Ask The Experts: Retirement

By Reg Jones

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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Furloughs vs. buyouts

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Q. Can someone explain why furloughing workers would be the first step to save money? I would think  buyouts would be first. There are thousands of CSRS employees just waiting for a buyout; why aren’t they being offered?

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Buyout likelihood

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Q. I am a federal employee under CSRS with 40 years of service this year for the Veterans Affairs Department at age 60. I am the only person at my facility doing my job and the only one in this facility with full knowledge of my job task and responsibilities. Is there an opportunity for a buyout in this position? Do I need to ask human resources if there is a chance for buyout potential?

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Buyout eligibility

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Q. I’m retiring at the end of this month. If there were to be an announcement of a buyout before 5 p.m. of my last day, would I qualify? I’m 62 with 29 years in the Postal Service.

A. Highly unlikely because the purpose of a buyout is to encourage employees to leave who wouldn’t do so without a financial incentive. Since you have already made the decision to retire and are on the verge of departing, your agency would have no reason to either offer or approve a buyout for you.

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VSIP and reinstatement

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Q. If a federal employee takes a buyout, but then wants to return to federal service, is he eligible for reinstatement rights, or does he have to compete as though he did not have prior federal service?

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Eligibility for benefits

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Q. I am 64 with 9.5 years under FERS, but it was split up after 4.7, then a few years later I returned and now have 4.8 years. Could I retire on an immediate retirement and be able to take my Federal Employees Health Benefits along with me? I know if there was an early-out/buyout offer, I could. I was given a service computation date of Feb. 4, 2004.

A. You could retire on an immediate annuity because you are at least age 62 and have at least five years of service. And you could carry your FEHB coverage into retirement if you were enrolled in the program for the five consecutive years before you retire. That break in service doesn’t matter if you were enrolled in the program when you left government and immediately re-enrolled when you returned, and the total of those two enrollment periods equals a minimum of five years.

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Retirement options

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Q. I am so totally lost in all of this early retirement and buyouts and furloughs. I have 33 years of service with the government and am 55 years old under CSRS. Not sure which to apply for or wait until our office gives us reduction-in-force notices if our office is going to reorganize, restructure. Would I be eligible for early buyout with full benefits come May?

A. You really are lost! However, everything should be clearer when I tell you that you can retire anytime you want to. That’s because you have the age (55) and service (at least 30 years) needed to do that. As a result, you can keep working, retire now, wait until your agency offers you a buyout, or wait until you receive a RIF notice. The world is your oyster. Enjoy it.

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Special retirement supplement

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Q. I work for Customs and Border Protection. I am 59 years and eight months old with 20 years and three months of service. If I retire ASAP, can I receive the special retirement supplement? Any information for early buyouts for us? It would make more sense to give us early buyouts and not furlough the front-line officers.

A. If you are a law enforcement officer, you can retire at any time. If you aren’t, you can only retire under the MRA+10 provision unless you are offered an early retirement opportunity by your agency. If one is offered, you’ll learn about it before we do. As for the special retirement supplement, you’d be eligible to receive it as a retired law enforcement officer or as someone who retires under the Voluntary Early Retirement Authority. If you retire under the MRA+10 provision, you won’t.

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Buyout eligibility

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Q. If I decided to retire this year and submitted my retirement paperwork already… If my agency came along later and offered a buyout, would I be eligible for that buyout?

A. Highly unlikely, since the purpose of a buyout is to encourage people to leave or retire who wouldn’t do so without a financial incentive. However, the decision is up to your agency. And their decision is final.

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VSIP

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Q. Is Voluntary Early Retirement Authority offered to those who are already eligible to retire? Does VERA apply to your high-three calculation for retirement?

A. It’s clear from your questions that you are asking about the Voluntary Separation Incentive Payment, not VERA.

According to OPM, “The Voluntary Separation Incentive Payment Authority, also known as buyout authority, allows agencies that are downsizing or restructuring to offer employees lump-sum payments up to $25,000 as an incentive to voluntarily separate. When authorized by the Office of Personnel Management (OPM), an agency may offer VSIP to employees who are in surplus positions or have skills that are no longer needed in the workforce who volunteer to separate by resignation, optional retirement, or by voluntary early retirement, if approved.” As such, a VSIP can be offered to someone who is already eligible to retire.

Receiving a VSIP would have no effect on your high-3, which is based solely on your three highest consecutive years of average basic pay.

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Wait before re-employment

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Q. I plan to retire this year under CSRS. I am interested in obtaining a seasonal position with the Internal Revenue Service. I will not receive a buyout. How long do I need to wait to be re-employed by the federal government?

A. You would have to be off the rolls for three days. FYI: If you take a federal job after retiring, the salary of your new position may be offset by the amount of your annuity. Before taking a seasonal job with the IRS, you’ll need to check with their personnel office to see if that rule will apply to you.

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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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56 or 57?

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Q. In reviewing many of your comments, it is fairly clear that if one were to take advantage of the Postal Service buyout, one would not receive the Social Security bridge supplement until the minimum retirement age is reached. I thought one had to serve one year following the year in which they reached their MRA to receive the bridge. Am I mistaken?

Our specifics are:  A postal worker, age 50, with 25 years of credited service, having been offered the buyout. If she does not take it, will she have to work to age 57 or 56 to retire and be able to claim her SS bridge benefits? If she takes it, will her SS bridge benefits begin at age 56 or 57?

A. Because you were born in 1962, your MRA is 56. If you accept an offer of early retirement, that’s the age at which you’ll be eligible for the special retirement supplement. If you don’t take the offer, you would first be eligible to retire and receive the SRS when you are 56 and have 30 years of service.

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Special retirement supplement

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Q. I am a 60-year-old FERS employee with 19 years at the Postal Service and four years of military service. I have taken the buyout and will retire Jan. 31. Do I qualify for the special retirement supplement?

A. Yes.

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Discontinued service retirement

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Q. I’m 60 with 24½ years of service. I was gone on detail and my position was filled with a permanent employee. So we are now both in the same position on the org charts. They are having me do the work no one wants to do, like a directives project that was due in 2009. I have been waiting for a buyout, but can they offer me a discontinued service out and are there any benefits?

A. No, they can’t. The only way you’d be eligible for a discontinued service retirement is if your agency officially proposed to separate you, either for poor performance or through such action as the elimination of your position.

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Resign with 13 years?

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Q. I’m a 67-year-old distribution/sales and service clerk. I will have 13 years of service by November. Does this mean I can’t take the retirement incentive? And exactly what do they mean when they say “resign”? Would I be losing any benefits if I resign instead of retire?

A. Resigning would make no sense. Any 62-year-old employee with at least five years of service can retire on an immediate annuity. Therefore, if you were to accept a buyout, you could retire at the same time. If you had been enrolled in the Federal Employees Health Benefits plan and Federal Employees Group Life Insurance programs for five consecutive years before you retire (or at least before the buyout was offered), you could carry that coverage into retirement.

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Buyout and taxes

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Q. I have more than 24 years’ federal service, am 65 and recently was offered a $20,000 buyout. When I received the printout for the buyout, it showed I had two exemptions not considered or computed for the federal tax and I was charged the full 25 percent federal tax, $5,000. The normal state tax with two exemptions, along with Social Security and Medicare, were taken out at the usual rate with two exemptions. Should my two exemptions have been figured into and deducted from the deduction?

A. The 25 percent federal tax deduction is automatic and is taken from every buyout payment.

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Resignation vs. retirement

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Q. The person who processes retirements at my agency told me that I could not retire with 32 years at 51 years. I am an offset employee under CSRS. I thought the Office of Personnel Management indicated that if you retire before 55 years of age, you are penalized 1/6 (no more than 2 percent for the first year and 2 percent for every after for being under 55.

So, I resigned. It’s only been a few days. The agency person said I could only retire at this age if they were offering a buyout. That seems right because I was offered a buyout about 15 years ago.

Can I file for retirement, get my benefits and health care, dental and vision care.  I think this person has it wrong. Can you explain to me?

My start date was January 1979 and I had a break of one year in 1983, but I had already worked more than four years when they put me in CSRS Offset.

Can I change my resignation from this agency to file formal retirement to Boyers, Pa.?

A. You could only retire before age 55 if you were offered either early retirement or a buyout. Anyone offered early retirement may do so if he is age 50 and has 20 years of service or at any age with 25. The annuity of that employee would, as you pointed out, be reduced by 1/6 percent for every year he was under age 55.

Any employee who is offered a buyout can accept it, regardless of whether he is eligible to retire. If he qualifies under the early retirement age and service requirements, he can do so. If he doesn’t, he can simply take the money and resign.

Because you resigned before being eligible to retire and had at least 20 years of service, you could apply for a deferred retirement at age 60. For the present, you would be able to continue your health and life insurance for 31 days at no cost to you. After that, you could continue your health insurance coverage under the temporary continuation of coverage provision for 18 month by paying 100 percent of the premium cost plus 2 percent.

Your life insurance would expire unless you decided to convert to an individual policy. Deferred retirees may not re-enroll in the health or life insurance programs.

Since you weren’t eligible to retire, you may want to approach your agency and ask if they would be willing to reinstate you.

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VSIP and annual leave cash-out

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Q. My agency is contemplating a buyout but wants everyone off the books by Dec. 31. I would think it would be beneficial to retire on a date that would roll any buyout payment and any annual leave lump sum into the following tax year, when income would be lower. Am I correct that retiring on Dec. 29 would place me on the annuity role in January, and my Voluntary Separation Incentive Payment buyout and annual leave lump sum would be 2013 income?

A. Yes.

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Buyouts and annual leave

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Q. In the last buyout the clerks had for $15,000, one of our clerks took that and said that she got paid for the holidays after her retirement date if her annual leave would have taken her through those dates. Back then, the retirement date was the end of November and she got paid for Christmas, New Year’s and Martin Luther King Day. Does this benefit apply all the time when a person retires, or is it just when a buyout is offered?

A. Yes. Unused annual leave is projected forward as if you were still on the job and paid at the hourly rate in effect at the time. For example, if an across-the-board pay increase occurred, any hours of unused annual leave that fell on or after that date would be paid at the new hourly rate. Note: No credit is given for step increases you would have received if you were still on the job.

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