Ask The Experts: Retirement

By Reg Jones

Catch-62 questions

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Q. I retired in 2010 with 40 years of service, including four years of military service (1972-1976) that I did not pay back. While I am 62 and don’t qualify for Social Security yet, I recently received a notice that I now qualify for survivor benefits. Will this affect my CSRS annuity? Second, is the one-time Catch 62 check at age 62 in law or process? My concern is that if it is process, then it could easily be changed because of the budget situation to check every year after age 62 or when you start to draw Social Security if you qualify after age 62.

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Catch-62

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Q. I was told I am included in the catch 62 provision. I served four years in the Air Force from 1974 to 1978 and began Postal Service employment in 1979 (to present). I’d like to retire this year. I also have 2,282 hours of sick leave, and my service computation begins in 1975.

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Catch 62 and Social Security

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Q. Can you please explain “catch 62”? Also, can you qualify for Social Security after age 62 if you fall under the parameters of catch 62? In other words, do Social Security or CSRS check your eligibility only once at age 62, or do they check periodically after age 62? Can your CSRS pension be re-examined if you qualify for Social Security after you reached age 62, i.e. age 65?

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Catch-62

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Q. I am trying to clarify Catch-62. I was hired in 1981 and I have 31 years in CSRS at age 55. I also have four years of military service that I have not bought back. If I have 24 quarters of Social Security, by age 62, will the four years of military automatically be added to my SSA quarters, thus reducing my CSRS pension? Or will I have to have the 40 quarters at age 62 beyond the 16 quarters paid while in the military?

A. Since Jan. 1, 1957, every member of the military has had Social Security deductions taken from his salary. If you had four years of service, you have already earned 16 credits. Therefore, if you earn 24 more credits, you’ll have the 40 credits needed to be eligible for a Social Security benefit. Whether that will make you subject to Catch-62 depends.

If you have not made a deposit for your years of active-duty service, retire before age 62 and are eligible for a Social Security benefit at age 62, those four years of active-duty service will be eliminated and your annuity recomputed downward. If you retire at or after age 62 and are eligible for a Social Security benefit at that time, the same thing will happen. If you aren’t eligible for a Social Security benefit at either of those points, you won’t be subject to Catch-62.

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Catch-62

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Q. I am about to retire under CSRS, under which I have worked since 1977. I am now receiving a disability pension from the Veterans Affairs Department for a service-connected disability. I was on active duty from 1969 to 1973. In the past, I had received my disability pension from the military. I have been told that my records show that my military time will count toward my CSRS retirement, but I have to pay for my military time.

I see that in the Effect of Military Retired Pay section of OPM Form 1515, for my military service to count toward my CSRS retirement, I must waive my military retired pay, or have been awarded retired pay because of a service-connected disability incurred in combat with an enemy of the U.S., or awarded because of a service-connected disability caused by an instrumentality of war, or awarded under the reserve retiree provision (Chapter 1223 of title 10, U.S. Code).

I do not plan to waive my VA pension, and I was not hurt in combat with an enemy or by an instrumentality of war. I was never in the active reserve.

Since I did not make my military service deposit years ago, to pay it now would be a hefty sum. So I want to make sure my military service will count toward my CSRS retirement.

Additional info: My service computation date leave on my leave and earnings statement includes my military service. My military service was added to my SCD leave some time in 2000. The reason I was given for the change is, it was corrected by a tiger team.

I’m 62 and I qualify for Social Security.

A. Because you were first employed by the federal government before Oct. 1, 1982, you’ll get credit for your active-duty service in determining your total length of service and in your annuity computation.

However, if you don’t make a deposit into CSRS for those years of active-duty service, you’ll be subject to what’s popularly called Catch-62. Because you are eligible for a Social Security benefit, when you retire, those years of active-duty service will be eliminated and your annuity computed without them. Note: The fact that you are receiving a disability pension from VA will have no effect on your civilian retirement. You won’t have to waive that benefit.

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Military buyback and Catch-62

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Q. I am a disabled retiree, retired by the Army at 60 percent with 19 years, 11 months and 18 days of service. I am a FERS employee with 10 years’ civil service. I am 63 and considering retirement and buying back my military time. As 90 percent of my pay comes from the Veterans Affairs Department, it seems like a good idea. How does the Catch-62 clause affect me when I file for my Social Security? Will any other areas be affected by buying back my military time? How do these rules affect me if I work after I retire?

A. Catch-62 doesn’t apply to FERS employees. It applies only to CSRS-covered employees who have been given credit for their active-duty service, haven’t made a deposit for that time, retire and are eligible for a Social Security benefit at age 62 (or when they retire, if it’s after age 62). In such cases, their annuities are recomputed to eliminate that active-duty service and reduced accordingly.

If you retire before reaching age 62, you’ll receive both your annuity and the special retirement supplement, which approximates the amount of Social Security benefit you earned while a FERS employee. If you work after you retire, the SRS will be reduced or suspended only if you exceed the annual Social Security earnings limit. This year, the earnings limit is $14,160.

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Catch-62

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Q. I moved to another base due to a base realignment and closure in 1994. I was told by my personnel office several years ago that it would be to my advantage to pay back my military time. So, trusting their advice, I paid it back. And because the interest accrued since 1986, the dollar amount tripled. I served in the Navy from 1974 to 1978.

However, I attended a retirement class for CSRS employees and was told by the instructor I didn’t need to pay it back. I do not have 40 quarters and I will not be eligible for Social Security at age 62. Is there any way I could be refunded the money I paid in? I was told no by the personnel office, but they are the same people who gave me the wrong information. Is there any advantage to my paying back my military service if I fall into the “Catch-62” scenario? I had not planned on getting another job to make up the quarters. Should I reconsider?

A. Many CSRS employees who were (or still are) subject to the post-1956 deposit option (or Catch-62) made the same payments you did because they wanted to be protected if they retired and were eligible for a Social Security benefit at age 62, or when they retired if it was after age 62. That’s because the effect was something to be avoided — having those years of active-duty service for which they got credit in their CSRS annuity computation eliminated and their annuity reduced. For some, like me, it was a gamble. I lost. As it turns out, I didn’t need to make the deposit. However, neither I nor you are eligible for a refund.

Whether you decide to go back to work in a job that will earn you enough Social Security credits to get a Social Security benefit is up to you. Because you will be retiring from CSRS, a system where you didn’t pay Social Security taxes, you’ll be subject to the windfall elimination provision. The WEP will reduce, but not eliminate, any Social Security benefit to which you are entitled.

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Military buyback and reduced Social Security

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Q. I have civil service retirement with the Postal Service. I have been informed that if I do not pay back the Social Security I did not need to pay when I was in my five years of military service, then once I am eligible for Social Security, the payback will start being deducted from that. I thought once that withdrawal started, it would not stop, even after it was paid up. Is this true? And if I pay it back in full now, my Social Security will not be touched for that at all. Is that correct? I am 58, and will be eligible for Social Security at age 62½ due to working all the quarters required.

A. First, let me correct a misunderstanding on your part. Because you served in the military after Dec. 31, 1956, you were required by law to have Social Security deductions taken from your military pay.

Now we can move on to the issue that’s bothering you. By law, any CSRS employee who retires, was given credit for his active-duty service in his annuity computation, did not make a deposit to the retirement fund for that service, and is eligible for a Social Security benefit at age 62 will have those years of service eliminated and his annuity recomputed without them. If he retires at or after reaching age 62, the reduction will occur on the day he retires.

While this “Catch-62” won’t affect the amount of your Social Security benefit, there’s another provision of law that will. The windfall elimination provision reduces the Social Security benefit of anyone who is receiving an annuity from a retirement system where he didn’t have Social Security deductions taken from his pay, such as CSRS, and has fewer that 30 years of substantial earnings under Social Security.

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Buying back multiple active-duty periods

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Q: I have three periods of military service for which I am required to pay a deposit under “Catch 62.” The first period, 1969 to 1972, I paid for when it came due in 1986. This bought me a period of about 2.6 years. I was mobilized for Operation Desert Shield/Desert Storm in 1990 to 1991, and for duty in Bosnia in 1997, for eight and seven months, respectively.

I plan to work off the additional time by delaying my retirement for 15 months or more. When I discussed this plan with our human resources office, I was told that I may not be able to keep the original 2.6 years I’ve already redeemed if I do not completely pay off all three periods of active duty. Is this true?

A: No, it isn’t true. When you have more that one period of active-duty service, you can select which one or ones for which you want to make a deposit. The time for which you already made a deposit is “in the bank” and can’t be affected by what you do about the other two periods.

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‘Catch 62′ and the WEP

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Q: I am a retiree under the Civil Service Retirement System. I had five years of military time which I did not make the deposit for and 26 years of federal service. I am not eligible for Social Security at this time. I have been told that if I return to work and qualify for Social Security, on my 62nd birthday my annuity will be recomputed and my five years of military service will be removed. Also, I was told my Social Security would be reduced to zero. Is all this true?

A: The post-1956 military service rules are simple: If you haven’t made a deposit for your period of active-duty service, you retire before age 62 and you are eligible for a Social Security benefit at age 62, those years of active-duty service will be eliminated and your annuity recomputed downward. Similarly, if you retire after reaching your 62nd birthday and are eligible for a Social Security benefit at that time, your annuity will be computed without those years of service.

The windfall elimination provision applies to anyone who is receiving an annuity from a retirement system where he didn’t pay Social Security taxes and has fewer than 30 years of substantial earnings under Social Security. The WEP reduces, but doesn’t eliminate, any Social Security benefit to which you may be entitled.

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“Catch-62″ and Social Security

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Q: When talking about “Catch-62,” you have written: “[If a Civil Service Retirement System employee] was eligible for a Social Security benefit either at age 62 or at retirement, if it was after reaching age 62, those years of service would be deducted and his annuity recomputed downward.” What is the situation for CSRS employees after age 62 if they qualify for Social Security with work after retirement?

A: There’s no problem at all. For those who are coming upon this subject for the first time, I’d better explain what we’re talking about: Anyone who served in the military after 1956 and went to work for the government in a position covered by CSRS is subject to “Catch-62.” It’s called that because if you haven’t made a deposit for that period of active-duty service, are retired and are eligible for a Social Security benefit at age 62, those years for which you got credit in your civilian annuity will be eliminated and your annuity reduced. The same is true if you retire after reaching age 62 and are eligible for a Social Security benefit at that time. As noted at the beginning of this paragrpah, becoming eligible for a Social Security benefit after either of those points in time won’t affect your CSRS annuity.

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