Ask The Experts: Retirement

By Reg Jones

Penalty waiver

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Q: During times of personnel reductions in the past, have they ever offered to waive the 5-percent penalty for years under 62 for MRA+10?

A: No. The age penalty requirement is set in law and there is no provison for a waiver.

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Unused leave

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Q: I am a CSRS Air Force employee with more than 37 years of civil service. I am considering retiring on Dec. 31. Can I cash in more than 30 days annual leave when I retire, or do I need to use everything over 30 days annual leave prior to my retirement date to keep from losing it? Will the payment of annual leave be paid in the 2012 tax year? Would I qualify for the buyouts the Air Force is about to offer with the same retirement benefits as if I retired Dec. 31?

A: As long as you retire no later than December 31, the end of the leave year, you’ll receive a lump-sum payment for all your unused annual leave.

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Retirement in 2011

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Q: I’m reading a Reg Jones column for 2006. I cannot find a similar article discussing retirement at the end of 2011.

A: Read my July 25 column, entitled “By the calendar, 2011 marks a good year to retire.”

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Separated after a year

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Q: If I am recently separated (voluntarily) from the civil service after 13 months and have not purchased my military time for retirement purposes, can I still submit the paperwork to buy back that time and be eligible for some FERS benefits at age 62?

A: No. Only an employee can do that. FYI: You would have to have worked for five years as a FERS employee to be eligible for an annuity. Bought back time wouldn’t count.

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Early retirement and Social Security

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Q: I will be 55 in September and I’m trying to retire when I’m
56. I have worked for the federal government for 26 years
and I am under FERS retirement. My agency is offering the
voluntary retirement until September and it has been offering this for the past five years. I hope this early voluntary retirement will be offered next year when I reach 56. It is my
understanding that if my agency is offering the voluntary retirement, I don’t have to reduce my FERS retirement at the 5 percent rate for each year. Is this correct? My other  question is how much will I get in supplemental Social Security income per month or per year when I retire at 56? My high-3 years of salary average $130,000.

A: If offered an opportunity to retire early, you are already eligible to receive an annuity without an age penalty. Anyone can do that if they are age 50 with 20 years of service or any age with 25. When you reach your minimum retirement age (56), you would be eligible for the special retirement supplement. To estimate it, use this formula: Your Social Security benefit times your years of service rounded up to the next higher year divided by 40.

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Survivor annuity eligibility

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Q: My father passed away a couple of months ago and my stepmother is waiting to receive the FEGLI and annuity packets from OPM. Per my father’s FERS paperwork, he left my stepmother, my brother (deceased) and I (adult child) as his beneficiaries. However, per all the survivor’s information on the OPM website, only children with disabilities, attending college or under the age of 18 are eligible. Is this true?

A: Any Federal Employees Group Life Insurance benefits will be divided according to your father’s designation of beneficiaries. However, while your stepmother would be entitled to a survivor annuity, to receive a survivor benefit a child must be unmarried and under age 18, be unmarried and incapable of self support because of a disability incurred before age 18, or be a full-time student between the ages of 18 and 22.

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VERA questions

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Q: I am a 53-year-old FERS employee with 34 years of service, 10 active military (bought back time), plus 24 years FERS time. If offered voluntary early retirement, will I get 34 percent of my final salary in retirement pay? And will I be eligible for the Social Security supplement? If so, how do I calculate it? 24/40 estimated full Social Security amount? Can I  make substantially equal withdrawals from my TSP account at age 53 without penalty, assuming I do an early-out retirement?

A: You would receive 1 percent of your high-3 for every year of creditable service (1/12 percent per month). You would be eligible for the special retirement supplement when you reached your minimum retirement age, which in your case would be 56. To estimate the amount of the SRS, take the Social Security benefit estimate provided you by the Social Security Administration and multiply it by your total years of FERS service rounded up to the next higher year. (Do not include any military service for which you paid a deposit.) Now divide the product by 40.

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Computing new pay rate

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Q: I work for postal service as a PS-06 mail processing bargaining clerk with a base rate of $53,102. I have been offered an Inspection Service ISLE 09 position (equivalent to a GS-09) that will include a locality pay of 24.22 percent. As far as I know, as a bargaining employee who gets an EAS promotion, the salary schedule would receive a 5 percent increase to my existing bargaining-unit salary. In my case, the new base pay rate would be $55,757. So how would the locality pay be computed? Would it be new base pay rate of $55,757 + 24.22 percent locality pay?

A: I can’t tell you what your new salary would be because I don’t know anything about the Postal Service’s rules governing pay adjustments upon promotion. However, I can tell you that locality pay would be on top of that new salary, whatever it is.

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No age deduction

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Q: I am a FERS employee. My personnel record says I am eligible to retire in 2015. I have paid into retirement from my military time and in November 2015 I will have 26 years of service and be age 60. Will I get penalized for not going to age 62?

A: No. Because you have at least 20 years of creditable service and will retire at age 60, you won’t be subject to the age-based reduction in your annuity.

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No retirement at 50

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Q: I’m a FERS employee. At 50 years of age I will have 25 years of working for the federal government. If I retire then, what will be the penalty? If I was to leave at 50, but would not apply for my pension until I was 55, would there still be a penalty? Would my pension be 50 percent of my best five years?(25 years X 2 percent = 50 percent)?

A: You can’t retire at age 50. The earliest you could retire would be when you reach your minimum retirement age. MRAs range between 55 an 57, depending on your year of birth. You could, of course, resign from the government and apply for a deferred annuity. Since you’d have at least 20 years of creditable service, you could get that at age 60. Unless the law changes between now and when you applied, the following formula would be used to calculate your annuity: 0.01 x your highest three consecutive years of average salary on the day yiou left government x your years and full months of creditable service.

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Paying twice for Medicare

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Q: I just turned 65 and started paying my Medicare premium on a quarterly basis. I am still working federal civil service and not drawing Social Security so I have to pay my Medicare premiums separately from my pay deduction. However, Medicare deductions are still taken from my civil service pay. It seems I am having to pay twice for the same coverage. If I was not working civil service I would not have the deduction and I would still receive the same coverage since I am 65 and paying the premiums for parts A and B.  Shouldn’t the pay deduction cease when a worker turns 65 since I am paying premiums directly now?

A: As long as you have earnings from wages or self-employment, Medicare Part A will continue to be deducted from your pay. Therefore, you shouldn’t be making quarterly payments for that coverage. If you are, write to MyMedicare.gov or call 1-800-Medicare to straighten things out. On the other hand, Medicare Part B deductions are not automatically deducted from an employee’s pay. If they are, you shouldn’t be making separate payments; if they aren’t, your should.

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FERS and retirement

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Q: I retired from the Air Force as an air traffic controller in 2001, with 20 years and 29 days. I was hired by the FAA under the Phoenix 20 program in 2006. In June of 2012 I’ll turn 56 and probably have to retire due to the age restriction, (I’m requesting a waiver). I have enough sick leave to complete six years with the agency. I’m under the FERS retirement plan and I have a couple of questions. I’m planning to buy back my 20 years and 29 days of military service. Will my 20 years of military service be computed at 1.7 percent annuity accrual rate or at 1 percent?. How about my six years as a FAA controller? Normally, by what percentage will my retirement increase, military vs. FERS?

A: For your annuity to be computed using the higher 0.0175 multiplier, you’d need to have 20 years of actual service as a FERS-covered air traffic controller. Since you won’t, your entire annuity would be computed using the 0.01 multiplier.

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Buying back military time

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Q: I am a FERS employee. I hope you can help me with calculating what my civil service retirement check will be if I do the military buyback program. I served seven years active duty and 22 years reserve duty. My reserve retirement paycheck will be approximately $1,700 that I will start collecting at age 60. I would like to know an approximate monthly amount that my civil service retirement check would be if I bought back my military time. I realize I can only collect one or the other. I am, at this point, in the military buyback program: I know what my wages earned are and how much the deposit is. I am at the point where I want to see if it’s worth it to continue with the military buyback program. I want to compare the two retirement checks.

A: First, let me correct an error. If you make a deposit for your active-duty service, it won’t affect your entitlement to reserve retired pay. Those years will simply be added to your years of civilian service and be used in the computation of your annuity. Since you are a FERS employee, you can use the following formula to calculate your FERS annuity: 0.01 x your high-3 x your years of service. If you retire at age 62 or later, the multiplier would be increased to 0.011. To be eligible to retire, you wold need to have one of the following combinations of age and service: 62 and 5, 60 and 20, at your minimum retirement age with 30 or at your MRA with at least 10 but fewer than 30. MRAs range between 55 and 57, depending on your year of birth.

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Health insurance after retirement

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Q: I retired from the postal service in November 2009. In January 2010 I discontinued my health insurance, and my husband, a current postal employee, put me on his health insurance. My plan was to drop this insurance when I became eligible for Medicare when I turn 65 in November. I’ve since discovered that Medicare Parts B and D plus a Medigap supplement would cost a lot more than if I had kept my original self-only health plan. Can I get  a self-only health plan now, or during open season? Does the fact that I’m on my husband’s plan mean I’m “in the system” and can reinstate my insurance? Or was dropping my insurance irrevocable? If I can get this insurance, should I still sign up for Medicare Part A?

A: Since you are covered by your husband’s self and family option, you can stay right there, if your want. Alternatively, during an open season, you could both elect self only coverage.
P.S. Not signing up for Medicare Part A coverage would be foolish. It won’t cost you a penny and it will help to reduce or eliminate some deductibles and co-pays.

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Best time to retire

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Q: I have 25 years in at the post office as of Aug. 18 as a FERS employee. I will be 65 on Dec. 18. I have 544 hours of annual leave and 395 hours of sick leave balance. When would be the best date to retire? I do not want to lose half of the sick leave I have earned, or my excess over 440 annual leave, so what is the best way to do this without too much time between my last paycheck and my first retirement check?

A: The earliest you could get credit for all your unused sick leave would be Jan. 1, 2014. Until then, you would only be able to get half credit. Unless you are an Executive Administrative Schedule employee, there isn’t any date you could pick that would allow you to get a terminal leave payment for unused annual leave in excess of 440 hours. EAS employees can get one for up to 560 hours. To maximize your sick leave and annual leave balance and reduce the gap between retirement and being on the annuity roll, you’d need to retire at the end of a pay period, the closer that is to the end of a month the better.

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FERS retirement

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Q: I was hired three years ago as a FERS technician for a Georgia National Guard facility. I worked the first two years, then the Guard unit activated and I deployed under Title 10 as active duty for last year. I bought back my active time from prior to being hired as a technician. My total time of creditable service then is 15 years, only the last three after being hired as a FERS employee. Do I qualify for a deferred retirement? I understand it would be a reduced amount. A recap: I have 12 years active time (bought back time this year); two years as a technician; and one year as a deployed technician on active-duty orders.

A: No, you’d have to have a minimum of five years of civilian service under FERS to be eligible for a deferred retirement.

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Buyout options

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Q: With all of the angst and uncertainty in Civil Service (i.e., pay freeze, pay retention, prospect of having to contribute more into retirement fund, etc.), I decided the heck with it and submitted my retirement papers on July 28. I will be 62 on Nov. 3 and in December will have nine years of federal service. If my DoD agency should offer a buyout in the next two or three months like several other federal departments are starting to do, am I eligible to apply for it, or would I have to pull my papers and then resubmit them?

A: The Voluntary Separation Incentive Payment program is intended to get employees who hadn’t intended to leave to do so. Since you have submitted your retirement papers, you’ve signaled that you don’t need an incentive to do that. If you withdrew your retirement papers, it would be up to your agency to decide if your position is one it wants vacated badly enough to offer you one.

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New job after retirement

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Q: I retired on May 31 at age 57. I have 22 years of law enforcement service with the Bureau of Prisons. I have just taken another job and realize I will lose about $12,000 a year because of the means test for the supplemental. A friend told me I will lose the supplemental forever once I exceed the limits. I want to retire from this non-government job in two years. Can I collect the supplemental for the last three years until I become eligible for Social Security at age 62?

A: Your friend is misinformed. While it’s true that your special retirement supplement will be reduced or suspended if you exceed the Social Security earnings limit, which is currently $14,160, if your earnings from wages or self employment fall below that level, the SRS will be restored. FYI, the earnings limit also applies to your Social Security benefit once you reach age 62 and the SRS stops.

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Retirement date

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Q: Does it make a difference if I retire on Dec. 31? I question it because Dec. 31 starts pay-period 2 and I want to cash in my annual leave without losing the amount over the maximum carryover.

A: You are mistaken. The 2011 leave year for non-Postal Service employees ends on Dec. 31. The new leave year begins Jan. 1.

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Storage of household goods

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Q: I am a Defense Department civilian, and I will retire next February from an overseas base. I will NOT be returning to my home of record, and instead will buy a house in a different state. I am not even sure what city I will buy in until I get there to look around. How long will the government store my household goods after I retire While I go through the house-buying ordeal that could take months?

A: The general rule is that the transportation and storage of household goods for up to 90 days may be made at the government’s expense when an employee’s relocation is in the interest of the government. Because you are a Defense Department employee, I suggest you review the department’s Joint Travel Regulations to pin down the eligibility requirements and relocation entitlements. You’ll find them at www.defensetravel.dod.mil/perdiem/trvlregs.html.

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