Ask The Experts: Retirement

By Reg Jones

Extra credit for intel?

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Q. I understand that if one works for the intelligence community in an overseas assignment, one receives extra credit toward the number of years worked. In CSRS, it is 0.5 percent for each of the first five years and then 0.25 percent for the next five years. Where can I find this regulation such that I can make sure I receive this when I retire, since I am no longer in the intelligence community?

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Military buyback

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Q. I retired in 2003 with 30 years of active Army service. I have been drawing full military retirement pay since then. I am now a GS employee with seven years of federal service. Can I still buy back my military time and combine the two for a federal retirement?

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Military buyback, bonus and taxes

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Q. I am interested about buying back my military time. However, I received a separation bonus from the military when I left. How is the buyback calculated in addition to my time in service? (Is it considered normal income?)

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Leave without pay vs. LWOP-US

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Q. I am a dual status technician GS employee in the Air National Guard. I’m trying to figure out if a three-month activation on Title 10 active duty for which I go leave without pay from my technician job will require me to make a military deposit to credit that tour after completion? Does such a short tour fall under the LWOP six-month rule and therefore doesn’t require any payment? Our agency has been calculating deposits to cover less than six-month tours in the past, but I’m curious if that’s necessary.

A. Your agency is correct. You won’t be taking LWOP. You’ll be taking LWOP-US, which means that you must make a deposit to get credit for that time.

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Early retirement, unused sick leave and SRS

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Q. I am 50-year-old FERS employee with 28 years of service. If I am offered an early-out and take it, what would happen to my 578 hours of sick leave? Would I still be entitled to get credit for my unused sick leave? Also, would I be eligible for special retirement supplement?

A. If you retire before Jan. 1, 2014, you’ll only get half credit for your unused sick leave in the computation of your annuity. If you retire on or after Jan. 1, you’ll get full credit for it. As for the special retirement supplement, you’ll be entitled to receive it when you reach your minimum retirement age, which in your case is 56.

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Buying back retirement credits

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Q. I worked for the Postal Service from late 1979 until about 1991. I had a lot of personal and work-related problems and was also given a letter of termination. I decided to quit. I also tried to pursue a disability, but I dropped that because of stress and depression.

I withdrew my retirement to pay an accumulation of four months of bills and rent that I was behind in. I vaguely recall reading that there was a buyback of retirement. Is this true? I am applying for Social Security benefits. I am only 58, but, due to health concerns, am not able to work. I have 31 Social Security credits and need 40 for full benefits. If I could buy back those years of retirement, I would have the full number of credits.  I honestly don’t know how all this works.

A. If you took a refund of your retirement contributions when you left, you wouldn’t be entitled to any retirement benefit nor could you redeposit that money, plus interest, to get credit for that service unless you returned to work for the government. If you left your contributions in the retirement fund, you’d be eligible for a deferred annuity at age 62.

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Sick leave limits

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Q. Is there a maximum amount of sick leave that can be applied toward retirement?

A. There is no limit if you are covered by CSRS. If you are covered by FERS, you’ll only get half credit unless you retire after Dec. 31.

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Rehire, job loss and annuity

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Q. I had 24.9 years of government civil service with the Navy. We were BRACed, and I retired. Then I got hired as a contractor for the government for less than a year. Now I work for the Air Force at a decrease in pay and grade. I may lose my job again because of the budget cuts in the government. How will all this affect my annuity, which I’m still receiving, if I lose this job?

A. If you received both your annuity and the unreduced salary of your new position, you wouldn’t receive any credit for that period of employment and your annuity would remain the same when you left. If your salary was reduced by the mount of your annuity and you worked for at least one year (or the part-time equivalent), you’d be entitled to your original annuity plus a supplemental annuity based solely on that new period of employment.

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Retirement contributions and taxes

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Q. I am a recently retired CSRS employee. I note a huge inequity concerning my CSRS retirement contributions from the federal retirement benefits booklet the Office of Personnel Management sent me. I am told that I have a retirement contribution credit of $164,836 after-tax dollars. From this amount, I will get 310 equal monthly payments of $531.73 that will be a tax-exempt portion of my total monthly annuity.

However, I am told once I receive gross monthly retirement benefits that exceed my contributions (tax exempt and taxed portion), there are no more contribution credits in my account, and no lump-sum payment will be made.  What regulation under Title 5 U.S. Code (or others) allows the government to screw me by extending the time period to use up my tax-free portion of my annuity while minimizing the time to exhaust my contribution amount? According to the retirements benefits booklet OPM sends, recovering an amount equal to my retirement contributions for tax purposes is treated differently from exhausting my lump-sum contribution credit. Has there been a class-action suit addressing this issue?

A. The amount of your retirement contributions that are considered a tax-free part of your annuity during any calendar year are determined by actuarial (life expectancy) tables contained in the federal tax code. To learn about the whys, wherefores and how to file, download a copy of IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits. You’ll find it at www.irs.gov/pub/irs-pdf/p721.pdf.

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Service computation date

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Q. My husband entered military service June 14, 1988, and has 24 years and 23 days of active-duty service, according to his DD 214. He retired as of Jan. 1, 2012. He worked as a Defense Department civilian from May 14, 2012, to Aug. 7, 2012. How much time does he get added to his service computation date for his 24 years of military service?

A. He won’t receive any credit toward his service computation date unless he makes a deposit to the civilian retirement system. The deposit would be a small percentage of his basic pay while on active duty. His personnel office can tell him how to find out what he would owe. Then he can decide if he wants to do that.

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Redeposit

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Q. I started employment with the Defense Department in September 1981 under CSRS. In 1995, I took advantage of a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay because my organization was downsizing. I also took a refund on my retirement account, which I tried to invest in buying a home and lost it. I was reinstated in the government in 2004 and came back as CSRS Offset.  I also rolled my 401(k) from the job I had outside the government into the Thrift Savings Plan. I will be 65 on March 7, and was planning to retire in May. Because I did not put my retirement back into the CSRS account, will that hurt my plans for retirement? Will my annuity be greatly reduced because I did not redeposit the funds? If so, by how much?

A. If you don’t redeposit the retirement contributions that were refunded to you, plus accrued interest, you’ll still get credit for that time in determining your total years of service. However, it won’t be used in your annuity computation. In effect, your annuity would be based solely on the time between when you returned to work for the government and when you retire.

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Crediting unused annual leave to FERS

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Q. About two years ago, a bill was submitted to allow credit of unused annual leave to FERS. Has this bill passed in any form to date? Has this been implemented to date? If so, how does one pursue this?

A. Yes, a law was passed that allowed FERS employees to get credit for accrued and unused annual leave in the computation of their retirement annuities. However, the law only granted half credit to anyone retiring before Jan. 1, 2014. Anyone retiring after Dec. 31, 2013, will get full credit.

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Part-time work and annuity computation

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Q. I have been in CSRS for 30 years as a Veterans Affairs Department employee. The first 24 years, I had a 5/8 VA appointment, the last six, I have been 8/8. For CSRS annuity purposes, do the part-time years count as 24 years or 5/8 of 24 years?

A. You’ll get full credit for that time in determining your total years of service. However, your annuity will be prorated to account for that period of part-time service.

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Retiring on last day of pay period

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Q. Is it true that to receive credit for annual leave and sick leave for the final pay period upon retiring, you must work all 14 days of the final pay period (and thus retire on the last day of the final pay period)? If you retire on the first to 13th day of a pay period, will you receive no annual leave or sick leave credit for the final pay period?

A. To receive any credit for annual and sick leave earned during a pay period, you must complete your tour of duty during that pay period. For most employees, that’s 80 hours. You won’t receive any credit for it if you leave before the end of the pay period.

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FERS sick leave credit

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Q. How does the new law that provides sick leave credit for longevity operate with immediate, postponed and deferred retirement? Can you get this sick leave credit for service longevity under each of these three categories of retirement?

A. No. It only applies to immediate and postponed annuities. The latter is included because it’s actually an immediate annuity, where the receipt of the annuity is postponed to a later date.

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Annuity reductions

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Q. My wife is a CSRS Postal Service employee with four years of military time and will retire in February with 36 years total. She did not pay back her military time. She was told by the post office that Social Security would deduct the money from her check when she reaches 62.

1. My wife does not plan on trying to collect Social Security at age 62, so will they still lower her retirement check?

2. I was told during a civil service retirement seminar that if she waited until age 68, she could go back to work and earn Social Security credits without a reduction to her CSRS postal retirement check. Is this true?

3. I will soon be a CSRS retiree (Jan. 3). I paid my military buyback. If I go back to work and earn enough for Social Security and I were to die, would my wife’s retirement check be reduced if she applied for my Social Security benefits?

A. 1. Because your wife is eligible for a Social Security benefit, at age 62 her annuity would be automatically recomputed to eliminate those four years, unless she makes a deposit to get credit for that time before she retires. Note: Unless your wife has 30 years of substantial earnings under Social Security, her Social Security benefit will be affected by the windfall elimination provision. The WEP will reduce but not eliminate that benefit.

2. Yes. Anyone who reaches full retirement age can earn as much as they want without it affecting their Social Security benefit.

3. If you become eligible for a Social Security benefit, that benefit would be affected by the WEP. Any Social Security spousal benefit to which either of you would be entitled would be affected by the government pension offset provision. The GPO would reduce that benefit by $2 for every $3 you receive in your CSRS annuities.

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Combining military, civilian service

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Q. I have 20 years of active-duty service (Army E-6) and have just retired (actual retired date will be Dec. 1). I have been hired by the federal government as a GS-11. Would it be financially beneficial for me to buy back my military time and contribute it to my federal civilian retirement down the road? If I buy back my military time, will that 20 years allow me to retire from my civilian position early, maybe in 10 years with a total of 30 years of service? What is the impact or consequence of this on my military retirement?

A. Combining your active-duty and civilian service would allow you to retire with 30 years total service but only if you have reached your minimum retirement age. MRAs range between 55 and 57, depending on your year of birth. If you make a deposit to get credit for your active-duty service, do it as soon as possible. You’ll have an interest-free window that’s at least two years long. After that, interest begins to accumulate. One cautionary word: If you decide to make that deposit, when you retire, you’ll have to waive your military retired pay.

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Sick leave credit

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Q. I have been offered early retirement. I have 25 years, six months and 13 days as of the retirement date. The offer showed that I will be rounded up to 26 years by adding five months and 18 days to reach my anniversary date of July 19.

I have used five months x 174 hours/month + 18 days x 8 hours/day to total 1,014 hours. If I double that amount, it becomes 2,028 hours, which is more than I now have, per the last pay stub, which shows 1,971 hours of sick leave.

I need about 16 hours for upcoming doctor visits. If I use the 16 hours needed, thus reducing my total, will I then drop below the 26 years even mark?

A. I can’t do your homework for you. What I can do is tell you how to calculate your length of service. Start with your years and full months of service as of the day you retire. Convert any leftover days to hours.

Combine these with any accrued and unused sick leave hours. Convert the total to retirement months. As you have noted, a retirement month is, on average, 174 hours long. Once you have tallied all of the months, add them to your years and full months of actual service. Any hours that don’t add up to a full month are dropped.

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Military buyback

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Q. I am 47 years old and worked for the post office for three years. During that time, I bought back my military service time of eight years. Am I eligible to someday get that retirement for the 11 years? If not, will I be reimbursed what it cost to buy back my time? Is the Thrift Savings Plan a separate entity, and when can I start receiving that? I’m currently working away from the federal realm.

A. Reg: No, you wouldn’t be eligible for an annuity because you didn’t have at least five years of actual civilian service. If you are planning to return to government service, you could pick up where you left off. Then the earliest you could retire would be when you reach your minimum retirement age. In your case, that would be 56 and two months. If you don’t plan on returning, you can ask for a refund of your retirement contributions, including the deposit you made to get credit for your active-duty service.

To do that, go to www.opm.gov, click on Find Form(s), and download a copy of Standard Form 3106, Application for Refund of Retirement Deductions.

Mike: The TSP is yours to maintain and manage for as long as you like. You may withdraw money from it whenever you are ready, but there are limits to how frequently you can withdraw your money. You are always free to withdraw all of your money in a lump sum, whenever you like. Your withdrawals will be taxed as ordinary income and may be subject to the Internal Revenue Service early withdrawal penalty until you reach age 59½.

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Military buyback

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Q. After serving 15 years of active duty with the Army I ETS’d to pursue a federal position (FERS) and continued my military career as a reservist. I’ve bought back the 15 years. I was involuntarily mobilized and attained enough active duty to retire under the sanctuary program. What happens to the 15 years that was already bought back as a reservist prior to retirement?

A. If you retired from the Reserve, that will have no effect on your FERS retirement. You’ll get full credit for the time for which you already made a deposit. If you want to get credit for the time when you were recalled to active duty, you’ll need to make a deposit for that period of service, too. In no case will that have any effect on your reserve retired pay. On the other hand, if you retired from active duty and are entitled to military retired pay, you’d have to waive that retired pay to get credit for any of the bought-back service.

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