Ask The Experts: Retirement

By Reg Jones

Reduction to part time

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Q. I will have 18 years in FERS and I am 59. My job  will be reduced to a part-time position in September and I need to know if I should retire before it gets reduced? Should I take the hit and stay with the part-time position until I turn 60? Will the part time reduce my annuity if I stay for the following six months? Read the rest of this entry »

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Military time

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Q. I have three periods of LWOP due to military deployments over the past 11 years. I am in the process of buying back my time. I have been told that my service deposit should be calculated at a lesser rate, not the standard 3 percent, due to me being a federal employee. I cannot find information regarding the lesser percentage. Can you clarify this issue and provide a reference? Read the rest of this entry »

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Severance pay

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Q. I am 52 with 17 years in the federal government (FERS). I am not eligible to retire yet and am not eligible for a discontinued service retirement. My agency field office is closing, and I have decided to decline their directed assignment outside of my state. I am eligible for severance pay due to the fact that it is not a reasonable job offer (it is outside of my commuting area, and I am not subject to a mobility agreement). I have submitted my information and found I am eligible to receive one year’s worth of severance payments. I know that if I receive severance payments but soon after get hired into another federal job, the severance payments will stop. Read the rest of this entry »

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Health care coverage

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Q. I am a federal employee, 66 years old, planning to retire Jan. 3. I now have full coverage under Blue Cross Blue Shield for me and my husband. I understand that when I retire, I must sign up for Medicare Part A, but I am not sure about part B. If I elect to take Medicare Part B, and have BCBS as my supplement, may I still purchase my prescriptions through CVS Care Mark after I retire? Can you tell me the monthly cost for my spouse and myself to continue with full coverage under BCBS? Read the rest of this entry »

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Mandatory removal

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Q. I am a Dual Status Military Technician GS-12 and I will reach my Mandatory Removal Date in 2019 when I am 50 and not eligible for retirement yet. This will end my Federal employment as a military technician. What options are there for me to gain new employment in the federal system and what impact does my previous GS-12 grade have? Read the rest of this entry »

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Deferred retirement

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Q. I am 50 and I have been in government for 27 years. I am going to apply for a deferred retirement at age 60 or 62.  I thought I read somewhere that the “high-3″ was consecutive. If I was a GS-13 and due to BRAC had to come back into the government at a much lower grade, could I still use my high-3 including grades 11-13 or am I required to use the last grade I held?

A. Yes. Your high-3 is the highest three consecutive years of average basic pay (78 pay periods), regardless of when they occur in your career.

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Deferred vs. postponed retirement

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Q. I am a FERS (non-LEO) employee and plan to leave government service at age 50 with 26 years of service. Do I elect to defer or postpone my retirement? At what age do I draw from my retirement; 56, 60 or 62? At what age would I qualify for life insurance to be included again? Read the rest of this entry »

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TSP and taxes

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Q. I intend to make a lump-sum payment this year to pay off the balance owed to recapture my military service for inclusion of this time toward my FERS retirement. I am paying it with after-tax dollars I have saved. Can this amount be claimed as a tax credit or claimed as a tax deduction? Which document says what can be claimed or that neither can be claimed?

A. No. It can neither be claimed as a tax credit nor a tax deduction.

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Sick leave

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Q. I have an estimate of 13 years, three months and eight days service credit. I have 43 hours of sick leave accrued. I’ll accrue 40 more by retirement. Would I be better off using them as needed for medical appointments as they will not add any time to service credit?

A. Assuming that your numbers are correct, those hours wouldn’t add up to the 174 needed to create an additional month and be used in your annuity computation.

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Civil service redeposit

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Q. My wife was told she could apply for a redeposit of service credit funds. The state agency she worked for has a program that let’s her file for retirement on funds she withdrew. This program will then take a portion of her monthly retirement to repay the withdrawn amount. I worked for the Defense Department civil service from 1977-1991 but withdrew all funds. Does the civil service retirement system have a similar program?

A. No, it doesn’t. You could only redeposit that money if you returned to work for the federal government.

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Retirement coverage

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Q. I plan to retire in approximately a year at age 55. I have been covered by my wife’s insurance and we thought that I could stop coverage with my wife in the next open enrollment and go on FEP, but they told me in my office that I had to have five years on FEP before I could have coverage upon retirement. Is this true? Why wasn’t this ever brought to my attention? Do I have any options? Read the rest of this entry »

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Disability retirement

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Q. I am an injured postal worker and I have many  conditions that  have accrued as a result of my past 12 years at the Postal Service carrying mail. I just met with the surgeon who did my last carpal tunnel surgery, and he told me that I should start exploring my options and consider medical retirement. Where do I begin to start the ball rolling and who do I need to get in contact with to help me through this difficult time?

A. Download a copy of Standard Form 3112 (Documentation in Support of Disability Retirement), available at www.opm.gov/forms. Take it to your personnel office, which is responsible for helping you complete the form and guide you through the application process.

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Sudden retirement

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Q. My mother is 66 and a letter carrier with 32 years of employment with the Postal Service. She loves her job, but as cuts are made and demands are harsher, she was wondering what would happen if she were to go to work one day and decide she wants to retire immediately. She wants to be sure that she could still get her accrued annual in a lump-sum payment. She als wants to know how long would it take for her to start receiving benefits? Read the rest of this entry »

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Disability retirement

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Q. I work for the Air Force, and I have 35 years of actual service under CSRS and I am 62. I have confirmed from OPM that I can apply for disability retirement within a year after retiring and start receiving annuity payments. I have had FEHB for only one year so the regular retirement will not allow me to keep FEHB (five-year rule). Can I apply for disability retirement before my regular retirement, or do I have to wait until after I retire to apply? Read the rest of this entry »

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FERS annuity

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Q. I have 20 years of federal service, am 52 years old and currently work for a Federally Funded Research and Development Center. When I separated from federal employment, I was told I have an annuity based on my employment years (contributions made).

A. Assuming that you didn’t get a refund of your retirement contributions when you left, you’d be entitled to a deferred annuity at age 60.

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Cumulative Retirement

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Q. Item 19 of the LES has “Cumulative Retirement” FERS:
What exactly does this number mean? Is it just a total amount in FERS, or something else? Monthly or yearly amount at retirement?

A. It tells you how much you’ve contributed to the retirement system.

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Military service time

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Q. I served eight years in the Navy Reserve and was honorably discharged. How do those years count toward retirement if I become employed by a federal agency?

A. Only time where you were called to active duty in the service of the U.S. would be creditable, and then only if you made a deposit for that time.

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Buyback on terminal leave

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Q. I have 28 years of active-duty service in the Navy. I am on terminal leave and just started working as a civilian federal employee. Can I buy back my military service while on terminal leave to get credit in the federal service without losing my military retirement once my terminal leave is over and I am fully retired from the military? Read the rest of this entry »

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Seniority

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Q. Does a person have seniority when two people in the same section are applying for the same job? Both have the same experience, one from active duty and retired from active duty of 23 years. But he will only have two years as a federal employee in August 2014. The other has 12 years federal service and 11 years active duty. Both are a GS-07 and looking to apply for a GS-09. I realize management has the right to hire anyone who they feel is qualified. Read the rest of this entry »

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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 average 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 pre-Oct. 1, 1982 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 qustions to fedexperts@federaltimes.com, and view his blog at blogs.federaltimes.com/ federal-retirement.