By Reg Jones
February 2nd, 2011 | RETIREMENT
Q: I plan to retire this year under FERS and I am considering accepting a job after retirement that will put me over the earnings limit for the supplement. I understand I will lose it or it will be reduced for every year I earn too much. My question is, am I only penalized for the additional years I work? If I retire at age 56, work two additional years that eliminate my SRS, would it then be reinstated for me from age 59-62 when social security kicks in, or would it be reduced/forfeited forever?
A: The special retirement supplement is only reduced or eliminated if you exceed the annual Social Security earnings limit. If, before age 62, your earnings fall below the threshold, the SRS will be restored. At age 62, when you become eligible for a Social Security benefit, the SRS stops. This is true whether or not you apply for that benefit.
Q: I am a recent retiree, younger than 65, and have just received my final annuity computations. I expected Medicare would continue to be deducted and have now read two puzzling things: That Medicare is not taken from annuity payments, and that I must contact the Centers for Medicare & Medicaid Services to have payments withheld. By law, I understand Medicare becomes my primary payer, with my federal health plan second, when I turn 65. My question is: As a retiree under the Civil Service Retirement System, do I “owe” 1.75 percent of my monthly annuity to Medicare and must set it up now to be eligible when I turn 65? I would not like to have to pay a lump-sum payment in a few years.
A: Deductions for Medicare Part A are only taken from wages and self-employment, not annuities or other sources of income. On the other hand, if you decide to enroll in Medicare Part B, you will need to arrange to have the payment deducted from you annuity. To do that you’ll need to contact the Centers for Medicare & Medicaid Services (CMS).
Q: I am 67 years old and have 10 years of federal service. I want to work another 10 years before I retire. I worked for 15 years in government beginning in 1966 before resigning and taking the retirement money. I would need to pay $23,000 at this point to refund that money. Is it worth it, or should I remain in the Civil Service Retirement System Offset program?
A: Let me clear up a few points. First, because you took a refund of your retirement contributions before March 1, 1991, you’ll get credit for those years in determining your total years of service. Therefore, you don’t have 10 years of service, you have 25. Second, you’ll remain in CSRS Offset no matter what you do. Third, if you make a deposit, your annuity when you retire will be increased by approximately 30 percent (2 percent times each year of service over 10). Finally, as a CSRS Offset employee, when you retire and begin receiving a Social Security benefit, your CSRS annuity will be reduced only by the amount of Social Security benefit you earned while employed under CSRS Offset. It’s up to you to decide which is the best option: Make the deposit or leave things as they are.
Q: My question deals with my wife’s Social Security survivor benefit upon my death. I am 70 years old and my wife is 68. Both of us started taking Social Security when we were 62. I receive $1,663 in gross Social Security payments a month, and my wife receives $136. I worked in private industry and retired. My wife worked for the Defense Department and retired under the Civil Service Retirement System, never paying into Social Security. My question is, with these figures, if I died today, what would my wife be entitled to?
A: Any Social Security spousal benefit to which she’d be entitled would be reduced by $2 for every $3 she receives in her CSRS annuity.
Q: I am a Civil Service Retirement System Offset retiree (15 years in offset) and turned 62 in October. I [was] scheduled to receive my first Social Security benefit Dec. 22. I have contacted the Office of Personnel Management on several occasions requesting to know how much my annuity will be offset, but no one seems to know. My annuity still has not changed. Is it normal for OPM to be late in changing (offsetting) annuities of CSRS Offset retirees? How will overpayments of my annuity be handled?
A: Because you aren’t due for your first Social Security benefit check until the end of December, it’s likely that OPM will make the reduction in your January annuity payment. While OPM doesn’t provide estimates of CSRS Offset reductions, you can get a good idea about what it will be by using the online calculator at www.FEDbens.us.
Q: Where does money go after I have the maximum amount of time under the Civil Service Retirement System? I am still working at the U.S. Postal Service.
A: After a CSRS employee has 41 years and 11 months of service, he is entitled to the maximum amount of earned annuity, which is 80 percent. If he continues to work, contributions will still be deducted from his salary; at retirement, he can either receive a refund of those contributions or use the money to buy additional annuity which, like unused sick leave, isn’t subject to the 80 percent limit.
Q: I am a Civil Service Retirement System Offset annuitant hired in 1968. In 1985, our branch of government was taken over by the private sector. The private sector bought all of my federal service. In 2002, there was a reduction In force. I was eligible for an early retirement at age 51 and therefore receive two retirement checks: One for federal service and the other for my time purchased by the private sector. As a CSRS Offset employee, at age 62 I am subject to the Offset Social Security calculations but also have the same time purchased by the private sector. What type of Social Security will I be entitled to?
A: You will receive a Social Security benefit based on all your Social Security-covered employment. However, because you were covered by CSRS Offset (CSRS and Social Security), your CSRS benefit will be reduced by the amount of Social Security benefit you earned while covered by CSRS Offset. To find out what that reduction would be, go to www.FEDbens.us and use the handy software you’ll find there.
Q: What are the available annuity options for a federal employee with 19 years of service under the Foreign Service Retirement and Disability System (FSRDS) and an additional 21 years under the Civil Service Retirement System? A former spouse has an entitlement for the 19 years under FSRDS, and a current spouse has entitlement for the 21 years in CSRS. Is there an option for two separate annuity computations? Also, what are the various benefits included in a lump-sum payment from the Office of Personnel Management?
A: If you don’t take steps to combine your service, you would be eligible for a FSRDS deferred annuity at age 60. Because you have at least 20 years of service, you’d be eligible for an immediate CSRS annuity at age 60. You could also retire under the minimum retirement age plus-10 provision when you reach your MRA, which ranges between 55 and 57 depending on your year of birth. However, your annuity would be reduced by 5 percent for every year you were under age 62 unless you postponed the receipt of your annuity to a later date.
As to your final question, basically there are two kinds of lump-sum payments. One is for unused annual leave and is paid either when you resign from the government or retire. The other is a refund of your retirement contributions if you resign from the government before being eligible for a retirement benefit.
Q: I am a term employee in the Labor Department covered by Blue Cross/Blue Shield. My term ends Dec. 20. I am also a surviving spouse of a federal employee who was covered under the Civil Service Retirement System. I elected to not take health insurance under the annuity about 15 years ago. I would like to continue my current coverage; can my coverage be converted to the annuity coverage? I am a career status employee with approximately 13 years of federal service, 11 years under CSRS, and I elected not to be included in the Federal Employees Retirement System when I received my current two-year term appointment.
A: Unless you have a minimum of five years of continuous coverage under the Federal Employees Health Benefits program when you are separated from the government, you will not be able to continue that coverage. However, under the temporary continuation of coverage provision of law, you would be offered the opportunity to maintain that coverage for up to 18 months at your own expense, plus 2 percent.
Q: I will be retiring from federal service at age 58 with 35 years of service under the Civil Service Retirement System. I have been paying the 1.45 percent Medicare biweekly payment since its inception in 1983. Will this tax be deducted from my monthly CSRS annuity until I reach age 65? And, without 40 quarters of paying into Social Security, does paying the Medicare tax for 17 years qualify me for free Medicare Part A?
A: Deductions for Medicare Part A are only required for those who have earnings from wages or self-employment, not annuities. The fact that you won’t be eligible for a Social Security benefit has no bearing on your eligibility to be covered by Medicare Part A at age 65.
November 2nd, 2010 | RETIREMENT
Q: I am a federal employee under FSRDS, the old foreign service retirement system, having been under CSRS from my 1979 employment date to my conversion to foreign service in 1989. I had active-duty military time that I purchased for federal retirement.
In 1968 I had about three months of civil service time with the Air Force as a civilian employee, and the $100 or so withheld for CSRS retirement was refunded to me in either the late 1960s or early 1970s. That three month’s service appears to be included in my Service Computation Date adjustment, along with the active military time.
When I rejoined federal service in 1979, for whatever reason, I apparently never made the three month’s civil service retirement redeposit, and by my calculations, the unpaid amount plus accrued interest, is about $1,200 or so.
The three months of civil service time is not going to increase my retirement computation (assuming I live another two years), as I will have over the maximum 35 years of service for retirement purposes (under FSRDS) without the three months, based on my current plans, to retire in the summer of 2012. Based on the comment in your Oct. 4 column, you write “if you don’t make a deposit for that period, your annuity will be reduced by 10 percent of the unpaid amount plus accrued interest.”
I am not sure what the reduction will be. I understand the math will give me a $120 reduction in annuity, so if that amount is per month, I recoup the redeposit in roughly 10 months. If the $120 reduction in annuity is based on the yearly annuity total, then it takes roughly 10 years to make up. Should I be worried about making a deposit for that three months? If my monthly annuity is reduced by $120, it would pay to make the redeposit. If the monthly annuity is reduced by much less, why worry? Based on the numbers above, what is the estimated monthly annuity reduction?
The three months prior civil service time is not going to increase my retirement computation (assuming I live another two years), as I will have over the maximum 35 years of service for retirement purposes (under FSRDS) without the three months, based on my current plans, to retire in summer of 2012.
A: Because you took a refund of your retirement contributions before March 1, 1991, you can either redeposit what you owe, plus accrued interest, or have your annuity actuarially reduced based on the amount you owe on the day you retire. The 10 percent reduction you referred to applies only to those who were employed before Oct. 1, 1982, and worked in a position where retirement deductions weren’t taken from their pay. If they don’t make a deposit for that time, their annuities will be reduced by 10 percent of what they owe, including accrued interest.
Q: Can an employee under the Civil Service Retirement System retire prior to his 55th birthday if sick leave is calculated? For instance, I will turn 55 in June, so with six months of sick leave on the books, can I retire at 54 1/2 years old without penalty?
A: Sick leave cannot be added to actual service to qualify you to retire. It can only be added after you have met the age and service requirements to retire.
Q: I plan to retire at the end of this calendar year under the Civil Service Retirement System. My tour of duty is 8 a.m. to 4:30 p.m. Monday thought Friday. Everything I read says the optimum date to retire is Dec. 31. Human resources says I can only retire on the first, second or third of the month, and they want me to retire Jan. 1. It is my understanding that there is no advantage to retiring after Dec. 31 because the weekend days aren’t paydays and if I retire Jan. 1, I will lose one day of my January annuity. How can I convince HR that Dec. 31 is the correct date?
A: You can retire on any day, including at the close of business on Friday, Dec. 31. No one else has a say in that. However, your assertion that there’s no advantage to retiring after that date is incorrect. Because the leave year ends on Jan. 1, you could retire on that day and still get paid for any unused annual leave that exceeds the carryover limit. The minor downside is that you’d lose 1/30th of your first month’s annuity.
Q: I have 33 years under the Civil Service Retirement System. Prior to that, I was with a private company and completed 32 quarters under Social Security. I will be 70 years old in June. My separation notice under the Base Closure and Realignment Act will be issued in June, and I will have to leave my job by Sept. 15. What are my best options to qualify for Social Security (40 quarters)? I understand there will be offset payments. Should I continue work two more years, finding another job after Sept. 15, and forget Social Security?
A: You can only acquire Social Security credits by earning enough through wages or self-employment to qualify for them. To earn one credit in 2011, you’d need to earn $1,120. If you do become eligible for a benefit, it will be affected by the windfall elimination provision, which reduces the Social Security benefit of anyone who receives an annuity from a retirement system, like CSRS, into which he didn’t pay Social Security taxes.
Q: In reading your article on key dates for federal retirement in the Oct. 4 issue of Federal Times, you say that “CSRS employees get full credit for unused sick leave.” I am eligible to retire by age and years under the Civil Service Retirement System, but have been told that only increments of 174 hours of sick leave will be “rolled” into my retirement calculation.
A: At retirement, any days and hours of actual service that don’t add up to a full month are added to any hours of unused sick leave. To provide retirees with 12 equal monthly payments, the Office of Personnel Management treats every month as if it had 30 days. To convert leftover periods of actual service and unused sick leave into retirement days, the year (360 days, or 12 times 30) is divided into 2,087 hours, the congressionally mandated number of hours in a work year. As a result, a retirement day is 5.797+ hours long, and a month approximately 174 hours long. The full months generated by this process are added to your years and months of actual service and used in the computation of your annuity. Any hours that don’t add up to a full month are discarded.
Q: I can retire in February with 31 years of service under the Civil Service Retirement System as a part-time/flex employee in the U.S. Postal Service. My “high-3″ years were from 2006-2009. Will they use these years to calculate my annuity? Is it always the last years? Is it always three consecutive years, or is it the highest consecutive three years? As a PTF, my hours changed yearly as to how many offices I worked in. Also, when I was hired in 1979, I never heard of “buying back” or anything related. Since I made no deposits, or didn’t know anything about any deposits, from what I have read, my time from 1979 to 1986 will not count toward my annuity unless I “buy back” these years.
Did the Postal Service not take anything out of my pay for those years? would a buyback be worth it, and how would it affect my retirement computation?
A: Your high-3 is always your highest three consecutive years of average salary. Under CSRS, all periods of nondeduction service are always creditable for determining your eligibility to retire. Getting credit for that time in your annuity computation depends on when the service was performed. It if was before Oct. 1, 1982, you have a choice: You can either make a deposit of the amount that would have been deducted from your salary plus accrued interest, or have your annuity reduced by 10 percent of what you owe. If it was on or after Oct. 1, 1982, you will have to make a deposit for that time to get credit for it in your annuity computation.
To find out how much you would have to deposit, go to the Office of Personnel Management’s website and download a copy of Standard Form 2803, Application to Make Deposit or Redeposit. Complete the form and send it to OPM. Once they’ve gotten back to you, you’ll have a better idea about whether it makes good financial sense to make the deposit. If it does, you agency payroll office can work out a payment schedule.
Q: I’m a disabled federal retiree drawing a federal retirement. I paid into Social Security while on National Guard status for 30 years. I’m currently working and paying into Social Security and will have enough quarters to draw Social Security payments at age 62. I understand there is an offset that will apply to my retirement. I have received a Social Security statement every year; my past statement shows I will draw around $750 at age 62. Is this my retirement amount after the offset, or do I need to reduce this amount by the offset amount? If that’s the case, what would the total amount be?
A: You are referring to the windfall elimination provision, which reduces the Social Security benefit of anyone receiving an annuity, in whole or part, from a retirement system, such as the Civil Service Retirement System, into which he didn’t pay Social Security taxes. To find out more about the WEP, visit the Social Security Administration’s Government Employee page. Once there, you can use SSA’s online calculator to see how the WEP would affect you. There’s an easier-to-use calculator here.
Q: My husband was federal technician and served in the Air National Guard. The military discharged him because of health reasons. So he lost his federal technician job. He now receives Civil Service Retirement System disability benefits. He applied for Social Security disability. Social Security counts his CSRS disability as a public disability, so his benefit is offset and his payment is reduced to $31.00 a month. Now that he is over age 55, can he change his CSRS retirement to a CSRS annuity or discontinued service retirement? Social Security stated that if he is receiving a CSRS annuity or discontinued service retirement he will not have that offset and receive $583.00 per month.
A: If his disability annuity is terminated because he has recovered from his disability or is restored to earnings capacity and hasn’t been reemployed in a position covered by a federal retirement system, he would be eligible for an immediate annuity if he met one of the following age and service requirements: age 62 with five years of service, 60 with 20, or 55 with 30. He would be eligible for a discontinued service annuity if he has reached age 50 and has at least 20 years of creditable service or is any age with at least 25 years. If his disability annuity terminates and he doesn’t meet any of these requirements, he would be eligible for a deferred annuity at age 62.
Tags: annuity, Civil Service Retirement System, CSRS, CSRS disability, disability annuity, disablity, discontinued service, discontinued service annuity, Discontinued Service Retirement, SOCIAL SECURITY
Q: After reading all the horror stories about the windfall elimination provision and Social Security demanding payback of erroneous payments, I’m writing to verify my Civil Service Retirement System Offset and WEP reductions. I have 22 years of CSRS service, from 1973 to 1995, put in 13-plus years of nonfederal work, and then was re-employed with the federal government as a CSRS Offset employee in 2008. I plan to retire at 62 with 27 years, 8 months of federal service, with about five years of that under CSRS offset.
My personnel office says that I am not subject to the government pension offset, but it can’t seem to explain whether I’m subject to WEP. They listed a Social Security deduction amount of $40 on my retirement estimate, but I’m still waiting to understand if this is a WEP deduction. I was under the impression that the WEP would cut my Social Security benefit in half. If the formula for CSRS Offset employees is time of CSRS Offset service multiplied by Social Security benefit amount divided by 40, then the reduction will not be so severe.
A: Anyone who is receiving an annuity, in whole or part, from a retirement system in which he didn’t pay Social Security taxes is subject to the windfall elimination provision if he has fewer than 30 years of substantial earnings under Social Security. While application of the WEP doesn’t normally reduce the Social Security portion of the benefit due to those receiving a CSRS Offset annuity, in rare instances it might. For more information about the WEP and how it is applied, go to this Social Security Administration fact sheet.
Q: I am 65 years old and will be 66 in January. I am contemplating retirement from the federal government. I worked in the private sector for more than 20 years and switched over to the government in 1985. I am under the Civil Service Retirement system. I was informed by a co-worker that my Social Security benefits, which I am counting on heavily to support my family, will be reduced substantially because I am under CSRS. Is this true?
A: Your Social Security benefit would only be affected if you have fewer than 30 years of Social Security-covered employment. If that’s the case, your Social Security benefit would be reduced, but not eliminated. To better understand how the windfall elimination provision works, read the Social Security Administration’s fact sheet.