Ask The Experts: Retirement

By Reg Jones

Leave without pay and involuntary recall

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Q. I am on active duty under Title 10 for a 225-day involuntary recall deployment. I am also a 15-year federal employee. Upon coming into the federal position in 2003, I bought back my four years of active-duty time, which has been applied to my FERS position. I would now like to have the deployment days added onto my federal career. I am on leave without pay. However, I am receiving differential of pay. Would I be authorized to have the deployment time calculated to my federal position? I was also informed that I would receive no evaluation or SF-50 while out of my federal position. Therefore, would a military evaluation be allowed in my federal service record for future job reference? How is leave without pay applied if I am applying for other federal jobs?

A. Because you are on LWOP-US, when you return to your civilian job, you can make a deposit to get credit for that time. While your military evaluation might be of interest to a future employer, it would only carry weight if your military assignment was in the same field and at the same level of the job for which you were applying.

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MRA scenarios

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Q. My month of birth is June 1963. I will have 12 years of federal service at age 56. What is my MRA? Is it 56 with a penalty and age 62 with 18 years of service no penalty?

A. Your minimum retirement age is 56. Since you are only 49, you’d have to wait until you reached your MRA to retire under the MRA+10 provision. Then your annuity would be reduced by 5 percent for every year you were younger than 62. You could, of course stick around until you had 20 years of service. By then you’d be at least 60 and could retire without penalty. You could do the same by waiting until you reached 62. Then you’d have around 25 years of service, not 18.

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CSRS versus FERS

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Q. My husband starting working for the Department of Defense in August 1984. He was put into the CSR Offset. He had four years of military service, and he immediately paid the deposit for civilian service credit. Effective Jan. 1, 1987, he was automatically put in FERS.  Does the military service he bought back count for creditable civilian service? If yes, then shouldn’t he have remained in CSRS, since he would have had more than five years of civilian service before Jan. 1, 1987? He had no previous civilian service, other than military service, before he was hired in 1984.

A. Yes, the active-duty service for which he made a deposit is considered creditable service. No, he shouldn’t have been left in CSRS because he hadn’t been a CSRS employee for five years before FERS came online.

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Retiree considering full-time job

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Q. I am a 69-year-old CSRS retiree. Would taking a full time job reduce my annuity?

A. No.

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Suspending FEHB

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Q. I am eligible to retire this year from federal law enforcement (age 51 with 20 years as an officer). I am serving on active-duty military orders, which will continue for the next three years. If I retire from my law enforcement position, can I suspend (NOT cancel) my health care coverage option (and premiums) while I am on active duty and covered by Tricare?

I would not be eligible for Tricare between ages 55 and 60 and therefore would not want to lose access to this important coverage when my military tour ends.

A. Yes, you can suspend your FEHB coverage under new regulations published by OPM. Read about it at www.opm.gov/insure/health/eligibility/tricare.asp.

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VERA

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Q. My wife was a CSRS clerk for the Postal Service for 30 years, and on June 30, 2009, she retired at age 54 under a VERA and lost 2 percent because she was younger than 55. Two months after she retired, the Postal Service offered a VSIP of $15,000 to any clerk who wanted to retire because they didn’t get the numbers they were looking for. Would she be entitled to the $15,000 because she left under a VERA?

A. No. The purpose of the Voluntary Separation Incentive Payment law is to encourage employees to retire, not to reward them for having done so.

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Rehired annuitant

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Q. I retired from the federal government with more than 35 years of service with a CSRS pension on Jan. 20, 2009, because I was serving in a non-career SES position (my final SF-50 indicated an involuntary separation). If I were to return to federal service, would I be eligible for an annuity offset, thereby keeping my annuity and federal salary? In addition, if, after working as a re-employed annuitant for two or three years and then re-retiring, would my CSRS annuity change or be re-calculated to reflect additional years of employment?

A. As a rule, if you were re-employed by the federal government, your salary would be offset by the amount of your annuity. If you worked full-time for a year (or the part-time equivalent), you’d be entitled to a supplemental annuity. If you worked for at least five years, you’d be entitled to a re-determined annuity. In other words, your annuity would be recomputed as if you were retiring for the first time.

On the other hand, if you were hired into a position that allowed you to receive both your annuity and your full salary, you wouldn’t be entitled to any additional retirement benefits when you left.

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Military buyback

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Q. I retired from active service with 30 years. I recently obtain a federal government job and am inquiring if I am eligible for the buyback program and, if so, if is there a cost comparison worksheet to review so I can determine if the buyback is advantageous to me.

A. Yes, you are eligible to make a deposit for your active duty service and have it used in determining your total years of civilian service and annuity; however, at retirement, you would be required to waive 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, with a copy of your DD 212, to your military finance center. When they let you know how much that is, take it, a copy of your DD 214 and a Standard Form 3108, Application to Make Deposit or Redeposit, to your local payroll office. They’ll figure out how much you owe and help you to work out a payment plan if you decide to do that. You can download copies of the RI and SF forms at www.opm.gov; click on Find Form(s).

The formula used to compute a FERS annuity is as follows: 0.01 x the average of your highest three consecutive years of civilian service (your high-3) x your total years and full months of service. If you retire at age 62 or later, the first number is increased to 0.011. To be eligible to retire, you would have to have a minimum of five years of actual service as a FERS employee and meet the age requirement.

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Survivor benefits and monthly deductions

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Q. Upon retirement from civilian government service, if you chose the survivor benefits plan for your spouse, are the payments deducted monthly from your retirement pay taxable by the government?

A. Payments aren’t deducted monthly for a survivor benefit. Instead, there is a one-time permanent reduction in your annuity. Since that reduction will be made before you receive annuity payments, you will be taxed only on the amount you receive. Note: A portion of your annuity will be tax-free, since it represents a return of the post-tax contributions you made to the retirement system. See IRS Publication 721 at www.irs.gov/pub/irs-pdf/p721.pdf.

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Special retirement supplement and disability

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Q. If you have met time in service and age requirements to retire under FERS special retirement but have not yet reached your mandatory retirement age and become too disabled to work, how is your retirement calculated? If it is considered a disability retirement, are you still eligible to collect the Social Security supplement since you met the requirements for a regular retirement? If it is considered a regular retirement, can you collect Social Security disability without the wash?

A. If you take regular retirement, you’ll receive the special retirement supplement. If you are approved for disability retirement, you won’t. If you take regular retirement and then are approved for Social Security disability benefits, the special retirement supplement will end.

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Retirement age

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Q. I am a full-time FERS employee born in 1959 with a minimum retirement age of 56 but with 21 years with the Department of Transportation, two years in the Defense Department and six years in the military. What is the earliest age I would be able to retire given years of service? What would be the effects (reduction in benefits) of retiring at that minimum age? What is the minimum age I could retire without a reduction in benefits?

A. The earliest age at which you could retire is when you reach your minimum retirement age — 56 — which is three years from now. At that time, you would have 26 years of service (24 DoT and two DoD). Therefore, you could retire under the MRA+10 provision. However, your annuity would be reduced by 5 percent for every year (5/12 percent per month) you were under age 62. You could, of course, postpone the receipt of your annuity to a later date to reduce or eliminate the age penalty. If you want to retire on an unreduced annuity, you have two choices: work four more years and retire at age 60 or, if you’d prefer to retire at age 56, you could make a deposit to the Civil Service Retirement and Disability Fund for your active-duty service. That would boost you over the 30-years-of-service mark.

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Air traffic controller mandatory retirement

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Q. I am an air traffic controller subject to mandatory retirement at age 56. I am under FERS. When I reach age 56, I will not have 20 years of service. Can I continue as a controller until I reach my 20 years of service even though I will be past age 56?

A. Yes.

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5-year rule

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Q. I am looking into medical retirement after 32 years with the federal fire department. At this time, the Air Force doc has not cleared me to work because of some prescription meds that I take on my off days. I’m going in for thumb surgery for arthritis. I also have lower back pain, and four vertebrae are not in the greatest health. I had Blue Cross/Blue Shield before, and when I got married, I dropped it because my wife’s medical insurance was better than mine. But she lost her job and is now disabled, too, and had to get BC/BS for the family. They say I have to wait five years to carry the coverage into retirement. But if I go out with a medical retirement, do I have to have it for five years in a row?

A. Yes, you have to be enrolled for five consecutive years before you retire.

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Reduced life insurance

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Q. I turned 65 and am not paying premiums on basic life insurance as I selected the 75 percent reduction. My life insurance was $54,000. What is it now worth, and how do you calculate what it will be worth once I reach the 25 percent?

A. Because you accepted the 75 percent reduction, the value of your insurance will decline by 2 percent each month until it reaches 25 percent of what it was when you retired. At that point, your $54,000 basic insurance will be worth $13,500.

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Law enforcement early retirement

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Q. I have an employee who wants to know if his GS-1810 (Investigator) service from Aug. 14, 1995, to May 2, 1999, with the Department of Justice will be credited toward the GS-1811 (Criminal Investigator) time even though he did not pay that time into the law enforcement officer FERS retirement fund and if so, can he pay into it? He would like to retire early under the LEO provisions of FERS?

A. He can’t “pay into it.” That period of employment isn’t covered service and can’t be credited toward the years needed to qualify for LEO retirement.

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Resignation vs. termination

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Q. I am a FERS employee with 31 years of creditable service but will not reach my minimum retirement age (56) until May 2013. I am faced with possible termination but plan to resign. I understand that deferred retirees are not eligible for supplemental annuity, nor are they eligible to enroll in life insurance and health benefits. What if I am terminated rather than resigning? Will I be eligible for immediate annuity plus supplement and eligible to enroll in health benefits? Or I will only be eligible for deferred retirement in 2013 after reaching my MRA?

A. It won’t make any difference to your benefits if you resign or are terminated. In neither case would you be eligible to retire. In either case, because you have at least 20 years of service, you’d be eligible for deferred retirement at age 60. Deferred retirees aren’t eligible to receive the special retirement supplement, nor may they re-enroll in the Federal Employees Health Benefits or the Federal Employees’ Group Life Insurance programs.

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Rehires and unused leave

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Q. I am a re-employed CSRS annuitant who is receiving both his full annuity and full salary. I receive and accrue annual leave and sick leave. When I retire again, for the second time, I will have accrued and unused annual leave and accrued and unused sick leave. At my retirement, will I be reimbursed for both the accrued and unused annual leave and the accrued and unused sick leave?

A. You will receive a lump-sum payment for your unused annual leave. You won’t receive any payment for your unused sick leave because it has no cash value.

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Military buyback and creditable service

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Q. I am a Postal Service employee with 27 years actual service. I also bought back four years of military service (actually three years, 11 months and 28 days). Will I get credit for four full years or three years and 11 months under FERS retirement?

A. While you will get credit for that service in determining your eligibility to retire and in the computation of your annuity, it won’t be included when computing the special retirement supplement. Only actual FERS service will be counted in that.

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Survivor annuity

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Q. I am a married CSRS retiree. When I retired, I elected a full survivor benefit for my spouse. My spouse is a soon-to-be FERS retiree, and I would like to know what parts of her FERS retirement I am entitled to by law. How can I make it equal to what I am leaving her?

A. You can’t make it equal to hers. A full survivor annuity for your wife equals 55 percent of your unreduced annuity, increased by any CSRS cost-of-living adjustments made between the day on which you retired and your date of death. If she leaves a full survivor benefit for you, it would equal 50 percent of her unreduced annuity, increased by any FERS COLAs (which are usually less than those for CSRS retirees) made between the day on which she retired and the date of her death.

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CSRS and Social Security

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Q. My mom and I have an ongoing debate: She has worked for the Postal Service for 34 years. She stated that when she retires, she will receive her retirement but will not be eligible to collect Social Security. Can you explain?

A. Apparently, your mother is a CSRS employee. CSRS employees aren’t covered by Social Security. Unless she has accumulated 40 Social Security credits from other employment, she won’t be eligible for a Social Security benefit.

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