Ask The Experts: Retirement

By Reg Jones

Windfall elimination provision and Social Security

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Q: I was a CSRS employee and I retired from the federal government in 1994 under the 10 percent reduction by President Clinton. I have been working in the private sector from 1995 to 2011. Can I connect Social Security from 1995 till 2011 if I am 65?

A: Because you are receiving an annuity from CSRS, a retirement system where you didn’t pay Social Security taxes, your Social Security benefit will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who has fewer than 30 years of substantial earnings under Social Security.

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Garnishment of Social Security

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Q: I have a large civil penalty from a state and want to know if they can garnish my Social Security income when I start to draw payments.

A: Section 407 of the Social Security Act states that “none of the moneys paid or payable under this subchapter shall be subject to execution, levy, attachment, garnishment or other legal process.” While this is generally true, there are exceptions; for example the collection of delinquent federal taxes or delinquent child support. And there are others. You’ll need to consult an attorney who can examine your particular situation and determine whether garnishment is possible.

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CSRS disability/federal taxes

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Q: I retired in October 2006 because of a disability from the CSRS. I had paid more than $60,000 into the CSRS and was told when I reach my retirement age of 55 (in February 2011) that I would not be subject to federal taxes on that 60,000. So I was hoping to not pay federal taxes the next couple years. But depending on who in the government I talk to I seem to get different answers. What is the truth? I have been paying federal taxes all along on the disability annuity they send me and was expecting some relief this year.

A: Under current law your disability retirement income is treated as earned income unless you are determined to be totally disabled for all gainful employment. Because OPM is only able to determine if you are disabled for the performance of the position from which you retired (or a vacant one of equal grade or pay), your disability retirement may not meet the Internal Revenue Service’s criteria for a tax-exempt benefit. Go to www.irs.gov to get current tax information

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Second retirement

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Q: I retired from the Air Force after 27 years of service. I have now been working for TSA for three years for a total of 30 years of federal service. When will I be eligible for retirement from TSA and does my time in the Air Force count toward a future retirement?

A: You will be eligible to retire when you have five years of civilian employment. You will only receive credit for your years of active duty service if you make a deposit to the civilian retirement fund and, at retirement, waive your military retired pay.

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FERS Technician and military buyback refund

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Q: I am a FERS dual status technician with the Air National Guard. I completed my active duty Title 10 military buyback (three years, seven months) to receive retirement credit under FERS. Is it possible to apply for a refund of the military buyback time and not receive credit under the FERS retirement system?

A: You can only get a refund of your retirement contributions if you leave government and apply for a refund of all your retirement contributions and deposits, thus voiding your entitlement to an annuity.

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Sick leave and retirement date

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Q: I plan to retire in December of 2011. If I retire Dec. 31, I will have 41 years and 10 months, one month shy of the 41 years and 11 months to be eligible for the 80 percent of my high-3 salary. I will have one month of sick leave. When my annuity is calculated and my sick leave added in, will I actually have the 80 percent I’m looking for? If I retire on Dec. 2 in the 24th pay period would I most likely receive my annual leave sum payment in pp. 26 which would actually be applied to the 2012 taxes, as the leave year for pay purposes usually ends with pp. 25.

A: One hundred and seventy-four hours of unused sick leave equals one month. If you have that added to your 41 years and 10 months of actual service, you would receive an annuity equal to a hair over 80 percent of your high-3. Your lump-sum payment for unused annual leave will be taxable in the year it is received. When you receive it will depend on how soon your retirement papers are cleared through your personnel and finance offices and the Department of the Treasury’s schedule for making payments.

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Time between retirement and rehire

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Q: Does a certain amount of time have to elapse between when a CSRS employee retires and can be rehired as a part-time rehired annuitant?

A: No, there isn’t any amount of time that must pay, whether you are covered by CSRS of FERS. However, because hours of unused annual leave are projected forward as if you were still on the agency’s roll, you will have to repay any of the money that represents days which haven’t yet gone by. For example, if you were paid for 20 days of leave and went to work the day after you retired, you’d have to repay the entire amount. If you didn’t go back for five days, you’d have to repay 15 days worth.

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Buyout and disability

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Q: I plan to apply disability retirement at a Social Security office in few months. What if our organization offers us buyout? Do I have to pay money (buyout) back to the federal government if I get disability retirement pension?

A: If you have a disability such that you are or would be eligible for disability retirement, you wouldn’t be eligible for a voluntary separation incentive payment (VSIP).

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Federal retirement versus reserve retirement

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Q: I’m 45 and will retire as a military reservist next year with 21 years of service. I joined the federal workforce in 2004 and am considering buying back the 14 years of active duty toward my federal retirement. When I retire, will I be able to draw both a military reserve retirement and federal pension? The way I read the regulation is that if I buy back the military time I would have to waive my military pension to get a federal pension. Is that correct? Could you offer additional insights on the pros and cons of the subject?

A: You would only be required to waive you military pension if you retired from active duty and received military retired pay. Since you will be retiring from the reserves and receiving reserve retired pay, you won’t have to waive it.

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Reduced USG annuity

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Q: I retired from USG under the CSRS Offset in 2009 at 60 with 23 years of service. I am now 62 and am still working in the private sector and have not nor intend to apply for Social Security benefits until much later. However, I received a letter from OPM last month stating that “by law we must reduce your annuity if you are eligible for” Social Security, “regardless of whether you have applied for the SSA benefit or have begun to receive it.” The offset ($500 in my case) is linked to PL 98-168 and PL 99-335.The OPM letter states that offset ($ number provided by SSA) is “the portion of monthly Social Security benefits you are eligible to receive as a result of any federal service you performed after Dec. 31, 1983, while covered by both” FICA and CSRS deductions. I understand that when I choose to apply for and receive SSA benefits, there will be an offset for my current income including any annuities. What I don’t understand is how or why I am being cut in my USG pension (as opposed to SSA benefits) and why now since I don’t receive any SSA benefits. This action would seem to force me to take Social Security now so as to not lose the offset amount. That is not good for me or Social Security.

A: OPM is required by law to offset your annuity by the amount of Social Security benefit you earned while covered by CSRS Offset when you reach age 62. Whether you choose to apply for that benefit now or later is up to you.

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Benefit estimate for a deferred FERS member

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Q: I worked for the Navy as a civilian from December 1985 to November 1996. I did not remove my funds from the Navy, other than my TSP which was rolled into a 401(k). How can I find out what my benefit will be? I have sent numerous requests to the National Personnel Records Center for copies of my documents. I don’t know what my final high-3 salary was, or my actual creditable service. I have also contacted OPM in writing. I have the opportunity to buy my public service time in my current retirement system, but am unable to get the information from the federal government to do an analysis of whether I should do that or remain status quo? Who can I contact to have someone look up my records and advise me?

A: Unfortunately, there’s nowhere else you can go. You’ll just have to be patient.

FEHB

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Q: Are there any plans for FEHB to offer self+1 coverage? This coverage is offered for vision and dental, but not health.

A: To do that would require a change in the law. I’m not aware that anyone is considering that.

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Annual leave balance carry over while on OWCP

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Q: Due to a workplace injury I sustained in 2009, I have been receiving FECA pay and benefits from OWCP. In 2009 I had a total of 280 annual leave hours. However, NFC now reflects that I have a total of 240 hours. I don’t think I should be penalized for losing 40 hours of leave since I have been out on workers’ compensation.

A: Sorry, but it’s the law. Your maximum annual leave carryover from one year to the next is 240 hours.

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Social Security disability and VA benefits

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Q: I am a Vietnam vet and receive disability payments from the VA based on the illnesses caused by Agent Orange. I was rated at 50 percent. I was in the Army for three years. I also plan to apply for Social Security disability due to other disabilities that are not service related. Will my benefits from the VA be reduced because I do this?

A: No.

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Retirement date versus date of final separation

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Q: I am a FERS employee planning to retire on Dec. 31, 2011 — the last day of the leave year and also the last day of the final pay period for 2011. I planned on doing this per the Nov. 15, 2010 column referencing “Advantages to retiring in 2010 and 2011” … i.e. I plan on maxing out my annual leave at 448 hours. While filling out the SF 3107 I came across Sect B, block 2 — “Date of final separation” — which was defined by the BEST counselor as “the date you put on the SF 3107 is your last day of work with the agency — NOT your retirement date.” If I follow this advice I would put Dec. 30 2011 in Sect B block 2 as that would be my last work day. Is this advice correct? Shouldn’t I put Dec. 31, 2011, in there in order to earn the last eight hours of annual leave to get me to 448?

A: Your date of final separation would be the close of business on Dec. 31. You retirement would commence on Jan. 1.

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Rehiring after going on disability

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Q: I have been on disability retirement for 4 1/2 years. I worked for the USPS for 28.6 years. I am able to work but can’t do the required lifting 70 pounds, pushing and pulling. I can do everything else. How do I apply for a position? I am now 58.

A: There are two ways you can apply for a position. You can go to the personnel office at your former activity or you can go to the Postal Service’s website at www.usps.com/employment/welcome.htm.

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DOJ VERA and VSIP

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Q: I will be 50 on June 29. If DOJ has a VSIP before my birthday but in the year of my birthday, can I take early retirement?

A: No.

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BCBS standard versus basic versus high options

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Q: I have 31 years of federal service and am eligible for retirement under CSRS. When did BCBS federal switch to “standard and basic” options versus “standard and high” options? I have always had the standard family option since I married in 1985 and have paid the lesser of the two premiums. I just noticed I pay the higher premium now. I didn’t realize there was a “basic” option available and I didn’t have it.

A: That change happened 10 years ago and was highlighted both in OPM’s open season material and in the plan literature sent to enrollees by Blue Cross-Blue Shield.

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CSRS Offset — unpaid redeposit

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Q: I plan to retire from Defense Department in four years when I turn 60. At that time I will have 25 years of creditable service. I received a CSRS Offset Retirement Estimate from my personnel office. I owe $8,500 of unpaid CSRS redeposit. I’m trying to determine whether to pay it back now or just have it taken out monthly when I start receiving my retirement. The projection shows they would deduct $71 per month from my annuity. I have to give 50 percent of my retirement annuity to my former husband. I don’t really want to take $8,500 from my savings and have him benefit from it. Does it make sense (and benefit me) for me to pay back the $8,500?

A: I can’t tell you whether it makes sense to redeposit that money. That’s a decision you’ll have to make based on how much your annuity would be increased and an estimate of how long you’d receive it versus what that money could earn for you elsewhere. What I can tell you is that you’d have to make the redeposit before you retire. Redeposits cannot be made after you are on the annuity roll.

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Spousal benefits

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Q: I am a retired CSRS federal employee with 35 years of service. I also earned 40 quarters under Social Security and receive about half of the Social Security benefit I would get if I were not getting CSRS retirement pay. My wife did not work enough to have 40 quarters, but I understand that she is entitled to half my Social Security benefit. Is she entitled to half my nonreduced Social Security, or half my reduced Social Security?

A: Her spousal Social Security benefit would be half of your reduced Social Security benefit. If you were to die first, her survivor benefit would be half of your unreduced benefit if she waited until age 65 to apply for it, less if she applied for the benefit before that.

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