Ask The Experts: Retirement

By Reg Jones

Buyout and LWOP

Bookmark and Share

Q. Does leave without pay status affect the possibility for buyout?  Does LWOP status affect retirement calculations?

A. Buyouts are targeted at positions or units where an agency wants to encourage employees to leave. If one were offered to you, the fact that you are on LWOP wouldn’t affect your ability to accept it. LWOP only affects your retirement calculation if it exceeds six months in any calendar year. No credit is given for LWOP in excess of six months.

Tags: , ,

Buyout

Bookmark and Share

Q.  As a career postal carrier, I understand that I am not immune to the “no layoff” clause of the national agreement since I have less than six years of service, nor am I eligible for early retirement. Would the Postal Service consider offering  voluntary layoff  buyouts for someone in my situation? Have they ever offered such buyouts in the past?

A. There is no provision in law that would permit the payment of buyouts for that purpose.

Tags: ,

Buyout changed

Bookmark and Share

Q. I am 56 years old and have been a FERS federal employee of the U.S. District Courts for almost seven years.  I was offered a $25,000 buyout along with four others in my department. I submitted my letter of intent. Today I was told that they’d made a mistake, that even though the agency head had offered me the amount of $25,000 and the paperwork had been approved, it’s now been decided that I can be offered only just under $10,000, the amount equal to or lesser than my severance pay. They said GAO won’t let them give me $25,000. This doesn’t seem right to me. I understood the buyout amount is equal to the lesser of your severance pay calculation, or $25,000, or an amount determined by your agency head.

A. Your agency is correct. It cannot give you a buyout that exceeds the amount of your severance pay. The phrase “an amount determined by your agency head” allows that official to offer anything that falls between the amount of severance pay and $25,000.

Tags:

CSRS buyout

Bookmark and Share

Q. In the event of a future buyout or within the next three months or so (February 2012):  I am 58 years of age and will have 29 years and five months of service.  My sick leave will be a little more than 200 hours.  Will it be worth taking the buyout, or will my monthly annuity be reduced for the loss of the seven months shy of 30 years of service and if so, what will be my loss (1/6 percent of a percent for each month or 1 percent in total)?

A. Let’s get one thing straight. Your annuity won’t be reduced. You’ll get everything you are entitled to based on your years and full months of service. Obviously, the more years and months of service you have, the larger your annuity will be. As you pointed out, every additional month you work will increase your annuity by around 1/6 percent. It’s up to you to decide which is a better choice, staying a few more months or accepting a buyout. I can’t do that for you.

Tags: ,

Buyout amounts

Bookmark and Share

Q.  I am a CSRS employee,  62 years old, with 34-plus years of service.  How do I figure out the amount of the VERA incentive that I will be offered?

A. First let me clear up a misunderstanding. No financial incentives are included in a Voluntary Early Retirement Authority (VERA) offer. If you are instead referring to the Voluntary Separation Incentive Payment (VSIP) program, then it all depends. That’s because your agency has the option of offering the lesser of:

1. An amount equal to the amount of severance pay you would be entitled to receive, as computed under 5 USC 5595(c), without adjustments for any previous payment made; or
2. An amount determined by your agency head, not to exceed $25,000.
So, you see, if an offer were made in your agency, it could be anything from pocket change up to $25,000.

Tags: ,

Early retirement and buyout

Bookmark and Share

Q.  I am a FERS employee with 25 years of service (including military service) and 54 years old.  I was told that our agency may be offering a buyout and wanted to know if I would be eligible to apply for it.  I was going to apply for early retirement because of the health and age of my parents, but was told to hold off applying for it because of the rumored buyout.

A. If you are offered a buyout, you are free to accept it and take early retirement. If you aren’t offered a buyout, but instead only offered an opportunity to retire early, you could do that.  If you aren’t offered either, you’re stuck.

Tags: , ,

Re-employment after buyout

Bookmark and Share

Q: I am 62 and I was a USDA-ARS employee who took a buyout in July and retired. I’m a qualified Wildland  Firefighter with a Red Card. If I were to join a crew, paid for by a state entity with pay coming from FEMA, headed to fight fire or work on flooding and hurricane duty for about two weeks, is that against OPM guidelines? I’m finding it hard to get an answer. They are asking for letters explaining payment of work. Hard to explain, since there are no contracts that I know of, only requests for crews who go on an availability list.

A: Here’s what OPM has to say: “An employee who receives a VSIP and later accepts employment for compensation with the Government of the United States within 5 years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it – before the individual’s first day of reemployment.” As such, it wouldn’t appear that your short-term employment by a state agency would fall into any of those categories, regardless of where the state money came from.

Tags: , ,

No buyout

Bookmark and Share

Q: Our organization announced it was approved for a VERA/VSIP. I applied for the VERA and was told that the agency would not offer the buyout with the VERA, due to funding constraints. I was under the impression that if the VERA/VSIP was offered, a buyout automatically came with the VERA. Am I mistaken?

A: Yes, you are mistaken. The Voluntary Early Retirement Authority is a broad-based tool that allows those who have the years and service to qualify for early retirement to do so. The Voluntary Separation Incentives Payments program is more narrowly focused. It’s designed to encourage employees who are in surplus positions or have skills that are no longer needed in the workforce to separate by resignation, optional retirement, or by voluntary early retirement. It’s goal is to get employees to leave who would be unlikely to do so without the cash payment.

Tags:

Buyout options

Bookmark and Share

Q: If offered a buyout, can an employee quit or resign from federal employment even though the employee is eligible for an immediate annuity? Can the buyout payment be extended into the next calendar year, or can the employee choose to retire early in a new calendar year and accept the buyout? How long after accepting a buyout can an employee who left federal employment, under conditions other then retirement, be rehired into federal service?

A: If you are offered a Voluntary Separation Incentive Payment, the fact that you are eligible to retire would have no affect of your accepting it during the period in which it is offered and resigning. The payment would be made under the schedule set by your agency for all buyouts. It’s unlikely that it would vary its rules for one individual. As for returning to work, here’s what OPM has to say: “An employee who receives a VSIP and later accepts employment for compensation with the Government of the United States within 5 years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it – before the individual’s first day of reemployment.” While there are exceptions to this rule, they are extremely rare.

Tags:

Buyout options

Bookmark and Share

Q: With all of the angst and uncertainty in Civil Service (i.e., pay freeze, pay retention, prospect of having to contribute more into retirement fund, etc.), I decided the heck with it and submitted my retirement papers on July 28. I will be 62 on Nov. 3 and in December will have nine years of federal service. If my DoD agency should offer a buyout in the next two or three months like several other federal departments are starting to do, am I eligible to apply for it, or would I have to pull my papers and then resubmit them?

A: The Voluntary Separation Incentive Payment program is intended to get employees who hadn’t intended to leave to do so. Since you have submitted your retirement papers, you’ve signaled that you don’t need an incentive to do that. If you withdrew your retirement papers, it would be up to your agency to decide if your position is one it wants vacated badly enough to offer you one.

Tags: ,

Early retirement

Bookmark and Share

Q.  Can I get a buyout with seven years to go before retirement?

A.  Any employee who is offered a voluntary separation incentive is free to accept it, whether or not he is eligible to retire. The purpose of the offer is to get employees to leave who wouldn’t do so without the incentive. To also be eligible to retire would require that you meet one of the following age and service criteria: age 50 with 20 years of service or at any age with 25.

Tags: ,

Buyout for temporary employee?

Bookmark and Share

Q. I am 58 with 20 years of service. In January of this year, I transferred from a permanent employee to temporary. I was told at first that I was eligible for the early retirement/buyout program. Later, I was told I was not because I am now a temporary employee. This doesn’t seem right. I’ve put in my time. I have the age. I’d like to know if perhaps I really am eligible for the early retirement and buyout.

A. No, you aren’t eligible. Because you are in a temporary position, you fail the first criterion to receive a voluntary separation incentive, which is that you must be serving in an appointment without time limit.

Tags: , , ,

Tax rate on buyout

Bookmark and Share

Q. I am a Civil Service Retirement System federal employee who is considering taking the Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay offered if I am approved. Are you taxed at a higher percentage rate on the $25,000 than you are taxed on your regular salary? According to the tax bracket table, my salary is taxed at 25 percent or 28 percent.

A. Buyout incentives are taxed as ordinary income, just like your wages.

Tags: , , , ,

Buyout

Bookmark and Share

Q.  I am 54 years old,and have 34 years’ service. I don’t want the early-out my agency is offering. However, since my agency is offering buyouts, can I get the buyout at only 54 years old?

A   If a buyout is offered, you can accept it at any age. However, unless you meet the age and service requirements to retire, you’d have to take the money and apply for a deferred retirement at age 62. You could only retire if your agency coupled the buyout with an offer of early retirement.

Tags: ,

Eligible for more than one buyout?

Bookmark and Share

Q. I am enrolled in CSRS Offset. I received a VERA/VSIP buyout in 2001 and returned to work in 2008. I am 56 years old and have 28 years of federal service. I indicated on the recent survey that I would accept a buyout if offered. I am now told that I am ineligible for a buyout because a person can only receive one buyout in their lifetime.  Is there any regulation that states an employee can only receive one buyout?

A. Your agency is correct. For confirmation, go to www.opm.gov/employ/html/vsi.htm.

Tags: ,

Submitting retirement application amid VERA/VSIP

Bookmark and Share

Q. I am an Air Force AFMC civilian employee and am planning to retire by Sept. 30.  I have been holding my application pending AFMC’s possibility of offering buyout incentives (VSIP) to eligible retirees.  My question is, do I have to wait until a VSIP is actually offered before I submit my retirement application to OPM?

A. Yes. The purpose of a buyout incentive is to encourage employees to retire, not to reward those who have already made up their mind and submitted their retirement papers..

Tags: ,

Buyouts for 2011 and 2012

Bookmark and Share

Q. Are there any planned buyouts for 2011 or 2012.  If so, for which agencies?

A. We don’t keep an inventory of current offers, nor do we have advanced knowledge of future ones. I suggest you continue to visit our website and, better yet, subscribe to the Federal Times to be sure you have the latest information.

Tags:

Update on early retirement?

Bookmark and Share

Q: I work at Kirtland Air Force base, N.M. A Voluntary Separation Incentive Pay/Voluntary Early Retirement Authority survey was sent out in May with a suspense date of May 21 to show interest. I completed the survey and received confirmation that it was received. The VSIP/VERA is scheduled for fiscal year 2011/2012. It’s been more than a month and I haven’t heard anything.  I’d like to know for planning purposes; I am a Civil Service Retirement System employee with 33 years’ experience. Are you aware of any details or rulings?

A: We haven’t heard a thing.

Tags: , , ,

Just one buyout

Bookmark and Share

Q: I am in CSRS Offset. I received a VERA/VSIP buyout in 2001 and returned to work in 2008. I am 56 and have 28 years of federal service. I indicated on the recent survey that I would accept a buyout if offered. I am now told that I am ineligible for a buyout because a person can only receive one buyout in their lifetime. Is there any regulation that states an employee can only receive one buyout?

A: Your agency is correct. For confirmation, go to www.opm.gov/employ/html/vsi.htm.

Tags: ,

Federal buyouts coming?

Bookmark and Share

Q: Are there any planned buyouts for 2011 or 2012? If so, for which agencies?

A: We don’t keep an inventory of current offers, nor do we have advanced knowledge of future ones. I suggest you continue to visit our website and, better yet, subscribe to the Federal Times to be sure you have the latest information.

Tags: