Ask The Experts: Retirement

By Reg Jones

Retirement deductions, penalty

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Q. 1) What are all the deductions that are taken out of a federal employee’s check when they retire?

2) Do these reductions stay at the same amount prior to retirement?

3) I have 33 years of service at age 51. I know there is a 2 percent penalty for each year under 55, but what about the three years I worked over 30? What happens to those?

A. 1) Federal income tax; and, depending on your situation, state tax, FEHB, FEGLI and FEDVIP premiums, savings account deductions and allotments to organizations to which you belong. If you are receiving a lump-sum payment for unused annual leave or a buyout, Social Security and Medicare.

2) I don’t understand your second question, so I’ll have to skip it.

3) If you accept an offer of early retirement, your annuity will be reduced by 2 percent for every year you are younger than age 55 (1/6 of 1 percent per month). Your annuity will be based on all your years of creditable service. Since you have 33 years, your annuity would be computed using that amount of service.

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