Ask The Experts: Retirement

By Reg Jones

Combine Postal, reserve service?

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Q. I am a postal employee looking to continue my service with the Army Reserve. Child care cost is about to pass my income level with the Postal Service. With my wife as the main bread winner, we are considering having me separate from the Postal Service to be a homemaker. I have 15 years with the Postal Service and some military time. If I enter the Army Reserve, could I combine my Postal Service years with the reserve retirement?

A. No, you can’t. There is no provision in law that would permit you to get credit for your civilian service. In order not to lose the benefit you have already accrued as a Postal Service employee, you might want to leave your retirement contributions in the retirement fund when you resign. Then, at age 62, you could apply for a deferred retirement.

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Earnings limit

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Q. I am a retired Marine veteran with 27-plus years of service. I have been employed since in 2004 (the same year I retired from the Marine Corps). I am employed with the Federal Bureau of Prisons.

Am I allowed to draw Social Security benefits since I retired from the military? And can I still work at my present employment while collecting Social Security? I enlisted in the Marine Corps in November 1975 and retired in February 2004. I am 55 years old.

A. While you could apply for a Social Security benefit at age 62 while still working, you would be subject to the Social Security earnings limit.

That limit would reduce your Social Security benefit by $1 for every $2 you earned above the annual limit. In 2012, that limit is $14,640.

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Offset payment denied

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Q. Since retirement and receiving pension from CSRS Offset at age 59, the offset was applied at age 62. Can I be denied payment of the offset amount by Social Security? Denial was based on my current self-employment with an income higher than the minimum level for early retirement. I am qualified for other retirement benefits at age 66.

A. Yes, if you exceeded the Social Security annual earnings limit. It reduces your Social Security benefit by $1 for every $2 you earn above the limit, which is $14,640 in 2012. If you had reached your full Social Security retirement age, the reduction would have been $1 for every $3 above a different limit, $38,880.

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Special retirement supplement

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Q. I am a foreign service officer and plan to retire at age 51 under FSPS (similar to FERS). FSOs may retire as early as age 50 if they have at least 20 years of service. I had understood that the Social Security earned income limit (currently $14,160) would be applied to my annuity supplement (like FERS supplement) after my first year of retirement.

However, another FSO who is already retired told me that her tax accountant told her that income over the $14,160 earned income limit does not reduce the FSPS annuity supplement until the retiree reaches 56 years old. In essence, then, a retiree receiving the FSPS annuity supplement should be able to earn as much as he wants in another job without fear of reducing their FSPS annuity supplement, as long as he is under age 56. Is this true? I cannot find confirmation of this information on any State Department or other federal government website. My retirement counselor at the State Department is not aware of this issue.

A. The special retirement supplement isn’t subject to the Social Security earnings limit, which only applies to earnings from wages or self-employment. The 2012 limit is $14,640.

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Social Security quarters

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Q. I worked for the Department of Corrections as an officer for 18 years. I had a private retirement plan, so the department didn’t pay into Social Security. Then I had a medical retirement. Will I still receive any benefits? Prior to working for the department, I had worked and accumulated 38 quarters, which didn’t amount to much money. Do I still also have to get to 40 quarters?

A. No, you won’t receive any Social Security benefit unless you have 40 credits. To get the additional two credits you need, you’d have to earn $2,260 in wages or self-employment in 2012. Next year, that amount will be a little higher.

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CSRS Offset

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Q. I retired as a federal employee in 2007. I took an early-out and am receiving my pension. I was CSRS Offset. I am working full time at a local school district and am 58 years old. The way I understand what I’ve read so far is that when I turn 62, using the formula that has been in your other responses, Social Security will be paying about $550 of my annuity payment.

I will have 28 years of Social Security payments when I reach 62. My Social Security benefit at that point, should I retire, will be 20 percent less than full payment minus the $550 that goes toward my annuity, plus I would be hit with a percentage for the windfall elimination provision? If that’s correct, it sounds as though it would be to my advantage to work until at least age 64, when I’ll have 30 years of paid Social Security, so as to not have to pay the windfall, or until full retirement at 66. Is that right?

A. There’s a calculator at www.ssa.gov/retire2/anyPiaWepjs04.htm that can help you determine the amount of the offset in your CSRS annuity that will occur when you are eligible for a Social Security benefit at age 62.

Three things to keep in mind: First, that reduction will happen even if you don’t apply for a Social Security benefit.

Second, the reduction will be based solely on the Social Security benefit you earned while a CSRS Offset employee.

Third, if you are still working and under full Social Security retirement age, your Social Security benefit will be subject to the annual earnings limit. If you exceed that amount, your Social Security benefit will be reduced by $1 for every $2 above the limit. In 2012, that limit is $14,640.

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FERS-RAE

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Q. I recently read that beginning Jan. 1, 2013, all new federal employees will be covered under FERS-Revised Annuity Employee, which basically means they will have to pay an additional 2.3 percent into FERS. However, per the Office of Personnel Management memo, “There are three exceptions to this general rule and the date Dec. 31, 2012, is a key date for each of those exceptions. An individual will be excluded from FERS-RAE coverage if any of these exceptions apply:

1. The individual on Dec. 31, 2012, was covered under FERS;

OR 2. The individual on Dec. 31, 2012, was performing civilian service which is creditable or potentially creditable service under FERS.

OR 3. The individual on Dec. 31, 2012, was not covered under FERS and was not performing civilian service which is creditable or potentially creditable service under FERS, as of Dec. 31, 2012, had performed at least five years of civilian service creditable or potentially creditable under FERS, including service subject to CSRS or CSRS Offset.

I am serving on active duty in the Air Force with more than five years in service (August 2007) and considering separating and seeking federal employment. Under Rule 3 above, does this count as five years of “potentially creditable service under FERS,” meaning that I will not be subject to FERS-RAE?

A. No. Under the law, you would have to have five years of civilian service to avoid the higher FERS-RAE payroll deduction amount.

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Retirement date

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Q. When is the last day of 2013 that I can retire and get a lump-sum payment for unused annual and sick leave?

A. Assuming that you are talking about retiring at the end of the 2012 leave year, the answer is Jan. 12, 2013.

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Substantial earnings

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Q. I have been reading your responses regarding the windfall elimination provision and you continually say 30 years of “substantial” earnings under Social Security.  What are considered “substantial earnings”?

I am 60 years old, with 26 years of government service and more than 16 years in private industry. I have almost 30 years that I paid into Social Security between the two. However, the earlier years were at a much lesser salary that I now make. (My earnings were $10,000 a year in the earlier years.) Does that qualify for “substantial earnings” under Social Security? Or will I have to work longer to avoid the WEP?

A. Here’s the difference. In 2012, you’d receive four credits (one year’s worth) if you earned $4,520. For those earnings to be considered substantial, you’d have to earn $20,475. To see what are considered substantial earnings in prior years, go to http://ssa.gov/pubs/10045.html.

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Social Security computation

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Q. I’m a CSRS/FERS hybrid federal retiree receiving Social Security and working part time. My earnings come close to but do not exceed the $14,000 limit. My employer withholds Social Security taxes from my earnings. Will my Social Security benefits ever increase because of my earnings? What if I earn in excess of the applicable yearly amount?

A. If you are under full Social Security retirement age, your Social Security benefit would be reduced by $1 for every $2 you earn through wages or self-employment. In 2012, that limit is $14,640. In the year you reach full retirement age, your benefit will be reduced by $1 for every $3 earned above a different limit. In 2012, that limit is $38,880. There won’t be any limit beginning in the month you reach full retirement age.

Even if you are subject to the earnings limit, the amount of Social Security benefit you are entitled to will grow every year based on your earnings and contributions to Social Security.

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Tricare for active-duty orders

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Q. I am a federal employee and am going on active-duty orders for more than 30 days, which makes me eligible for Tricare for 180 days before my deployment, during my deployment and 180 days after my deployment. Can I suspend my FEHB during that period or just the time that I am on orders for?

A. Yes. See www.opm.gov/insure/health/eligibility/tricare.asp.

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Survivor annuity and health coverage

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Q. I am a CSRS employee with more than 30 years’ service and plan on retiring in a few months. What is the minimal amount I need to put on Form 2801-110 in Section F (Annuity Election), Number 2, which states, “I choose a reduced annuity with a partial survivor annuity (equal to 55% of $_____________ a year) for my spouse named in Section E”? I saw in a related question someone had asked if all they need to put here was $1 of survivor benefit for their spouse to be covered by the FEHB insurance and the answer was yes. Putting $1 in that space actually ends up being less than $1 annuity … $0.55, right? I’m guess that’s what a lot of people do, though, who are not interested in the survivor benefit. Sorry for being paranoid. I just don’t want her to lose this health insurance benefit.

A. The minimum amount you need to designate as you spouse’s survivor annuity is $1. You’ll have to do the arithmetic to decide what number you should put in the box to achieve that. However, just remember this: You are required by law to provide your spouse with a full survivor annuity unless she agrees to a lesser amount in writing and that is notarized.

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Health insurance after previously married husband died

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Q. My friend’s husband died recently. She does not receive a survivor’s benefit because his first wife was awarded the maximum benefit in the divorce settlement. Can she keep her federal health insurance?

A. She could continue her health benefits coverage only if she was 1) receiving a survivor annuity, 2) a federal employee or 3) a retiree who was receiving an annuity based on her own federal employment.

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Retirement and health benefits

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Q. I retired at 75 percent with a mixed FED CSRS/LE retirement, was not carrying health benefits and DID NOT take a reduced annuity. I have the life insurance 3X. My wife is soon to retire at about 50 percent with 34 years (fed CSRS locked in 21 years plus FERS), and she will be over the MRA of 56. Our Blue Cross Blue Shield coverage is under her name. How should we continue health benefits? How would it affect coverage and her annuity if she DOES NOT take the reduced annuity? I am being told that her annuity is reduced because she has me covered under her health coverage. I though annuity and survivor’s benefits were one thing and health coverage was another.

A. Because you are receiving an annuity and covered under the self and family option of her FEHB plan, she wouldn’t have to elect a survivor annuity for you to be able to continue that coverage if she were to die.

If you had no eligible dependents, you could convert to a self-only enrollment. The only reduction in her annuity would be for the premiums she’d pay for the FEHB coverage. Note: Since you mentioned the U.S. Postal Service, if your wife is employed by them, she is paying a lesser amount in FEHB premiums than other employees and retirees. When she retires, she will be paying the same amount as they do.

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Annual and sick leave accrual

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Q. I’m a full-time civilian Defense Department employee in the Navy Reserve.

I’ve been involuntarily recalled to active duty under SEC 12302, Title 10 USC, for 400 days to Afghan. Will I continue to accrue annual and sick leave on active duty? Thank you.

A. No. You could accrue annual and sick leave only if you took annual leave for some or all of the time you were on active duty.

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Military disability

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Q. I know that if the military loses membership due to medical reasons, they get processed out on the technician side and apply for the 60/40. If I am a federal civilian technician and I become medically unable to return to work, am I eligible for the same 60/40 disability? I am just curious about my entitlements since I have been out of work medically almost 6 months.

A. You would have to apply for disability retirement.

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Civil service and Social Security

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Q. My wife retired from a civil service job with 31 years of service and gets a retirement check each month. She continued to work elsewhere under Social Security and now has enough quarters to get a Social Security retirement. Will she continue to get her complete civil service check and one from Social Security?

A. Assuming she was a CSRS employee, she’ll continue to receive her unreduced CSRS annuity; however, her Social Security benefit will be subject to the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system, such as CSRS, where he or she didn’t pay Social Security taxes and has fewer than 30 years of substantial earnings under Social Security.

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Military retired pay before nonmilitary retirement

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Q. I retired from the Coast Guard with 20 years of service. I have not bought any time for retirement. I know that if I buy back those 20 years, I will have 30 years to count toward civilian retirement. If I do buy it back now, what happens to my Coast Guard retirement check if I keep working for the government? I know it will stop once I retire, but what happens if I keep working?

A. Regardless of when you make your deposit, you won’t have to waive your military retired pay until you retire from your civilian job. Until you do that, you’ll continue to receive your military retired pay.

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Annual leave lump sum

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Q. I will be retiring Jan. 11, 2014, the end of the last pay period of 2013. Will I be able to carry over all my accrued annual leave, about 730 hours, at that time? I am a federal firefighter.

A. I don’t think you are asking if you can carry that leave over. Instead, you want to know if you will be able to get a lump-sum payment for the entire amount if you retire no later than close of business Jan. 11, 2014. The answer is yes.

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Sick leave credit

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Q. I plan to retire at the end of 2013. This includes two years’ Navy time, which I have paid back some years ago. My service computation date is April 1, 1974. I have a sick leave balance of 2,700 hours. My work schedule is nine-hour days Monday — Thursday and four hours on Friday. How much credit will I earn for my unused sick leave? How will not working a standard eight-hour day affect the sick leave credit calculation?

A. Your nonstandard work schedule has nothing to do with how your sick leave will be credited. You’ll get one year’s credit for 2,087 hours. And, since each month is worth 174 hours, you’ll get three more months’ credit for 522 hours. You’ll end up with a balance of 91 hours, which could be added to any days of actual employment that don’t add up to a full month and used to create an additional month or months. Just remember that those unused days are converted into the same kind of hours used for crediting sick leave. Therefore, one of those days is 5.797-plus hours long. That number is derived by dividing 2,087, the number of hours in a work year, by 360, the number of days in 12 30-day months. To assure that a retiree receives equal payments across a year, all months are treated as if they are the same length.

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