Ask The Experts: Retirement

By Reg Jones

Dropping coverage

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Q: I have Medicare, Tricare and Blue Cross/Blue Shield coverage and was told that I should drop my BCBS and I would have the same coverage without the extra expense. What say you?

A: While I’m not in a position to advise you, I can tell you that many retirees with Tricare and Medicare Parts A & B have suspended – not dropped – their FEHB coverage and are satisfied with the results. By suspending your coverage, you  protect your right to re-enroll if you lose Tricare coverage.

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Offset deductions

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Q: Can I be charged offsets on Social Security and CSRS?

A: Yes. Your CSRS annuity will be offset by the amount of Social Security benefit you earned while employed under CSRS Offset. Your Social Security benefit will be reduced if you have fewer that 30 years of substantial earnings under Social Security.

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Early-out option

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Q: I am a federal employee with just more than 29 years of service. I am 56 and I am under CSRS. If offered, I will take the early-out in December. What will happen to my sick leave?

A: Any unused sick leave hours will be added to any hours of actual work that don’t add up to a full month. Any additional months created will be added to your actual service and used in the computation of your annuity. For retirement purposes, those months are 174 hours long. Any hours left over will be dropped.

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Changing jobs

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Q: I have been employed as an 1811 criminal investigator since May 3, 1982. I am 55 and I am still employed in this capacity. However, with mandatory retirement looming in less than two years, I am interviewing for other jobs, some of which are not 1811 positions.  Based on my time in grade, I am vested in the federal law enforcement retirement system, and I maintained my CSRS retirement plan. If offered a non-1811 position, would it be more beneficial to retire and take a job? Or, because of my time in grade as an 1811, does that matter?

A: Once you have 20 years of covered service, you can switch to a noncovered position and continue working. Assuming that you are at least 50 years old, you could retire at any time you wanted. On the other hand, if you retired and returned to work for the federal government, in most cases the salary of your new position would be offset by the amount of your annuity. Depending on how long you worked, you might be eligible for a supplemental or redetermined annuity.

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Retirement date

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Q: As of June 21 I completed 44 years of government service. All my retirement contributions are in CSRS. Tentatively, I am planning on retiring July 3, 2012, unless circumstances change, then I would need to revise my retirement date accordingly. Would it be to my benefit to work another six months in 2012, or retire at the end of 2011?

A: While I can’t offer you advice, I can provide you with some information that may help you make a decision. When you accumulated 41 years and 11 months of creditable service, you reached the maximum allowable earned annuity rate: 80 percent of your high-3. When you retire, all the contributions you made to the retirement system after that point will be returned to you with the option of buying additional annuity that isn’t subject to the 80-percent limit. However, the value of that additional annuity is based on a different formula. For example, for anyone retiring at age 55, $100 would buy $7 more annuity per year. That amount increases by 20 cents for every year you are older than 55 at the time you retire. Unlike your regular annuity, this additional annuity isn’t increased by cost-of-living adjustments.

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Waiving military retired pay

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Q: I’m retired military and am making a deposit to get credit for my 20 years of active duty service. I’ve been told that at the same time I make the deposit I also have to waive my military retired pay. Is that correct? I thought I could wait to waive my retired pay until I retired.

A: According to OPM, an employee doesn’t have to waive his or her military retired pay at the time he makes a deposit. Instead, he or she ”must send the waiver request directly to the Defense Finance and Accounting Office at least 90 days but not later than 60 days before his or her retirement [emphasis added].” Click here and scroll down to Section 22A.1.2, which applies to both CSRS and FERS.

Annuity after re-employment

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Q: I took an immediate retirement at age 51 under the law enforcement provision of CSRS with 30 years of service. Mandatory retirement is age 57. After one month, I returned to federal service in a term position as a re-employed annuitant with a dual compensation waiver (pension plus salary). My term position may expire in the next 12 months. Can I forgo my CSRS pension and compete for a law enforcement position again? Assuming the new position is a promotion over my last permanent position, would my CSRS pension be recalculated upon my final retirement? Would I be obligated to repay the pension money I have received for the past year, assuming I am not seeking creditable service for the time, since it was a term position?

A: By law, time spent as a re-employed annuitant under a dual compensation waiver isn’t creditable for any retirement purpose. When your employment ends, your annuity will simply continue without alteration. If you were re-employed in a position where the waiver didn’t apply, your salary would be offset by the amount of your annuity. If you worked full-time for one year, you’d be eligible for a supplemental annuity. If you worked for at least five full-time years, your annuity would be recomputed as if you were retiring for the first time.

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Just one buyout

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Q: I am in CSRS Offset. I received a VERA/VSIP buyout in 2001 and returned to work in 2008. I am 56 and have 28 years of federal service. I indicated on the recent survey that I would accept a buyout if offered. I am now told that I am ineligible for a buyout because a person can only receive one buyout in their lifetime. Is there any regulation that states an employee can only receive one buyout?

A: Your agency is correct. For confirmation, go to www.opm.gov/employ/html/vsi.htm.

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Returning to service

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Q: I worked for the Navy as a GS-11 for five years but left in 1991. I have an SF-50 that says “completed service requirement for Career Tenure from 07-17-88 to 07-17-91.” However, I actually started with the Navy on Aug. 28, 1986 and my resignation papers have an effective date of Sept. 24, 1991. I’m hoping to return to federal service but want to know if I am eligible for any future retirement benefits.

A: If you completed at least five years of creditable service and didn’t take a refund of your retirement contributions in the retirement fund when you left, you’d be eligible for a deferred annuity when you reach age 62.

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Retirement application

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Q: I am an Air Force AFMC civilian employee and I plan to retire by Sept. 30. I have been holding my application pending AFMC’s possibility of offering buyout incentives (VSIP) to eligible retirees. Do I have to wait until a VSIP is offered before I submit my retirement application to OPM?

A: Yes. The purpose of a buyout incentive is to encourage employees to retire, not to reward those who have decided and submitted retirement papers.

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Which calculation to use

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Q: I re-entered federal service in 2004 having a short amount of temp time before that. Back then, the retirement system I was placed in was the CSRS offset. During that time, I also paid in for military service at the CSRS rate then in place. Beginning in 2007, as I did not have five years in the offset system, I was automatically converted to FERS. I have requested clarification as to whether the 2004-2007 time frame, I will receive a separate CSRS component to my retirement or whether it will all be under the FERS calculation. In addition, will the military component be calculated using the CSRS rate applicable when I paid in or the FERS rate?

A: Because you had fewer than five years of creditable service when you re-entered the federal service, you should have automatically been placed in FERS. Now that you have, all your time, civilian and military alike, will be FERS service. As a result, you are due a refund of the excess amount you paid to get credit for your active-duty service.

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Combining service time

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Q: I have approx 10.2 years of active military service. I relocated and worked approximately two years with the U.S. Postal Service and now I am working as a civil service employee for the Defense Department. Am I able to combine these together to put toward retirement? If so, would I need to make a deposit of 3 percent of my basic pay? Which basic pay do I use ( military and postal)? I started my civil service job last year at age 51. How many years will I need to work in order to retire? And if I work longer within the Defense Department, does this allow me to receive a higher monthly retirement income? Does my basic Thrift Savings Plan contribute toward my retirement income as well?

A: If retirement deductions were taken from your Postal Service salary, that period of employment should already be reflected in your service record. Check your service computation date (SCD) to see if it’s included there. If not, check with you local personnel office to either be sure that it is or to learn why it isn’t. Note: If you took a refund of your retirement contributions when you left the Postal Service, you’d need to redeposit that money, plus accrued interest, to get any credit for it. You can make a deposit to the civilian retirement system to get credit for your active duty military service. If you do it will be used to determine your total years of service and in your annuity computation when you retire. The amount of the deposit would be 3 percent of your basic military pay. No interest would be charged if you completed the deposit within two years. As a FERS employee, you’d have the option of retiring when you reach your minimum retirement age (56) with as few as 10 years of combined service. However, your annuity would be reduced by 5 percent for every year you were under age 62. (You could reduce or eliminate that age penalty by retiring and postponing the receipt of your annuity to a later date.) You could also retire at your MRA with 30 years of service or at age 60 with as few as 20.

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FERS, buyback computation

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Q: I am a law enforcement (6c) FERS employee who plans to retire at the end of 2012 with 25 years of Law Enforcement (6c) coverage. I also have two years and two months under regular FERS before I entered my covered LE Position and I bought back three years of military time. I know how my covered LE(6c) time will be calculated. My question is how will my two years and two months of regular FERS and my three years of bought-back military time be calculated and included in my annuity?

A: Everything above those 20 years of law enforcement-covered service will be calculated using the standard FERS formula: 0.01 x your high-3 x any years and full months of service over 20.

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Retirement pay

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Q: In a recent column you wrote: Fourth, if you receive military retired pay, set up another meeting with your counselor, ideally six months before you are ready to retire. You’ll want to assess the impact of military retired pay on your civilian annuity. Under limited circumstances, you may be able to receive both. However, in most cases, you’ll have to waive military retired pay.
I am age 53, retired from the military for 11 years, getting military retired pay now. I am also a GS-13 with 8 years in. I was specifically told by CPAC when I was hired that as long as I don’t try to buy back my active time, my GS retired annuity and my military retired pay would have NO affect on each other. Are you saying that when I retire in 20 years, that I will get only one or the other retirement, but not both?

A: No. What I’m saying is that if you want to get credit in your civilian annuity for the time you spent in the military, you’d usually have to make a deposit to the civilian retirement system and waive your military retired pay. There are only limited circumstances under which you can both get credit for those years and receive both annuities. Even then, you’d have to make a deposit to the civilian retirement system to have those years included in the computation of your civilian annuity.

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Temporary promotion rules

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Q: Can management temporarily promote (non-competitively) an employee to the lower grade of a six/seven-graded position for 120 days? Are temporary promotions limited to the full-performance level only of a given position? What specific rules support or prevent such actions?

A: Temporary promotions are intended to meet the temporary needs of the agency’s work program when those services can’t be provided by other means.To be temporarily promoted, an employee has to meet the same qualification requirements that are needed for the permanent promotion. He or she receives the higher-graded salary for the period assigned and gains quality experience and time-in-grade at the higher grade level. The first 120 days can be made noncompetitively. In other words, the employee doesn’t have to compete with other employees for the temporary assignment. If the temporary promotion is extended beyond 120 days, competition is required. The maximum time period for a temporary promotion is five years, unless OPM authorizes the agency to make and/or extend it for a longer period. If the temporary promotion that was originally made under competitive procedures, it can be extended up to five years without further competition.

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Special retirement supplement

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Q: I am a FERS law enforcement federal employee with 22 years in and eligible to retire. I am supposed to receive an OPM supplement of approximately $800 a month. I understand that I start receiving the supplement when OPM finally determines (in six to 12 months) the correct amount of my retirement. Do I get back pay on approximately $5,000 to $10,000 of the supplement, or do I lose the $800 a month until OPM decides to process my retirement?

A: The special retirement supplement, like any shortage caused by receiving an interim, rather than final, annuity, will be made whole when the adjudication of your case is complete.

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Term appointments

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Q: Am I right that my two, four-year term positions will count for retirement and after five years of continued employment I can keep my insurance? I am asking if my understanding is correct.

A: If you were later appointed to a CSRS-covered position, those term positions will count toward an annuity if you make a deposit for that time to the retirement fund. If you were later appointed to a FERS-covered position, only term service performed before Jan. 1, 1989, would be creditable with a deposit. Term positions entered into on or after Jan. 1, 1989, aren’t creditable for any retirement purpose nor can you make a deposit to get such credit.

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Federal buyouts coming?

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Q: Are there any planned buyouts for 2011 or 2012? If so, for which agencies?

A: We don’t keep an inventory of current offers, nor do we have advanced knowledge of future ones. I suggest you continue to visit our website and, better yet, subscribe to the Federal Times to be sure you have the latest information.

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Buying back active duty time

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Q: I am thinking about buying back my time on active duty (22 years) to make a deposit so that I can retire early from the Foreign Service. If I do, will I lose any of my military retirement privileges?

A: If you make a deposit for your active duty service, just before you retire from your civilian job, you will also have to waive your military retired pay. Doing so will have no affect on any other entitlements you have based on your active duty service.

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Social Security prior to federal employment

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Q: I’m a 28 year federal employee under CSRS, but I also paid into Social Security from 1963 until 1980. Assuming I ever retire, will I receive any Social Security benefits in addition to my federal retirement pay?

A: If you have fewer than 40 credits (10 years) under Social Security, you won’t receive any Social Security benefits. If you have 40 or more, you will. However, because you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes, you would be subject to the windfall elimination provision. The WEP would reduce your benefits if you have fewer than 30 years of substantial earnings under Social Security.

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