Ask The Experts: Retirement

By Reg Jones

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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Military buyback

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Q. I was active-duty Navy (1980-84), then active Coast Guard (1991-2000). I received a tentative offer for employment with Army a few weeks ago (I’ve been a contractor since 2000). All required documents are submitted. Now I wait.

How do I buy my 13 years active duty into FERS? Can I use my existing 401(k) to pay this? How much would it cost me?

I also found out that, as of Jan. 1, the deduction for retirement went up to 3.1 percent. I guess a tentative offer before Dec. 31 doesn’t count for hired, so my pay is decreased. Adding on an increase in the cost of living (D.C. area), increase of health care coverage, retirement, Thrift Savings Plan, Social Security and decrease from my current salary, there’s not much of a paycheck left. What are the benefits of government employment? Any idea why Fort Belvoir does not have a cost-of-living adjustment?

A. Yes, you will be able to make a deposit to get credit for either or both your periods of active-duty service. When you are hired, your personnel office can explain how you do that and what it would cost. While you can use any source of money to make the deposit, I don’t know what the tax consequences of using your 401(k) would be.

The fact that you were made an offer of employment before the change in retirement deductions went into affect won’t change the fact that you’ll be required to pay the higher amount.

Your question about COLAs and Fort Belvoir makes no sense. Employees don’t receive COLAs, only retirees. And whatever COLAs one retiree gets are applied to the annuities of all eligible retirees. On the other hand, if you are referring to annual pay increases, these have been frozen for all employees for the past few years.

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Special retirement supplement

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Q. I would like to retire this year. I will be 56 in September with 34 years of creditable service — 28 under FERS and six years of military time that I bought back. Will I be eligible for the special retirement supplement, along with a FERS retirement? Or will I have to work for two more years under FERS to get the SRS?

A. Because you will have reached your minimum retirement age, you’ll be entitled to receive the special retirement supplement when you retire. However, the SRS will be based solely on the years you were covered by FERS. The active-duty service for which you made a deposit will not be included in that computation.

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Self-only vs. self and family

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Q. I am a FERS retiree with premium deductions from my annuity for Federal Employees Health Benefits family coverage. My wife is not a federal retiree.

1. If I change to single during open season, can I change back to family coverage the next year?

2. When I die, I assume FEHB coverage will halt for her, correct?

A. Yes, you can change from self-and-family coverage to self-only during any open season and change back during any open season. If you provided a survivor annuity for your wife, and you are covered by the self-and-family option when you die, she will be able to continue that coverage; if you were enrolled in self-only, she wouldn’t.

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Military service and retirement pay

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Q. I was hired in 1993 by the federal government under FERS. I made a military deposit for more than 10 years I served in the Army. I then joined the National Guard in 1995. I then transferred to the Army Reserve in 2000. In 2002, I was mobilized for 12 months (title 10) for Operation Noble Eagle. I returned to work. Then, in November 2004, I was mobilized again (title 10) for more than four years, I returned to work and made a deposit on that time. Then, in September 2009, I was mobilized again (title 10), and then I made the Army Reserve Sanctuary Program. I am to retire from this active duty in the next couple of months, and I am going to return to work.

I have been getting conflicting information; I am being told that I am still considered a reservist and that I am going to be able to collect my retirement now instead of at 60 years old. This is true; however, how is this going to affect my FERS retirement? Am I going to have to request a refund of all of my deposit, or will some of my active time or mobilized Reserve time still count toward my civilian retirement? My retirement order has my component as USAR.

A. While I can’t give definitive answers about individual cases, I can give you information that will help you determine where you stand.

First, you can receive credit for any periods of active-duty service by making a deposit to the civilian retirement system. That credit will be used in determining your length of service and in your annuity computation.

Second, if you make a deposit and are eligible for reserve retired pay, you’ll be able to receive that pay and your civilian annuity, with no reduction in either. However, if you have made a deposit and are eligible for military retired pay, you will have to waive that pay when you retire from your civilian job or you won’t get credit for that time. If you don’t waive that pay, you’ll receive a refund of your deposit, plus 3 percent interest.

Because this is a site for federal civilian employees and retirees, I don’t know when you could begin receiving your retired pay from either the reserves or active duty.

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Service computation date and military academy time

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Q. I am an Army retiree (July 2011) with 21 years and am serving as an Army civilian in Germany.

I recently bought back my military academy time in FERS. According to CPAC, they are not authorized to adjust my service computation date for leave accrual because of my retired military status. I do not believe this to be correct, since my service academy time did not count toward my military retirement.

What must I do to have OPM credit the 35 months of service academy time toward my service computation date?

A. CPAC is correct. The service computation date for officers is the date they graduate from a military service academy.

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Calculating retirement from part-time work

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Q. I’m in CSRS. In the 1980s, I worked part time for a few years, and my SF-50 shows part time, 32 hours a pay period. I saved all of my leave and earnings statements, which show that I actually put in 70 hours per pay period. How will this service be viewed for retirement calculation purposes? This situation doesn’t fit into an electronic calculator!

A. The method used to compute part-time service is at www.opm.gov/retire/pubs/handbook/C055.pdf. Scroll to Part 55B2.

Although this applies to FERS employees, as the result of a recent court case, it also now applies to CSRS.

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Substantial earnings and military buyback

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Q. I served 9.5 years in the Air Force and just short of five years for the FAA under CSRS. When I left the FAA in late 1987, because of a misunderstanding of how CSRS worked, I thought I had to withdraw my contributions to CSRS because I had fewer than five years.

Counting most of my Air Force time, I have 39 years of substantial contributions to Social Security. I returned to government employment two years ago and am considered CSRS Offset.

Since I plan to retire in four years, I am trying to determine my best option regarding paying back military time as well as withdrawn, and how that will affect my overall retirement income. Payback would come out of my 401(k)s.

From what I’ve determined from government websites, the windfall elimination provision does not apply if I have 30 or more years of substantial contributions.

But I have been unable to determine if this includes CSRS Offset and if making the military contribution subtracts from my years of substantial contributions. In other words, do I damage myself if I use 401(k) funds to make the military deposit?

A. If you had fewer than five years of CSRS-covered service when you left and had been away for one year before you returned, you should have been placed in FERS, not CSRS. That would be true regardless of whether you left you contributions in the fund or took them out when you left.

Further, if for some inexplicable reason you did have a choice between CSRS Offset and FERS, you would have had to make that decision on your return to government employment, not two years later.

Putting all that aside, all Social Security covered employment is counted when determining if a CSRS-covered employee has 30 years of substantial earnings under Social Security.

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VERA/VSIP vs. military retired pay

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Q. I’m a civil service employee covered by FERS. My agency is offering Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay. I am 62 and receiving military retired pay. I’ve been told that I’m not eligible for either VERA or VSIP because I’m receiving military retired pay. Is that true?

A. Not that I’m aware of. According to the Office of Personnel Management:

Employees in the following categories are not eligible for VSIP. Employees who:

1. Are re-employed annuitants;

2. Have a disability such that the individual is or would be eligible for disability retirement;

3. Have received a decision notice of involuntary separation for misconduct or poor performance;

4. Previously received any VSIP from the federal government;

5. During the 36-month period preceding the date of separation, performed service for which a student loan repayment benefit was paid, or is to be paid;

6. During the 24-month period preceding the date of separation, performed service for which a recruitment or relocation incentive was paid, or is to be paid; and

7. During the 12-month period preceding the date of separation, performed service for which a retention incentive was paid, or is to be paid.

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Military buyback

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Q. I retired Aug. 31 after 30 years as a mailhandler. Would it benefit me now to buy back my military time?  I have the information I need and I am ready to put the check in the mail to buy it back. I just can’t find the info on how long I have after retirement to buy it back. Will it benefit me after I have already retired under the mailhandler early-out? I am 57, and retired under FERS.

A. You’re too late. Only employees can make a deposit to get credit for their active-duty service.

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CSRS Offset

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Q. I am contemplating retiring this year with 30 years in FERS. I was under CSRS when I started in 1970 and left in 1974 to start my family. I was reinstated into the federal government in March 1987, with a new service computation date of 1983 and four years in CSRS. When I returned, I was automatically placed into FERS.

Now that my retirement is drawing closer and I have been to Social Security, they are telling me that they will take two-thirds of my Social Security benefits, listed as CSRS Offset. I have done some research and see that since I only worked four years and not the specified five, that I am not considered a CSRS Offset.

Chapter 3 of the Federal Retirement System Handbook states: “Returning employees eligible for re-entry into CSRS, either with or without Social Security coverage, may choose coverage under FERS; such an election must be made during the first six months after rehire. Employees without five years of creditable service under CSRS are automatically enrolled in FERS with their previous service credited under that program. Employees either automatically enrolled or who elect FERS are not subject to the offset.”

Am I correct in my interpretation?

A. You are reading it correctly. Whoever told you that you were CSRS Offset doesn’t know what he or she is talking about. All of your CSRS service automatically became FERS service when you returned to work for the government.

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Deferred retirement

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Q. I am a full-time letter carrier with 25 years of service at 50 years of age. I am having health issues and have trouble completing my job. I am considering deferred retirement this month. As I understand, I’ll lose my health insurance, but I can apply for my FERS retirement at my minimum retirement age of 56 with no penalty. What is your opinion?

A. Unfortunately, you are mistaken. If you resigned and applied for a deferred retirement at age 56, your annuity would be reduced by 5 percent for every year you were under age 60 (5/12 percent per month). If you wanted to receive an unreduced deferred annuity, you’d have to wait until you were age 60. If health issues are making it difficult for you to carry out the essential elements of your job, you should apply for FERS disability retirement. If you do that, you’d also need to apply for Social Security disability benefits, otherwise the Office of Personnel Management wouldn’t review your application.

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VISTA and creditable service

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Q. I am looking into my retirement options. I have 28 years as a FERS employee. I was also in VISTA from 1978 to 1979. I would like to know what I need to do for that year to be counted as creditable service. I have spent the last two years trying to get this information from my human resources department and other retirement counselors. Everyone is familiar with buying back military time, but no one appears to know the specifics for VISTA. Can you help?

A. That’s shameful. All those folks needed to do was consult the Office of Personnel Management’s CSRS and FERS Handbook for Personnel and Payroll Offices. You’ll find what you need by going to www.opm/gov/retire/pubs/handbook/C020.pdf and scrolling down to Section 20A2.1-2, which applies to both CSRS and FERS employees.

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VERA and age penalty

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Q. I’m 58 and have worked under FERS for 20 years. If I take an early-out, do I get any penalties? What would my retirement benefit be?

A. If you retired under the Voluntary Early Retirement Authority, you wouldn’t be subject to an age penalty. Your annuity would be computed using the standard formula: .01 x your high-3 x your years and full months of service.

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VERA denial

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Q. I work for NASA and will be eligible for early FERS retirement under a Voluntary Early Retirement Authority this year. Can the agency or center deny an employee who requests a VERA separation if he/she is eligible? The response from my center has been, “While VERA requests are generally approved, employees must remember that separating under VERA is not an automatic entitlement and requests can be denied for various reasons.”

I would like some policy insight to substantiate this statement. Are there approved criteria associated with such a denial? I would like to plan in advance for an early retirement, but this would not be possible if a denial could occur at the time of application.

A. Your center is correct. VERA is a management tool, which it can use to achieve its organizational goals. In its sole discretion, it can identify the positions to which the VERA applies and omit others. What it can’t do is single out an individual who is part of a group holding the same occupation and grade and say, “X can sign up for early retirement and Y can’t.”

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Annuity calculation

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Q. How many years of federal service does one have to work before retiring and receiving the exact amount of pay they are getting while working? Someone said you had to work until 35 years of service to receive your full retirement pay.

A. Regardless of which retirement system you are in, it would be impossible to retire and receive an annuity that equaled what you were earning as an employee. Under FERS, even if you worked for 50 years, your annuity would only equal 55 percent of your highest three years of average salary (.011 x your high-3 x 50). Under CSRS, you would receive the maximum earned annuity of 80 percent when you completed 41 years and 11 months of service. Of course, under both retirement systems, unused sick leave would be added and allow you to receive additional annuity. And if you were a CSRS employee who continued working after 41 years and 11 months of service, you could use your excess retirement contributions to purchase additional annuity, just as you could if you had participated in the Voluntary Contributions Program. However, it’s unlikely that they would get you close to the exact amount you were earning when you retired.

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Term employee benefits

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Q. I am 58 years old and am separating from a Department of Interior agency due to a term employment expiration. I have 10 years in the federal system: six years as a permanent employee and four years as a term employee. The permanent position was as a GS 11 Step 3, and the term position is a GS-12 Step 5.

I am trying to find information regarding retirement options. Where can I look for this kind of information? Specifically, I’d like to calculate how much I may receive if I start taking a pension now, and how much I would be eligible for if I hold off until I’m 62 years old, four years from now.

A. Go to www.opm.gov/retire/pubs/handbook/hod.htm and review chapters 42 (MRA+10 Retirement) and 45 (Deferred Retirement). Then review the FERS portion of chapter 50 (Computation of Annuity Under the General Formula).

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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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VERA and special retirement supplement

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Q. I have been working for the Postal Service since September 1988, and I am now 58½. I will have 24 years and five months service time when the early retirement offer takes effect. Beside the annuity, do I also get that special retirement supplement? If so, how much is it if my retirement pay at 62 from Social Security is $1,350 a month?

A. Yes, you’ll be entitled to the special retirement supplement. While I can’t tell you how much it will be, I can give you a formula that will approximate the amount. Here it is: Take that Social Security benefit estimate provided to you by the Social Security Administration, multiply it by your total years of FERS service, rounded to the nearest year, and divide the product by 40.

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