Ask The Experts: Retirement

By Reg Jones

GPO and WEP

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Q: I retired under CSRS in 2005 after 23 years with the Secret Service as an 1811 LEO. Private employment has permitted me to acquire enough earned SS credits to qualify for $1,028 per month at 62 years of age. My wife has also been privately employed for 35 years and has earned Social Security credits to qualify for $923 per month at 62. What impact will GPO and WEP have on my Social Security benefits? Does it make a difference if I apply for Social Security benefits before my wife (I’m six months older) with respect to survivor benefits?

A: The government pension offset will likely eliminate any Social Security spousal benefit to which you would otherwise be entitled. That’s because it will reduce that benefit by $2 for every $3 you receive in your CSRS annuity. On the other hand, the windfall elimination provision will reduce but not eliminate your earned Social Security benefit. As for who applies first for a Social Security benefit, I’m not aware that it would make any difference. Neither the GPO or the WEP will apply to your wife. And while your earned Social Security will be reduced, any Social Security spousal benefit to which she would be entitled would not. However, she would only get the larger of the two benefits.

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Two forms of health insurance

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Q: I am 68 and a CSRS retiree. What are the advantages of enrolling in Medicare Part A when I am already covered under the FEHB?

A: You want some advantages? First, it’s free. You already paid for it through payroll deductions while you were working. Second, the combination of Medicare Part A and your FEHB plan will reduce or eliminate most of the deductibles and out-of-pocket charges for hospital care. Third, because the two programs don’t always cover the same things or in the same way, they tend to complement each other, giving you better coverage at lower cost.

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Length of service

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Q: I am 7 days short of my 40 years of service, But with the sick leave , it puts me at 40 years, 3 months. Do I get a 40-year pin and certificate?

A: Whether you get a pin and a certificate is up to your agency. However, these forms of recognition are only given to employees who have actually completed a service milestone. While unused sick leave can be added to your length of service when you retire, it can’t be used to increase your service time while you are still working.

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Subject to WEP

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Q: I am a 55-year-old recently retired postal employee and I receive a CSRS annuity every month. I plan to collect Social Security benefits when I reach age 62. I have been working part time and paying into Social Security as well as working my full-time position for approximately 30 years. What will the reduction to my Social Security be because I am a CSRS retiree?

A: Because you are receiving an annuity from a retirement system where you didn’t pay Social Security taxes, you’ll be subject to the windfall elimination provision. The WEP will reduce your Social Security benefit if you have fewer than 30 years of “substantial earnings” under Social Security. Substantial earnings are greater than those required to earn Social Security credits. To see what substantial earnings are by year and to estimate the reduction in a Social Security benefit, go to www.socialsecurity/pubs/10045.html.

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Preapproved waivers

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Q: I have an employee that enrolled in the FEHB plans effective Jan. 2, 2011, and has worked for the government for approximately 30 years. My agency is undergoing a VERA/VSIP announced in September. However, I found out that my agency did not request a preapproved waiver to include the health insurance. Can you tell me if this employee will be eligible to carry her health insurance into retirement?

A: In order for her to continue her FEHB coverage, your agency needed to attach a memorandum to her retirement application stating that she met the requirements for a pre-approved waiver by OPM. That certification had to include the number of the public law granting the agency’s buyout authority and the beginning and ending dates of the agency’s buyout period. If your agency didn’t do that, it will have to correct that error.

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CSRS return to work

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Q: I worked under CSRS for 18 1/2 years, ending in 1987, and withdrew my contributions at the time.I have worked in private industry paying full Social Security for 29-30 years (work totally separate than my CSRS work.)
I have recently rejoined the government and was placed in CSRS-Offset retirement.I am 62 and plan to work another three to five years under the CSRS-Offset system (time frame somewhat relative on whether I buy back my previous retirement credit.) I am deciding on redeposit (with interest, of course) to obtain the 18 1/2 years of CSRS retirement credit I formerly had. If I redeposit, will my ultimate CSRS retirement related to those years be reduced by Social Security even though my Social Security income is from separate private employment combined with a relatively short time under the CSRS-Offset system and those 18 1/2 years of income are not counted in determining OASDI benefit? (Or will that time be included as a result of my redeposit? I don’t believe that the redeposit amount includes anything contributed to OSADI, correct?)

A: Because you took a refund of your retirement contributions before March 1, 1991, you can either repay the refund, plus interest, or not do so. If you don’t, you’ll still get credit for that time in determining your years of service but your annuity will be actuarially reduced based on the amount you owe and your age when you retire. If you retire before age 62, at age 62, your CSRS annuity will be offset only by the amount of Social Security benefit you earned while covered by CSRS Offset. If you retire on or after reaching age 62, the offset will occur on the day you retire. The amount of Social Security benefit you are entitled to  based on your entire employment record won’t change.

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Canceling military buyback

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Q: Upon joining government service, I exercised the option to buy back my
military service of more than 24 years and paid military deposit of a little more than $3,386. I plan to retire from government service in two or three years, but I am having second thoughts about it now because of the prospect of losing my military benefits, whether all of them or just some, I have no idea, and would like to know. If I’d lose my military ID card, Comstore, NEX and pharmacy privileges, then I would like to reverse or cancel my buyback option.
Questions:
1. What specific military benefits/privileges do I stand to lose with the buyback?
2. How do I request reversal or cancellation of my military deposit?
3. Where do I find specific information about my questions.

A: I’m not aware that you would lose any military benefits by waiving your military retired pay; however, to be sure, you should follow up with your branch of service. There are only two ways that you could get a refund of your retirement contributions. First, if you aren’t eligible to retire, you could resign from the government and ask for a refund of all your retirement contributions, which would void your entitlement to a civilian annuity. Second, at retirement, you could decide not to waive your military retired pay, which would result in an automatic refund of your deposit. You can find this information at www.opm.gov/retire/pubs/handbook/C023.pdf.

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Penalty for early retirement?

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Q: My activity is offering VSIP/VERA. I am 56 and have 22 years in service under FERS. Do I get the 5-percent penalty if I accept the offer? Am I allowed to withdraw monthly on my TSP? Can I receive the Social Security supplement?

A: You won’t be penalized for being under age 62 if you are approved for early retirement. And, because you were born between 1953 and 1964, you’ll be eligible to receive the special retirement supplement.

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Combining retirements

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Q: I retired from the Air Force with just more than 20 years. I began work as a temp employee GS-11 for two years, then term for four more. I am now 45 with just more than six years with CS. I am not a permanent employee, but am contributing to a FERS retirement. Is it possible to combine my AF and CS retirements and if so, how would I go about it?

A: You can get credit for your active-duty military service by making a deposit to the civilian retirement system and, at retirement, waving your military retired pay. To find out how much you would owe, complete Form RI 20-97, Estimated Earnings During Military Service, and mail it, along with a copy of your DD 214, Report of Transfer or Discharge, to the Air Force finance center. They’ll tell you what your earnings were. Take that information to your payroll office, along with a copy of your DD 214 and a Standard Form 3108, Application to Make Deposit or Redeposit. Your payroll office will estimate what you owe and arrange for you to make a deposit all at once or over time if you decide to do that. Note: the RI and Standard Form are available at www.opm.gov/forms.

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WEP and taxes

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Q: I worked  four years in a supermarket and another 20 years in the U.S. Air Force, bringing my U.S. Social Security years worked up to 24.I returned to Spain and began working and now have 20 years in the Spanish Social Security system which gives me another retirement. I paid taxes on my U.S. earnings at the time and now pay taxes on my Spanish earnings. If you are paying taxes does the WEP come into play?

A: Yes, you will be subject to the windfall elimination provision if you have fewer than 30 years of substantial earnings under Social Security.

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CSRS and break in service

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Q: 1. Early retirement at age 51 and 23 years of service — If RIF, what will be offered to me for my retirement plan? 2. CSRS versus FERS — started with government on May 8, 1985; I started with CSRS and my agency changed me to FERS, because I was informed I should have been hired with FERS. 3. Quit government — Oct. 1, 2010, through April 7, 2011; worked as a contractor. How many years and months of service should I have reflected on my OFP records? 4. Promoted to GS-13-5 in 2009 — when should I expect another step increase?

A: When you entered the government in 1985, you were placed in an interim system – CSRS and Social Security. When FERS became effective Jan. 1, 1987, you were automatically transferred to FERS because you had fewer than 5 years of CSRS-covered service. Since you are a FERS employee, if you were eligible for early retirement, your annuity would be calculated using the following formula: 0.01 x your high-3 x your total years and full months of service. (If you didn’t receive a refund of your retirement contributions when you left government, you would receive credit for all the time you’ve worked for the government. If you took a refund, you wouldn’t get any credit for that time unless you repaid the amount, plus accrued interest.) As an early retiree, you wouldn’t be subject to the age age penalty for being under age 62. You would be eligible for the special retirement supplement when you reach your minimum retirement age, which in your case would be 56. Since you were placed in step 5 of your grade, assuming satisfactory performance, your next step increase would be due after 104 weeks.

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Unused credit hours

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Q: I read that unused compensatory time will be paid in a lump sum at retirement. Is the same true for unused credit hours earned?

A: Yes, you would be paid for any unused credit hours at your basic rate of pay.

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Social Security calculation

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Q: I will have to retire (age 57) in January 2014 as a federal
law enforcement officer with 29 1/2 years of service under FERS. If I am
correct, the Social Security Supplement will be calculated by multiplying my Social Security estimate of $1,792 per month (obtained from their website) times 29.5 divided by 40 (40 quarters). This will equate to $1,321 per month at retirement or $15,859 per annum. Did I calculate this correctly?

A: Close. However, the formula you used needs one minor adjustment. Your FERS-covered years should be rounded up to the next higher whole number, which would be 30. The answer then would be $1,344. Just remember that the Social Security estimate you received will have changed by the time you retire. Also that the amount you receive will vary according to your Average Indexed Monthly Earnings, just as it is true with any Social Security benefit.

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Hospital coverage

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Q: I am a postal retiree and I have my wife on my hospital coverage. When I die, will she be able to keep the APWU health plan, and what will be her cost.

A: If your widow is receiving a survivor annuity based on your employment, she can continue that coverage. For that coverage, she would pay self-only premiums instead of the self-and-family premiums you pay now.

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Pension offset

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Q: My wife began working for the post office in 1977 and retired in 2010 with 33 years of service under the CSRS Offset retirement system. During all these years Social Security was deducted from her check. She will turn 62 in October 2014, and as I understand the rules, her civil service pension will be offset a calculated amount based on the Social Security that she will be eligible to draw when she turns 62. I can understand this being the case had she not paid into Social Security. Since she paid into Social Security all those years, it doesn’t seem right that her civil service pension should be offset. If an individual worked for a non civil service company and retired, their pension is not offset by the amount of Social Security they would draw. The Social Security would be in addition to their regular pension check.

A: Your analogy doesn’t hold water. Regular CSRS employees contribute 7 percent of their salaries to the civilian retirement fund, in return for which they receive a full CSRS annuity. CSRS Offset employees contribute 0.08 percent of salary to the civilian retirement fund and 6.2 percent to Social Security, in return for which they receive the same amount of annuity benefit as their full CSRS colleagues. It just comes from two different places, the Civil Service Retirement and Disability Fund and the Social Security Administration.

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Re-employment and RIF

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Q: Our base is about to undergo a Reduction in Force. I retired from the Air force Reserve and I’m a retired civil service employee due to the fact I was in the Air Force Technician Program. When I turned 60, I was forced to retire. I am receiving an annuity and have been re-employed. Would my service computation date still help me keep my job, or would I end up at the bottom of the list since I am a re-employed, rehired annuitant?

A: As a re-employed annuitant, you are an “at will” employee. This means you can be released at any time and for any reason. Your service computation date wouldn’t protect you because, as a re-employed annuitant, you would have the lowest retention standing.

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Borrowing quarters

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Q: I retired in 2010 from the Defense Department with 40 years, four months and 13 days of service under CSRS. I”am 62 and have 23 Social Security quarters, so I need 17. My wife of 23 years is 59 and getting Social Security Disability. Could I borrow the remaining quarters from her?

A: No, you cannot. You’ll have to earn them yourself.

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Retirement and spouse Social Security

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Q: I plan to retire this year. I am under CSRS. I understand the WEP for me but have some doubts about the Social Security benefits of my wife. She has been paying Social Security all her life and never worked for a government with another type of pension. Is her Social Security retirement affected because of me? If I choose a survivor benefit, how is that going to affect her Social Security?

A: The fact that you will receive a benefit from a retirement system where you didn’t pay Social Security taxes will have no affect on her own earned Social Security benefit or on the survivor benefit you elect for her.

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Employment after buyout

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Q: After receiving a buyout, would employment with a government contractor require repayment of the buyout?

A: You would only have to repay the buyout if you later accepted employment with the federal government (including work under a personal services contract or other direct contract) within five years of the date of the separation on which the VSIP is based.

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Changing to self-only plans

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Q: My husband and I are retired federal employees. While we were employed, we did not have separate self-only health insurance plans. My husband was a part of my self-and-family plan. We continue to have a self-and-family plan. Because the combined annual cost of self-and-family coverage is about $900 more than the cost of two self-only policies, we would like to have separtate policies. Can we do this? If the answer is yes, is there an OPM or FEHB reference I can share with my husband. He is concerned about making changes and insists he was told at pre-retirement seminars that the self-only coverage is possible only if he had the self-only coverage while employed by the government.

A: To make a change to two self-only emrollments, call OPM’s Retirement Information Office at 888-767-6738 (202-6-6-0500 in the D.C. Metro area).

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