By Reg Jones
Partial annuity
December 30th, 2011 | Uncategorized
Q. I am A CSRS employee who is retiring Dec. 31 and wish to elect a partial annuity for my husband. He’s a retired civil service employee and receives his own pension. We’ve decided that about 25 percent of my annuity would be sufficient for him. However, on the Application for Immediate Retirement Form, Section F, it seems that I can only elect 55 percent of a fixed dollar amount. If I do this, say 55 percent of 50,000 per year ($27,500), would this amount still be indexed for future cost-of-living adjustments, or would it always remain at $27,500? I’ve asked the retirement branch at my agency, and they don’t know. I’ve also researched all of the Office of Personnel Management documentation and can’t find this addressed, either.
A. If your spouse agrees to a lesser amount in writing, you can elect any dollar amount you want him to receive. If you predecease him, he will receive that amount increased by any cost-of-living adjustments that have been applied to your own annuity since you retired. From that point forward, his survivor annuity will be increased by future COLAs, just as yours would have been.
Tags: annuity, COLA, pension, survivor annuity
Buyout rules
December 30th, 2011 | Uncategorized
Q. I am a Civil Service Retirement System postal employee. I am eligible for optional retirement in December 2011. Are there any incentives available, or are they only for early retirement?
A. If your agency offered you an opportunity to retire early or a buyout, you would be free to accept it.
Tags: buyout, CSRS, Early retirement
Unresolved CSRS contribution balance
December 30th, 2011 | Uncategorized
Q. I am getting ready to retire at the end of December after 37 years with the Civil Service Retirement System. In 1986, the Office of Personnel Management converted to a new system and I had a rather large balance in CSRS contributions. We noticed that our balance went to zero when the new pay stubs were issued. They told us not to worry back then and the money would be added back in when we retired. My current LES shows again a large amount of contributions. I asked the human resources office about a document that combined both balances, and they had no knowledge of this requirement. I am trying to search for a reference so I can get this resolved. I already found out they changed the legal binding contract for my retirement in 1986 and now I have to follow IRS pub 721, which states I will only get a small percentage back each year. It will take 331 months to get the entire balance returned. Can someone tell me where it is written that they have to combined both amounts so I can submit the entire amount using IRS pub 721?
A. When you retire, OPM will provide you with a statement that includes all your contributions to the retirement system. That’s the figure you’ll use when calculating the tax-free amount of your annuity. The way to do that is laid out in IRS Publication 721, which you mentioned.
While you assert that you had a legally binding contract, that contract was amended by a new law requiring that anyone retiring on or after July 1, 1986, would no longer be able to receive a tax-free refund of his retirement contributions and then be taxed on the full amount of his annuity. Since that change in the law, the tax-free portion of an annuity has been based on actuarial tables provided by the Internal Revenue Service.
Tags: contributions, CSRS, IRS, OPM, RETIREMENT
Social Security reduction
December 30th, 2011 | Uncategorized
Q. I am in the Federal Employees Retirement System and will retire Dec. 31. I will be 62 when I retire, with 41 years of service. Because Social Security is part of my retirement, will my Social Security checks be reduced if I work and earn more than the max allowed?
A. Yes. Your Social Security benefit would be reduced by $1 for every $2 you earn through wages or self-employment until the year in which you reach your full retirement age. At that point, the reduction would be $1 for every $3 you earn. There is no limit to the amount you can earn starting with the month in which you reach full retirement age. Note: The earnings limit is $14,160 in 2011. It will be $14,640 in 2012.
Tags: FERS, reduction, RETIREMENT, SOCIAL SECURITY
Best month to retire
December 30th, 2011 | Uncategorized
Q. What is the best month and day to retire? I should have 240 hours at the end of December, which could be carried over to the next year. If I retire in December, would I not only receive the 240 hours but 208 for the next year. If I retire Jan. 1 of the next year, would I receive the 240 in the hole plus the 208 I would accrue for the new year? I am trying to get 400 hours. How can I do this? I know it takes a while for the retirement benefits to arrive and I need something to tide me over.
A. You can only receive a lump-sum payment for the number of hours you have actually accrued. If you have accumulated 240 hours and retire Dec. 31, you’ll be paid for all the hours you’ve accrued, even if they exceed 240. If you retire Jan. 1, you would only be paid for a maximum of 240 hours. Assuming that you went into 2012 with an annual leave balance of 240 hours, earned 208 more hours in 2012, and retired no later than Jan. 12, 2013, you’d receive a lump-sum payment for 448 hours.
Tags: leave accrual, lump sum
Dental and vision coverage
December 30th, 2011 | Uncategorized
Q. I am voluntarily retiring Dec. 31 with full benefits under the Civil Service Retirement System. I understand that my health insurance will continue to be covered with the same amount paid by Uncle Sam as was covered when I was working. I have heard that dental and vision insurance will not receive the same amount matched in retirement. Do I have to pay the full amount for these extra plans in retirement?
A. Enrollees in the Federal Employees Dental and Vision Insurance Program, whether employees or retirees, pay the full cost of premiums. There isn’t any government contribution.
Tags: CSRS, HEALTH INSURANCE, RETIREMENT
Annual leave payout
December 30th, 2011 | Uncategorized
Q. I am a Civil Service Retirement System employee who will be retiring Dec. 31. I currently have 360 hours of CY2010 carryover leave (based on my overseas assignment). I also have 120 hours of use or lose for CY2011, for a total of 480 hours. When I retire, will I get annual leave payout for 480 hours?
A. Yes.
Tags: annual leave, carryover, CSRS, payout, RETIREMENT
Social Security credits and annual leave
December 30th, 2011 | Uncategorized
Q. I am a Civil Service Retirement System employee planning to retire Dec. 31. I will receive a lump-sum payment for unused annual leave in 2012. I understand that this payment will be subject to federal and state (where applicable) taxes but that other deductions (health care, retirement and Thrift Savings Plan contributions) are not taken. Do I have the option to have a Social Security contribution taken from this payment? (I need seven credits to get to 40 credits/[quarters]) and this would seemingly represent an opportunity to acquire four of them if it is an available option). Is there a way to accrue Social Security credits via this lump-sum payment?
A. No, there isn’t. Social Security credits can only be acquired through deductions taken from wages or self-employment that is covered by Social Security.
Tags: annual leave, CSRS, lump sum, RETIREMENT, SOCIAL SECURITY, TSP
Final paycheck
December 29th, 2011 | Uncategorized
Q. If I retire on Dec. 31 with 30 years at age 57 with a buyout, when will I receive my final paycheck, lump-sum buyout payment and my first FERS retirement annuity and supplement pay?
A. Only your agency payroll office can tell you when you’ll receive your final paycheck and lump-sum buyout payment. And only the Office of Personnel Management knows when you’ll receive your first annuity interim payment, which won’t include the special retirement supplement. You’ll only get that when you receive your first full annuity payment, which will include any amounts you are owed for both benefits. There is no way to estimate how long that process will take.
Tags: annuity, buyout, FERS, lump sum, supplement
20 years or 21?
December 29th, 2011 | Uncategorized
Q. I am a Postal Service employee whose retirement comp date is Feb. 6, 1991. I also have four years of military service credit. I would like to retire Dec. 30. But I am confused by how my total years of service are calculated. I should have 711 hours of sick leave accrued, so at 50 percent of that, my calculations are that I will have more than enough hours to get my total years of service to 21 instead of 20. However, I read somewhere that any months that you work fewer than 30 days are thrown out. So does that mean I don’t get credit for my first month of work because I started on Feb. 6? Also, is the time you work prorated for partial years (20½ versus 21)? Basically, do I have to work a week or so longer than I planned to make sure I get the benefit for 21 years?
A. Your personnel office can give you the exact date on which you will have 21 years of service or you can go to www.opm.gov/retire/pubs/handbook/C050.pdf and read Sections 50A2-1 and 3, plus the job aids at the end of the chapter, and figure it out for yourself. As you’ll quickly learn, your annuity will be based on all your years and full months of service. Any days that add up to less than a full month are discarded.
Tags: military service, Postal Service, RETIREMENT