Ask The Experts: Retirement

By Reg Jones

Mandatory retirement

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Q. I worked 20 years and two months in a covered firefighter position. I then worked two years in a non-covered position.  I have returned to a secondary covered position.  Do I face mandatory retirement?  Or does my break in service allow me to work past 57?  Where would I find the answer in the federal regulations or is this decided by case history.

A. Yes, you will face mandatory retirement. Go to www.opm.gov/retire/pubs/handbook/C046.pdf and scroll down to Section 46A3.3-2B1, which applies to both CSRS and FERS LEOs and firefighters. Note: That section hasn’t been updated to show that the mandatory retirement age for firefighters is now 57.

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Gross or net?

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Q. I am in FERS with 18 years of federal service. Will my FERS pension be calculated on base pay (gross) or net pay after TSP contributions?

A. It will be calculated on basic pay. To see what’s included in basic pay, go to www.opm.gov/retire/pubs/handbook/C030.pdf and scroll down to Section 30A.1-2.

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Retirement pay eligibility

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Q. I worked for the Interstate Commerce Commission from September 1984 to September 1994. Will I be eligible to collect retirement benefits when age appropriate?

A. Yes, if you didn’t take a refund of your retirement contributions when you left government. Because you had at least five years of service, you could apply for a deferred annuity at your minimum retirement age (MRAs range from 55 to 57 depending on your year of birth). However, your annuity would be reduced by 5 percent for every year you were under age 62, unless you postponed the receipt of your annuity to a later date to reduce or eliminate the age penalty.

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Self-only vs. self and family

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Q. I am currently retired (CSRS) and have single coverage under the Federal Employees Health Benefits plan. My spouse is still employed by the federal government (FERS) and has single coverage under FEHB. We were both under my family plan until our youngest child became ineligible. We then went to self-only plans because the premiums were less together than the family plan. She will be eligible for retirement in three years. She is also considering simply quitting before then and taking a deferred retirement when she is eligible.

I am not covering her for spousal annuity, nor will she be covering me. We plan to put her on a family plan with me when she retires. If she retires (or quits) before she has established five consecutive years as self-only under FEHB, will she eligible to gain self-only under FEHB in case of my death? If not, can she continue self-only into retirement (or deferred) and then join me later under the family plan?

A. She doesn’t have to have been enrolled in a self-only option for five years to take that coverage into retirement; she only needs to have been covered by or enrolled in the FEHB program for that long. If she were to leave the government before being eligible to retire, she would receive a 30-day extension of her coverage at no cost to herself and, if she chose, enroll in her current plan or another for up to 18 months under the temporary-continuation-of-coverage provision. If she did so, she’d be required to pay 100 percent of the premiums plus 2 percent for administrative costs. Alternatively, and a much more sensible choice, during a health benefits open season before she resigns from the government, you could switch to a self-and-family option of your plan. During the next open season after she began receiving her deferred annuity, the two of you could switch back to self-only options.

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Military buyback and special retirement supplement

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Q. I retired from the Army after 20 years. I am a GS-13 with 14 years. It will cost me $14,203.39 to buy back 20 years military time. (The calculations have been done.) I plan to retire at 62. If I buy back the 20 years, when will my military retirement check stop: immediately, or when I eventually retire from the government?

I am 56 years old. Will I be eligible for 14/40ths of what my Social Security will eventually be for each month until I turn 62?

A. You can wait until shortly before you retire to waive your military retired pay. To estimate the amount of your special retirement supplement, use the following formula: your Social Security benefit at age 62 x your total years of FERS service (rounded up to the next higher year) divided by 40.

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VSIP

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Q. Can an agency direct an employee not to submit a retirement packet prior to its Voluntary Separation Incentive Pay decision? Does an agency decision to grant VSIP affect an employee’s ability to pursue optional retirement?

I’m a FERS employee with the Defense Department and was eligible for MRA+10 effective December 2011. My agency deemed my position surplus in 2011 and offered VSIP and Voluntary Early Retirement Authority to separate in 2012. I’ve opted to retire under MRA+10 effective Sept. 30, and to request VSIP. (I’m ineligible for VERA.) I’m prepared to submit my retirement packet to the Army Benefits Center-Civilian, but my agency says I’ll be disqualified for VSIP if I submit it prior to receiving the agency’s decision on VSIP.

A. You can put in your retirement application any time you feel like it. However, your agency is correct. If  you do that before a decision is made about a VSIP, you wouldn’t be eligible to receive it. The VSIP is intended to encourage employees to retire who had not yet made up their minds, not to reward those who have already taken steps to do so.

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Annuity calculation for part-time work

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Q. I was hired in 1985 as rural carrier relief, then converted to rural carrier associate. I became full time in January 1995. I was allowed to buy back time for 1985-89. Do I receive full credit for four years toward retirement? How is the time from 1985-89 counted?

A. You’ll find the method used to compute an annuity that includes part-time service at www.opm.gov/pubs/handbook/C055.pdf.

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Retirement and annual leave payment timing

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Q. I am a CSRS employee who plans to retire at the end of 2012 and plans to have 440 hours of annual leave, for which I wish to get paid in 2013 so it will be in my 2013 income.

I understand that I could retire Dec. 29, which is the end of the 26th pay period, and receive this annual pay in my last paycheck, which I would receive Jan. 4, 2013.

Can I retire Jan. 3 and still carry over my extra leave and get paid for that in the 27th paycheck, which would be issued Jan. 14?

A. You can retire Jan. 3 and receive a lump-sum payment for all your unused annual leave. However, if you do, your first month’s annuity will be reduced by 1/30 for each day you are still on the payroll. Note: If it helps in your decision making, lump-sum annual leave payments are rarely included in the final paycheck. They are usually made only after your personnel file has been closed out by your agency.

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Retirement after part-time federal work

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Q. I have worked as a clinical dietitian for more than 20 years (part time — 24 hours/week for the past 12). I am considering leaving to do private practice full time. How will this affect my pension, retirement, etc.? Will I still be eligible for my pension after a certain age?

A. If you don’t take a refund of your retirement contributions when you leave, you’ll be eligible for a deferred annuity at age 60.

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General versus honorable discharge and MRA

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Q. I am 55 and have five years’ military time (paid deposit for both — Army two years and Navy three years) and will have 27 years with my agency this year when I reach my MRA for FERS.

Three years of my military time were with the Navy, and I have a general discharge (two years Army is an honorable discharge). I read that the military time must be honorable and thus am concerned if my Navy time will be allowed for service credit regardless of paying the deposit on it more than eight years ago. Boy, I’d sure hate to retire in December and have someone from OPM in Boyertown, Pa., finalizing my retirement let me know I have only 29 years of creditable service (only counting Army service) and will only qualify for MRA+10 retirement. I need the Navy service to get the full 30 years’ government service credit or I will need to work another year to December 2013 to reach my 30 years under FERS to get the unreduced pension and the special supplement pay. (I was hired in November 1985).

A. Assuming your general discharge was under honorable conditions, that time will be creditable. For confirmation, go to www.opm.gov/retire/pubs/handbook.pdf and scroll to Section 22B2.1-2.

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FERS/military retirement, service computation date

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Q. I was active-duty military (Title 10) from 1988 to 1999. I joined the National Guard soon after I ended my time in service from active duty, and in February, I retired as a member of the active guard reserve (Title 32). In April, I became a federal civilian employee. I plan to retire at age 56 from FERS. This coincides with my federal MRA+10 (age 56). Can I collect a FERS retirement and a military retirement? I intend to buy back those 10 years of active duty.

Next question: Will my creditable military service (active duty title 10) time count towards my service computation date for leave purposes?

A. If you make a deposit to get credit for your active-duty service, you can collect a FERS retirement based on your combined civilian and active-duty service and reserve retired pay. Whether or not you make a deposit, you’ll get credit for your active duty service in determining your service computation date for leave accrual purposes.

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Federal retirement options

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Q. I, perhaps incorrectly, understood that a person can “declare” retiring at a time earlier than MRA and 30 years’ service, with reduced benefits (reduced pension). I’m in FERS; is this true?

A. Not exactly. You can retire at age 62 with five years of service, age 60 with 20, at your MRA with 30 or at your MRA with at least 10 but fewer than 30. In the last case, your annuity would be reduced by 5 percent for every year you were younger than 62. However, if you have at least five years of service and don’t take a refund of your retirement contributions, you can resign from the government and apply for a deferred annuity at age 62, or age 60 if you have at least 20 years of service.

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Primary and secondary insurance in retirement

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Q. I am a retired federal employee with current BC/BS FEP Code 112 health insurance and Medicare parts A and B. Which is considered primary, and which secondary? Should I expect service providers to submit claims to both?

A. Because you are retired, Medicare is primary and your BC/BS plan secondary. Yes, you should expect your providers to submit claims to both.

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FEHBP enrollment changes

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Q. My wife and I are federal employees under FERS. I will be retiring with 25-plus years of service as a federal law enforcement officer this year. I have been enrolled in self and family coverage under the FEHBP during my entire career, and my wife has been covered under my benefit plan during this period. My wife has been employed with the government for a little more than a year in a non-LEO position and plans to remain in her job at least until she reaches MRA, which will give her right at 10 years of service. I do not intend to take a survivor annuity when I retire because we made other arrangements long ago with life insurance and personal IRAs.

Based on this scenario, I have a few questions about our options during the next FEHBP open season:

1. Since I will be retired when the next FEHBP open season occurs, will my long-term eligibility for FEHBP be harmed if I drop my self and family coverage plan during open season and my wife enrolls in a self and family plan to cover us both?

2. If my wife passes away before I do and after she retires, would I be able to re-enroll in the FEHBP even though I dropped my enrollment after retiring for coverage under my wife’s plan?

3. If my wife retires at the MRA and defers her annuity, would she still be eligible to be enrolled in the FEHBP between her retirement date and when she begins drawing her annuity? If not, would I be eligible to pick up self and family coverage for both of us during this time?

4. Overall, would it be better (or easier) for me to remain enrolled in the FEHBP after I retire and continue to carry my wife on my policy? What would be the advantages and disadvantages of doing this?

5. Finally, although we are confident that I do need to take a survivor annuity because of the arrangements we have made, would we be forgoing anything important by not taking it? I know the main issue for many people is the ability of the spouse to maintain health insurance in retirement, but since my wife is a federal employee, does it really matter?

A. While I could answer each of your questions in turn, I won’t. That’s because there’s nothing to be gained by you and your wife engaging in enrollment hopping. The only sensible thing for you to is to be continuously enrolled in the self and family option of your plan. That way all contingencies are covered.

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FERS and military reserve retirement benefits

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Q. I’m under a federal employee retirement system with a mandatory retirement age of 57 as a law enforcement officer. Additionally, I already bought back approximately four years of active military service. I’m also eligible for a military reserve retirement when I turn 60 after completing 20 years of military reserve service. Would I be eligible to draw retirement benefits under FERS and the military reserve even though I have already bought back my active-duty time?

A. Yes.

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Pre-MRA retirement

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Q. In April, I will have completed 20 years of federal employment. I will be only 55 and will not have met the MRA, 56. I was told at a retirement seminar that I could still separate (at 55) and wait to apply for the postponed retirement when I reach MRA. Is this correct, or would this be a deferred retirement and would I lose my ability to renew my health and life benefits options when I reach 60?

A. Because you have at least 20 years of service, if you left before being eligible to retire, you could apply for a deferred annuity at age 60. However, you wouldn’t be able to re-enroll in the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs.

On the other hand, if you waited to retire until you reached your MRA, you could retire under the MRA+10 provision. Then your annuity would be reduced by 5 percent for every year you were younger than 60. You could, of course, defer receipt of your annuity to reduce or eliminate the age penalty. Whenever you began receiving your annuity, if your met the five-year enrollment rule before you retired, you could re-enroll in FEHB and FEGLI.

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Leave without pay and high-3

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Q. This question concerns the computation for an annuity under FERS. The high-3 method requires computing the three consecutive highest-earning years for computing the annuity payments. What effect does leave without pay (LWOP) have on that method? If you had four months of leave without pay during one of the high-3 years, is the base pay used in the computation or are the actual earnings (accounting for the leave) used in the computation?

A. Because you had fewer than six months of leave without pay, your base pay will be used, not your actual earnings.

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Windfall elimination provision

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Q. I worked from 1970 to 1984, then from 2005 to present (and still working) in the private sector. I worked for the Postal Service from July 1982 to December 2004, taking an early out with a reduced retirement annuity.

I have worked 22 years for the Postal Service and 23 years in the private sector. I want to know what I will face when I begin to draw Social Security, which I hope to do in December 2015, when I’m 62. At this point, I will have worked only 26 years in the private sector. Am I correct in having read something about needing 30 years in the private sector not to have my Social Security reduced?

A. You are referring to the windfall elimination provision, which reduces the Social Security benefit of anyone who receives an annuity from a retirement system, such as CSRS, where he didn’t pay Social Security taxes and has fewer than 30 years of coverage under Social Security. To find out how your Social Security benefit would be affected, go to www.socialsecurity.gov/pubs/10045.html.

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CSRS Offset lump-sum payment in lieu of monthly annuity

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Q. Can a CSRS Offset retiree cash in or buy out his/her monthly annuity being received for a lump-sum payment, health and survivor benefits notwithstanding?

A. No.

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FERS and early retirement annuity

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Q. I have 11 years in FERS and I’m 60. If I take early retirement, will my annuity be reduced?

A. Yes, it will be reduced by 5 percent for every year you are younger than 62.

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