Ask The Experts: Retirement

By Reg Jones

Retirement age

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Q. I am a federal law enforcement officer. I am aware that I can retire at age 50 if I have 20 years experience in a primary law enforcement officer position. If I have 20-plus years primary law enforcement officer experience, but separate from the government at age 47 or 48, can I still receive benefits beginning at age 50?  Would I still be able to receive my pension, health benefits, etc., beginning upon my 50th birthday? Or am I required to work for the government up until my 50th birthday?

A. If you don’t wait until age 50 but instead resign, you’d be eligible for a deferred retirement at your minimum retirement age. MRAs range between 55 and 57, depending on your year of birth.

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Deposits and redeposits, part 1

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Based on the mail I’ve been getting, there’s a lot of confusion about the rules governing deposits and redeposits to get credit for prior service in determining your eligibility to retire and having that time used in your annuity computation when you retire. In this column, I’ll deal with the rules that apply to Civil Service Retirement System and CSRS Offset employees. In my next column, I’ll do the same for Federal Employees Retirement System employees.

Deposits

The term “nondeduction service” applies to any period of federal government employment where retirement deductions weren’t taken from your pay. If you are a CSRS and CSRS Offset employee, you can make a deposit to get credit for that nondeduction service. The deposit equals the amount of the contributions you would have made to the Civil Service Retirement and Disability Fund if your job been covered by CSRS, plus accrued interest.

Retirement eligibility

If you are covered by CSRS or CSRS Offset when you retire, most kinds of federal government employment that aren’t covered by CSRS count toward the years of service needed to be eligible to retire. That includes federal government employment where only Social Security deductions were taken from your pay. It also includes employment covered by another federal retirement system, such as the Foreign Service, as long as you aren’t receiving any benefits for that time under the other system.

Annuity computation

When you performed that nondeduction service has a significant effect on the way it will be treated.

If you had any nondeduction service before Oct. 1, 1982, you’ll get credit for that time in determining your eligibility to retire; however, unless you make a deposit, your annuity will be reduced by 10 percent of the amount you would have paid into the fund, plus interest.

If you had any nondeduction service on or after Oct. 1, 1982, it, too, will be creditable for determining your eligibility to retire; however, if you don’t make a deposit to get credit for that time, it won’t be used in the computation of your annuity.

Redeposits

With one important exception, if you ever separated from the federal government, took a refund of your CSRS retirement contributions, and later returned, you’ll have to redeposit that money, plus accrued interest, before the time can be used in the computation of your annuity. However, if you don’t make the redeposit, you will still get credit for the time in determining your length of service for retirement, as well as for determining your “high-3.” Your high-3 is the average of your three highest consecutive years of pay, regardless of when they occurred in your career.

Here’s the exception: If you received a CSRS refund covering a period of service that ended before Oct. 1, 1991, you won’t have to pay the redeposit if you don’t want to. You’ll receive full credit for it in your annuity computation (unless you retire on disability). However, your annuity will be actuarially reduced based on your age and the amount of the redeposit you owe, including interest, on the day you retire.

Contribution rates

Beginning with the first pay period in January 1970, the contribution rate for CSRS has been 7 percent (7.5 percent for law enforcement officers and firefighters beginning with the first pay period in January 1975). If the nondeduction service you performed was before that date, the contribution rate will be lower.

Interest rates

Interest for nondeduction service earned before Oct. 1, 1982 (and refunded service if the application for a refund was made on or after that date) equals 3 percent. Interest for nondeduction and refunded service on or after Oct. 1, 1982 equals 3 percent through Dec. 31, 1984. Thereafter, a variable rate is applied. (In 1985 the rate reached an all-time high of 13 percent. In 2014 it’s at an all-time low of 1.625 percent, the same as it was in 2013.)

If you owe any deposits or redeposits, go to www.opm.gov/forms/pdf_fill/sf-2803.pdf and download a copy of Standard Form 2803, Application to Make Deposits or Redeposits. Once you’ve filled it out, take it to your personnel office. When they tell you how much you owe, you can decide if it’s worth the cost.

To help you make that decision, use the following formula: 0.015 x your high-3 x 5 years of service, plus 0.0175 x your high-3 x 5 years of service, plus 0.02 x your high-3 x all remaining years and full months of service.

As you can see, if you have over 10 years of actual CSRS service, each additional month of credit your get by making a deposit or redeposit is worth 1/6 percent. That’s 2 percent per year.

If you decide to make the deposit, you can pay it in a lump sum or set up a payment schedule, with payments as low as $50 a month. Just remember. The longer you wait to complete the payment, the more you’ll have to pay in interest.

Reg Jones was head of retirement and insurance programs at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com, and view his blog at blogs.federaltimes.com/ federal-retirement.

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Creditable service

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Q. I received nine years creditable service for Annual Leave accrual for non-federal work experience when first hired for federal service. A friend of mine recently told me that the creditable service will also be factored into my CSRS retirement date. For example, if I plan on retiring after 30 years of service, I would only need to work an additional 21 years for the government. I cannot seem to find anything on the internet to support his claim. Can you tell me if my friend is correct?

A: Your friend is mistaken. You wouldn’t receive any credit for that time in determining your eligibility to retire.

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Retirement penalty

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Q. If a VERA/VSIP is offered next year, will I be able to retire without penalty? I will have 29 years of creditable service as of Jan. 23. I will be 56.

A. Yes.

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COLA, FERS increase

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Q. When I retire (I will be at my MRA and 31-1/2 years on Dec. 31, 2015) and start receiving the Social Security FERS Supplement, and I start my retirement for 2016, do I receive the Social Security COLA and the FERS percentage increase each year?

A. Neither your annuity nor your special retirement aupplement would be increased by COLAs. Your annuity would first be increased by COLAs when you reach age 62. At age 62 your SRS would end and you’d be eligible for a Social Security benefit.

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Unused annual leave

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Q. I am considering retirement under the MRA+10 provision and postponing my annuity until I reach age 62. If I follow this course, am I eligible to sell back any unused annual leave without penalty?

A. Your unused annual leave will automatically be paid to you in a lump sum when you separate from the government.

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Unused leave

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Q. How soon would I receive my lump-sum payment for unused annual leave when I retire?

A. Only your agency payroll office can answer that question.

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Social Security earnings

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Q. I am 62 and would like to retire and receive my social security. What is the most I can earn per week without my benefit being cut?  Read the rest of this entry »

Minimum retirement age

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Q. I been a federal employee of 17 years now. I started my career at the age of 24 . At what age can I retired in order to receive my federal pension? Read the rest of this entry »

VSIP Amount Calculation

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Q. I received $19,100.00 severance pay in a RIF in 1996. In 2000 I was re-employed by the Federal Government. I am now considering a VSIP. What amount can I expect? I am 72 years old with 20 years of service. Read the rest of this entry »

SCD Calculation

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Q. I was in the Kentucky National Guard for 7 years and was honorably discharged in 1976. During that time I attended basic training at Ft. Bragg and advanced training at Ft. Eustis from December 29, 1968 and June 23, 1970. I am currently in the FAA as a federal employee and I am near retirement.

Does this time in the Kentucky National Guard training for almost 6 months count toward my SCD calculation? Will I need to “buy back” the time? Read the rest of this entry »

Benefits after retiring from active employment

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Q. When you stop working and start receiving pension benefits I know Federal taxes can be withheld, but I am not sure if Medicare and Social Security are still deducted. Are they?  Read the rest of this entry »

Lump sum for unused annual leave

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Q. How soon would I receive my lump sum payment for unused annual leave when I retire?

A. Only your agency payroll office can answer that question.

VERA/VSIP

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Q. Will a VERA/VSIP be offered in 2014?

A. If you are asking if they would be offered somewhere in the U.S. and its territories, the answer is yes. If you are asking if they will be offered where you work – and to you – I have no idea.

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Military Buyback and Pay Increases

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Q. I will be separating from the military in September 2014 with 11 years, six months service. I am looking to get a federal GS job where I can buy back my military time. I know this goes toward the pension plan, but does it also count anything toward GS within-grade pay increase? Read the rest of this entry »

Best retirement date

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Q. I am in the FERS system and plan to retire Jan. 9, unless Dec. 28 would be a better date? I will have a large lump-sum leave payment and want to maximize any possible salary increases (i.e. 1 percent) that might be applied to the lump sum in 2015 without losing my maximum carry-over hours. I am willing to start my annuity the following month.

A. You’ve touched all the bases in your analysis. Since you are willing to forgo an annuity in the month you retire, you’ve already answered your question: Jan. 9 is the date that best fits your goals.

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Work after retirement

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Q. I am 62 and would like to retire and receive my Social Security. What is the most I can earn per week without my benefit being cut?

A. In 2014 the earnings limit is $15,480. Your Social Security benefit would be reduced by $2 for every $3 you earn above that limit.

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FERS retirement

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Q. I have 13 years as a federal worker under FERS at GS 10. I left federal service at age 48. Am eligible to collect any type of federal retirement and how does age play a role? Read the rest of this entry »

Military buyback and re-enlisting

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Q. I have 13 years in the Air Force, all of which were on Active Duty. I separated honorably and bought back my time and now work for the Dept. of Veterans Affairs (FERS). I currently have 27 years of creditable service. If I were to re-enlist into the Air Force Reserves, would I be able to collect my military retirement after a 7-year enlistment completing 20 years of total military service, even though I bought back my 13 years of active duty time? Read the rest of this entry »

Sick leave into annual leave

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Q. I am a FERS employee with 32 years of service credit. I’m planning to retire on 6/30/14. I’m going to have around 480 hours of sick leave when I retire. Since you only get credit for a full month, I will lose around 130 hours. My HR person told me that I could get supervisor approval to change my sick leave to annual leave, not exceeding a total equal to the annual leave that I have on the books. I had never heard of that so I asked for specifics, which she couldn’t provide. Is it possible to convert sick leave to annual leave? If so, how do you do it? Read the rest of this entry »