Ask The Experts: Retirement

By Reg Jones

Retirement eligibility

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Q. I plan on retiring in 1½ years. I will be 56 and have 23 years federal service. I bought back my three years of military time, but I understand that I will not be able to use that unless I do 30 years. I am FERS and was born in 1958, so my minimum retirement age is 56. Will I be able to retire at 56 with 23 years of federal service?

A. You could retire under the MRA+10 provision. However, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. To avoid the age penalty, you could retire and postpone the receipt of your annuity to a later date. Note: Regardless of when you retire, you will receive credit for those years of active-duty service for which you made a deposit in determining your length of service and in your annuity computation.

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Retirement application

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Q. I am an Air Force retiree who has 13 years as a federal employee. I am eligible for MRA+10 on March 24. If I apply to retire, how long does it take to process my application for approval or what is the earliest date I can actually resign? I am considering a private sector job and they want to start in 30-45 days.

A. When you fill out the Standard Form 3107, Application for Immediate Retirement, you’ll put the date you are retiring in Section B2. It doesn’t matter how long it takes to process your application, that’s your last day of employment. I suggest that you inform your management well in advance and give your personnel office time to review the 3107 to make sure that everything is in order. Note: Since you’ll be retiring under the MRA+10 provision, you have the option of accepting an immediate annuity, which will be reduced by 5 percent for every year you are under age 62, or postponing the receipt of your annuity to a later date to reduce or eliminate the age penalty.

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VERA/VSIP and age

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Q. I have 26 years of uninterrupted federal service, am 58 years old, in FERS, no military service.

1. Is Voluntary Separation Incentive Pay ever offered without Voluntary Early Retirement Authority, or VERA without VSIP?

2. Can I, at less than 60 years old, accept the VERA/VSIP and retire if one or the other is offered?

3. If I take VERA and am not 60 years old but have over 25 years of service, will I be eligible to receive the special retirement supplement immediately or have to wait until age 60? How about under VSIP only?

4. If I take VERA and am not 60 years old, will I get a pension reduction for early retirement before age 60 with 5 percent off for each year short of 60? Or, does that get waived and my pension will be based on age 60?

A. VERAs are usually offered without a VSIP. And when both are offered, the positions covered are much broader in scope than the VSIPs, which are normally targeted. Only employees who are eligible for retirement can access a VERA. Anyone who is offered a VSIP can accept it, even if he’s not eligible to retire. CSRS employees who retire under a VERA will have their annuity reduced by 2 percent for every year they are under age 55. The age penalty is waived for FERS employees.

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Postponed annuity and unused sick leave

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Q. I work for the Postal Service. If I retire at 56 with 20 years of service after Jan. 1, 2014, and decide to postpone my annuity, what happens to my sick leave? Will I be credited with 100 percent, 50 percent or 0? If it does not count, is there any reimbursement?

A. You’ll receive full credit for your unused sick leave in the computation of your annuity. That’s true regardless of when you begin receiving your annuity. Because you’d be retiring under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. You can, of course, defer the receipt of your annuity to a later date to reduce or eliminate the age penalty.

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Special retirement supplement

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Q. I’m pretty certain if I retire with 30 years of service and at my minimum retirement age (which for me is almost 60 to have both), I will get the special retirement supplement until age 62. Is that correct?

If I have reached my MRA (age 56) with 26 years of service and retire (I believe there is a 5 percent-per-year under-62 penalty; i.e., a lot).

Under official early-out offers (Voluntary Early Retirement Authority; no penalty if at MRA, I believe), if at that time I were 57 (MRA is 56) and 27 years of service, might I get the FERS supplement? Or must one have 30 years of service to get the FERS supplement no matter what?

More simply put: Are there any scenarios where one can collect the FERS supplement with less than 30 years of service?

A. Anyone who retires at age 60 with 20 years of service or at his MRA with 30 will receive the special retirement supplement. Anyone who retires under a VERA will also be entitled to the SRS at his MRA. No one who retires under the MRA+10 provision is eligible for the SRS.

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Military buyback and postal retirement

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Q. I have been a postal Service employee for 19 years and a member of the Air Force, Air Force Reserve and Air National Guard for 26 years. I have approximately three years of active-duty time. If I buy back my military time to put toward my postal retirement, will that affect my military retirement? Also, when is the earliest I can retire/separate from the Postal Service and keep my pension, and what effect will retiring early have on my benefits?

A. First, making a deposit for your active-duty service will have no effect on your reserve retired pay. Second, the earliest you could retire is at your minimum retirement age with at least 10 years of service. Under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. MRAs range between 55 and 57, depending on the year in which you were born. Note: You could, of course, resign from the government at any time and apply for a deferred annuity. If you had 20 years of service (actual and bought back), you’d be eligible at age 60. I you had fewer than 20, you’d be eligible at age 62.

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Annuity computation

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Q. I am a registered nurse and I am considering taking a job at a Veterans Affairs Department outpatient clinic. If I work 20 years, what would my monthly pension include? I would like to know a monthly dollar amount.

A. While I can’t give you a dollar amount, I can give you the formula that would be used to determine your annuity. Here it is: .01 x your highest three consecutive years of average basic pay x your years and full months of service. To be eligible to retire, you’d have to meet one of the following age and service combinations: 62 with five, 60 with 20, your minimum retirement age with 30 or your MRA+10 (at least 10 years but fewer than 30). In the latter case, your annuity would be reduced by 5 percent for every year you were under age 62. Note: MRAs range between 55 and 57, depending on your year of birth.

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Special retirement supplement eligibility

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Q. I am a FERS employee with 20 years service at age 59. If I retire now, will I be eligible for the special retirement supplement when I turn 60, or must I still be working to qualify?

A. If you retired at age 59 with 20 years of service, you’d be doing so under the MRA+10 provision (minimum retirement age with 10 to 29 years of service). Not only would your annuity be reduced by 5 percent per year (5/12 percent per month) that you were under age 62, but you wouldn’t be entitled to the special retirement supplement.

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Excepted service retirement

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Q. I have 27 years with the government. At 23 years, I took a job with excepted service and it was not explained to me that they never offer early retirements. Is there any possibility of getting a retirement under FERS with excepted service at less than the full retirement number of years and age?

A. You didn’t mention how old you are. If you have reached your minimum retirement age, you could retire under the MRA+10 provision. However, your annuity would be reduced by 5 percent for every year you were under age 60.

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Annuity computation

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Q. Could you show the math in calculating how much I could expect to receive every month? I want to retire at 56 because I was born in 1958. I’ll have 15 years of service at that time. I earn approximately $50,000 a year.

A. Because you were born in 1958, your minimum retirement age is 56. If you retired with 15 years of service, the formula for computing your annuity would be: .01 x your highest three consecutive years of average basic pay x all your years and full months of service. However, because you’d be retiring under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62.

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Submitting retirement packet early

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Q. I have 33 years of service under FERS at age 55. I will not reach minimum retirement age until December. I would like to submit my retirement packet now. Is there a waiver I would qualify for to avoid the 5 percent-per-year penalty or that would waive the next 11 months to MRA?

A. Since you’d be retiring under the MRA+10 provision, there is no provision in law or regulation that would allow for a waiver of the 5 percent-per-year penalty. Because you have at least 20 years of service, the penalty would apply to age 60.

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Special retirement supplement

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Q. I’m planning on retiring Sept. 1 at age 56 with 25 years and 30 days in the Postal Service. I haven’t been offered early retirement. Will I be eligible for the special retirement supplement?

A. Because you’ll be retiring under the MRA+10 provision, your annuity will be reduced by 5 percent for every year you are under age 60. Further, you won’t be eligible for the special retirement supplement.

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VERA and annuity reduction

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Q. I am planning to retire Feb. 21, 2014. I will be 60 years old and will have completed 10 years and one month of service. I am prepared to take the permanent reduction for being under age 62.

1. If a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay is offered at the time of my planned retirement, would I qualify for one or both?

2. I was told that if a VERA/VSIP is offered at the time of my retirement, I could approach my leadership and ask that the 10 percent reduction be waived. I believe this was because I would be fully eligible, so the VERA would not be applicable. Is this true?  If so, how do I approach this?

A. Yes, if a VERA or VSIP was offered, you could accept it. However, if you did, it wouldn’t affect the 5 percent-per-year age penalty. That waiver only applies to early retirees who are age 50 with 20 years of service or at any age with 25. Since this is a matter of law, your agency would have no say in it.

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Deferred retirement

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Q. I am a full-time letter carrier with 25 years of service at 50 years of age. I am having health issues and have trouble completing my job. I am considering deferred retirement this month. As I understand, I’ll lose my health insurance, but I can apply for my FERS retirement at my minimum retirement age of 56 with no penalty. What is your opinion?

A. Unfortunately, you are mistaken. If you resigned and applied for a deferred retirement at age 56, your annuity would be reduced by 5 percent for every year you were under age 60 (5/12 percent per month). If you wanted to receive an unreduced deferred annuity, you’d have to wait until you were age 60. If health issues are making it difficult for you to carry out the essential elements of your job, you should apply for FERS disability retirement. If you do that, you’d also need to apply for Social Security disability benefits, otherwise the Office of Personnel Management wouldn’t review your application.

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Disability retirement

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Q. I will be 56 by mid-January. My service computation date is May 13, 1992. I am a GS-13, level 8.

I have received my 20-year pin (I bought back six years of Navy active-duty time) yet the payroll department at our Veterans Affairs medical center now tell me I only have 17 years.

I left the VA system for private business in 2003 for three years, then came back to my previous position in VA.

I left my FERS money in the system when I left. Would this make me eligible to retain those three years toward my retirement, making me have 20 years toward retirement?

I would like to retire at age 56 but do not wish to be penalized the 5 percent per year under the age of 62.

Am I eligible for a buyout? They are talking about reductions in force in our Veterans Integrated Service Network office. I am not at the VISN office but in a VA hospital.

I am a 50 percent service-connected disabled veteran.

Recently, I was in an auto accident and sustained a head injury that has greatly reduced my memory and have been under a physician’s and neuropsychologist’s care. This is the first year that I received a less than excellent rating on my evals, due to the amount of sick leave and inability to remember many of my day-to-day objectives and tasks.

Since I am responsible for all the medical technology within the medical center, I am seriously considering early retirement to keep from a negative incident occurring.

A. You could apply for disability retirement because you have enough creditable service (18 months) to do that. If you are offered a buyout, you could accept that even if you didn’t have 20 years of creditable service. If you can find out why you are getting a 20-year pin but not being credited with 20 years of service for retirement purposes, and it turns out that you have 20 years, you could accept an offer of early retirement.

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Early retirement

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Q. I bought back my military time and will have 15 years (combined military/federal service) in 2013. I am under FERS. My husband has a rare form of cancer that has left him permanently disabled and his prognosis is unknown due to the rarity of the cancer. Is it possible for me to retire early — I am 49 — and keep my benefits so that I can take care of him?

A. Unfortunately, no. The earliest you could retire would be at your minimum retirement age, which is 56. Even then, your annuity would be reduced by 5 percent for every year you were under age 62.

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VERA and annuity calculation

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Q. I am 54 and have 28½ years in with the Postal Service. My first official retirement date is July 9, 2014. However, I am being told that if I retire now with the Voluntary Early Retirement Authority, my annuity will be higher than if I wait until 56 due to the 5 percent penalty for each year I am under 62. That would give me a 30 percent penalty on my annuity. Is this correct? I just want to go the way I will have the most in my annuity.

A. The person you talked to was confused. If you retire under the VERA, your annuity will be computed using the standard formula based on your high-3 and your 28½ years of service. If you wait to retire until your official retirement date, your annuity would be calculated using the same formula and your 30 years of service. In neither case would you be subject to the age penalty.

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5 percent penalty

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Q. I will be 60 years old in February. I will have 16 years and five months of total service with Customs and Border Protection and am covered for retirement with FERS.  What does the 5 percent penalty mean “if I retire under the age of 62”? Does this apply only to my Social Security benefits or my FERS retirement? I will not ask for any Social Security benefits until I reach the age of 62. I am also retired from the military with 20 years of total service.

A. Because you have fewer than 20 years of service, you’d be retiring under the MRA+10 provision (minimum retirement age with at least 10 years of service). As such, your annuity would be reduced by 5 percent for every year you are under age 62 (5/12 percent per month). The fact that you are retired military is irrelevant.

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VERA/VSIP

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Q. I am 59 years old and will have 23 years of service under FERS with the federal government in January. If I decide to retire via Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay, will I take a penalty in my retirement pay? If so, at what percent would that be? Also, would I still receive the supplemental benefit if I leave? In filling out the form for VERA/VSIP, would I select the VSIP or VERA? Would I be eligible for the VSIP?

A. If you were to accept an offer of early retirement, you wouldn’t be subject to the 5 percent-per-year reduction for every year you were under age 62. Since you have already reached your minimum retirement age, you’d be entitled to the special retirement supplement. Only your agency can tell you if you are eligible for a VSIP. If you are, you could both accept that payment and take early retirement.

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Why keep the sick leave?

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Q. I will have 28.75 years with the Postal Service in FERS when I’m eligible to take the Voluntary Early Retirement Authority offered for Jan. 31. With half of my eight months of sick leave, I will have another four months credited to me. I will be 56 years old in January, so this is a real birthday present!

I understand that my FERS annuity will not be reduced because of the VERA. So, if my annuity is not reduced before I would retire with 30 years of service because of the VERA offer, is there any incentive to keep my sick leave before I retire?

Is that extra four months of leave advantageous to me in any way? Is retiring with 28.75 years any different from retiring with 29 years of service when an employee retires through a VERA? (I don’t plan to call in sick for the next few months. I just wondered if I still get “credit” for that accumulated sick leave).

A. I think you misunderstand what no reduction in your annuity means. It doesn’t mean that you’ll get the annuity you would have had if you’d worked for 30 years. It means that your annuity won’t be penalized by 5 percent per year for retiring before you reach age 62.

Your FERS annuity will be computed using your actual service plus half of your unused sick leave. It will only be half because you’ll be retiring before Jan. 1, 2014. Four months of sick leave would increase your annuity by 1/3 percent.

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