Ask The Experts: Retirement

By Reg Jones

Retirement and disability

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Q. I am a federal employee on the CSRS offset retirement system.  If I retire with full benefits (age 55 with 30 years), and I become disabled later, will I be able to receive my full federal retirement annuity, and a disability check?

A. No.

 

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Disability retirement

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Q. I recently applied for disability retirement.  My package is done at Randolph AFMPC and is at the Defense Finance Accounting Service now.  I am an Air Force civilian.  I am 53, turning 54 in December.  I have 21 years of service, with an SCD of March 18, 1990.

I just read on your site that if my disability is disapproved by OPM, that I will then get fired.  Can this be true?  It seems so unfair.  I’m so afraid of getting fired, that I am considering canceling my application and just continuing to work through the pain.  It’s a huge risk, isn’t it?  Could you advise me any?  Am I eligible to retire “normally” now?

A.  If your application for disability retirement is turned down, but your agency subsequently determines that you can’t satisfactorily carry out the requirements of your job, they may try to find a vacant position you are able to perform and for which you are qualified. Failing that, they can separate you for unsatisfactory performance.

 

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Supplemental requirements

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Q. I’m a 53 year old FERS employee with 25 years of service this June. I’m considering taking a VERA if one is offered in late March 2011. I know that a supplemental is offered as an incentive if you have the right requirements. I fall short of the age requirement. My question is, if I took the VERA that might be offered, would I still be able to get the supplement when I reach the MRA? If so, would it automatically be put into my pension at the time I reach my MRA or would I have to apply for it when I would be eligible ?

A. If you accept an offer of early retirement, you would be eligible to receive the special retirement supplement when you reach your MRA. It wold automatically be added to your regular annuity unless you have earnings from wages or self-employment that exceed the Social Security earnings limit.

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Retired annuitant and sick leave

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Q. I retired under FERS in 2006.  When I came back to work at DoD last July as a rehired annuitant, my sick leave that I had lost when I retired (900+ hours) was reinstated.  But as an annuitant, I believe I have zero benefits (e.g., my retirement isn’t affected).  So when I leave this July, would I only get paid for any accrued annual leave?  Do I just lose my sick leave (again)?

A. Because you were hired under a provision that allowed you to keep both your full annuity and the salary of your new position, when you leave your position you won’t be entitled to any additional retirement benefits. Therefore, you will receive no credit for that time or for your accumulated sick leave. Both will be zeroed out.

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Re-employment after involuntary retirement

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Q. I was involuntarily retired in October 2010 due to BRAC. I had reached age and time requirements to take a full annuity. I was, however on the Priority Placement List and have received a tentative job offer. My question is what happens to my annuity when I re-enter federal service?

A. If you are re-employed, your annuity will stop and you’ll be treated as regular employee, with the right to retire again on a date of your chosing.

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CSRS offset and windfall elimination

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Q. Is there a difference between the Offset and the windfall elimination? Which of the two agencies is responsible for deducting which amount from which benefit?

I am a CSRS offset employee who retired Sept. 1, 2010. I started getting Social Security benefits in January 2010.  The Social Security Administration and OPM have sent correspondence notifying me that there will be some sort of reduction and each claims the right to do the reducing.  I am confused as to the nature of Offset vs Windfall elimination and who is supposed to do the deducting.  It is my understanding that one or the other is responsible and not both.

A. As a CSRS offset employee, when you are first eligible for a Social Security benefit at age 62, OPM will offset your CSRS annuity by the mount of Social Security benefit you earned while covered by CSRS offset. Concurrently, if you have fewer than 30 years of substantial earnings under Social Security, under the windfall elimination provision, the Social Security Administration will reduce the amount of your Social Security benefit.

 

 

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Taxes on retirement annuity

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Q. What does a retiree need to do to have federal and state taxes deducted from his or her retirement annuity?

A. Call OPM at 888-768-6738.

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Sick leave conversion

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Q. I am a CSRS employee.  I will have 3165.59 hours of sick leave when I retire. What is the actual time I will be credited for?  I have received conflicting answers on whether 2,080 or 2,087 hours amount to one year of credited time and also whether the .59 hours round up or get dropped from the calculations.

A. There shouldn’t be any conflict on the number of hours that equal a year. By law it is 2,087. On the other hand, I’m not aware of any rule covering the crediting of an amount of time that is less than a full hour.

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Best retirement date

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Q. I’m planning on retiring at the end of June.  With 3,100 hours of sick leave, I’ll have 38 years of CSRS service.  I’ve selected June 30 as my last day for the following reasons:

1) My annuity will begin the very next day, 2) Even though June 30 is a Thursday, I will have completed my 80 hours of work to earn my final leave accrual, and 3) since retiree COLAs are based on whole months, I will get the retiree COLA for month of July (assuming there is one).

Is there anything wrong with my reasoning?

A. With one possible exception, your reasoning is sound. Even if there was a cost-of-living adjustment in 2011, it would not be included in your annuity until January 2012. And it would be 5/12 of the amount. That’s because COLAs are effective on Dec. 1 of the year in which you become eligible and are reflected in the January annuity payment.

 

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Minimum annuity for spouse

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Q. I noticed on one of your blog postings that you stated the minimum annuity you can leave a spouse is $1. I’ve been told by my personnel office that the minimum is $3,600. Which is correct?

A. What I stated is correct. Your personnel office was misreading what OPM has written on the subject. The reduction in an employee’s annuity is “2.5 percent of the amount up to $3,600 elected as the base for the survivor annuity [emphasis added].” The reduction is 10 percent for any amount elected over $3,600. Go to www.opm.gov/retire/pubs/handbook/C050.pdf and scroll down to Section 50A3-1-3D

 

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Credit for military service

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Q. I’m in federal law enforcement (covered), and the Army National Guard. For retirement purposes I need 20 years covered, and 50 years of age to retire? Last year I was involuntarily deployed for 12 months in Afghanistan, and was automatically placed on leave without pay status. I am curious: Do I lose a year of covered law enforcement time because military time is done under the rules governing credit for military service? I’ve heard there was a bill passed that stated that for every year spent deployed over seas, a year is taken off for retirement purposes, or does my covered time continue under FERS? Can you please explain how this all works.

A. When a covered law enforcement officer is called to active duty and, after his tour is over, returns to a covered position, that time is creditable for LEO retirement purposes if he makes a deposit to the civilian retirement system.

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FERS disability annuitant first year

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Q. I am receiving a FERS disability annuity at 60 percent of my base pay (first year).  I thought I was told prior to retirement that the salary limit of 80 percent did not apply the first year I draw the annuity.  I cannot find any notes I might have taken or documentation from my previous human resources office supporting this idea.  I accepted a civilian position where I made more than 80 percent of my fed tech position within the first calendar year of receiving the annuity.  I received an earned income questionnaire from OPM and if submitted with earned income, I will forgo my annuity for six months. Is there any documentation to support the idea that earned income within the first year of drawing a disability annuity is not looked at for the 80 percent limitation?

A. The 80 percent earnings limit is a matter of law and applies to earnings from wages or self employment during a calendar year. If anyone told you something different, he was mistaken.

 

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Date of final separation

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Q. I am a CSRS employee who plans to retire on my 55th birthday on May 3, 2012 with 32 years of service.  This is the middle of a pay period. Do I list May 3 as my “date of final separation” on the appropriate form and do I have to report to work (or be on leave status) on that day, or is that the first day that my retirement begins?  In other words, am I a retiree or an employee on May 3?

A. You will be 55 on the day before your birthday. On May 3, you will be 55 and one day old. Therefore, you can retire at the close of business on May 2, if you want, and be on the annuity roll on May 3. Talk to the folks in your personnel office to make sure that they both understand what you want to do and understand that you can do it.

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Social Security reduction

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Q. My mother retired from the Postal Service in 1990 with 28 years of service.  In addition, she has worked (and continues to do so) in the private sector for 31 years.  The exemptions for the offset provisions list 30 years of paying into Social Security.  How would she determine if she is eligible for the exemption and which department should she contact?

A. The Social Security Administration has an electronic fact sheet that should answer your questions. Go to www.socialsecurity.gov/pubs/10045.html.

 

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CSRS, LWOP and retirement

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Q. I am under CSRS and have 28 years in the federal government. I have developed neck, back and disk problems from a car accident I was in three years ago. I also suffer from severe asthma, allergies, and anxiety. I need to be in regular therapy for my back. I’ll be 52 in November 2011, and do not have the age yet for retirement. Is it allowable to use leave without pay in combination with annual and sick leave for continued therapy until I reach 55 and have 30 plus years and can retire? The LWOP will not exceed six months each year. I’ll be using LWOP one to two days per pay period. Also, under what program could I retire under with 30 years in even if I am not yet 55? I need time to take of myself and continue with my life as best as I can.

A. While those forms of leave could be used to extend your employment, you would need to verify the need to use extended amounts of sick leave. Annual leave use may be approved when it doesn’t interfere with work requirements and the leave schedules of your fellow employees. And LWOP could be granted only at the discretion of your supervisor. Rather than impose on your agency for three essentially unproductive years, you might want to consider applying for disability retirement.

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Retire

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Q. Is an employee who is eligible for retirement and is ready to, forced to retire immediately or may he/she have the option to simply quit federal employment and apply for their retirement annuity at a later time?

A. Yes, you can either apply for an immediate annuity now or quit and apply for one at a later date.

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FERS retiree with CSRS component

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Q. I am retiring at age 56 under FERS with a CSRS component.  I plan to continue working part time, paying into Social Security and will make approximately $10,000 per year.  I plan to collect Social Security at age 62 when my FERS supplement ends.  Will my Social Security benefit be affected by my CSRS component?

A. Yes, if you have fewer than 30 years of substantial earnings under Social Security. Then your Social Security benefit will be affected by the windfall elimination provision.

 

 

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FERS and sick leave

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Q. I have two questions that pertain to FERS retirement and sick leave. First, if I understand this correctly when I retire, I assume it will be in 2014 or later, and I’ve met the requirements of MRA and number of years of service. Assume the day I retire that I have 37 years of service (34 government and three years military) and two months, 13 days left over. Let’s also assume that I have 11 months, 20 days of accrued sick leave. The two would be combined to give me a total of 38 years, two months, three days. Because I would only be credited with whole months (174 hours or 30 days) the three days would not be used towards my annuity calculation, leaving me 38 years two months. Is this correct?

My second question is, would the sick leave be also used towards calculating my Special Retirement Supplement. My military time would not be used towards this calculation leaving me 34/40’s but would my sick leave be added leaving me 35/40’s. Also would I get credited with any additional full months or is this calculated using full years only?

A. First, I won’t grade your homework, but only agree that any time that doesn’t add up to a full month (approximately 174 hours) is dropped. Second, unused sick leave isn’t used in the calculation of a special retirement supplement. It is based solely on the actual time you were employed under FERS. To estimate what that would be, take the most recent Social Security benefit estimate provided by the Social Security Administration, divide it by 40, and multiply it by your total years of FERS service, rounded up to the next highest year.

 

 

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CSRS and Social Security disability

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Q. I am a 58 year old CSRS employee with 34 years’ service. I need to retire due to health problems but my agency (USPS) says that I must take optional retirement instead of disability retirement. If I retire, can I apply for Social Security disability?” I have 54 quarters of coverage from other jobs and my SSA statement says I am eligible for disability payments if I qualify as disabled. Also, will this effect my civil service annuity?

A. Your agency is mistaken. You have the option of applying for disability or optional retirement. However, there is no financial advantage to disability retirement and a lot of hurdles to overcome. OPM has explained why the latter may be preferable to the former. Go to www.opm.gov/retire/pubs/handbook/C060.pdf and scroll down to Section 60A9.1.1-4. Even if you elect optional retirement, you can still apply for disability benefits under Social Security. However, the criteria are different. To be eligible for CSRS disability retirement, you only have to be unable to provide useful and efficient service in your current job or one for which you are qualified at the same grade or pay in your commuting area. To qualify for Social Security disability, you have to be so disabled that you are incapable of any and all gainful employment.

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SBP FOR CSRS retiree

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Q. I retired from the Post Office in 1996 after 31 years. My retirement was under CSRS. My wife was covered all that time under the Survivors Benefit Program. She passed away in 2006. I suspended her SBP coverage in January 2007. I remarried in 2009. I have been trying to enroll my wife in the SBP since July 2010. Recently, I received a letter from OPM saying that would have to pay around $45,000 in penalties to enroll her. I believe they are wrong. Can you help?

A. You didn’t “suspend” your late wife’s eligibility for a survivor annuity. It was canceled when you notified OPM of her death, and your own annuity was prospectively restored to what it would have been had you not elected a survivor annuity. While I can’t tell you if the amount OPM has asked you to pay to provide a new survivor annuity right to your new spouse is correct, I can tell you how the amount is calculated.  There will be two reductions in your own annuity. The first one is to provide the survivor benefit. The amount depends on whether you have elected to provide a full or a reduced benefit. The second one is a permanent actuarial reduction to pay the survivor benefit deposit. The deposit equals the difference between the new annuity rate and the annuity you were paid for each month since you retired, plus 6 percent interest.

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