Ask The Experts: Retirement

By Reg Jones

Immediate retirement

Bookmark and Share

Q: I am 55 and have 28 years of service under FERS. I was involuntarily downgraded in 2002 from a GS-7 position (step 7) to a GS-4 position (step 00) with safe pay, no step increases in the 10 years since this happened, and receiving only half the cost of living. This occurred because of a contracting study which was done and in which my directorate won the study over the bidding contractors followed by a handful of directorate employees choosing who would leave the directorate and be involuntarily placed into whatever was chosen for them. I received no assistance in regaining the grade it took me 17 years to achieve. Are the penalties any different for me if I decide to retire now at 55 or wait until I reach 56 because of these unfortunate circumstances that happened to me?

A: In order to retire on an immediate, unreduced annuity, you’d have to be at least 56 years old and have 30 years of service. The earliest you could retire would be when you reach age 56. However, because you wouldn’t have 30 years of service, you’d be retiring under the MRA+10 provision (minimum retirement age with at least 10, but fewer than 30, years of service).

Tags: ,

Offset trigger

Bookmark and Share

Q: I retired from civil service at 55. I have been working in the private sector. I just turned 62 and plan on continuing to work and not collect Social Security benefits until I retire altogether. When can I expect a reduction in my CSRS Offset annuity?

A: Since you have just turned 62, the offset should occur in your next annuity payment. The offset will be made regardless of whether apply for a Social Security benefit and will be equal to the amount of benefit you earned while employed under CSRS Offset.

Tags: ,

Buying back military time

Bookmark and Share

Q: I am thinking about buying back my 20 years of active-duty time to make a deposit. I am a 100-percent combat-disabled vet. I read in the FERS handbook under Creditable Military Service that under certain conditions someone receiving retired military pay may receive that pay and full civilian annuity, but only if a deposit is made to the civilian retirement system for that period of active-duty service. To be eligible, the employee who is receiving retired military pay must have been awarded it (a) on account of service-connected disability incurred in combat with an enemy of the United States or (b) on account of a service-connected disability caused by an instrumentality of war and incurred in the line of duty during a period of war. Does this apply to me?

A: Only your branch of service can confirm that your disability fits the definition you cited. Once you have that proof, take it to your personnel office, which can make it a part of your official personnel record. Then if you decide to make a deposit, you can do that.

Tags: , ,

Disability benefits

Bookmark and Share

Q: I’m a dual-status federal/military technician in the Air National Guard. I have eight years of active duty with the remainder in the ANG for a combined total of just more than 20 years of military service. I’m going before a medical board because of service-connected disabilities (VA rated at 70 percent). Soon after the board, I will be separated from the ANG and retire from my technician position on FERS disability. Assuming my military disability rating will come back at 30 percent or more, will I be eligible for immediate concurrent receipt of all military disability pay, VA disability compensation and FERS disability retirement?

A: I’m only qualified to answer the part that deals with your entitlement to civilian retirement benefits. As a National Guard technician, if you are medically disqualified for military duty, you’d receive FERS disability benefits wihout having to meet the usual disability criteria. You’ll have to check with the VA and your branch of service to learn if you are entitled to any other benefits.

Tags: , ,

Re-employment after buyout

Bookmark and Share

Q: I am 62 and I was a USDA-ARS employee who took a buyout in July and retired. I’m a qualified Wildland  Firefighter with a Red Card. If I were to join a crew, paid for by a state entity with pay coming from FEMA, headed to fight fire or work on flooding and hurricane duty for about two weeks, is that against OPM guidelines? I’m finding it hard to get an answer. They are asking for letters explaining payment of work. Hard to explain, since there are no contracts that I know of, only requests for crews who go on an availability list.

A: Here’s what OPM has to say: “An employee who receives a VSIP and later accepts employment for compensation with the Government of the United States within 5 years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it – before the individual’s first day of reemployment.” As such, it wouldn’t appear that your short-term employment by a state agency would fall into any of those categories, regardless of where the state money came from.

Tags: , ,

How the first COLA in 2 years will be paid

Bookmark and Share

For the first time since 2009, many retirees and survivors will receive a cost-of-living adjustment to their annuities beginning in January. For those covered by the Civil Service Retirement System, the COLA will be 3.6 percent; for those covered by the Federal Employees Retirement System, 2.6 percent.

The Office of Personnel Management uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published monthly by the Labor Department’s Bureau of Labor Statistics, to determine COLAs.

COLAs for both CSRS and FERS are based on the percentage increase in the CPI-W for the July-September quarter compared with the most recent quarter July-September on which an inflationary increase was based. When there isn’t any increase from the third quarter of one year to the third quarter of the following year, no COLA is payable. That’s what happened for two years running.

When COLAs are paid, CSRS retirees receive them regardless of the age at which they retire. Most FERS retirees only get them when they are age 62. However, there are exceptions. Survivors and disability retirees receive them regardless of their age, as do FERS retirees who were military reserve technicians who lost their military status due to medical reasons and were age 50 with at least 25 years of service, law enforcement officers, firefighters, air traffic controllers , and special CIA employees.

If the CPI-W increases by 3 percent or more in any year, FERS-covered retirees and survivors receive one percentage point less than that amount. If the CPI-W increases by 2 percent to less than 3 percent, CSRS retirees receive the full amount while FERS retirees receive 2 percent. If it increases by less than 2 percent, the adjustment equals the CPI-W for both CSRS and FERS.

Under both CSRS and FERS, when a COLA is payable, it’s applied to annuities that are effective Dec. 1, and the increase shows up in pension payments made on the first business day of January. If you retire any time during the year immediately preceding a COLA, your first COLA will be prorated. Because that has led to a lot of confusion about who is eligible for a COLA and how much it would be, here is the full picture.

If your monthly annuity began in December 2010, you will have been on the annuity rolls for 12 months when the 2012 COLAs take effect. Therefore you will receive the full COLA of 3.6 percent if you retired under CSRS or 2.6 percent if you retired under FERS.

Here is how COLAs are prorated for those who retired later:

• 3.3 percent under CSRS or 2.4 percent under FERS for January retirees.

• 3.0 percent under CSRS or 2.2 percent under FERS for February retirees.

• 2.7 percent under CSRS or 2.0 percent under FERS for March retirees.

• 2.4 percent under CSRS or 1.7 percent under FERS for April retirees.

• 2.1 percent under CSRS or 1.5 percent under FERS for May retirees.

• 1.8 percent under CSRS or 1.3 percent under FERS for June retirees.

• 1.5 percent under CSRS or 1.1 percent under FERS for July retirees.

• 1.2 percent under CSRS or 0.9 percent under FERS for August retirees.

• 0.9 percent under CSRS or 0.7 percent under FERS for September retirees.

• 0.6 percent under CSRS or 0.4 percent under FERS for October retirees.

• 0.3 percent under CSRS or 0.2 percent under FERS for November retirees.

Those who will retire in December are not eligible for COLAs in 2012.

Since the CPI-W is also used by the Social Security Administration to determine the amount of a Social Security cost-of-living adjustment, any of you who are eligible and have applied for a Social Security benefit can expect to receive a COLA pegged to the amount of time you’ve been entitled to that benefit. There’s no difference in the treatment of CSRS and FERS retirees and survivors. Those who have been on the Social Security benefit rolls since December 2010 will get the full 3.6 percent increase in January. Those who have entered the rolls since then will get proportionately less.

Multiple survivor benefits

Bookmark and Share

Q. I am a federal retiree, and have recently married a woman whose ex-husband (also a federal retiree) assigned ex-spouse survivor benefits to her. (They divorced while he was stilll employed.) She is older than 55, so the age at remarriage is not an issue. I intend to provide at least some sort of survivor benefit for her, so that she will be able to continue health benefits after my death.

If I die first, will she be able to select her ex-husband’s (higher) survivor annuity upon his death? (I assume she cannot receive both. ) If both her ex and I die, and assuming she selects his survivor annuity, will she be able to continue her participation in the FEHB as a result of the fact that I assigned her an annuity, even if she selects the other one?

I called OPM regarding this and received very conflicting and confusing information.

A: To learn more about multiple annuities, go to www.opm.gov/retire/pubs/handbook/C071.pdf and scroll down to Section 71A2.1-1C, More Than One Survivor Annuity. To be eligible for continuing FEHB coverage, she would have to have been covered as a family member under the self and family option of your plan at the time of your death.

 

Tags: ,

Retirement buyback

Bookmark and Share

Q. I left the government in 1984 (after eight years of service) and cashed out my retirement. I then came back in 1985, as a term employee with no retirement, until 1989 when I obtained a permanent position. Thinking I would only be with the government several more years I converted from CSRS Offset to FERS for the TSP matching. Ten years later, I made a deposit (based on OPM calculations) to buy into CSRS for the time I was a term employee and have those years count toward my years in service. I was advised at the time, not to redeposit the previous CSRS money plus interest, as the reduction in my CSRS annuity wouldn’t, on a present value basis, offset paying back the principal and interest. My benefits office is calculating my retirement as 12 years CSRS (to 1989) and now 22 years FERS. Does this sound right?

Is there any way to get my FICA back for the four years that I paid into Social Security that I assume are now covered under CSRS after the buyback?

What are your thoughts about a CSRS redeposit versus reduction in annuity for my original eight years (Probably about $11,000 principal and $50,000 interest right now), if I retire at 59?

A. 1. You will get credit for all those CSRS years in determining your eligibility to retire. However, only the years for which you made a deposit will be included when calculating the CSRS component in your annuity. 2) No, you can’t get a refund of your FICA deductions. 3) You’ll have to do the math to find out which makes better sense, a redeposit or the reduction in the CSRS portion of your annuity.

Tags: , , ,

Cashing in annual leave

Bookmark and Share

Q. I have an employee who works for me (CSRS) who recently had a preretirement conference with HR. He is a postal worker who is able to carry over 440 hours of earned annual leave from year to year. He plans to retire at the end of this year which ends Dec. 31 or possibly Jan. 2, which would place him in the following leave year. His question is, if he carried over 440 hours of annual leave from 2010 into 2011, and earned another 208 hours of additional annual leave this year, and retired prior to the end of 2011 could he cash in up 648 hours of earned annual leave (assuming he uses no annual leave during this year) since he would not be carrying over any leave into 2012, or is 440 the maximum that he would be able to cash in period? Is this the same for both CSRS and FERS? If he retired on Jan. 1 or later, would he loose the 208 hours from 2011? HR told him he could only cash in 440 hours.

A. His HR was correct. He can only cash out a maximum of 440 hours. Any hours above 440 would be lost.

 

Tags: , ,

Early retirement / Social Security

Bookmark and Share

Q. I am 50 years old with 25 years of service (FERS). There is talk of an early retirement being offered later this year. If I were to take an early retirement would I receive the Social  Security supplement?

A. You wouldn’t be eligible to receive the special retirement supplement until you reach your minimum retirement age. Since you were born between 1953 and 1964, your MRA is 56.

Tags: , ,

Retirement date

Bookmark and Share

Q. I am planning to retire either at he end of 2011 or early 2012. Which is the best time to retire, should it be the end of December or early January? How would it affect my annuity if I set the retirement date for Jan. 3, 2012?

A. If your main concerns are to 1) get credit for all the annual and sick leave you earned by completing a pay period, and 2) maximize the size of your lump-sum payment for unused annual leave, and 3) walk off the employment roll and onto the annuity roll without the break of a single day, then you’d want to retire on Dec. 31, 2011. In 2012, the leave year ends on Jan. 12. To get close to the same benefits you’d have to retire on Dec. 29, 2012. In 2013, the leave year end on Jan.11, 2014. So Dec. 28, 2012, would be the optimal date. Of course, you could work up to the third day of January in the latter two years. However, while you’d gain a few more days of pay, you wouldn’t get partial credit for any annual or sick leave earned during those days and your first month’s annuity would be reduced by 1/30th for every day you weren’t on the annuity roll.

Tags: , , ,

FERS calculation

Bookmark and Share

Q. I am a FERS  employee. I have paid back four years military time and 2.5 years temp time before 1989. Will these years be used in the FERS supplement calculation?

A. No. Only actual time as a FERS employee will be used in the computation of your special retirement supplement.

Tags: ,

VERA and 2 percent per year age penalty

Bookmark and Share

Q.  I am a Defense Department employee with close to 32 years of service.  I am 51 ½ years old.  I fall under CSRS.  They are talking about offering voluntary early retirement with a $25,000 bonus.  If I had a firm offer, I would love to negotiate a trade of the $25,000 for some or all of the 2 percent per year reduction I will need to take if I accept the VERA.   Have you ever heard of this being done?

A. No, because it can’t be done. The law doesn’t permit it.

Tags: , ,

Living overseas while on disability retirement

Bookmark and Share

Q. I am 52 years old and on FERS Disability Retirement. If I move to Israel and live there for a few years, would such a move affect my status?  And would my annuity be reduced?  I acknowledge that I must show up to the required medical examinations as stated in my retirement plan.  Would Israeli doctors suffice or must I be at a specific medical facility in the United States?

A. Moving to Israel would not affect the amount of your annuity nor would you be required to go to a medical facility in the U.S. All you need to provide OPM is proof of your continuing disability. That can be supplied by any doctor who is qualified to evaluate your condition, plus the official records of recent tests or examinations.

Tags: , ,

Military buyback

Bookmark and Share

Q. I am a GS employee and sent in the forms with a quote on my military buyback. The total is $4,900 and it appears monthly on my LES. Do I need to pay this back while I am a federal employee or can I leave for the private sector and then send in a check?

A. You must complete the deposit while you are a federal employee or, if you retire, before the final adjudication of your retirement application by OPM.

Tags: ,

Counting active duty LE time toward 6c retirement

Bookmark and Share

Q.  I am a federal law enforcement officer covered under the 6c LE retirement.  I spent eight  years on active duty with the Air Force, which I have bought back for my retirement.  For the final three of my active-duty years, I was a special agent with the Air Force Office of Special Investigations.  As such, my duties were “primarily the investigation, apprehension, or detention of individuals suspected or convicted of offenses against the criminal laws of the United States” as is the Title 5 definition of a “law enforcement officer.”  Civilian AFOSI agents, with the same job title and description, are covered under the 6c retirement plan.  Can I use the three years as an active- duty AFOSI agent toward my 6c retirement calculations?

A. No, you can’t. Only actual covered service as a civilian counts toward an LEO retirement. That’s the law.

Tags: , ,

“Special Monthly Rule” for earnings affecting Social Security

Bookmark and Share

Q. Social Security references to the “special monthly rule” (monthly maximum earnings limit versus annual earnings limit) state that this applies in the “first year of retirement.”

I retired at age 62 from the CSRS Offset Retirement System in October 2010, but did not apply for Social Security benefits until May 2011. Is my “first year of retirement” 2010 when I retired from the federal government or is it considered 2011 when I applied for Social Security?

A. The so-called “first year rule” applies only to the year in which you retire, not to the one in which you apply for a Social Security benefit.

 

Tags: , ,

FERS deferred retirement

Bookmark and Share

Q. I  separated from federal service 11 years ago with 19 years covered under the FERS program.  I have requested my separation papers and have not been able to determine if I am eligible for a deferred annuity.  Is there a way I can check to see if I received my retirement funds upon separation or if I am still eligible for a deferred benefit?

A.  Send your request for information to:
OPM
Retirement Operations Division
P.O. Box 45
Boyers. PA 16017-0045
Be sure to include as much information as you can, e.g, your full name, date of birth, Social Security number, agency and activity for which you worked, and the years you worked there.

Tags: ,

Caps on CSRS annuity COLAs

Bookmark and Share

Q. I am the disabled dependent survivor of my father who was a federal employee for  30 years. I collect Social Security Disability Income and Medicaid. Collecting the disabled child survivor annuity would put me over the unearned income limit to collect Medicaid, and I can’t afford insurance. The state of Maine has a Medicare Savings Plan that I could join but the income limits are very low and very strict. The income limit is $1362  per month. I spoke with some legal specialists in the field of Medicaid and they said that my SSDI COLAs would not affect my eligibility for this Medicare Savings Plan but the COLAs from the annuity would. I read somewhere online this quote:

Note: A benefit will not be increased if it would cause the annuitant to receive payments in excess of any cap amount specified by law.
Does this mean I could get my annuity COLAs capped to remain eligible for this Medicare Savings Plan which is essentially the same thing as Medicaid? Also as the income limit increases for this Medicare Savings Plan, could I get an increase to match the allotted increase of income limit?
 
A. No, you cannot get your child survivor annuity capped. If one is due, you will receive it.

Tags: ,

Are child survivor benefits retroactive?

Bookmark and Share

Q. My father was a federal employee for 30 years, and he passed away in November 2010. He listed me as his death benefit beneficiary with the intent to grant me an annuity. I applied as his disabled dependent child survivor. I filed my paperwork in January. I heard nothing for months. I finally contacted them by phone in June and asked for them to send me forms for doctors to fill out for my claim. Are child survivor annuities retroactive? I heard that they begin on the day the retiree passes away. If this much time has gone by,  can I collect all past monthly annuities due to me?

A. If you were approved for a survivor benefit because you were disabled before age 18, are unmarried, and were dependent on your father for support, that benefit would be retroactive. As a result you would receive an initial payment that would cover all the months that had elapsed since his death.

Tags: ,