Ask The Experts: Retirement

By Reg Jones

Interrupted government service and pension

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Q. I am 54, with five years under FERS. I am taking a job in the private sector but would like to return to federal employment for three to five years. If I do nothing, can I apply for a deferred pension at age 62? If I do return to government service, do the total number of years accumulate? So, for example, if I return and work another five years, is my pension based on 10 years, even though they were interrupted?

A. As long as you don’t take a refund of your retirement contributions when you leave, you could apply for a deferred annuity at age 62. Also, if you left that money in the fund and returned to government employment, you’d be able to pick up where you left off, and all that time would count for determining your length of service and your annuity computation. If you did take a refund and returned to government service, you’d have to repay that amount plus accrued interest to get credit for that time.

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USPS early retirement and special retirement supplement

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Q. I have 30-plus years total; 11 years and nine months of that is military time I bought back. The rest of it is in the USPS. I will be 52 and am being offered early retirement. When I reach my MRA, will I be eligible for the special retirement supplement?

A. While you’ll be eligible for the special retirement supplement when you reach your MRA, it will be based solely on your years of actual FERS employment. Active-duty service for which you’ve made a deposit will not be included in that computation.

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FERS FROZEN and MRA+10

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Q. The minimum retirement age under FERS is 56 in my case (date of birth May 15, 1956). My PS Form 50 states my retirement plan as A – FERS FROZEN. Do I still qualify for the MRA+ 10?

A. According to the Office of Personnel Management, “When a CSRS employee elects to become covered by FERS, the SF 2806 must be ‘frozen’ or ‘redesignated.’ Whether the SF 2806 is ‘frozen’ or ‘redesignated’ depends on whether the employee had enough prior service to have a CSRS component in a future annuity.” Thus, the FERS FROZEN designation has no affect on your ability to retire under the MRA+10 provision.

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COLA

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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.

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Military buyback and leave accrual

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Q. A buddy and I both retired from military service recently and now work as civilians for the federal government (in different departments). We both “bought back” our academy time (just under four years) and they will now count toward our civilian careers. However, my department also counted these years for leave accrual, such that I have been earning six hours per pay period.

My friend’s department did not count these years for leave accrual, so he is only earning four hours per pay period.

It seems to me that his department only referred to 1-6 of this reference: http://www.opm.gov/feddata/gppa/gppa06.pdf (which I noticed you used in this Q&A: http://blogs.federaltimes.com/federal-retirement/2012/01/30/creditable-military-service-and-leave-accrual/)

However, looking at 1-4, there is another reference to consider: The law states: “In determining years of service, an employee is entitled to credit for all service of a type that would be creditable under section 8332” … And while paragraph J-1 of that reference would seem to indicate “No” for our situation, paragraph J-2 reads as follows: (2) The provisions of paragraph (1) of this subsection relating to credit for military service shall not apply to: (A) any period of military service of an employee or Member with respect to which the employee or Member has made a deposit with interest, if any, under section 8334(j) of this title;”

Do you believe his department is correct, or mine? If mine, then how can he go about correcting this, having already tried a couple of times?

A. According to the Office of Personnel Management:

“Section 1115 of the [National Defense Authorization Act] for FY 2008 is the applicable provision of law that explicitly makes academy service time creditable for retirement — and therefore for annual leave accrual purposes.

“Section 1115 of the NDAA amended title 5 United States Code so that it explicitly made academy service time creditable toward retirement for both CSRS and FERS employees. Service is creditable retrospectively, as well as prospectively. Here is the Section 1115 text-

“SEC. 1115. RETIREMENT SERVICE CREDIT FOR SERVICE AS CADET OR MIDSHIPMAN AT A MILITARY SERVICE ACADEMY.

(a) CIVIL SERVICE RETIREMENT SYSTEM.-Section 8331(13) of title 5, United States Code, is amended by striking “but” and inserting “and includes service as a cadet at the United States Military Academy, the United States Air Force Academy, or the United States Coast Guard Academy, or as a midshipman at the United States Naval Academy, but

(b) FEDERAL EMPLOYEES RETIREMENT SYSTEM.-Section 8401(31) of such title is amended by striking “but” and inserting “and includes service as a cadet at the United States Military Academy, the United States Air Force Academy, or the United States Coast Guard Academy, or as a midshipman at the United States Naval Academy, but

(c) APPLICABILITY. The amendments made by this section shall apply to

(1) any annuity, eligibility for which is based upon a separation occurring before, on, or after the date of enactment of this Act; and

(2) any period of service as a cadet at the United States Military Academy, the United States Air Force Academy, or the United States Coast Guard Academy, or as a midshipman at the United States Naval Academy, occurring before, on, or after the date of enactment of this Act.

“In terms of credit for annual leave accrual purposes, it’s important to understand how the statute governing service credit for annual leave accrual purposes is written. 5 U.S.C. 6303 (a) provides that service which would be creditable for CSRS retirement purposes is creditable for determining an employee’s years of service for leave accrual purposes.

Once one understands the 5 U.S.C. 6303(a) text, it becomes clear that, since academy service time is creditable for retirement purposes, it is creditable for purposes of determining an employee’s annual leave service credit date.

“Here is the title 5, chapter 63 reference —

“5 U.S.C. 6303 (a)-

“…In determining years of service, an employee is entitled to credit for all service of a type that would be creditable under section 8332, regardless of whether or not the employee is covered by subchapter III of chapter 83, and for all service which is creditable by virtue of subsection (e). However, an employee who is a retired member of a uniformed service as defined by section 3501 of this title is entitled to credit for active military service only if–

(A) his retirement was based on disability–

(i) resulting from injury or disease received in line of duty as a direct result of armed conflict; or

(ii) caused by an instrumentality of war and incurred in line of duty during a period of war as  defined by sections 101 and 1101 of title 38;

(B) that service was performed in the armed forces during a war, or in a campaign or expedition for which a campaign badge has been authorized; or

(C) on November 30, 1964, he was employed in a position to which this subchapter applies and thereafter he continued to be so employed without a break in service of more than 30 days…”

“Therefore, academy service time is creditable for annual leave accrual purposes. For military retirees who have had academy service time, the restrictions of 5 U.S.C. 6303(a)(A)-(C) would of course apply.”

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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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COLA

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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.

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Disability retirement and taxes

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Q. I am a 52-year-old FERS clerk working for the Postal Service. I was been diagnosed with Parkinson’s disease in November 2005. I am wondering about a disability retirement and how the money I am paid, if approved, is taxed or not?

A. The Internal Revenue Service considers CSRS and FERS disability annuities taxable income. If you were also approved for a Social Security disability benefit and judged by them to be totally disabled for any gainful employment, then your benefits would be tax-free.

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Annuity computation

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Q. I am a 62-year-old federal police officer. I have over 33 years of combined military and civilian time. I have an adjusted service computation date of Jan. 4, 1978, and I have FICA, CSRS (partial) and FERS offset.

Promotions and upward mobility are few and far between in my job series, not to mention reaching a “high- 3.” I am contemplating retirement. However, since we no longer have a local human resources department to assist us, I am writing to ask if you can advise me.

A. It doesn’t make any difference what level of income is used, the formulas for calculating federal employee annuities are the same. For CSRS the formula is:

.015 x your high-3 x 5 years of service, plus

.0175 x your high-3 x 5 years of service, plus

.02 x your high-3 x all remaining years and full months of service

For FERS, the formula is:

.01 x your high-3 x all years and full months of service

(.011 if you retire at age 62 or later with at least 20 years of service)

Since you have both CSRS and FERS service, you’d do two calculations and add the results together. If you made a deposit to get credit for your active duty service, you’d be done. If you didn’t make a deposit, you’d get credit for the time in determining your eligibility to retire.

However, your annuity would be reduced actuarially by the amount you owe and your age when you retire.

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Special retirement supplement

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Q. I am a FERS retiree who was RIF’d into retirement in October 2009 with 27 years of service. I reached my minimum retirement age of 56 on Jan 4. I understand I will receive the special retirement supplement for first year regardless of my employment income. Will that continue for the 12 calendar months from February through January 2014? Or is it only until Dec. 31, which would be 11 months?

After that first year, I understand that the Office of Personnel Management will evaluate my previous year’s income (I assume total 2013) and then cut off my supplement or at least adjust it based on how much over the $14,160 earnings limit I made. I will have made more than three times the $14,160, so I assume, in my case, they will cut me off. Will they cut me off for 12 months and evaluate me again on Jan. 1, 2015, looking at my 2014 income? Or will they look at each month of 2014 to see if I exceed the prorated allowable income during 2014?

A. Start your search for answers at www.socialsecurity.gov/retire2/rule.htm.

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Social Security and Medicare

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Q. I am retired and on Social Security disability. I am 63 and now receiving regular pension since 62. I am covered by FERS BC/BS. I was under the impression that my coverage continued till age 65 when I retired in 2000. I will have to wait till 66 to retire under the new Social Security rules for retiring. Will the health coverage continue till age 66, or will it stop at 65, leaving me with no insurance since I can’t get Medicare till age 66 now? And how does one keep the coverage later?

A. First, a correction. The eligibility age for Medicare is still 65. Only the age at which someone becomes eligible for a Social Security benefit has changed.

Now on to your basic question. As long as you continue to have premiums deducted from your annuity, you will be able to continue your Federal Employees Health Benefits coverage for the rest of your life.

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Military service and federal employment and retirement

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Q. I was born on Aug. 2, 1967, and was in the military for nine years and three months (Feb. 25, 1992, to June 13, 2001). I worked at the VA hospital for 11 months (October 2003 to September 2004) and while there received my 10 years of service pin.

I am looking to obtain GS employment again (soon) and wanted to know if I could retire and receive a retirement check once I complete 10 more years of service, giving me 20 years of service. If I am unable to receive my retirement check after 20 years of service, at age 55, when would I be eligible to? Given the scenario above, what is the best retirement option for me once I am back in the GS system (FERS or CSRS), and do I have to pay money back to receive a retirement check?

A. No, you couldn’t retire with 20 years of service. The earliest you could retire would be when you reached your minimum retirement age, which is 56 years and six months. Further, you would get credit for your active-duty service only if you made a deposit to the retirement system.

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FERS RIF and annuity

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Q. I am 57 and have 27 years of service as a FERS employee with the Interior Department. I am in an RIF situation and would like to know my options.

It appears, because of my age, that I am eligible for an immediate annuity.

Will my annuity be reduced because of my age and my being three years short of 30 years of service?

A. Yes, you will be eligible to retire, and you won’t be penalized because you are short of the 30 years of service normally required for an immediate, unreduced annuity.

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Workers’ compensation and separation

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Q. I’m a postal worker under FERS. I started in 1988. I’ve been on workers’ compensation for the last four years. Now they are starting separation procedures.

I guess that’s code for termination, but am I eligible for retirement disability? And if so, do I have to take the retirement disability, or can I continue to collect workers’ compensation.

And if they separate me from the post office, does that mean that my workers’ compensation stops.

A. You’ll have to apply for disability retirement, which your agency is required to help you do. If you are approved for it and you continue to qualify for workers’ compensation, you’ll have to choose between the two benefits. As a rule, workers’ compensation is a better choice financially.

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Service computation date

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Q. I started in the government on Feb. 21, 1984, as a full-time equivalent temporary employee not to exceed one year but managed to get another job in November of that year — FTE, 18 months to three years — which became a permanent job. FICA was being taken out of my pays. What will be my service computation date for retirement purposes? I will have 29 years next month and be 56 years old. My personnel office is telling me January 1987. I am under FERS.

A. Your agency is correct. Unless you make a deposit for that period of nondeduction service, you won’t get any credit for it in determining your length of service or in your annuity computation.

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Special retirement supplement

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Q. In May, I will have 20 years under FERS with 10 years of military service included. I have bought back my military time. Will I be eligible for the special retirement supplement?

A. With 30 years of service, you could retire at your minimum retirement age.  MRAs range from 55 to 57 depending on your year of birth. If you retire on an immediate annuity before age 62, you’d be entitled to the special retirement supplement. However, the SRS would be based solely on your years of actual FERS service. Active-duty service for which you’ve made a deposit wouldn’t be  included in that computation.

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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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Five-year rule

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Q. I will be 66 years old in April. I have been with the Postal Service (FERS) for 16 years. I am eligible for retirement, but I am concerned about health insurance. I was always covered under my spouse’s insurance, since she started in the workforce before I did. I took on my own health insurance in January 2011 since she retired on disability due to medical complications. When I took on health insurance, I also covered for her health insurance. I know it has not been five years yet. What do I need to do to be eligible to keep health insurance?

A. You can relax. You only need to be enrolled in or covered by the FEHB program for the five consecutive years before you retire. You’ve met that requirement.

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FERS firefighter retirement

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Q. I am a federal firefighter and a FERS employee. In 2022, I will have 21 years of creditable service and four years of bought-back active military time and be 48 years old.

1. Will I be able to retire under the provisions of 25 years of service at any age?

2. Will I receive the special category retirement percentages (1.7 x high-3 x creditable service, etc.)?

3. Will I receive the special retirement supplement until 62?

4. Will I not be able to withdraw any Thrift Savings Plan annuities until 62?

A. Reg: 1. No, you won’t be able to retire. Only actual service as a firefighter — not active duty for which you’ve made a deposit — counts toward the 25-year requirement.

2. When you are eligible for retirement and do so, your annuity would be computed using the special category percentage for the first 20 years; the remaining time would be computed using the standard multiplier.

3. When you retire, you would receive the special retirement supplement, regardless of your age, until you reach age 62.

Mike: 4. You will have access to your TSP assets, for withdrawal or to purchase an annuity, as soon as you retire.

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Sick leave

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Q. When I retire under FERS, do I add my sick leave time to my service time, or do I cash in my sick leave?

A. Sick leave has no cash value. When you meet the age and service requirements to retire, it will be added to your actual service and used in the computation of your annuity. However, if you retire before Jan. 1, 2014, you’ll only receive half credit for any unused sick leave.

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