Ask The Experts: Retirement

By Reg Jones

Military buyback and RIF before vesting

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Q. I am a career conditional employee with 1½ years total civilian service time who is eligible to buy back my military time. Due to the current budget constraints, I fear that I could be subject to a reduction in force. If I buy back my time and am RIF’d prior to completing my five years of civilian service that are required to be vested in FERS, what happens to my military deposit?

A. You’ll have a choice to make. You can either ask to have that money refunded to you or you can leave it in the fund. If you ask for a refund and later return to government service, you can always redeposit the money.

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Separation before NTE date and unemployment compensation

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Q. If a federal re-employed annuitant is let go prior to his “Not to Exceed” date not for cause (i.e. to save money), is he entitled to unemployment compensation?

A. Highly unlikely because you are already receiving an annuity. However, you would have to check with your state employment office to be sure.

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Is VSIP always a lump sum?

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Q. I am 62 with 25 years of service. Since Voluntary Separation Incentive Payments have been offered in my organization, I am thinking about taking one. Do I have to take the lump sum, or can the incentive be taken in installments?

A. How the payments are made is entirely up to your agency, and, with the exception of the Postal Service, they usually make it in a one-time lump sum.

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Early retirement and annuity reduction

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Q. I am a 45-year-old letter carrier under CSRS with 25 years of service. If I accept an early retirement offer from the Postal Service, will I still be subject to the 2 percent-a-year penalty for being under my minimum retirement age? What other penalties will I face accepting a VERA at an early age?

A. Yes, as a CSRS employee, you’d be subject to the 2 percent per year permanent reduction in your annuity. Another effect would be that your annuity would be based on fewer years of service than if you’d waited until you reached age 55 and were eligible for an immediate unreduced annuity.

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VERA and special retirement supplement

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Q. I will be age 59 in May with 21 years in. How does VERA/VSIP apply? Will I be able to get the special retirement supplement until age 62, and at what age would it start?

A. The Voluntary Early Retirement Authority and the Voluntary Separation Incentive Payment are two different things. If an employee is offered a VERA, he can retire at age 50 with 20 years of service or at any age with 25. If he is offered a VSIP, he can accept the money and leave, regardless of whether he is eligible to retire.

Because you meet the age and service requirements to retire if offered a VERA or a VSIP, you could do so. Because you have already reached your minimum retirement age, you would be immediately entitled to the special retirement supplement, which would continue until you reached age 62.

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VERA eligibility

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Q. I am a federal agent with the Department of Homeland Security. I have 18 years on and am 47 years old. If the furlough goes into effect, and they offer early-outs, is there a way for me to take it? Will I lose a huge chunk of my retirement? Will the deferred annuity work for me? I have a couple of prospects for private-sector employment with great benefit packages. I just would like to know is it worth staying the last two years.

A. You don’t meet the age and service requirements for early retirement: age 50 with 20 years or at any age with 25. Your options are to stay until you are eligible for the enhanced law enforcement officer retirement benefit or leave and apply for a deferred retirement when you reach age 62, which would be computed using the standard annuity formula.

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VSIP eligibility

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Q. With 20 years of federal civilian employment at age 50, would I be eligible for Voluntary Separation Incentive Pay if it’s offered? I am under FERS.

A. Yes, because anyone who is offered a VSIP can accept it, whether or not he is eligible to retire. In your case, you have the years and service to both accept the payment and retire.

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VERAs and sick leave

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Q. If I have met the requirements for a Voluntary Early Retirement Authority being offered in 2014 (over 25 years and any age — in my case, 27 years and age 46), would I get credit in my retirement benefit calculation for sick leave. I know after Dec. 31, 2013, the full amount can be used. However, I wasn’t sure if you have to retire under “normal” circumstances and whether it was still applicable in a VERA situation. After meeting the requirement for a VERA, I know you can collect your retirement annuity immediately. Does the same hold true for the Thrift Savings Plan? Are there penalties for being under the minimum retirement age?

A. Yes, any unused sick leave would be used in your annuity computation.

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VERA vs. immediate annuity

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Q. You recently answered a question that stated there would be no point in accepting a Voluntary Early Retirement Authority offer if already eligible for an immediate retirement annuity. If, however, there is a monetary incentive involved, wouldn’t it be smarter to take the VERA to receive the cash incentive?

A. There isn’t any monetary incentive under the VERA, only with a Voluntary Separation Incentive Payment. So, my answer stands.

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VERA/VSIP offers

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Q. If a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay is offered, how can a Defense Department employee find this info if the agency does not announce the news?

A. You can’t. You’ll learn about it when the offer is made.

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Spousal health insurance

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Q. I am a federal retiree, and my husband is on my health insurance.

Will he be able to keep my health premium if I die before him?

A. Yes, if you elected a survivor benefit for him when you retired.

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Advanced annual leave

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Q. OPM’s Standard Form 71 (Request for Leave or Approved Absence) contains options for Advanced Annual/Sick Leave in addition to Accrued Annual/Sick Leave, Leave Without Pay (LWOP), etc. Due to personal circumstances, I asked my immediate supervisor for both Advanced Leave and LWOP, and he said that he while he could grant LWOP, he would not be able to grant Advanced Leave because his upper management discourages it. Can my agency legally exclude Advanced Leave as one of my leave options?

A. Yes. You’re not entitled to advanced annual leave. In making a decision, your agency may consider such factors as its need for your services, the likelihood of your returning to duty and the benefits to the agency of retaining you.

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Deducting FICA from military pay

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Q. In what year did the Air Force start deducting FICA from military pay?

A. Every branch of service began doing that Jan. 1, 1957.

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Annual leave after military service

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Q. I have more than eight years of active-duty service, and I have just obtained my first federal government job. Where can I go to find out how much annual leave I’ll be entitled to?

A. Go to www.opm.gov/StaffingPortal/vetguide.asp#ServiceCredit-Leave Accrual Rate.

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TVA work and federal retirement

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Q. I was in CSRS with Tennessee Valley Authority for 9½ years. I had a 15-year break in service and returned to work with the USPS under CSRS offset. When I retire at age 62, I will have 15 years with the USPS. Will the 9½ years I spent with TVA be added to my service time from the USPS for retirement calculation purposes?

A. No.

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Insurance after remarrying

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Q. My health insurance is carried by Rural Carrier Benefit Plan because my husband was a rural carrier for 26 years plus military time. He passed away seven years ago, and I receive a portion of his retirement pay. If I remarry, can I continue to carry the same insurance? I am 75.

A. Yes.

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Spousal death and survivor benefit

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Q. My husband of six months passed away in April 2005 while an active federal employee. His will made me the personal representative and his daughter (my stepdaughter) as alternate if I should not wish to be the personal rep. After his death, his daughter said she would be the personal rep because I asked her to since the estate would be given to his three children. After his death, I was told that I had no claim on his FERS account since we were not married for a year. But do his grown children? If not, what happens to the funds that he paid in all those years?

A. Because no one was eligible for a survivor benefit, a lump sum benefit would be payable according to the standard order of precedence, the first two of which are relevant: first, to the beneficiary he designated on a Standard Form 2808 (CSRS) or 3102 (FERS); second, to the widow.

You need to consult an attorney who can make sure the benefits are properly distributed, including any Federal Employees’ Group Life Insurance he may have had.

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High-3 and deductions

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Q. You have stated that to calculate the high-3, OPM will consider only salaries from which the government has deducted retirement contributions.

For which items will they not deduct the contributions? Social Security taxes? Medicare taxes? Medical, dental and vision insurance payments? Thrift plan payments?

I think it is fraud when everywhere it is stated “average of three highest salaries” and the actual amount is way low. Nobody told me that’s how it is calculated.

I was a title 38 physician and have retired under FERS, but I also have CSRS component.

A. First, let’s clear the deck. There isn’t any fraud. A high-3 is based on an employee’s highest three consecutive years of average basic pay, not salary. Second, basic pay is the amount you receive before any deductions are taken out for Social Security, Medicare, medical, dental and vision insurance, the TSP, etc.

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Part-time employees and retirement

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Q. I am a CSRS employee. I have 10 years of part-time service after 1986. I also have 1½ years of part-time service in 1977-78 from while I was in college.

I had heard that when OPM implemented the 1986 part-time law, it made a mistake that seriously disadvantage retirees with part-time service. I also heard there were efforts to correct that, but I hadn’t learned the outcome of those. With respect to the Q&A below from your website, does it mean OPM’s error has been corrected with respect to part-time service and the calculation of annuities? Does 55A no longer apply to the calculation of annuities for people with part-time service? If so, can you tell me where that is written? If 55A does still apply, what is the reason and effect of the change referenced by the QA below?

“Q. I have a friend who is eligible for retirement but wants to continue to work part time for the federal government in the same area. How is their retirement calculated for part time work?

“A. Tell your friend to go to www.opm.gov/retire/pubs/handbook/C055.pdf<http://www.opm.gov/retire/pu bs/handbook/C055.pdfand scroll down to Subchapter 55B. Although this information originally only applied to FERS employees, thanks to a change in the law, it now also applies to those covered by CSRS.”

A. OPM didn’t make a mistake. It interpreted the law correctly. Subsequent legislation changed the law so the treatment of CSRS retirees would mirror that of FERS retirees. To see how your part-time service would be treated, go to www.opm.gov/retire/pubs/handbook/C055.pdf and scroll to Subchapter 55B, which now applies to both FERS and CSRS retirees.

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Federal employee re-employment

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Q. I worked for the federal government for 13½ years under CSRS. I left federal service in 1990 and withdrew my contributions because I never expected to go back. However, I was recently offered a job in the federal government that is worth taking and know I would have to go under FERS.

I was fairly young when I left the federal service, so I would work at least five more years before retiring. Can I buy back my previous 13½ years of federal service, and if so, would the deposit to buy back my time be based on what I received when I left in 1990, or would it be based on FERS contribution rates?

A. Because you took a refund before March 1, 1991, you’d get credit for that time in determining your total years of service. To get full credit for those years in your annuity computation, you’d have to redeposit the refund you received, plus accrued interest. If you didn’t, you annuity would be reduced actuarially based on the amount you owe and your age at retirement. If you were re-employed, your years of CSRS service would be treated as CSRS service. Therefore, you would be placed in CSRS Offset (CSRS and Social Security) with the option of transferring to FERS.

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