By Reg Jones
Military service credit requires payment to retirement fund
April 29th, 2012 | RETIREMENT
In my April 2 column, I laid out some of the rules for getting credit for active-duty military service time in your federal civilian annuity. This time, I’ll explain how you can make a deposit to the Civil Service Retirement Fund — if you decide it’s to your advantage to claim any credit you are due.
For most of you, the decision about making or not making a deposit to gain military service credit in your annuity will be a matter of dollars and cents. You’ll have to compare the amount you owe to the retirement fund against what you would gain in increased retirement benefits over your projected lifetime.
The amount of the deposit is equal to a percentage of your military base pay, not including differentials and allowances. The percentage depends on the retirement system you are in and when the military service was performed.
If you are covered by the Civil Service Retirement System, the deposit is 7 percent of basic pay for periods of active duty before Jan. 1, 1999; 7.25 percent during 1999; 7.40 percent during 2000; and 7 percent after Dec. 31, 2000. If you are covered by the Federal Employees Retirement System, the deposit is 3 percent, 3.25 percent, 3.40 percent and 3 percent for the same periods.
If you have more than one period of service, you can pick the period or periods for which you want to make a deposit. However, to get credit in your civilian annuity, you have to complete the deposit before you retire.
In most cases, deposits are made to your agency.
If you pay your deposit within three years of being hired, you won’t be charged any interest on the deposit you owe. That same grace period applies if you are called to active duty or even if you leave your job to enter military service. When you return, a new three-year grace period begins for that specific period of service.
If your deposit is not paid within three years of your beginning or returning to civilian service, you will pay interest on the deposit you owe. Interest rates are set by the Treasury Department and have ranged from 13 percent in 1985 to 2.25 percent this year.
To find out how much you owe, fill out Form RI 20-97, Estimated Earnings During Military Service, which you can get from your personnel office or download at www.opm.gov under Find Form(s). Attach a copy of your DD-214, Report of Transfer or Discharge, or its equivalent, and mail to the finance office for your branch of service, which will verify your active-duty earnings.
If you don’t have a DD-214, fill out SF-180, Request Pertaining to Military Records, available from your personnel office or from the National Personnel Records Center website at www.archives.gov/ st-louis/. Send the form to your branch of service, which will send you a new DD-214 or its equivalent. You can attach a copy of that to a completed RI 20-97 and mail it to the finance office for your branch of service, which will send you an estimate of your earnings.
Once you have your earnings estimate, take it to your local payroll office, along with a copy of your DD-214 or equivalent, and a completed SF- 2803 (CSRS) or 3108 (FERS), also available from your personnel office or the OPM website.
Your payroll office can determine how much you owe, including any accrued interest. If the time since you left active duty has been years rather than months, the accrued interest may exceed the principal you owe.
If you do decide to make a deposit, you don’t have to make it in a lump sum. It can be made in amounts as small as $50. And it can be made through payroll deduction.
WEP question
February 28th, 2012 | RETIREMENT
Q: I was an attorney for the government from 1976 to 1982. I withdrew a lump-sum retirement and have not/will not refund deposit. I worked from 1982 to 2002 in the private sector, during which I had substantial earnings and paid applicable Social Security. In 2002 I returned to a federal job and hope to retire in November. By then I will have about 15 years of federal service of which 10 years I paid both Social Security and CSRS offset. Am I safe in assuming that I wil not suffer WEP?
A: The fact that you took a refund of your CSRS contributions and don’t intend to redeposit that money doesn’t exempt you from the windfall elimination provision. You will still get credit for that period of service in determining your eligibility to retire and in your annuity computation. The latter will simply be actuarially reduced based on how much you owe and your age at retirement.
Fit for duty
February 28th, 2012 | Disability retirement
Q: I have worked in government since April 15, 1991, and in December of that year had an on-the-job accident. I have endured four surgeries since then and the doctors want me to have a fifth. It’s now up to OWCP on the direction to go. I have been on light duty for more than a year, and my employers want to resolve this, including getting me to volunteer to retire, medical retire or even do a fit for duty. I have four more years before I am 57,and I prefer to stick it out, but if I choose to retire, what are my options?
A: Because of your age and service, you would only be eligible for involuntary retirement if your agency separated you, or disability retirement if OPM found you qualified for it.
Tags: Early retirement
Eligible but holding
February 27th, 2012 | Creditable service: CSRS
Q: I am a 57-year-old CSRS employee with 35 1/2 years creditable service. I am eligible to retire now (since June 21, 2009) but enjoy the challenge of my job, so I have stayed on. I gave serious consideration to retiring Dec. 31, 2011, but I am not 100 percent certain that is what I want to do (my wife wants to work a while longer). Am I running a risk of losing any benefits by staying a while longer? What is the minimum amount of time required after mailing my retirement application, and the effective date I retire?
A: As to your first question, at this point, no one knows what risk you are taking by staying on. Only time will tell. On your second question, you can submit your paperwork up to the day you leave work. However, prudence suggests that you let your employer know what your plans are well in advance and that you take enough time to have your application reviewed by your personnel office. The consequences of putting your application in at the last minute include having it bounce because of errors or omissions and/or delays in processing by your agency that keep you from getting your initial interim annuity payment until months after you leave.
Retirement date
February 27th, 2012 | RETIREMENT
Q: I plan to retire the last day in February. Is that a good time to retire? I was going to retire Dec. 31, 2011, but had to change the date.
A: For most agencies, Feb. 25, 2012, was the end of a pay period. By retiring on the last day of February, you’d be getting credit for the annual and sick leave earned during that pay period plus three additional days of pay and service credit. You’d also be on the annuity roll the following day.
Tags: annuity
FERS and back pay
February 24th, 2012 | Creditable service: FERS
Q: I retired Sept. 30. I have begun receiving my estimated annuity each month. When I begin receiving my FERS supplement, will it include the amounts not paid in the months after I retired but before OPM did my final annuity computations?
A: Yes, it will.
Retiring LEO
February 24th, 2012 | Creditable service: FERS
Q: I am a FERS employee who had 20 years at 6c (FF/LEO) in December. In January 2013 I will have 25 years total federal civil service (21 years 6c, 4 years non-6c, with no breaks in service). I am being told that I can retire. Is this true? OPM and retirement state “25 years of service,” not 25 years of 6c?
A: A FERS law enforcement officer can retire at age 50 with 20 years of covered service or at any age with 25 years of covered service. If you are under age 50, a combination of covered and non-covered service wouldn’t make you eligible to retire.
Tags: FERS, law enforcement, OPM
Retired military
February 23rd, 2012 | Creditable service: FERS
Q: I am 63 and a retired Marine. I started working for the VA in September of 2009 and decided not to participate in a buyback. There is a FERS deduction taken from my pay. Will I be eligible for retirement under FERS? If so, when?
A: You would be eligible for an annuity after you have completed five years of FERS service.
Tags: annuity, FERS, military service
Time to retire
February 23rd, 2012 | RETIREMENT
Q: I am 58 and have been with the government for 37 years under CSRS. My high-3 salary was achieved Jan. 18. I have read the best dates to retire are: June 30, 2012 – which is the first date the pay period ends at the end of the month for annuity to start in July; Jan. 3, 2013; in which I will receive payment for annual leave over 240 hours; or June 29, 2013 – in which I would receive 75 percent of my salary. (My 39th anniversary with the government. By waiting, I am concerned about several things: the high-3 salary changing to high-5 salary; pay freeze; and what about buyouts? If you had narrowed down your retirement dates to the above three, which would you choose, and why?
A: Only you can chose a retirement date. And you can do that by selecting the one that best satisfies your financial and emotional needs. Just remember that since you are already eligible to retire, if it looks like the law is going to change or there are freezes or buyouts, you can retire at any time before your “optimal” date.
Transitional employee
February 22nd, 2012 | RETIREMENT
Q: I am a 46-year-old letter carrier with a start date in September of 1990. However, for the first four years, I was a casual (NTE) and a transitional employee (TE). I have been a career employee since August of 1994. Does my NTE or TE time count in any way toward retirement? If I chose to retire now (before I was eligible for full retirement, 56/30 or 60/20), would I be able to retain my health insurance (at the retired employee rate)? Our NALC magazine and the post office website explains briefly the retirement process, but it’s not detailed. Any info on how much I could expect to receive monthly if I retired now would be greatly appreciated. Also, would I have to wait until age 56 years and 2 months to receive any retirement benefits or would they come now? I have $95,000 in my thrift savings account. Would I have to take a 30 percent hit on that if I took that out now upon separation? Or could I draw monthly installments without a penalty?
A: Neither your NTE or TE employment count toward retirement. Because you don’t meet the age and service requirements, you can’t retire now. You could, of course, resign and apply for a deferred annuity. Because you have at least 20 years of service, you could do that at age 60. However, deferred retirees may not re-enroll in the FEHB program. Note: Postal service retirees pay the same FEHB premiums as other federal retirees. They no longer pay the lower premiums enjoyed by Postal Service employees.
Tags: Postal Service