Ask The Experts: Retirement

By Reg Jones

Retirement deductions, penalty

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Q. 1) What are all the deductions that are taken out of a federal employee’s check when they retire?

2) Do these reductions stay at the same amount prior to retirement?

3) I have 33 years of service at age 51. I know there is a 2 percent penalty for each year under 55, but what about the three years I worked over 30? What happens to those?

A. 1) Federal income tax; and, depending on your situation, state tax, FEHB, FEGLI and FEDVIP premiums, savings account deductions and allotments to organizations to which you belong. If you are receiving a lump-sum payment for unused annual leave or a buyout, Social Security and Medicare.

2) I don’t understand your second question, so I’ll have to skip it.

3) If you accept an offer of early retirement, your annuity will be reduced by 2 percent for every year you are younger than age 55 (1/6 of 1 percent per month). Your annuity will be based on all your years of creditable service. Since you have 33 years, your annuity would be computed using that amount of service.

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Comments

  1. William Martin Says:
    November 14th, 2012 at 4:57 pm

    In Question 2 I think he means do health benefits employee premium stay at the same amount after retirement as they were before retirement. My understanding is that is correct. but on the other hand Life insurance cost changes drastically.

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