out of my Base Closing and Realignment Commission-related job and take a new, non-BRAC job at a lower pay rate. Will my BRAC-restored leave be paid out at my rate of pay at time of payout, at my rate of pay just before/upon moving out of BRAC, or at the various rates of pay at which the leave was earned?

A: It will be paid at the rate of pay you were earning on the date your position transfered.

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Disability retirement after loss of dual status

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Q: I am a Federal Employees Retirement System dual-status federal technician in the Army National Guard. I am looking at a possible involuntary separation because of losing my dual status (nonmedical related) later this year. I am 45 years old with 12 years of federal service. Would I qualify for any type of involuntary separation/disability annuity payment?

A: You would be eligible for disability retirement if you are separated due to a disability that disqualifies you from membership in a reserve component of the armed forces or from holding the military grade required for such employment; you aren’t appointed to another position in the federal government; and you haven’t declined a reasonable offer of another position in your agency.

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Arranging for Medicare deductions

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Q: I am a recent retiree, younger than 65, and have just received my final annuity computations. I expected Medicare would continue to be deducted and have now read two puzzling things: That Medicare is not taken from annuity payments, and that I must contact the Centers for Medicare & Medicaid Services to have payments withheld. By law, I understand Medicare becomes my primary payer, with my federal health plan second, when I turn 65. My question is: As a retiree under the Civil Service Retirement System, do I “owe” 1.75 percent of my monthly annuity to Medicare and must set it up now to be eligible when I turn 65? I would not like to have to pay a lump-sum payment in a few years.

A: Deductions for Medicare Part A are only taken from wages and self-employment, not annuities or other sources of income. On the other hand, if you decide to enroll in Medicare Part B, you will need to arrange to have the payment deducted from you annuity. To do that you’ll need to contact the Centers for Medicare & Medicaid Services (CMS).

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Social Security disability offset?

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Q: I am 62 years old, and my Federal Employees Retirement System disability retirement benefit has been recalculated to a regular annuity. I am still on Social Security disability. Will Social Security offset the amount that I  will be getting in my annuity?

A: No, it won’t.

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Taxes and annuity payments

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Q: Are Social Security and Medicare taxes withheld from Federal Employees Retirement System annuity and supplement checks for retired law enforcement officers?

A: No, they are not.

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Prior civil service and CSRS Offset

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Q: I am 67 years old and have 10 years of federal service. I want to work another 10 years before I retire. I worked for 15 years in government beginning in 1966 before resigning and taking the retirement money. I would need to pay $23,000 at this point to refund that money. Is it worth it, or should I remain in the Civil Service Retirement System Offset program?

A: Let me clear up a few points. First, because you took a refund of your retirement contributions before March 1, 1991, you’ll get credit for those years in determining your total years of service. Therefore, you don’t have 10 years of service, you have 25. Second, you’ll remain in CSRS Offset no matter what you do. Third, if you make a deposit, your annuity when you retire will be increased by approximately 30 percent (2 percent times each year of service over 10). Finally, as a CSRS Offset employee, when you retire and begin receiving a Social Security benefit, your CSRS annuity will be reduced only by the amount of Social Security benefit you earned while employed under CSRS Offset. It’s up to you to decide which is the best option: Make the deposit or leave things as they are.

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National Guard and federal retirement

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Q: I served eight years on active duty in the Army and then went into the National Guard. While in the National Guard, I began working for the federal government. I bought back the eight years of service in the Army and plan to draw a federal pension as well as a National Guard retirement. Will either retirement offset the other?

A: No, there wouldn’t be any reduction. You’d get the full amount of each retirement benefit.

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Social Security and WEP specifics

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Q: I recently went into the Social Security office and was given three different answers by three different people regarding offsets and the windfall elimination provision. I received an increase in my Social Security monthly payment for 2011 based on my 2009 earnings. In 2009, I made more then the minimum and qualified for another year (26 years now) toward my 30-year full exemption from the offset and windfall, so should Social Security also have given me an additional 5 percent because I now have one more year of substantial earnings toward my 30-year exemption?

I was told by the Social Security office that they do not recalculate it yearly and won’t until I get all 30 years completed. I will have 27 years when they calculate 2010 earnings next year. The real question is, are they supposed to calculate the additional year that I have earned toward my 30 years of substantial earnings immediately and give me money now, or do they wait until all 30 years are completed?

A: If you are subject to the windfall elimination provision, the reduction in your Social Security benefit is determined at the point you first become eligible for that benefit and is permanent. Any subsequent increases you are entitled to based either on cost-of-living adjustments or additional Social Security-covered earnings are simply added to that original, reduced base.

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Military buyback and local-government service

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Q: I am 50 years old and have been working for the last five years in a civil service position for a county sheriff. I served eight years and three months in the Coast Guard and have an opportunity to move to a federal job. If I stay in my current position, I will have to wait until I am 65 to retire. Is there a retirement benefit to moving to the federal job? Can I combine the periods that I have worked in the military, civil service and in a federal job for a total of 20 years and retire when I am 62? Can I use the civil service job to count toward retirement, and if so, will I have to buy that time back? Will it require that I “buy back” military time? How do you find out how much that would cost?

A: While employment by a state or local government wouldn’t be creditable, your active-duty service in the Coast Guard would be. However, to get that credit you would have to make a deposit to the federal civilian retirement system, plus accumulated interest. As a practical matter, you won’t be able to find out exactly how much you’d owe until you enter the federal service, at which point your agency would lead you through the process. In the meantime, you can get a good handle on the cost by using the calculators at www.FEDbens.us.
 
As a Federal Employees Retirement System employee, you would be eligible to retire with an immediate unreduced annuity with the following combination of age and years of service: 62 and five, 60 and 20, and at your minimum retirement age with 30. You could also retire at your MRA with at least 10 but fewer tham 30 years of service; however, your annuity would be reduced by 5 percent for every year you were under age 62. MRAs range between 55 and 57, depending on your year of birth.

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Social Security survivor benefits

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Q: My question deals with my wife’s Social Security survivor benefit upon my death. I am 70 years old and my wife is 68. Both of us started taking Social Security when we were 62. I receive $1,663 in gross Social Security payments a month, and my wife receives $136. I worked in private industry and retired. My wife worked for the Defense Department and retired under the Civil Service Retirement System, never paying into Social Security. My question is, with these figures, if I died today, what would my wife be entitled to?

A: Any Social Security spousal benefit to which she’d be entitled would be reduced by $2 for every $3 she receives in her CSRS annuity.

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Retirement dates and leave payouts

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Q: I am an employee under the Civil Service Retirement System, 6C, facing mandatory retirement the second week of January 2012. I anticipate finishing 2011 with 448 hours of annual leave on the books. Jan. 1, 2 and 3 would be the ideal retirement dates. In 2011, Pay Period 26 ends on the last day of the year. I’m now looking at Dec. 31, a Saturday, as the retirement date on the paperwork in order to receive the full annual leave 448-hour lump-sum payment.

Do you see any problem with that date given the information provided? Additionally, I would imagine the lump-sum payment, which will be a direct deposit sometime in January 2012, will be counted as 2012 income and not in the 2011 tax year. 

A: No, I don’t see a problem with retiring on that date; and yes, your lump-sum payment will be taxed in the year it’s received.

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FERS retirement eligibility

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Q: I worked as a civilian federal employee from July 2006 through December 2008. During that time, I bought back my three years of active-duty military service. Does this give me enough credited service to receive a retirement under the Federal Employees Retirement System?

A: No, it doesn’t. You’d have to have five years of creditable civilian service to be eligible for a deferred annuity at age 62.

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Benefit reductions from home sale

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Q: A friend told me that her monthly Social Security benefit was reduced by $250 because of the profits made from the sale of a house that she inherited from her mother. Can this be true?

A: The Social Security earnings limit only applies to earnings from wages or self-employment, and then only for those individuals who haven’t reached full retirement age. In the ordinary course of events, income received through the sale of a home wouldn’t be considered to be earnings. However, if she reported any portion of the proceeds as earnings on her federal income tax return (because she served as a real estate agent, for example) that amount would be subject to the earnings limit.

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Buying time to get benefits?

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Q: If someone is going into his eighth year under the Federal Employees Retirement System and is eligible to retire in two years, is there any way he could buy two years of service so he could retire with benefits?

A: No, there isn’t.

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Use-or-lose for 2011

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Q: I want to retire Jan. 1, 2012. will I lose my 240 hours of accumulated leave? What is the use-or-lose date for 2011?

A: In 2011, the leave year ends Dec. 31. However, even if you retire after that date, you won’t lose your 240 hours of annual leave; that’s the number of hours you can carry over from one year to the next. If you retire after Dec. 31, you would lose any hours of annual leave in excess of 240. Those are your use-or-lose hours.

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Time limits for high-3 to take effect?

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Q: I know it won’t matter for at least the next several years, but when we receive a pay raise at the beginning of the year, how long do we need to be at the new salary for it to be a part of the computation of our high-3?

A: A high-3 is simply the average of the three highest consecutive years of base pay, whenever they occur. Assuming that your most recent 36 months are the basis for your high-3, for every additional month you work at the same or higher pay rate, one month will be dropped from the beginning of the sequence.

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