Ask The Experts: Retirement

By Reg Jones

Leaving without an early-out

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Q. What are my options for leaving government service now without an early-out? I am looking to relocate and have been applying for every job I see at government agencies in my new desired location with no luck. I have 23 years of continuous service, and I’m 52 years old. Can I just leave, then relocate on my own to where I want to move and try to get back into the government when there? What exactly do I give up if I do this — besides the salary?

A. If you resign from the government, leave your money in the retirement fund, and don’t get another government job, you’d be eligible for a deferred annuity at age 60. The amount would be based on what it would have been on the day you left government. If you are covered under the Federal Employees Health Benefits or Federal Employees Group Life Insurance programs, your coverage would continue for 31 days at no cost to you. In both cases, you’d be offered an opportunity to continue your coverage. Under the temporary continuation of coverage provision, you could continue your FEHB coverage for up to 18 months. However, you’d have to pay100 percent of the premiums plus a 2 percent administrative fee. You could convert your FEGLI coverage at a cost determined by the life insurance provided. In neither case would you be able to reactivate your FEHB or FEGLI coverage when your annuity begins. If you returned to work for the government and had left your retirement contributions in the fund, you’d simply be picking up where you left off.

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Early retirement

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Q. I am a 54-year-old letter carrier with 23 years of service and eight years 10 months of military service.  If the Postal Service offers an early-out incentive upping eligible employees two to three years, will I then be eligible for the special retirement supplement or will I still have to wait until my minimum retirement age?

A. You’ll have to wait until you reach your MRA.

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Early outs and MRAs

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Q. You have indicated that when an early out is offered, Federal Employees Retirement System employees with more than 25 years are eligible at any age. So in theory, a potential annuitant could easily be less than 50. If the employee is not at the mandatory retirement age but has the 25-plus years of service accepts the offer, is he or she entitled to the Social Security makeup benefit? If not immediately, when?

A. Unless they are special category employees, such as law enforcement officers, they won’t be eligible for the special retirement supplement until they reach their minimum retirement age. MRAs range between 55 and 57, depending on the year of birth.

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Legislative branch vs. executive branch

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Q. I am covered by CSRS and I’ve worked under the legislative branch for 16 years and the executive branch for 12 years. How will my retirement annuity be affected by working under the different branches? I am being offered an early out. I see mentioned the enhanced formula will be used for the legislative branch service but do not know what that is.

A. Your service as an employee of the legislative branch will be calculated as follows: 2.5 percent x your high-3 x your years and full months of legislative branch service. Your executive branch service will be computed using the CSRS formula.

 

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Early out and insurance

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Q. I am Chapter 38, with 17.5 years of federal service. I am 55 years old and under the Federal Employees Retirement System. How can I early out and keep insurance? If I do not touch the retirement until 62, is there a penalty?

A. You can’t “early out” because you haven’t met the new age and service requirements to retire: age 50 with 20 years or any age with 25.

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VA early buyout

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Q: Is the Veterans Administration having any early out/buyout in the near future?

A: Not there we’re aware of.

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Health insurance after a buyout

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Q: I am 53 years old and have 36 years of federal service. One catch: I don’t have the five years of coverage under a Federal Employees Health Benefit plan (I’m still four years short). If my office offers early out through downsizing or restructuring, approved by the Office of Personnel Management, can I retire and carry my health benefits into retirement, even though I don’t have five years of coverage?

A: Yes, you would be eligible to carry your coverage into retirement because you would have been enrolled in the program at the time your agency received approval from OPM to offer early retirements. Your agency would attach a memo to your retirement application stating that you meet the requirements for an immediate waiver of the five-year rule.

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Early out offers

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Q: I understand the federal government is beginning to consider offering early outs. Can you confirm this?

A: No.

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Payments won’t affect Social Security benefit

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Q: I have checked your Q&A and have asked several people about the special retirement supplement (SRS) and can’t seem to get an answer. I’m a 56-year-old Postal Service employee with 22 years of service. Rumor has it there will be another Voluntary Early Retirement Authority (early out). My two questions are, if I go out on VERA, will I be able to take money out of my Thrift Savings Plan account without early withdrawal penalties even though I`m not 59 1/2 years old? I know I will be eligible for SRS. Will the fact that I will be getting SRS, an annuity and TSP payments affect my estimated Social Security benefit at age 62?

A: The special retirement supplement approximates the Social Security benefit you earned while employed under the Federal Employees Retirement System. Your Social Security benefit will be based on all those years of employment during which you were covered by Social Security. The only thing that could alter either benefit is if your earnings from wages or self-employment exceeded the annual Social Security earnings limit.

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Early outs and incentives

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Q: I retired back in February on an early out. Will we receive the incentive eventually that the union is fighting for all employees to receive? Plus, will we receive something for our unused sick leave?

A: I have no idea what incentive your union is fighting for; however, if they get it, it’s unlikely that it would apply to those who have already retired. The same goes for the unused sick leave credit for Federal Employees Retirement System employees. That credit is only available to those who retire after the effective date, and only half credit at that, until 2012.

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Early outs

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Q. Is there any word on the federal government offering early outs?

A: No.

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