Ask The Experts: Retirement

By Reg Jones

Buy back state government time?

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Q. I have 23½ years of federal service in FERS. Prior to this, I had seven years of North Carolina state government service. Can I buy back those seven years to credit toward my federal service?

A. No.

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Buying back retirement credits

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Q. I worked for the Postal Service from late 1979 until about 1991. I had a lot of personal and work-related problems and was also given a letter of termination. I decided to quit. I also tried to pursue a disability, but I dropped that because of stress and depression.

I withdrew my retirement to pay an accumulation of four months of bills and rent that I was behind in. I vaguely recall reading that there was a buyback of retirement. Is this true? I am applying for Social Security benefits. I am only 58, but, due to health concerns, am not able to work. I have 31 Social Security credits and need 40 for full benefits. If I could buy back those years of retirement, I would have the full number of credits.  I honestly don’t know how all this works.

A. If you took a refund of your retirement contributions when you left, you wouldn’t be entitled to any retirement benefit nor could you redeposit that money, plus interest, to get credit for that service unless you returned to work for the government. If you left your contributions in the retirement fund, you’d be eligible for a deferred annuity at age 62.

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VERA eligibility

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Q. My organization has been approved for Voluntary Early Retirement Authority. I am covered by FERS and will have 30 years creditable service May 24 at age 57. Am I still eligible to request a VERA after I have reached the 30-year mark?

I also have two years of temporary service that I can buy back for approximately $2,500. What would be the monthly pension amount with 30 years versus 32 years, if I purchased the two years of temp time?

A. Although you could accept a VERA, there wouldn’t be any point in doing that if you already have the age and service needed to retire on an immediate annuity. As a FERS employee, every year of additional service is worth 1 percent in additional annuity. You can figure the dollar amount using this formula: .01 x your high-3 x all years and full months of service.

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Buyback

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Q. I am 54 years old and was employed with a federal agency for 17 years from 1979 to 1996. Upon resignation to enter the private sector, I withdrew 100 percent of my CSRS contributions. If I return to full-time federal employment this year, do I have the option of buying back the creditable service of 17 years for the same amount that I withdrew in 1996? Secondly, would I be able to continue with CSRS rather than FERS upon re-employment? Would I be eligible to retire after eight more years of federal employment service?

A. If you returned to work for the federal government, you’d be placed in CSRS Offset (CSRS and Social Security) with the option of transferring to FERS. On your return, you would be able to redeposit the money you took out and get credit for your prior service. However, it wouldn’t be the amount that was refunded to you; it would be that amount plus accrued interest. If you made the redeposit, you’d get credit for your prior service in determining your total service and in your annuity computation; if you didn’t, you’d only get credit for it in determining your length of service. Either way, you’d be able to retire at age 62.

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CSRS Offset

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Q. I worked in the Postal Service from 1970 to 1977. I got back my retirement money, almost $5,000. I started working for the Veterans Affairs Department Medical Center in West Palm Beach, Fla., in 1994 and was put in the CSRS Offset program. As of May, I will have been here for 19 years. I paid back my two years of military time. I asked someone in personnel whether I should pay back my Postal Service time and she said no. She said that some of your money comes from the Offset and some from Social Security. She said I would owe too much money to pay back and it doesn’t matter, with the way the offset works. Is she correct?

A. Because you took a refund of your retirement contributions before March 1, 1991, you have a choice. You can either redeposit the money, plus accrued interest, or not do that and have your annuity actuarially reduced based on the amount you owe and the age at which you retire. I can’t tell you which way to go, but others who have faced the same decision told me that taking the reduction is the better way to go financially.

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WEP

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Q. I’m retiring in January and am a 58-year-old CSRS Offset employee with 35+ years of creditable service. My service computation date is in November 1977, although seven years were temporary civil service prior to my permanent hiring in March 1984.

1. Will the windfall elimination provision apply to me?

2. If I buy back my post-1982 temp time, will that have an effect on whether or not the WEP will apply to me? My current Social Security statement shows my SSA earnings started in 1970, if that makes any difference.

A. The rule governing the windfall elimination provision is clear. It applies to anyone who: 1) receives an annuity — in whole or part — from a retirement system, such as CSRS, where Social Security deductions weren’t taken from his pay; and 2) has fewer than 30 years of substantial earnings under Social Security. To see what the term “substantial earnings” means and how having fewer than 30 years of them would affect your Social Security benefit, go to www.ssa.gov/pubs/10045.html.

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CSRS buyback and Social Security

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Q. I have 16 years in FERS. But I worked 18 years under CSRS and received a refund for that service in 1992. If I buy back that CSRS time, will it be computed as a CSRS component that will affect my Social Security? If I don’t do a redeposit of the CSRS time, will I be free and clear of any Social Security benefit reduction?

A. While you will get credit for that period of service in determining your eligibility to retire, because you took a refund of your retirement contributions after Feb. 28, 1991, you’d have to make a deposit to the retirement system to have it used in your annuity computation. If you did, you’d be subject to the windfall elimination provision, which would reduce the amount of your Social Security benefit. If you didn’t, you wouldn’t be subject to the WEP and your FERS annuity wouldn’t be affected.

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Annuity for four years of FERS service

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Q. I am a FERS employee with two years of service. I am on a two-year term employment. When it expires, I will have four years of FERS employment. I have already bought back my four years of academy time. I am 56 and will be 58 when my term employment ends.

Can I receive a FERS retirement annuity at the end of my term employment since I will have only four years of FERS time? Or do the four years of academy time that I bought back give me eight total years of creditable service? Since I would be only 58, I understand I would have to apply for a deferred retirement.

A. No. Because you don’t have five years of actual FERS service, you wouldn’t be eligible for an annuity. If you were, you could apply for a deferred annuity at age 62.

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Break in service and buyback

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Q. I am under FERS. I worked for the Defense Department from 1987 to 1992, and left the government work. I later returned to DoD in 2005 and have been working there since. My service computation date is Aug. 23, 2000. When I left in 1992, I cashed out the retirement fund. Would I be eligible to buy back the time I cashed out in 1992 for five years of service I had accrued? If so, how could I do it?

A. Yes, you can. Just fill out a copy of Standard Form 3108, Application to Make a Deposit, indicating that you want to redeposit the money that was refunded to you, and give it to your personnel office so they can certify it. They’ll forward the form to the Office of Personnel Management. When OPM processes the application, they’ll send you a bill and instructions for making payments. You can get a copy of the 3108 in your personnel office or download a copy by going to www.opm.gov, click on Find Form(s).

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Railroad buyback

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Q. In 1985-87, I worked for the railroad and I was paying into FERS. I left without being vested in the system. Now I have completed five years in FERS. Am I able to buy the railroad retirement time of two years and apply it to my FERS? I called the railroad retirement system and they said the federal money I contributed was sent to Social Security.

A. Unfortunately, no.

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Incomplete buyback and resignation

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Q. A former federal employee was making his buyback through payroll deduction and still owed approximately $2,500. He was suspended indefinitely and, after several years, resigned. He was never given an opportunity to pay the lump sum to max his buyback. He was led to believe it would be taken out of his unused leave. Will he still be able to pay a lump sum or at least get credit for the amount he already contributed?

A. He will neither be able to pay a lump sum to complete the deposit nor get credit for the amount he already put in. Unless he returns to federal service, his only option is to request a refund. He can do that by going to www.opm.gov, clicking on Find Form(s), downloading a copy of Standard Form 2802 (CSRS) or 3106 (FERS) and sending the completed form to OPM. The address is on the form.

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Severance pay and military deposit

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Q. I have 15 years on active duty and am working toward a FERS retirement. I received a severance payment. Do I have to buy back the active-duty time or the severance pay to count the time on my present federal retirement?

A. You would only have to make a deposit to the civilian retirement system get credit for your active duty service. The severance payment is yours to keep.

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Leave without pay, military time and retirement contributions

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Q. I am a GS employee that is also a member of the Air Guard. I will be leaving on leave without pay to go through military training for roughly five to six months. How will this affect my FERS retirement and my Thrift Savings Plan contributions? Do I have to buy back my military retirement to obtain my FERS retirement contributions during my LWOP?

A. Reg Jones: You will be on LWOP-US. Therefore, you will have to make a deposit to the retirement system to get credit for that period of active-duty service.

Mike Miles: You may not contribute to the TSP while in LWOP status.

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Annuity calculation for part-time work

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Q. I was hired in 1985 as rural carrier relief, then converted to rural carrier associate. I became full time in January 1995. I was allowed to buy back time for 1985-89. Do I receive full credit for four years toward retirement? How is the time from 1985-89 counted?

A. You’ll find the method used to compute an annuity that includes part-time service at www.opm.gov/pubs/handbook/C055.pdf.

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Military time and creditable service

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Q. I am working for the Veterans Affairs Department hospital. I served six years of service with the active-duty Navy, in which I was awarded the Armed Forces Expeditionary Medal and was honorably discharged with an RE1 enlistment code after the Navy. I served 14 years Active Guard Reserve with the Army National Guard. I do not wish to sell my time back, but I want to know why my active-duty time with the Navy does not count toward my time for leave or vacation when there are fellow workers who have less time (3-4 years) that do.

A. It should count. According to the Office of Personnel Management, “For nonretired members [of the armed forces], full credit for uniformed service (including active duty and active duty for training) performed under honorable conditions is given for annual leave accrual purposes.”

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Early-out money and refunds

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Q. Can early-out money be used to pay back refunded money? Since the Office of Personnel Management sends you the option either to buy time back or not, you would have the early-out money in hand.

A. Yes, you can redeposit the amount you owe prior to the final adjudications of your claim by OPM.

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Leave without pay and involuntary recall

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Q. I am on active duty under Title 10 for a 225-day involuntary recall deployment. I am also a 15-year federal employee. Upon coming into the federal position in 2003, I bought back my four years of active-duty time, which has been applied to my FERS position. I would now like to have the deployment days added onto my federal career. I am on leave without pay. However, I am receiving differential of pay. Would I be authorized to have the deployment time calculated to my federal position? I was also informed that I would receive no evaluation or SF-50 while out of my federal position. Therefore, would a military evaluation be allowed in my federal service record for future job reference? How is leave without pay applied if I am applying for other federal jobs?

A. Because you are on LWOP-US, when you return to your civilian job, you can make a deposit to get credit for that time. While your military evaluation might be of interest to a future employer, it would only carry weight if your military assignment was in the same field and at the same level of the job for which you were applying.

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VSIP

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Q. I took my retirement money out in 1990. Can I use Voluntary Separation Incentive Pay money to pay that back? The Office of Personnel Management told me I would have the opportunity to buy back refunded money or time before final annuity payments were calculated, but I worried that if I retired, they would not count that time into my annuity before I had time to pay it back.

A. What OPM told you is correct. And, since you will have your VSIP long before your annuity is finalized, you’ll be able to make the redeposit with time to spare.

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Military time and career status

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Q. I was on active duty from September 1999 to September 2008. I was honorably discharged with 30 percent service connected disability. I became a civil service employee in December 2010 in a permanent position. I was in this position for 18 months and then transferred to a term position. It was a permanent position but switched to term when the person in it left. I was told that I could not be brought in as permanent because I hadn’t reached ‘career status’ yet, which they stated was three years as a civil service employee. I was told that had I been ‘career status,’ it would have remained permanent. Does my active-duty time count toward ‘career status’ if I buy it back? Does the fact that I have 30 percent service-connected disability have any bearing?

A. Active-duty service cannot be used to reach career status, nor does having a service-connected disability have any effect on it. You actually have to serve the time needed to meet that criterion.

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Service computation date

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Q. I am currently on active duty. Prior to that, I was employed in the federal Bureau of Prisons. What would be my service computation date: the date I began as a civil servant or the date I came on active duty?

A. For retirement purposes, your SCD would be the date you entered on duty as a civilian employee of the federal government. Your period of active duty wouldn’t be included in determining your length of service unless you returned to a federal civilian position and made a deposit to the retirement fund for that period of active-duty service.

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