Ask The Experts: Retirement

By Reg Jones

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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FERS retirement

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Q.  I started my civil service career on Sept. 28, 1983. I was originally under the CSRS system until 1988 and I was offered a chance to change over to FERS. This was offered to employees who had under five years of service. I chose to change to FERS. They repaid me all of my monies that I had contributed to CSR retirement (7 percent annually) except 19 percent. I am assuming that this 19 percent was to pay into the FERS system.

My question is, does all of my time count under FERS toward my retirement computation for years in FERS? Does my FERS time go back to the actual start date of my civil service career. My service comp date is Jan 28, 1982, due to my military time. I had 20 months in the Air Force. If I buy these 20 months back, does my FERS computation date go back to Jan 28, 1982. This is my SCD in EBIS system. EBIS shows me as eligible to retire on July 15, 2013. This is the date that I turn 56.

Also, does the almost five years that I was under CSRS count toward my Special Supplement Retirement computation if I choose to retire before I’m 62 years old?

A.  Because you had fewer than five years of CSRS service when FERS went on line Jan. 1, 1987, by law you had to be converted to FERS. All that prior service then became FERS service and will be included when determining your total years of service and used in your annuity and special retirement supplement computations.

If you make a deposit to get credit for your active duty military service, it will increase your years of service and be used in your annuity computation. However, that deposit service won’t count when determining the amount of your special retirement supplement, which is based solely on actual FERS service.

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FERS retirement and spousal Social Security

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Q.  My wife, age 63, is retired from FERS and draws a monthly retirement check. When I turn 67 in three years and begin drawing my Social Security benefit, is she able to draw a spousal Social Security benefit (50 percent of mine) as well as her full FERS retirement check?

A.  You’ll find the answer at www.socialsecurity.gov/OACT/quickcalc/spouse.html.

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Health insurance and annuity reduction

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Q. I am a Postal Service employee under the Federal Employees Retirement System who will have eight years of service in April. If I decide to retire with 10 years of service in 2014 at the age of 58½, would I receive health benefits from the USPS, and could I receive a full annuity if I waited to draw the annuity at age 67, or would this affect insurance benefits?

A. If you retire with 10 years of service, your annuity would be reduced by 5 percent for every year you were under age 62. Assuming that you were enrolled in the Federal Employees Health Benefits program for the five consecutive years before you retired, you’d be able to carry that coverage into retirement. You could retire and delay the receipt of your annuity until a later date to reduce or eliminate the age penalty. If you did, your FEHB coverage would end after 31 days, but you’d be able to continue that coverage under the temporary continuation of coverage provision for up to 18 months. However, you’d be responsible for paying the entire premium, plus 2 percent for administrative costs. When that coverage ended, you’d have no coverage until your annuity begins, at which point you’d be able to re-enroll in the FEHB program.

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Sick leave math

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Q. I have a question regarding adding sick leave to complete partial months of creditable federal service. I’m a federal law enforcement agent with over 20 years of Federal Employees Retirement System time and am over 50 years old.  My service computation date is April 22, 1985, which means as of Dec. 22, 2011, I had 26 years, eight months of service, including military time. By Dec. 31, I’d have nine extra days of service that will be lost because the Office of Personnel Management only recognizes years and full months. I want to add sick leave days to complete a full 30 days and add a month of service time.

Every 174 hours of sick leave equals one full extra month of service; this translates to 5.8 hours per day (174 divided by 30 = 5.8).

On Dec. 31, my final sick leave balance would be 760 hours. So, to add one month of service, can I add 21 days of sick leave (21 x 5.8 = 121.8); then I’ll add an extra month of service (174 hours) and this will give me a total of 26 years, 10 months.

The total sick leave that I can still use will be: 760 – 121.8 – 174 = 464 divided by 2 = 232 (29 days).

 

A. I won’t check your arithmetic. Instead I can confirm that any leftover hours of actual service are converted into retirement days, which, on average are 5.797 hours long. In most cases, a retirement month is 174 hours long. Unused hours of sick leave are likewise converted to retirement days and added on.

If the combination makes up a full month, that month is added to your service time and used in the computation of your annuity. While it would be nice to thread the needle and end up with only enough combined hours to make up a month (or months), it’s prudent to allow yourself a little cushion in case you’ve made a miscalculation.

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Deferred annuity

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Q. I worked as a WG-10 for the Air Force from November 1985 to July 2000, after fours years of active duty. I already rolled over my Thrift Savings Plan 401(k). I was under the Federal Employees Retirement System, but I remember contributing a small amount each pay period toward retirement. Where can I find out what benefits I will receive and when I am eligible to collect?

A. Assuming that you didn’t get a refund of your retirement contributions, at age 62 you could apply for a deferred annuity. It would be computed using the following formula: 0.01 x your highest three years of average salary (your high-3) x your years and full months of FERS employment. Your active duty service wouldn’t be included in those years of service unless you had made a deposit for them to the civilian retirement system while you were still working for the federal government.

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Early outs and MRAs

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Q. You have indicated that when an early out is offered, Federal Employees Retirement System employees with more than 25 years are eligible at any age. So in theory, a potential annuitant could easily be less than 50. If the employee is not at the mandatory retirement age but has the 25-plus years of service accepts the offer, is he or she entitled to the Social Security makeup benefit? If not immediately, when?

A. Unless they are special category employees, such as law enforcement officers, they won’t be eligible for the special retirement supplement until they reach their minimum retirement age. MRAs range between 55 and 57, depending on the year of birth.

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Retired reservist under FERS

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Q. I am currently a federal employee under FERS. I am also a retired reservist eligible to receive retired military pay when I reach 60. Right now I’m age 50. I would like to buy back three years of active time toward federal time. Do I have to waive my military retirement pay when I reach 60?

A. No, you don’t. Only those who are receiving military — not reserve — retired pay are required to do that if they want to get credit for that time.

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Creditable service toward retirement

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Q. I am considering rejoining federal service and have a question about whether a prior temporary appointment is creditable service toward retirement. In the summer of 1970, I had a three-month appointment (summer job) at the U.S. Postal Service. Would this time be creditable toward CSRS retirement?

A. If you returned to work for the government, you would be covered by the Federal Employees Retirement System, not CSRS. I don’t know if your particular appointment in the Postal Service would be considered to be creditable service. You’d have to check with a benefits specialist in the agency that is considering hiring you to be sure. However, if it is, you’d need to make a deposit for that time plus accrued interest

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FERS retirement

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Q. I recently sent out a 3108 form to see if my time in the federal government can be repaid. I worked for the Defense Intelligence Agency from 1983 to 1984 and the U.S. Postal Service from 1985 to 1988. Since most of that time was spent in the old CSRS Retirement System,  I was told by Human Resources that this would count toward my annuity if I buy back my time and if I had in fact paid FICA during the times in question. Is this true?

A. If retirement deductions were taken from your pay during those years, you would automatically receive credit for it; however, if only Social Security deductions were taken out, you’d have to make a deposit to the retirement system for that period of service to get credit for it.

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COLA for customs officers

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Q. Customs and Border Protection Officers (CBPOs) were covered by standard FERS until 2008, when they went under a new enhanced (law enforcement) retirement system.  Standard FERS retirees do not receive a COLA until age 62, while law enforcement retirees do not have this requirement.   If a CBPO retires at age 57, will the entire immediate annuity be covered by the COLA or only the portion earned after 2008 with the remainder covered at age 62?

A. There is no such thing as a partial cost-of-living adjustment. If you have at least 20 years of law enforcement-covered service when you retire, you will receive the same COLA that is provided to other FERS retirees, regardless of your age. If you don’t have at least 20 years of such service, you won’t receive your first COLA until you reach age 62.

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Early retirement

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Q.  I took early FERS retirement at age 59 to take care of a family member. That problem has passed. Can I withdraw my retirement and come back to work for the government?

A. While you can’t withdraw your retirement, you can apply for a job with the federal government. If you get one, your annuity would continue and your salary would be offset by the amount of your annuity.

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Military buyback for rural carrier

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Q. I’m buying back 10 years and became a regular rural carrier in 2004. Does this mean, in 2014 I’ll be considered a 20-year mailman and at 30 years and minimum retirement age (55 years), I can retire? What exactly would I be collecting?

A. When you reach your minimum retirement age and have 30 years service, you will be eligible to retire. Your Federal Employees Retirement System annuity will be calculated using the following formula: 0.01 x your high-3 x your total years of service (actual and active-duty military for which you’ve paid a deposit).

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