Ask The Experts: Retirement

By Reg Jones

Buyout options

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Q. I am 58 years old, with 24 years with Veterans Affairs Health Care System in the Midwest at GS-6. I have multiple health conditions including several brain surgeries and don’t understand all the nuances with retirement.  I have been told I’m eligible to retire in December 2014 with full benefits but would like to continue working until I’m at least 62 years old. I understand I can keep my Federal Employees Health Benefits insurance and life insurance after retirement. I have heard rumors of Voluntary Separation Incentive Pay or buyout at $25,000. I think I have several options of separating: retirement in 2014, disability, accept early buyout if offered, early retirement (am I eligible?).

I have a loan against my Thrift Savings Plan and understand it’ll have to be paid in full before I can retire. Would I be offered buyout with outstanding TSP loan? Or could I take buyout and pay off the TSP loan? What is the penalty for early retirement? If I take disability, can I still carry FEHB and life insurance? Is my grade eligible for the $25,000 buyout?  Would this be as one lump sum? Taxed? Is a buyout offered for a specific position nationally or is it up to each department and local facility?

A. You aren’t eligible for a buyout because you have a disability such that you are or would be eligible for disability retirement. As a FERS employee, if you were offered early retirement, you wouldn’t be subject to the 5 percent-per-year age penalty for being under age 62. Your annuity would be computed using the standard formula: .01 x high-3 x years and full months of service. If you were covered by the FEHB and Federal Employees Group Life Insurance programs continuously for the five years before you retire (or before the most recent early retirement authority was granted to your agency), you could carry that coverage into retirement.

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