Ask The Experts: Retirement

By Reg Jones

Retirement + Social Security disability

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Q. If I retired from the federal government and draw an annuity, can I still apply for Social Security disability? I’ve been off work for about a year, ill, and can’t return to the job

A. Yes, you can.

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VERA

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Q. I have 25 years with the Postal Service. Will I be eligible for the VERA when and if one comes available?

A. If offered a voluntary retirement opportunity, any employee with 25 years of service can accept it. With 25 years, it doesn’t matter how old you are.

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Comparability pay vs. market pay

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Q. Is comparability pay the same as market pay? My payroll stub has market pay and basic pay allowances.  Are both “market” and basic pay used in determining the annuity amount?

A. Because I don’t know what’s included under each of those headings, I can’t provide you with a direct answer. What I can tell you is that only pay from which retirement contributions are taken will be used in the computation of your annuity. To see what’s included and excluded from basic pay, go to www.opm.gov/retire/pubs/handbook/C030.pdf and scroll down to Section 30A1.1-2 Basic Pay.

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Social Security and WEP

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Q. I am a CSRS Offset retiree and have the required number of quarters worked for Social Security. If I file for Social Security at age 62, will the offset reduce my Social Security pension to zero? I was advised at a federal retirement seminar that when I file for Social Security, an offset would take place on my CSRS retirement. Is that true? Will my Social Security pension be adjusted? I turn 62 this year and plan to file for Social Security.

A. Normally, the offset in your CSRS annuity would be matched by the Social Security benefit you receive at age 62, resulting in your receiving the same amount of money but from two different sources. However, if you have fewer than 30 years of substantial earnings under Social Security, your Social Security benefit would be affected by the windfall elimination provision. While the WEP could result in a reduction in that benefit, it wouldn’t eliminate it. For more information on the WEP, read the Social Security Administration’s fact sheet at www.socialsecurity.gov/pubs/10045.html.

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Deceased father’s pension

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Q. My father remarried when I was 15. I was his only child. When he was 51 and I was 24, he was diagnosed with cancer. While he was in the hospital undergoing colon surgery, I was informed that he was changing his beneficiary status to his new wife. I received a small portion compared to the half that was originally on the form. I received a pension check for half of his pension one time after his death, and then his widow started to receive the entire amount. Besides the hurt this caused me, she remarried within a year and gave up his pension. Is that it?

I am, of course, an adult child of this man, but I was his only child. I am not sure what was said or why he decided to change his beneficiary designations while facing terminal cancer, but he did. Am I not entitled to any of this pension that he gave 30 years of government service to? I have been single and struggling with mental and emotional issues for many years and certainly could have used my dad’s pension. What are my options, if any?

A. It’s important to understand that if you had continued to be listed on your father’s designation of beneficiary, you would have only been entitled to the proceeds of his Federal Employees Group Life Insurance (if any) and a refund of his retirement contributions. When your father died, the only other benefit for which you would have been eligible would have been a children’s survivor annuity, and then only if you were an unmarried dependent under age 18. With one exception, that modest benefit, worth only a few hundred dollars a month, would have ended when you reached age 18 (22 if you were a full-time student). The exception would be if you had been determined to be disabled and incapable of self-support before age 18 and weren’t married.

If your father was still an employee of the federal government when he remarried, he was required by law to provide a full survivor annuity for his new wife. If he remarried after he retired, he would have had the option of providing a survivor annuity for his new spouse.

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Credit for military time

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Q. I served four years in the Army and was medically retired. I am now a federal employee and am accruing four hours of leave per pay period. Because my retirement was not deemed “service-connected,” only the year that I spent in Iraq counts toward my service computation date. I am no longer receiving retirement payments because my Veterans Affairs Department disability is greater than my retirement amount. If I buy back my military time, will all of the years count toward my SCD and retirement?

A. For nonretired members, full credit for uniformed service (including active duty and active duty for training) performed under honorable conditions is given for leave accrual purposes, and for retirement purposes, provided that a deposit, as required by law, is made to the retirement fund.

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VCP transfer into Vanguard Roth IRA

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Q. I will have 40 years with the Internal Revenue Service in 2012 and plan to retire either this year or in 2013. I have been contributing to both the Thrift Savings Plan and the Voluntary Contributions Program. I plan to leave the TSP contributions to the G Fund alone and let it grow.

The VCP is another matter. I have a Roth IRA with Vanguard and would like to transfer all of the VCP to the Vanguard Roth IRA.

I know I am required to pay tax on the interest the VCP has earned in the year received. How do I do this transfer? There seems to be a lot of information about the TSP, but I am finding it difficult to find information about the VCP.

A. To find out how to make the transfer, you can call the Office of Personnel Management at 888-828-9451 from 8 a.m. to 5 p.m. Eastern time. In the Washington, D.C., area, you can reach them at 202-606-0706. You may also contact them by email at VoluntaryContributions@opm.gov, or write to:

U.S. Office of Personnel Management

Voluntary Contributions

1900 E Street, NW, Room 3H30

Washington, DC 20415

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Retiring from a second job

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Q. I am 73, have been drawing military retirement since 1982, and became a federal employee three years ago. Qualifying for the combined years of military and federal service would be impossible because the payback would be prohibitive. Does FERS allow for this circumstance, or should I resign knowing that no retirement from this second federal job is possible?

A. Retirement from your civilian job is possible. As soon as you have five years of FERS service, you’ll be able to retire and receive an annuity based on that period of employment.

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Disability and retirement calculation

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Q. I was born in 1956 and I am at my minimum retirement age of 56. I have 14 years of civil service under FERS. I retired from the Coast Guard after 22 years. I have paid my redeposit in full to buy back my military time. I have not yet waived my retired military pay. I am filing for a FERS disability. If approved, would it be considered a voluntary retirement MRA + 36 years of service (14 FERS + 22 military), or would I receive 60 percent of annual salary first year, 40 percent thereafter until 62?

A. If you were approved for disability retirement, your annuity would be calculated in the same way as every disability retiree. Your total years of service would have no bearing on it.

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Credit for first stint

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Q. I worked for DoDDS schools from 1987 to 1990. At that time, vesting was five years with FERS. When I resigned, I believe I had to forfeit my retirement and was made to withdraw my Thrift Savings Plan. Would this have been correct for that time period with FERS? And DoDDS?

I came back to work for DoDEA in January 2001. I called to make certain that I was going to get credit for those three years. I wanted to redeposit my TSP money but was not allowed to, and was told there was no provision for repayment. It seems that I was also told that my forfeited retirement would now be reinstated and that the three years would be added to whatever time I worked. I am now ready to retire and this is causing some confusion.

A. Mike: If you withdrew your TSP money and did not roll it over to an Individual Retirement Account, you will not be allowed to redeposit this withdrawn money to your new TSP account. You may, however, roll untaxed IRA money into your TSP account at any time.

Reg: If you left your contributions in the retirement fund when you left, that period of service would be reinstated. If you didn’t, you’d have to redeposit that amount plus accrued interest to get credit for it.

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Leave and earnings statement

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Q. Regarding the amount on each leave and earnings statement about my total CSRS contributions to date:  My agency was BRACed in the 1990s, and I transferred to another. We were told at the time to keep track of our last LES from the old station as the retirement contribution amounts would not transfer on the LES. In the move, of course, I lost the old LES. At the new station, our pay system changed and we were told the same thing again. I noticed both times that the contribution amount was reset to zero. Is that information still true about the current figure on the LES, or does it now reflect the actual amount of CSRS contributions to date? If not, how can I find out what that amount really is when I need to make the calculations for tax purposes after retirement?

A. When you retire, the 1099-R form the Office of Personnel Management sends you will include both your total contributions to the retirement fund and the amount of your annuity that is taxable.

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No advantage in putting off retirement

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Q. I am nearly 62 with 18 years service and separated from service at age 53. If I wait until 63 or later for a deferred FERS, is there an advantage in waiting longer?

A. There is no advantage to waiting. Your annuity will be based on your high-3 and years and full months of service on the day you resigned from the government. Therefore, you should fill out a Standard Form 3107, Application for Immediate Retirement (available at www.opm.gov, click on Find Form(s)), and send it to the Office of Personnel Management two months before your 62nd birthday.

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Survivor benefits

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Q. I have 20 years of service under FERS, but I am only 41. If I work a few more years, take a deferred retirement, and then die before reaching age 60, will my wife still be entitled to claim the survivor benefit/annuity? Can you point me to the reference?

A. Yes. You’ll find the reference you are looking for at www.opm.gov/pubs/handbook/C072.pdf.

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Credit for leave without pay

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Q. I worked for the Defense Department in Germany. When my husband was given a permanent change of station, I was granted terminal leave without pay for one year from my job. I started working again for the federal government one month after my terminal leave ran out. How is this terminal leave time counted toward my retirement? I am under FERS.

A. There is no provision for terminal leave in the federal civilian government. Therefore, unless DoD has a special provision of which I’m unaware, you were on leave without pay. If that’s the case, you would get credit for six months of LWOP in a calendar year. No credit would be given for any time beyond that, nor could you make a deposit to get credit for it.

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Military to federal service

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Q. I served in the Navy from 1973 to 1982 and received an honorable discharge. Also, I received 10 percent disability. I am considering entering federal service this year. Will my active-duty time count for benefits (vacation, retirement, etc.)?

A. The Office of Personnel Management’s Vets Guide is the definitive source of information about the benefits available to members of the military who join the civilian federal government. Go to www.opm.gov/StaffingPortal/Vetguide.asp and scroll down to Service Credit.

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Retirement timing and the survivor benefit

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Q. I am 59 and have 14 years of federal service under FERS. I plan to retire around the end of April. I turn 60 on Oct. 10, and am wondering if I should retire on the 10th of the month in order to avoid an extra month being added to the annuity reduction. Also, if I choose a 25 percent survivor benefit, will my wife have to pay more in health insurance premiums (than with a 50 percent survivor benefit) in the event of my death?

A. You can retire on any day of the month you want to. However, if you retire after the last day of a month, you won’t be on the annuity roll until the following month. For example, if you retired Sept. 30, you’d be on the annuity roll in October. If you waited until Oct. 10, you wouldn’t be on the annuity roll until November. On the other hand, every month you wait to retire will reduce the age penalty you’ll face. That reduction in your annuity will be 5/12 of a percentage point for every month you are under age 62. You’ll have to figure out which retirement date is financially best for you.

As for health benefit premiums, they will be the same for your wife regardless of the amount you jointly elect. (I say jointly elect because by law you must provide her a full survivor annuity unless she agrees in writing to a lesser amount or none at all.) If the survivor annuity amount turns out to be less than the required premiums, she can make up the difference out of her own pocket.

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Credit for CSRS service

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Q. I started working for the federal government in September 1982 under CSRS and transferred to FERS in 1987 with just under five years in CSRS. I withdrew my CSRS contributions when I transferred to FERS. I have not had a break in federal service. Does my time working under CSRS count as creditable service for retirement under FERS? I’ve gotten different answers from different sources.

A. If you had fewer than five years of employment under CSRS, that time would automatically credited as FERS service and be used both in determining your total years of FERS service and in the computation of your annuity. To verify why that’s so, go to  www.opm.gov/retire/pubs/handbook/C010.pdf.

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Savings statement error?

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Q. I am a federal employee under CSRS. I started in August 1978. On my leave and earnings statement under cumulative retirement, it is only showing $51,067.73 for 33 years of service. I think there should be more. Is there any way to find out?

A. If you have only worked for one agency, you can ask your payroll office to check it out for you. If you worked for more than one agency, you’ll have to go to the National Personnel Records Center at www.archives.gov/st-louis/civilian-personnel, where records of your prior service may have been sent.

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Credit for military time

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Q. I am in the process of filing for FERS retirement. I currently have 30 years of civil service (GS-11), which includes three years and seven months of military service. I am being told by human resources that they cannot include the three years military time for Retirement Annuity Computation because I receive a check each month from the Veterans Affairs Department for a 30 percent disability rating (service-connected disability). Also, my leave and earnings statement (LES) shows that I have repaid the military time. I have sent human resources a letter from VA showing that I was removed from the temporary disability retired list and discharged from naval service for physical disability with severance pay of $7,971 in 1986. I am not always sure human resources has all the answers. Will my military time count toward my retirement annuity when the Office of Personnel Management receives my package?

A. Yes, since you made a deposit, OPM will give you full credit for that period of active-duty service.

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Deferred annuity

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Q. I have 22 years federal government time. I was fired in 2007 for missing too many days because of being sick. Do I still get a pension?

A. If you left your contributions in the retirement fund when you left, you would be eligible for a deferred annuity at age 62.

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