Ask The Experts: Retirement

By Reg Jones

SRS and reductions, COLA

Bookmark and Share

Q. I am 58 and have 23 years of service with the IRS. Two items I have yet to see specifically addressed on the special retirement supplement are: Will my FERS retirement benefits be reduced or lower in any way if I draw the SRS? Also, the amount of the SRS is fixed on the day it is first calculated and isn’t increased by cost-of-living adjustments. Is the non-SRS portion of a FERS employee’s retirement pay still subject to cost-of-living adjustments when the employee is drawing the SRS?

Read the rest of this entry »

Tags: , , , ,

Disability retirement and annuity recalculation

Bookmark and Share

Q. I am on disability retirement from the Federal Bureau of Prisons. I have 13 years of service and fall in the MRA bracket born in 1953-1964. When will my annuity be recalculated? Will my annuity be more than what I am receiving on disability?

Read the rest of this entry »

Tags: , , , ,

COLA and relocation

Bookmark and Share

Q. I’m currently employed as a U.S. Probation Officer for the federal judiciary. I recently volunteered to relocate to another office within the same agency/district. My new office (New Bern, NC) has a lower cost-of-living adjustment than my previous office (Raleigh, NC). Due to short notice, I was unable to sell my home in Raleigh prior to moving to New Bern. As a result, I continue to pay a mortgage and properties taxes at my previous duty station, Raleigh. The federal judiciary did not authorize any relocation expenses. However, I’m looking for literature governing COLA disbursements for situations similar to mine. Specifically, although relocation expenses were not authorized by my agency, am I entitled to maintain my COLA in Raleigh until my house sells in Raleigh?

Read the rest of this entry »

Tags: , ,

COLA

Bookmark and Share

Q. I became a CSRS retiree as of Nov. 30. I received my first pension payment for December in early January. I always thought that I would be eligible for my first cost-of-living adjustment starting in 2014. But the retirement article “2013: Employee pay is frozen, but retirees get 1.7% COLA,” states: “If you’ve been retired for less than one year when you become eligible for a COLA, the amount you get will be proportional to the number of months you’ve been on the annuity roll. For example, if you were on the annuity roll in June 2012, you’d receive half of the 2013 COLA.” According to this statement, I was on the annuity roll in December 2012. Would I receive a COLA equal to 1/12 of 1.7 percent?

Read the rest of this entry »

Tags: , , ,

12 questions on VERA

Bookmark and Share

Q. I am a letter carrier, age 52, started in 1985 and have 28 years of creditable service.

If I understand what I’ve gleaned from the posts here and the Postal Service were to offer me a Voluntary Early Retirement Authority this year,

1.  Would I begin my annuity immediately?

2.  Would I have no reductions in calculations of my annuity? (average high-3 x 1 percent x 28)

3.  Would I receive credit for half of my sick leave and all of my annual leave? (How are these applied?)

4.  Would I receive the special retirement supplement beginning at age 56 (my minimum retirement age), and receive it until I reach age 62?

5. Would I be able to continue carrying my current health and life insurance at non-USPS rates? (I couldn’t find how long these could be carried. Until death?)

6.  Could I begin receiving Social Security as early as age 62?

7. Any withdrawal from my Thrift Savings Plan prior to age 59½ would be penalized 10 percent as per Internal Revenue Service regulations? (Can I continue to contribute to TSP after retirement?)

8. As a FERS annuitant, is there no limit to what I can earn after separation from the Postal Service as it pertains to my annuity payment?

9. At age 56 (my MRA), the special retirement supplement from Social Security would begin and would be subject to yearly income limits. Would supplement payments be reduced by approximately $1 for every $2 I earned above that year’s Social Security income limit?

10. At age 65, I’d be eligible for Medicare parts A and B? (Would this affect my health insurance coverage through Federal Employees Health Benefits?)

11.  Would there be cost-of-living increases at any point for my annuity?

12.  Is there a date during the year that maximizes the benefits of retirement?

Did I get this right, and are there any other things I should know before considering a VERA if it is offered?

Read the rest of this entry »

Tags: , , , , , , , , , , , , , , , , , , , , , ,

COLA

Bookmark and Share

Q. If I retire with 32 years at age 57 (minimum retirement age) and start receiving annuity payments at that time will I get a cost-of-living adjustment for the years from age 57 to 62 when I hit 62? Or do I merely start getting the COLA for the year I am 62 and each subsequent year?

If I defer annuity payments until age 62, would I get a COLA for the years from age 57 to 62?

A. You would only receive a COLA to your annuity when you are age 62.

Tags: , ,

Disability vs. regular retirement

Bookmark and Share

Q. I retired from civil service on disability as a GS-11 under FERS in 2007 with nine years of service. My disability monthly pay is about $ 1,630. I will be age 62 in August and, from what I have been reading, my disability will convert to regular retirement at that time. If my time in service is counted up until age 62, I am thinking I will have about 15 years service. Can I expect my monthly pay to drop or increase at age 62? I don’t know what my high-3 is or would be since I am retired.

A. I don’t know if your monthly annuity payments will be higher or lower than what your disability pay is. All I can do is explain how the former will be calculated using the standard formula: .01 x your high-3 on the day your disability annuity began x your years and full months of service from the day on which you retired on disability up to age 62. That amount will be increased by any cost-of-living adjustments that have been added to retiree annuities in the interval.

Tags: , , , , , ,

January vs. February retirement checks

Bookmark and Share

Q. Usually the checks federal retirees receive in February are lower than the January checks. This is usually due to increases in health insurance premiums. This year, the checks were larger. The January checks reflected the cost-of-living adjustment increase. What caused the February increase?

A. Since annuity payments are retroactive, your February payment was for the month of January. You might check to see if the increase was due to a decrease in the premiums for your health benefits.

Tags: , , ,

COLA

Bookmark and Share

Q. I retired Dec. 31, 2010, at age 60 and turned 62 on Dec. 11 under the FERS 60/20 retirement plan. I thought this would qualify for the 1.7 percent cost-of-living increase in 2013 as I did not get a COLA for two years per the conditions. Will I actually have to wait another year to qualify for a COLA as I am being told?

A. Yes.

Tags: , ,

COLA

Bookmark and Share

Q. Are FERS annuities adjusted for inflation? I have 33 years of government service. With that many years of work, will my FERS annuity be lower if I retire in March, before my 62nd birthday in September?

A. Unless you are a special category employee, such as a law enforcement officer, you would first be eligible for a cost-of-living adjustment at age 62. Be aware that COLAs are applied based on the number of months you are on the annuity roll after reaching age 62. Therefore, if you retired in March, you would first be eligible in September and receive a fraction of the 2014 COLA.

Tags: , , , ,

Military buyback

Bookmark and Share

Q. I was active-duty Navy (1980-84), then active Coast Guard (1991-2000). I received a tentative offer for employment with Army a few weeks ago (I’ve been a contractor since 2000). All required documents are submitted. Now I wait.

How do I buy my 13 years active duty into FERS? Can I use my existing 401(k) to pay this? How much would it cost me?

I also found out that, as of Jan. 1, the deduction for retirement went up to 3.1 percent. I guess a tentative offer before Dec. 31 doesn’t count for hired, so my pay is decreased. Adding on an increase in the cost of living (D.C. area), increase of health care coverage, retirement, Thrift Savings Plan, Social Security and decrease from my current salary, there’s not much of a paycheck left. What are the benefits of government employment? Any idea why Fort Belvoir does not have a cost-of-living adjustment?

A. Yes, you will be able to make a deposit to get credit for either or both your periods of active-duty service. When you are hired, your personnel office can explain how you do that and what it would cost. While you can use any source of money to make the deposit, I don’t know what the tax consequences of using your 401(k) would be.

The fact that you were made an offer of employment before the change in retirement deductions went into affect won’t change the fact that you’ll be required to pay the higher amount.

Your question about COLAs and Fort Belvoir makes no sense. Employees don’t receive COLAs, only retirees. And whatever COLAs one retiree gets are applied to the annuities of all eligible retirees. On the other hand, if you are referring to annual pay increases, these have been frozen for all employees for the past few years.

Tags: , , , , , , , ,

Value of CSRS annuity

Bookmark and Share

Q. How can I find out the total value of my CSRS pension? Is there a methodology or interactive tool online where I enter my annual earnings throughout my career and a value is produced? I am a few years away from retirement and, from my annual personal benefits statement, I see my estimated monthly annuity based on options for when I retire and what survivor benefit I choose. But what is the total value today: past contributions + interest? My situation: totally CSRS (no FERS), no break in service, no extra contributions or withdrawals, just a straight 30 years of CSRS deductions from paycheck.

A. Perhaps my colleague, Mike Miles, will have a better answer to your question. As far as I know, there isn’t any reliable way to determine the present value (or the total value) of a CSRS annuity. The reason is that there is no direct correspondence between what you contribute to the retirement fund and what you receive in benefits. While you can know how much you’ve put in, unless you know when you’ll retire, what the annual cost-of-living adjustments will be, and the day on which you’ll die, you’ll only be fiddling with numbers that have no basis in reality. P.S. If you were to leave government and request a refund of your contributions, you wouldn’t receive one cent of interest on them.

Tags: , , , , , ,

Deferred annuity arrears

Bookmark and Share

Q. I turned 62 in 2006 October. Since I am gainfully employed, I did not file for deferred annuity until February 2012. To my surprise, my calculation is showing that my eligibility starts in October 2008 and paid arrears only up to October 2008. Secondly, it appears that cost-of-living adjustments are not considered in calculating arrears. Could you please advise me to understand and resolve this issue?

A. According to the Office of Personnel Management, “For a deferred retirement, the commencing date is normally their 62nd birthday. The commencing date remains the same even if they don’t apply until a later date. The annuity will be retroactive to the date they were first eligible and they receive any COLAs that would have been applicable from the commencing date until the date the case is adjudicated.” If this doesn’t square with what you received in your deferred annuity calculation, you’ll have to get in touch with the people who sent you that information.

Tags: , , , , ,

High-3 calculation

Bookmark and Share

Q. I have been on FERS disability retirement from the Postal Service since November 1996. I turned 62 in October and received a letter from the Office of Personnel Management notifying me that my annuity was recalculated and what my new monthly annuity would be.

My creditable service calculation is correct, but the high-3 doesn’t look right. FERS Publication RI 98-1 states, “The total service used in the computation is increased by the amount of time you were on the disability annuity roll and your average salary is increased by the FERS cost-of-living increase during the time you were on the roll. The basic annuity formula is then applied, using the adjusted time base and average salary.”

When I retired in 1996, my base salary as a PS4 Step F was $ 33,294. FERS tells me that my new high-3 is $ 33,934. Does this new high-3 seem correct for 16 years of FERS COLAs? (Currently, PS4 Step F base rate is $ 42,031).

A. I don’t do numbers, so I can’t confirm or refute the figure OPM gave you. What I can do is provide you with the COLA increases FERS retirees received beginning with the first full one you would have been entitled to: 1998 2%, 1999 1.3%, 2000 2.0%, 2001 2.5%, 2002 2%, 2003 1.4%, 2004 2%, 2005 2%, 2006 3.1%, 2007, 2.3%, 2008 2%, 2009 4.8%, 2010 0%, 2011, 0%, 2012 2.6%.

Tags: , , , , , , ,

Postal job moving

Bookmark and Share

Q. I work for the Postal Service. If my job moves 75 miles away and I only have 15 years of FERS under my belt but will not move, what would be the difference in dollar terms under FERS of resigning with 14½ years at 43 years old vs. putting up with commuting or renting during the workweek for five more years of FERS to make 20 total years at 50 years old. Last high-3 basic pay would be around $56,000 per year.

A. If you really want an answer to your question, you’ll have to hire a financial adviser to do the math. However, even if you provide him with more information, such as the rent you’ll be paying, you’ll only end up with a rough estimate.

On the other hand, I can provide you with some facts that may help you to do the math yourself. Whether you resign or are separated by adverse action, you wouldn’t be eligible for a deferred annuity until age 62.

Assuming that your high-3 was $56,000 when you left, your annuity would be $8,120 (.01 x $56,000 x 14.5). It wouldn’t be increased by any intervening cost-of-living adjustments nor would you be able to re-enroll in the Federal Employees Health Benefits of Federal Employees’ Group Life Insurance programs when your annuity began.

If you accepted the transfer and continued to work, you’d receive the salary of that position, increased by any longevity and/or annual pay adjustments, thus increasing your high-3. You’d also be able to continue your FEHB and FEGLI coverage. While you cite age 50 with 20 years service as your goal, you wouldn’t be able to retire then unless presented with an early retirement opportunity. If you weren’t, the earliest that you could retire would be at your minimum retirement age, which would be 56 and 10 months. Since you wouldn’t have 30 years of service, you’d be retiring under the MRA+10 provision, and your annuity would be reduced by 5/12 percent for every month you were under age 60 when you retired.

Tags: , , , , , , , , , , ,

COLA

Bookmark and Share

Q. Will a COLA be applied in 2013?

A. If you are referring to the cost-of-living increase applied to the annuities of federal retirees, the answer is yes, but only if you have been on the annuity roll for 12 months beginning in December 2011. If you haven’t, the amount you receive would be proportional to the time you were on the annuity roll.

Tags: , ,

Social Security quarters

Bookmark and Share

Q. I am a 65-year-old federal employee on the CSRS retirement plan. I plan to retire next month after 39 years in the government. I have earned 20 quarters of Social Security credits but need 20 more to qualify for any benefits. Would it be worth my while to work for five more years (20 quarters) in private industry to qualify for these benefits, or will it all be offset by the CSRS retirement? If I choose to work, what is the minimum amount of money I have to make each year or what is the minimum number of hours I have to work each year to qualify for Social Security benefits after five more years (20 quarters) of work?

A. The windfall elimination provision reduces but doesn’t eliminate the Social Security benefit of anyone who receives an annuity from a retirement system, such as CSRS, where he didn’t pay Social Security taxes. Therefore, if you worked in the private sector and earned enough additional credits to be eligible for a benefit, you’d get something. To get one credit in 2012, you’d have to earn $1,130. To get four, your have to earn $4,520, and you could do that all at once or over time. The amount needed to get one credit is adjusted each year by the amount of the annual cost-of-living adjustment.

Tags: , , , , , ,

COLA and survivor annuity

Bookmark and Share

Q. Is the cost-of-living adjustment computation made before or after the survivor annuity reduction is made? If I retired with a $50,000 retirement, approximately $5,000 per year would be deducted. Would the increase be adjusted to the $50,000 amount or the $45,000 amount?

A. Cost-of-living adjustments are only made to your base annuity, not the amount you would have received if you hadn’t elected a survivor annuity.

Tags: , ,

Law enforcement and COLA

Bookmark and Share

Q. I’m retiring Dec. 31 as a law enforcement officer under FERS. Would I be eligible for the retirees’ cost-of-living adjustment in 2013?

A. No, you wouldn’t. However, you would be eligible for 11/12ths of the 2013 COLA, which would show up in your January 2014 annuity payment.

Tags: , , , ,

COLA

Bookmark and Share

Q. As a CSRS retiree, what is the last day I can retire and still qualify for the full retiree cost-of-living adjustment increase?

A. If you retired no later than Dec. 3, you would receive a full cost-of-living adjustment in your January 2014 annuity payment.

Tags: , , ,