Ask The Experts: Retirement

By Reg Jones

CSRS offset and retirement timing

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Q. I am a FERCCA case. I was inadvertently placed in FERS when hired by my agency after eight years in the legislative branch.

I have elected CSRS offset coverage. I have 28 years, eight months of creditable service and am eligible to retire now.

My annual salary and high-3 are not likely to change in the next few years. Are CSRS offset annuities helped by length of service? Would it benefit me to work two or three more years?

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FERCCA question

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Q. Last year it was determined that I fell under FERCCA. I decided on CSRS offset as my retirement coverage. I am just shy of 30 years of service.

For 1987-1991, I was told I would be receiving a refund of my FERS contributions with no interest. It just does not seem correct that I have to pay for years of nondeduction service with interest to reduce or not have an actuarial reduction in my retirement annuity, yet money deducted from me sits for 25 years and is refunded without interest.

I would think at a minimum I should receive some sort of retribution. I was told it was an administrative error and I am not entitled to interest. Only if I were separating from civil service would I receive those contributions with interest.

A. Sorry, but what you were told is correct.

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CSRS Offset

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Q. I worked for an independent federal agency from 1977 to 1989, which had its own retirement system that was neither CSRS nor FERS. I had a break in service for one year then returned to work for the federal government (Transportation Department), where I was erroneously placed in FERS by human resources. In 2006, following a FERCCA ruling that took over 2½ years, I chose to be placed in CSRS Offset rather than FERS. I paid Social Security as a federal employee (plus through part-time jobs dating back to 1970) until I retired in 2010 with 32 years of service. I was told I would receive a reduction to my pension and/or Social Security at age 62 due to the offset. I have also read that there will be no reduction because I have more than 30 quarters of Social Security. Should I file for Social Security at age 62 since I will receive a possible reduction, or will I receive no reduction in Social Security benefits?

A. Because you are a CSRS Offset retiree, at age 62, your annuity will automatically be reduced by the amount of Social Security benefit you earned while a CSRS Offset employee. Further, you may be subject to the windfall elimination provision, which reduces the Social Security benefit of anyone receiving an annuity in whole or part from a retirement system where he didn’t pay Social Security taxes and has fewer than 30 years (not 30 quarters) of substantial earnings under Social Security. To see how that might apply to you, go to http://ssa.gov/pubs/10045.html.

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CSRS retirement refund and actuarial reduction

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Q. I have 25 years of CSRS service. From 1971 until Aug. 15, 1991, I worked for the post office, then I quit and took out my retirement, $20,000 at the time. I went back to work at the VA in 2008. I owe $64,000 on my deposit. I was in FERS; then FERCCA helped me get in the offset. When I retire, I will be 62. Am I entitled to an actuarial reduction? How does that work?

A. Because you took a refund of your retirement contributions after Feb. 28, 1991, you will receive credit for that service in determining your eligibility to retire; however, it won’t be used in the computation of your annuity unless you redeposit the refunded amount plus accrued interest. You would have been eligible for an actuarial reduction in your annuity only if you had received that refund before March 1, 1991.

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FERCCA

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Q. My agency committed an error by moving me from CSRS to FERS. After 18 months and senatorial support, it was finally resolved; the agency satisfied the debt; and I retired Dec. 29. I have since received W2-Cs for past three years. I am looking at a decrease of approximately $17,000 in Social Security taxes withheld for those three years. Those monies were pulled back and put into my CSRS account. If the Internal Revenue Service determines that there is now a tax liability after filing my amended returns, can I make an appeal to the Office of Personnel Management (under the provisions of Federal Erroneous Retirement Coverage Correction Act) to reimburse me for that liability?

A. No.

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Wrong retirement package

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Q. I submitted my application for retirement at the Postal Service, accepting the early-out. While waiting for my returned papers, I received a letter from Postal headquarters stating I was put in the wrong retirement. As I had more than five years of prior service, I should have been put in CSRS Offset instead of FERS, so it says to be patient and Washington will send me a new retirement package. With my Jan. 31 retirement date approaching, what can I do?

A. If you had five years of CSRS service before Jan. 1, 1987, you should have remained in CSRS. If you had five years of CSRS service but left for at least a year and returned after Dec. 31, 1983, you should have been placed in CSRS Offset. Once you are off the Postal Service rolls and the Office of Personnel Management has your paperwork, they will let you know what your options are. You can find out more about the Federal Erroneous Retirement Coverage Corrections Act at www.opm.gov/retire/pre/fercca.

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Avoiding WEP

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Q. I am 69 years old. I started my Social Security benefits on my own SS earnings record at my full retirement age (66) and continued working. I am going to retire in October. I thought I could change to auxiliary spouse benefits when I decided to retire to avoid the windfall elimination provision and have been informed that I can’t make this change since I would be technically entitled on my own SSN. I was a Federal Erroneous Retirement Coverage Corrections Act case as far as my CSRS retirement was figured. According to my estimate, I will be offset the full amount of my Social Security benefit rate at age 66.

A. Your CSRS annuity will only be offset by the amount of Social Security benefit you earned while a CSRS Offset employee. If you earned other Social Security credits outside of your CSRS Offset employment, the amount of that portion of your Social Security benefit won’t be affected.

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CSRS or FERS?

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Q. According to all my paperwork, I am covered under CSRS. I started with the Postal Service on Dec. 27, 1982. What date did the feds switch over to FERS?

A. Because you had fewer than five years of service under CSRS when FERS became effective on Jan. 1, 1987, you should have been placed in FERS. Therefore, you should notify your agency’s human resources office. You can get more information about the Federal Erroneous Retirement Coverage Correction Act (FERCCA) at www.opm.gov/retire/pre/fercca.

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Eligible for CSRS?

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Q. I was put under FERS when I joined the federal government as a civilian employee in 1994. At the time, it appeared to make sense given that FERS was created in 1987 and all new federal employees were put into FERS.  However, it looks like it is possible that I was eligible for CSRS when I was first hired.

I was in the military from 1981 to 1990, which included more than five years of service when FERS was created in 1987.  My federal employer probably decided that since this was military service, not civilian service, I was not eligible for CSRS.  (I paid the required fees to have that military service credited to FERS.)

Was this correct? Should I have been given the option of selecting CSRS? I have read that my military service was “creditable” as “civilian service” as defined under the Federal Erroneous Retirement Coverage Corrections Act.

A. No, you were never eligible for CSRS coverage. To have been eligible, you would have had to have five years of actual service under CSRS before Jan. 1, 1987.

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DSR, RIF and the wrong retirement system

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Q: If you are eligible for a discontinued service retirement and you are part of a reduction-in-force, because you are on a priority placement program for a year, why can you not wait until the year is almost up to put in for your DSR?

Also, I am under the Federal Employees Retirement System, but I have money that I paid into the Civil Service Retirement System. I am not under CSRS Offset because when I was transferred the choices were not explained to me; I was just told that I had to transfer. What happens to the money that I left in my CSRS retirement when I retire (I paid in for about 14 years)?

A: If you are subject to separation in a reduction-in-force, that will happen on the date specified in your official RIF notice. There is no provision in law or regulation that would allow you to stay on board beyond that date.

On you second question, if what you say is correct, you were placed in the wrong retirement system when you returned to work for the government. You should have been put in CSRS Offset. The Federal Erroneous Retirement Coverage Corrections Act was created to deal with such erroneous enrollments. Go here to learn more about FERCCA and find out what your next steps should be.

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