Ask The Experts: Retirement

By Reg Jones

Retired military

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Q: I am 63 and a retired Marine. I started working for the VA in September of 2009 and decided not to participate in a buyback. There is a FERS deduction taken from my pay. Will I be eligible for retirement under FERS? If so, when?

A: You would be eligible for an annuity after you have completed five years of FERS service.

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LWOP and benefits

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Q: I will be on long-term 12 to 18 months of LWOP. Can you tell me the impact on my retirement (FERS), health benefits, life insurance and any taxes due. How do I pay these premiums to continue my benefits in the future, especially when I retire.

A: The answers to all your questions except taxes due will be found at www.opm.gov/oca/leave/HTML/LWOP_eff.asp. For the tax question, you’ll have to go to the Internal Revenue Service.

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Future pension

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Q: If I left federal service (FERS) at age 56 with 14 years of service, would I be eligible for a FERS pension at age 62?

A: If you didn’t take a refund of your retirement contributions, you’d be eligible for a deferred annuity at age 62.

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Active duty and reserve service

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Q: I served 15 years of active service in the Marine Corps. I was discharged and for the past three years I have had a job as a civilian in the federal government. I would like to buy back my 15 years of active-duty military time to have it count toward my FERS retirement. I am also planning to join the Marine Corps Reserve. If I buy back my 15 years of active service and then serve in the reserves for five years, am I then eligible to receive a retirement check from the reserves and also have that same 15 years count toward my civilian government retirement? In short, can I receive two separate retirement checks using the same 15 years of active service? On a related note, does my time in ROTC also count toward my military reserve retirement?

A: Since this is a site for civilian employees and retirees, I don’t know if you’ll be eligible for a retirement check from the reserves. However, if you are and you make a deposit for your active-duty service, you will be able to receive both benefits.

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Elimination of FERS supplement

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Q: The congressional supercommittee proposed eliminating the FERS supplement. The committee failed to reach agreement, but I can’t help but think these proposals will surface again. Had they been successful, would this elimination have applied to all employees retiring under FERS after enaction of their proposals? Or would it only have applied to new hires with less than five years of service? What if an employee retired under early out provisions before enaction? I’m 53 with 30 years of service and won’t be eligible for the FERS supplement until October of 2014. If the proposed action would have passed or has potential to pass in the future, do you know if I would be affected, or would still be eligible for the supplement if I took the early out before it’s enacted?

A: You want what you can’t have, a prediction of future events. You’ll just have to wait to see what changes, if any, occur and, if they do, how they will be applied.

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Military, civilian retirement

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Q: I completed 19 years of active-duty service in the Army. I completed my time in the Texas National Guard for retirement. At age 60, I started receiving my military retirement check. I am a federal civilian employee with 11 years under FERS. I have received my statement (amount) of buyback of military time. I want to be sure I will retain my military retirement check. Buyback will give me a total of 30 years for civilian retirement when I pay the deposit. I just want to confirm I will receive both retirements with no reduction.

A: If you make a deposit for that active-duty service, you’ll be able to receive both retirement benefits with no reduction in either.

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Retirement-date numbers

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Q: I am a FERS employee who plans to retire Nov. 30 or Dec. 31 this year or Jan. 15, 2013. My Service Computation Date is May 15, 1982. Which one is the best date to retire? I will be 59 on Aug. 20. I also read an article about losing annuity supplement if it exceeds the maximum amount
of $14,160 annually (not my Social Security benefit unless I retire at 62).

A: I can’t advise you. What I can do is give you some facts that may help you make a decision. First, the 2012 leave year ends Jan. 12, 2013. If you retire after that date, any annual leave you have above the maximum carryover will be lost. Second, as a FERS employee, if you retire after the last day of any month, you won’t be on the annuity roll until the following month. For example, if you retired Jan. 12, you wouldn’t be on the annuity roll until February. Third, to receive a full cost-of-living adjustment in the year following your retirement, you’d need to be on the annuity roll in December. Any month you retired after that would result in your COLA being reduced by 1/12th.

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Sick and annual leave

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Q: I am a FERS employee who has more than a year of accumulated Sick leave. Under the current rules, I can get credit for 50 percent until 2014 when I can get 100 percent credit. What’s the first day I can retire to get the 100 percent credit, and how does that fit with the best day to retire to take advantage of getting paid for the maximum amount of annual leave 240 carry over, plus the maximum accumulated during the last year?  Can I get both or will I have to make a choice?

A: You can get full credit for your unused sick leave if you retire on or after Jan. 1, 2014. Because the 2013 leave year ends on Jan. 11, 2014, you could retire up to that date and get credit for all your accumulated annual leave.

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No buyback

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Q: I work for the government under FERS. I retired from the military after 20 years, but did not buy back my time for retiring from the federal government. I am a GS13 and will be 62 next year and will also have 10 years working for the federal government. Will I get some sort of retirement? Will I be allowed to draw a retirement from the the federal government and also continue to draw my military retirement pay?

A: To be eligible for a FERS annuity at age 62, you would only need to work for five years. If you retire at that age with 10 years, your annuity would be calculated using this formula: 0.01 x your high-3 x 10 years. Because you haven’t combined your active-duty military service with your civilian service, you’ll be able to receive both benefits, with no reduction in either.

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Penalty for early retirement?

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Q: My activity is offering VSIP/VERA. I am 56 and have 22 years in service under FERS. Do I get the 5-percent penalty if I accept the offer? Am I allowed to withdraw monthly on my TSP? Can I receive the Social Security supplement?

A: You won’t be penalized for being under age 62 if you are approved for early retirement. And, because you were born between 1953 and 1964, you’ll be eligible to receive the special retirement supplement.

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Social Security calculation

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Q: I will have to retire (age 57) in January 2014 as a federal
law enforcement officer with 29 1/2 years of service under FERS. If I am
correct, the Social Security Supplement will be calculated by multiplying my Social Security estimate of $1,792 per month (obtained from their website) times 29.5 divided by 40 (40 quarters). This will equate to $1,321 per month at retirement or $15,859 per annum. Did I calculate this correctly?

A: Close. However, the formula you used needs one minor adjustment. Your FERS-covered years should be rounded up to the next higher whole number, which would be 30. The answer then would be $1,344. Just remember that the Social Security estimate you received will have changed by the time you retire. Also that the amount you receive will vary according to your Average Indexed Monthly Earnings, just as it is true with any Social Security benefit.

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Re-employment and RIF

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Q: Our base is about to undergo a Reduction in Force. I retired from the Air force Reserve and I’m a retired civil service employee due to the fact I was in the Air Force Technician Program. When I turned 60, I was forced to retire. I am receiving an annuity and have been re-employed. Would my service computation date still help me keep my job, or would I end up at the bottom of the list since I am a re-employed, rehired annuitant?

A: As a re-employed annuitant, you are an “at will” employee. This means you can be released at any time and for any reason. Your service computation date wouldn’t protect you because, as a re-employed annuitant, you would have the lowest retention standing.

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Pay caps in annuity calculation

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Q: I am  a GS-14 Step 6 Federal 1811. With my locality pay (New York) and availability pay, I am subject to the bi-weekly and annual pay cap. For calculation of my high-3, do they use my grade plus locality plus availability pay (as per the charts) or do they use the lower amount that I got paid due to the pay cap?

A: Your annuity will be based solely on the highest three consecutive years of average pay that you actually received, the amount from which retirement deductions were taken.

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Dual health coverage

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Q: My wife and I are federal employees. I’m under CSRS and will probably retire in 2012 with 40+ years of service at age 62. She is under FERS and not eligible to retire until 2017. We’re enrolled in a family FEHBP under my name. Does it make sense for us to swap during this Open Season so that we are covered by a family plan under her name and paid for by her pre-tax dollars? Are there procedural risks of me dropping coverage and her new election not going through, which would jeopardize me meeting the five-year rule for carrying coverage into retirement?

A: There are no risks in switching during Open Season because you only need to be enrolled or covered by the FEHB program for the five consecutive years before retirement to carry that coverage into retirement.

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Retirement and pension

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Q: I receive military retirement pay under FERS for 21 years of service in the Air Force. I started working a job as a federal civilian employee two years ago.  I did not buy back my military time. If I continue to work as a federal civilian for another seven years (bringing my total federal
service to 30 years), how will my retirement pay be affected? Will my monthly retirement pay increase?

A: If you don’t make a deposit for your active-duty service and, at retirement, waive your military retired pay, you won’t get any credit for it in determining your years of civilian service or in your annuity computation. Assuming that you continue to work until you have 10 years of civilian service and have reached your minimum retirement age, you could retire under the MRA+10 provision. However, your annuity would be reduced by 5 percent for every year you were under age 62 unless you retired and postponed the receipt of your annuity to a later date.

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FERS disability

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Q: I am a recently disabled 58-year-old letter carrier with 28 years of service. Since I reached my MRA at age 56, am I considered eligible for “voluntary” retirement under the FERS disability rules? I take that to mean I would only receive roughly $1,200 a month with no Social Security supplement, as opposed to 60 percent of my salary if I was under age 56.  After reading your archived FERS disability articles, I am still unclear on this particular issue.

A: If you retired voluntarily, you would be doing so under the MRA+10 provision (minimum retirement age and at least 10, but fewer than 30, years of service). As a result, your annuity would be reduced by 5 percent for every year you were under age 62.

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Standby Premium and FLSA in high-3?

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Q. I am a Federal Employees Retirement System non-law enforcement officer (1811) employee who receives Standby Premium and Fair Labor Standards Act pay. I can retire at age 56, when I will have 33 years of service. In calculating my high-3 average, will Standby Premium and/or FLSA pay be included in the average?

A. An employee’s basic pay is used to calculate his high-3. To see what’s included and excluded from basic pay, go to www.opm.gov/retire/pubs/handbook/C030.pdf.

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Disability and health benefits

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Q. I’m retired under the Federal Employees Retirement System, and have been retired for over 10 years. I was injured on the job, unable to perform the work I was doing, and have had to change to an office job. I was lucky enough to be employed by the state and had really good insurance. So I opted out of my FERS medical benefits and received a larger annuity monthly payment. I didn’t think at the time that double insurance was needed.

I am 47 now, still disabled and unable to return to my government job. I continue to receive an annuity but would like to opt back in for the medical insurance. Is that possible during open enrollment?

If I’m still considered disabled at 62, will they stop all payments and consider me permanently disabled? Will I have to apply for Social Security disability, or do the payments continue under a different name?

A. The fact that you didn’t elect to continue your Federal Employees Health Benefits insurance into retirement bars you from re-enrolling now. As for your annuity, if you are still disabled when you reach age 62, your annuity will be recomputed as though you worked to 62. As a result, actual service will be added to the time you spent on the disability rolls. The total will be multiplied by 1 percent and the product will be multiplied by your high-3 on the day you went on disability, increased by any FERS cost-of-living adjustments payable from that time to age 62.

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Buyback and FERS

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Q. I retired from the Air Force last year after 27 years and now work as an Army civilian. I plan to work 10 more years, then retire at age 67, when I will have a combination of my Air Force retirement, Federal Employees Retirement System retirement and Social Security. To what degree, if at all, would I benefit financially from using the military buy back to pay into FERS? How many years should I buy back, and how soon should I do it?

A. If you made a deposit for your active-duty military service, you would get credit for those years in determining your eligibility to retire and in your annuity computation. Because you would have at least 20 years of service and be age 60 or older, your annuity would be calculated using a more generous formula: 0.011 (instead of 0.01) x your high-3 x your total years and full months of service. In exchange for receiving credit for that active-duty service, you would have to waive your military retired pay when you retired from your civilian job.

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Returning to government service

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Q.  I left the Postal Service approximately 10 years ago.  At that time I had 22 years of government service and was covered under the CSRS but did not qualify, so I did not receive any retirement.  I opted to take the money out of my retirement at that time. If I were to return to government service:

(1) Would I be able to receive credit for the 22 years of service that I had previously performed?

(2) If so would I be covered under CSRS or FERS?
A.  1. If you took a refund of your retirement contributions after Feb.28, 1991, you’d get credit for that time in determining your years of service but it wouldn’t be used in the computation of your annuity unless you redeposited that money, plus accrued interest. If you received the refund before that date, you’d get credit for the time; however, unless you redeposited the money, plus interest, your annuity would be actuarially reduced based on on the amount you owe and your age at retirement.

2. If you returned to work for the federal government, you’d be placed in CSRS Offset (CSRS and Social Security) with the option of transferring to FERS.

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