By Reg Jones
Q. I am a Postal Service employee under FERS. I originally planned to retire Nov. 28, 2014 to avoid another holiday season.
First, can you retire with more than 440 hours of annual leave?
Second, if I delay my retirement to the end of December and my annual leave is paid in January, will that lessen the taxes I would pay since my income would be less?
December 9th, 2013 | annuity reduction Benefits Creditable service: CSRS CSRS annuity computation Government pension offset PAY SOCIAL SECURITY spouse benefits substantial earnings taxes Windfall elimination provision
Q. Will I be able to draw Social Security if my husband is retired military and retired CSRS? I have work for more than 30 years paying Social Security tax and have been told I can’t draw. Will my husband be able to draw because he has paid Social Security tax as a self-employed contractor?
Q. I am a federal employee under CSRS enrolled in the Federal Employees Health Benefits program with self-and-family coverage for myself, my wife and my daughter (under age 26). We have been covered under the FEHB program for more than five years. My wife is also a federal employee under FERS. We also have FEDVIP vision plan coverage.
I may retire next year, which will be three years or so before my wife retires. In view of the fact that as a retiree, my FEHB premiums would no longer be deducted pretax, I am considering canceling my enrollment and having my wife enroll through her federal employment, during the current open season. Then the premiums would continue to be pretax until she retires.
However, I have some concerns about making this change.
1. Would this affect either her or me in terms of the requirement to be in the FEHB program for five years before retirement to continue coverage into retirement?
2. What documentation is required to prove participation as a covered family member?
3. Would I continue to be covered if the FEHB enrollment is through her federal employment (and later retirement) in the event that she passes away before me?
4. Would this change affect our daughter’s coverage under the plan in any way?
5. Would my wife have to provide a survivor annuity benefit for me to continue FEHB coverage if she passed first?
Are there any other considerations that I should be aware of as far as you know?
Q. A federal employee who has worked for the Social Security Administration under CSRS since 1975 has, according to the earnings and leave statement, $103,887.34 in cumulative retirement. What does that figure represent?
Q. I plan on applying soon for a FERS deferred annuity.
Nowhere have I read whether the Office of Personnel Management actually purchases an annuity from a private insurance company, creates its own version of annuities, or a FERS deferred annuity is simply a transfer of monies out of the General Fund (tax payments)? Please explain whether a FERS annuity is a private annuity contract, a public contract or just another tax payment transfer program (like the Social Security Administration).
If it is private, what insurance company is used? If it is public, is this just another transfer program from FERS current contributors?
Q. Do you know if I will have to pay Arizona income taxes on my FERS retirement benefit (Postal Service)? I am not disabled. I know I am exempt from federal income tax here in Arizona.
Q. I am looking at the Trust Fund Data of Social Security & Medicare Tax rates from the Social Security Administration website. For the year 1971-72, I see a 4.6 withholding rate under OASDI and .600 under HI.
Would a federal employee covered under CSRS in 1972 have paid the 0.6 percent into Medicare? I know they would not pay the 4.6 under OASDI.
Q. When I take Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay and I have annual leave, are they combined into one lump sum for tax purposes, or are they separate?
Q. I expect to receive a lump-sum payment for annual leave accumulated in 2012-13 in 2014. When should that lump sum be taxed?
Q. I’m retired under FERS and my husband is still working for the federal government (also FERS). He has covered his son and me with Blue Cross/Blue Shield under the family plan. His son turned 27 years old this year, and we’re trying to decide whether to drop the family plan and seek insurance as self only. The savings per month is about $60, but I think we’ll end up paying more for taxes. Is there a way to calculate this? Do you have any suggestions?
Q. My father was a retired U.S. postal carrier. My mother was receiving his survivor benefits. My mother passed away and the funeral director is asking for the civil service number. My mother had direct deposit, and the bank said it doesn’t have this information. I have not located this information in going through her files. Where can I go for this information?
Q. Regarding the recent Supreme Court case that determined that the Affordable Care Act penalty for not having health insurance was a tax. May the reduction in a Social Security retirement benefit due to the application of the windfall elimination provision penalty be characterized as a tax?
Q. My wife and I are both federal employees covered under a family medical plan in my name. I’m thinking of retiring within the year, and my wife has at least five more years to retirement. Can we change the medical insurance to her name to continue pretax payment of insurance premiums and to continue with a flexible spending account?
Q. As I understand it, everyone who has health insurance will be required to notify the Internal Revenue Service of that fact no later than February 2014, which is much earlier than tax filing date in April, and much earlier than when I usually file. How are we supposed to perform that notification since it has to be done independently of tax filing?
Q. I am a CSRS federal law enforcement retiree (age 50 with 20 years of service). Other than having paid into FICA taxes, I never paid into Social Security like present FERS employees. When I turn 65, am I eligible for both Medicare parts A and B? If not, how do you suggest I proceed to supplement my coverage?
Q. My husband will be retiring for the Postal Service in November. Should he get a spousal annuity for me, a CSRS employee who will be retiring in 2016? Will I be eligible to draw Social Security benefit from his retirement and my CSRS retirement upon his death?
Q. My special retirement supplement was discontinued due to exceeding the Social Security income limit. I have not worked this year and should be eligible for the benefit to resume in January 2014 based on zero income in 2013. I don’t understand what will trigger the payments to resume. Are they tied to my income tax filing? Will I get a retroactive payment based on eligibility if they don’t resume until after January 2014?
It’s that time of year when employees start asking, “What’s the best date to retire?” Well, there isn’t a single date that’s best for everybody. Still, there are some dates that are better than others. I’ll explain why.
Time of month
The rules governing the time of month to retire are different for CSRS and FERS. FERS employees have to retire no later than the last day of a month to be eligible for an annuity payment in the following month; CSRS employees may retire up to the third day of a month and be eligible for an annuity in the same month. However, their annuity payment for that month will be reduced by 1/30 for every day they aren’t on the annuity roll. (All months are treated as though they are 30 days long.)
Picking the wrong date by as little as one day can affect your annuity. If you are a FERS employee who retires Jan. 1 instead of Dec. 31, you won’t be on the annuity roll until Feb. 1, and you won’t receive your first month’s annuity payment until March 1. The same delay applies if you are a CSRS employee who retires Jan. 4 instead of Jan. 3.
When you retire also affects your annual cost-of-living adjustment, which is based on the month you are first on the annuity roll. For example, to receive a full COLA in 2014, a FERS retiree must retire no later than Nov. 30, 2012, and a CSRS employee no later than Dec. 3, 2012. For every month you are not on the annuity roll, your 2014 COLA would be reduced by 1/12 of 1 percent.
Unused annual leave
Most employees are limited to carrying 240 hours from one leave year to the next. Therefore, if you have a lot of “use-or-lose” leave, there’s a financial incentive for you to retire before those hours are lost because you’ll receive a lump sum payment.
To calculate that payment, your agency treats every hour of leave as though you were still on the job. Assuming that there’s a pay increase in 2014, the closer you retire to Jan. 11, 2014 (the last day of the 2013 leave year), the larger your lump sum will be because more of those hours would be paid at the higher rate.
However, unless you are willing to give up one month’s annuity in exchange for the additional annual leave hours you will gain by completing a pay period and the higher hourly rate at which all your unused annual leave will be paid, you’ll need to leave no later than Dec. 31 (FERS) or Jan. 3 (CSRS).
If you retire at the end of the year, the amount you pay in taxes will be greater than if you had retired earlier and had less income to report. But your income will be lower because you’ll be receiving an annuity, a portion of which will be tax exempt. To find out how much of it will be tax exempt, go to http://www.irs.gov/pub/irs-pdf/p721.pdf.
Questions to consider when deciding when to retire: Are you financially able to retire? Are you mentally and physically ready to retire? Consider the financial consequences and have a clear idea why you are leaving government. Then you’ll be in a much better position to pick the best retirement date for you.
Q. Is the 10 percent FERS survivor benefit reduction pretax or post-tax? In other words, if your FERS benefit is $50,000 and the spouse reduction is $5,000, is your pension income reported to the Internal Revenue Service as $50,000 or $45,000?
Q. I am under CSRS. My service computation date is Nov. 13, 1983. I have 34 Social Security quarters paid. Can I pay the remaining Social Security quarters in lump sum, or do I have to work to contribute? Will this be to my advantage?