Ask The Experts: Retirement

By Reg Jones

CSRS Survivor Annuity

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Q. I retired in 1995 and am receiving a pension under CSRS rules;  I was single at the time.  In 2002 I married my wife and, under the rules at the time, I elected to provide her a survivor annuity.   She has recently been diagnosed with an aggressive form of leukemia and may not survive as long as I will.  If she dies before I do, does my pension revert to the amount I received prior to the election of the survivor annuity?  If so, how would my pension be recalculated?

A. The standard reduction you took in your annuity to provide for the survivor annuity would be eliminated and your own annuity increased accordingly. However, the other reduction that was taken to pay for the survivor deposit — the difference between the new annuity rate and the annuity paid to you for each month since you retired, plus 6 percent interest — is a permanent reduction. It wouldn’t be eliminated if your marriage ends.

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Calculating interest on the military deposit

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Q. In making the military deposit, we have two years from the time it is due to make the payment without interest. After that, interest accrues until payment. Does the interest accrual start from the initial time it is owed (separation from military service), or does the interest accrual start at the end of the two-year interest-free mark?

A. It starts at the end of the interest-free period. There isn’t any look back.

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Windfall elimination provision

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Q. I retired as a CSRS offset employee.  My entire federal pension is based solely on nine-plus years under CSRS offset.  I paid Social Security taxes during those years.  I have no pension for any years in which I did not pay Social Security taxes.  Social Security now wants to impose a windfall elimination provision reduction of $143 a month.  Since I paid Social Security taxes on my government earnings while paying CSRS offset I do not think WEP should apply.

A. To be exempt from the windfall elimination provision, you would have to have 30 years of substantial earnings under Social Security. Since you don’t, the WEP will reduce your Social Security benefit.

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FERS LEO retirement options

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Q. I have been an 1811 under covered positions for 15 years. I also have bought back years of active-duty time.   My organization is discussing offering a Discontinued Service Retirement.  If offered this retirement would I receive: 15 years x 0.017 (25.5) x average of high three plus 10 years x 0.01 (10) x average of high three  or a total of 35.5 percent of high three plus 50 percent of my sick leave time applied to length of covered time. (This is only a couple of months – 600 hours).

A. Yes and no. While you would receive half credit for your unused sick leave, the fact that you don’t have 20 years of covered service would mean that your entire annuity would be calculated using the standard formula: 0.01 x your high-3 x all years of creditable service.

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Buyout and LWOP

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Q. Does leave without pay status affect the possibility for buyout?  Does LWOP status affect retirement calculations?

A. Buyouts are targeted at positions or units where an agency wants to encourage employees to leave. If one were offered to you, the fact that you are on LWOP wouldn’t affect your ability to accept it. LWOP only affects your retirement calculation if it exceeds six months in any calendar year. No credit is given for LWOP in excess of six months.

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Military buyback

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Q. I was honorably discharged after nine years of active military service (1988 through 1997).  Upon separation, I received a voluntary separation under the provisions of the Special Separation Benefit.  Through this program, I received a lump-sum payment of $38,000 in 1997.  I believe this is considered retirement pay.  I have just received an employment offer for a GS position.  Is it possible for me to repay my SSB separation benefit and the deposit amount for my military pay to receive creditable military service time in the Federal Civilian Service?   Under FERS, I believe I am required to repay 3 percent of my military pay for creditable service purposes.  But is it possible to also repay the $38,000 lump sum?

A. If you come to work for the government, you won’t have to repay the SSB. However, as you noted, you would have to deposit an amount equal to 3 percent of your base pay while on active duty to get credit for that time. If you deposit that amount within two years, no interest would be charged.

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Buyout

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Q.  As a career postal carrier, I understand that I am not immune to the “no layoff” clause of the national agreement since I have less than six years of service, nor am I eligible for early retirement. Would the Postal Service consider offering  voluntary layoff  buyouts for someone in my situation? Have they ever offered such buyouts in the past?

A. There is no provision in law that would permit the payment of buyouts for that purpose.

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Disability retirement and redeposit

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Q. I am a CSRS employee and withdrew all pension contributions in 1995 after 15  years of service.  No redeposit has been made.  I now have another 15 years of continuous service since that withdrawal and I am now 57  years old. If a redeposit is not made:  (1) Since I am over 55 with more than 30 years of service, can I receive a disability retirement if approved or must I take a regular retirement; and (2) what is the impact on the annuity for a disability retirement (assuming it would be authorized and approved), if no redeposit is made?

A. If you were approved for disability retirement, your annuity would first be computed under the general formula, as follows:

0.015 x your high-3 x 5 years of service, plus
0.0175 x your high-3 x 5 years of service, plus
0.02 x your high-3 x your remaining years of service (5 years+)
Since that amount would be less than the guaranteed minimum, you would instead receive the lesser of:
- 40 percent of your high-3, or
- the amount obtained under the general formula after increasing your actual creditable service (15+ years) by the time remaining from the commencing date of your annuity to the date of your 60th birthday.

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Postal Service/Civil Service retirement

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Q. I spent  three years as a postal service mail handler.  During the last year (2001),  I became permanent employee  I was a part-time FLEX before.  I resigned  from the Postal Service and took a private sector job.  I  was offered a GS position in 2007 . I have been in this position  from 2007 to the present. Can I count the three years of Postal Service time toward my retirement?

A. Only service for which retirement deductions were taken from your pay would be creditable for retirement purposes.

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Retirement date

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Q.  I am CSRS, turned 61 years old in September, and  have 40 years of unbroken service. I’ve tentatively selected June 2012, as my retirement month but would appreciate information on the most opportune day (or an alternate month if that’s more beneficial).

A. All I can suggest is that you pick a date that 1) falls at the end of a pay period and 2) is as close to the end of the month as possible. By retiring at the end of a pay period, you will get credit for any annual and sick leave you  earned during that period. And the closer to the end of the month you retire, the smaller the gap will be between your last day of employment and when you are on the annuity roll.

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Reinstatement

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Q.  I retired with 28 years of service at age 51 (voluntary early retirement), was rehired as a retired annuitant with my current term ending Jan. 31 after 4 ½ years and collecting both my pension and salary.  Now, I wish to come back (reinstatement) to my old field position at the same grade level  and wish to rescind the collection of my pension and receive my old salary.  Will I have to pay back anything and will there be any off set to my salary at Grade 12 because of receiving a pension in the past?

A. Because you retired voluntarily, if you return to work for the government in the way you described, the salary of your new position will be offset by the amount of your annuity.

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Retirement date

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Q. I am a federal employee under CSRS with 36 years of service.  I’m thinking about retiring the end of this year.  Is there any advantage to retiring on Saturday, Dec. 31,  which is the beginning of the pay period  versus Tuesday, Jan. 3, after the New Year holiday?

A. Saturday, Dec. 31, is the end of a pay period, not the beginning. If you retired then, you’ll receive a lum-sum payment for any unused annual leave you had to your credit. If you retired after that, any unused leave that exceeded the limit (usually 240 hours) would be lost. That’s why it’s called “use of lose” leave. Also, by retiring at the end of the pay period, you would be on the annuity roll the following day, Jan. 1. Because you are a CSRS employee, you could retire up to January 3, 2012 and be on the annuity roll in January. However, while you’d gain a couple of days of extra pay by staying on, you’d lose two things by doing so: any use-or-lose leave you had to your credit and a 1/30th reduction in your first month’s annuity for each day you weren’t on the annuity roll.

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Reinstatement

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Q. I have been out of federal service since Jan. 1, 1994, and got a buyout then.  I am looking to re-enter federal service.  Do I have to repay my buyout or do I have to put money back in my CSRS or can I just start with FERS?

A. Since you have been away for at least five years, you do not have to repay the buyout you received. When you return to government service, you will automatically be placed in CSRS Offset (CSRS and Social Security) with the option of transferring to FERS. Because you took a refund of your retirement contributions after Feb. 28, 1991, you will get no credit for your prior service unless you redeposit that money, plus accrued interest

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Early retirement

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Q. have been a postal employee for 28 years under CSRS.  I just turned 56.  If the Postal Service were to offer a retirement package, what would I be penalized?  Would it be 4 percent because I do not have the 30 years.

A. There wouldn’t be a penalty, You’d get exaxcty what you earned. To see what that would be, use the folliwing formula:

0.015 x your high-3 x 5 years of service, plus
0.0175 x your high-3 x 5 years of service, plus
0.02 x your high-3 x all remaining years and full months of service.

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FICA limit

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Q. As a CSRS Offset employee, I understand that once the FICA limit is reached, my retirement contribution will increase as the FICA withholding is decreased as discussed in the following paragraph:

CSRS Offset employees contribute 0.8 percent (.008) of their after-taxed wages to the CSRS Retirement and Disability Fund, and 6.2 percent of their wages is subject to the FICA tax up to the maximum Social Security wage base ($106,800 in 2009). If a CSRS Offset employee earns more than the maximum wage base, then FICA taxes will stop being withheld until the end of the calendar year. CSRS deductions will then increase to the full CSRS rate for the remainder of the calendar year (7 percent during 2009). The FICA tax withholding will resume at the start of the new calendar year and the CSRS deduction will decrease to the offset amount, until the employee again reaches the maximum taxable wage base for that year. The FICA tax is also imposed on some types of wages such as overtime and awards that are not subject to the CSRS retirement contribution rate of 7 percent. This means that an employee’s FICA deduction may stop before the employee’s CSRS deduction reverts to the full amount.
 
A. You’ll have to check with your payroll office to find out how the calculation was done.

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Survivor annuity

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Q. My mother was married late in life to a retired U.S. Post Office employee who received an annuity under CSRS.  He died in 2006 and my mother in 2010.  She never applied for survivor benefits before her death.  I am the executor of her estate.  OPM has taken the position that her failure to apply before her death waived her claims.  Can this be correct?

A. Assuming that your stepfather elected a survivor annuity for your mother, her entitlement to that benefit ended with her death.

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Buyout

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Q.  I am CSRS employee with 31 years of service and I am 61 years old. I just went on leave without pay because of extended health problems. Would that cause problem if my agency offers buyouts?  Also, can I ask for retirement figures without submitting retirement papers and would that cause problem if buyout is offers?

A. The fact that you are on leave without pay would not prevent you from being offered a buyout if your position was among those that your agency wanted vacated. Neither would asking for an estimate of what your annuity would be. You don’t need to submit your retirement papers to get that.

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Involuntary separation

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Q. I am 54 with 20 years of service under FERS.  I’ve been offered the Voluntary Separation Incentive Payments/Voluntary Early Retirement Authority,  but do not want to retire yet.  I would not receive much in retirement.  What are my rights under involuntary separation?

A. If you were involuntarily separated, you would be eligible for immediate retirement, just as you would if you accepted an offer of voluntary retirement and/or a buyout. In the same way, you’d receive the special retirement supplement when you reach your minimum retirement age. Because you would be eligible for an immediate annuity when you separated, you wouldn’t be entitled to severance pay.

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Buyout changed

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Q. I am 56 years old and have been a FERS federal employee of the U.S. District Courts for almost seven years.  I was offered a $25,000 buyout along with four others in my department. I submitted my letter of intent. Today I was told that they’d made a mistake, that even though the agency head had offered me the amount of $25,000 and the paperwork had been approved, it’s now been decided that I can be offered only just under $10,000, the amount equal to or lesser than my severance pay. They said GAO won’t let them give me $25,000. This doesn’t seem right to me. I understood the buyout amount is equal to the lesser of your severance pay calculation, or $25,000, or an amount determined by your agency head.

A. Your agency is correct. It cannot give you a buyout that exceeds the amount of your severance pay. The phrase “an amount determined by your agency head” allows that official to offer anything that falls between the amount of severance pay and $25,000.

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Military technician

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Q. If a military technician loses his military affiliation due to cause, how does it affect his technician retirement? I am looking for a hard reference as well.

A. If you are asking about losing your affiliation due to a disability that would otherwise not qualify for true disability retirement, you’ll find all you need at www.opm.gov/retire/pubs/handbook/C046.pdf. Just scroll down to Section 46A4.1-1C (CSRS) or 46B4.1-2 (FERS).

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