Ask The Experts: Retirement

By Reg Jones

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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Military buyback and annuity

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Q. I am 64 with 3½ years in the Federal Employees Retirement System. I realize I need five years in FERS to qualify for a FERS pension. I bought back two years of military service time. Do these two years, added to the 3½ years in FERS, allow me to retire with a FERS pension?

A. No, they don’t. You need to have five years of actual FERS service to be eligible for an annuity.

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Social Security reduction

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Q. I am in the Federal Employees Retirement System and will retire Dec. 31. I will be 62 when I retire, with 41 years of service. Because Social Security is part of my retirement, will my Social Security checks be reduced if I work and earn more than the max allowed?

A. Yes. Your Social Security benefit would be reduced by $1 for every $2 you earn through wages or self-employment until the year in which you reach your full retirement age. At that point, the reduction would be $1 for every $3 you earn. There is no limit to the amount you can earn starting with the month in which you reach full retirement age. Note: The earnings limit is $14,160 in 2011. It will be $14,640 in 2012.

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Final paycheck

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Q. If I retire on Dec. 31 with 30 years at age 57 with a buyout, when will I receive my final paycheck, lump-sum buyout payment and my first FERS retirement annuity and supplement pay?

A. Only your agency payroll office can tell you when you’ll receive your final paycheck and lump-sum buyout payment. And only the Office of Personnel Management knows when you’ll receive your first annuity interim payment, which won’t include the special retirement supplement. You’ll only get that when you receive your first full annuity payment, which will include any amounts you are owed for both benefits. There is no way to estimate how long that process will take.

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Six parts

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Q. I will be age 56 on Feb. 15 with 22 years FERS time and nine years, 11 months active-duty military time (deposit paid); 31 years total. I also retired from the Navy Reserve and looking forward to a pension at 60. I would like to retire under the Federal Employees Retirement System at the end of 2012.

1. Will the nine years, 11 months be used to calculate my special retirement supplement? If no, why not?

2. Will the nine years, 11 months affect my social security benefits at age 62; if so, how and where can I find more information?

3. Will the nine years, 11 months affect my military retirement pension? If so, why and how?

4. Why is all this pertinent information not disclosed by personnel offices upon hiring so that employees can make better decisions about retirement earlier?

5. How long does it take the Office of Personnel Management to adjudicate my annuity?

6. Would it be more beneficial for me to withdraw my service deposit for the active-duty time and work another nine years and forget the confusion?

A. 1. No. By law, the special retirement supplement is based solely on actual years of service as a FERS employee.

2. All years of employment where Social Security deductions were taken from your pay will be included in determining the amount of your Social Security benefit.

3. The fact that you have made a deposit for your active-duty time won’t have any effect on your reserve retired pay.

4. Some agency personnel offices do a good job of providing the information that employees need; other don’t. Apparently yours is one of the latter.

5. I don’t know how long it will take. Not surprisingly, it varies.

6. You don’t really have a choice. Having made the deposit, the only way you could get a refund is if you resigned from the government before being eligible to retire and withdrew both your deposit and your retirement contributions.

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Four retirement options

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Q. I am a 58-year-old letter carrier covered under the Federal Employees Retirement System with 27½ years of service. I recently became incapacitated due to an occupational disease/illness. I am considering submitting a CA-2 form for worker’s comp under the Federal Employees’ Compensation Act, applying for FERS disability and Social Security disability, or applying for early retirement. Can I apply for all four options at the same time and choose the best option later?

What is not clear to me is the FERS disability option. Since I have reached my minimum retirement age and qualify for immediate retirement excluding the Social Security supplement, am I stuck with the 1 percent of high-3 annuity only, or can I receive the option for 60 percent of my current salary? The annuity option seems to be a huge disadvantage to the tune of $18,000 yearly until age 62 (estimated on a $53,000 base salary).

A. You are free to apply for any or all of the benefits you mentioned. In fact, you have to apply for a Social Security disability benefit if you apply for FERS disability retirement. Regardless of your eligibility for discontinued service retirement, you can apply for FERS disability retirement. If approved, during the first year you would receive 60 percent of your high-3 minus 100 percent of any Social Security disability benefit to which you were entitled. After that, you’d receive 40 percent of your high-3 minus 60 percent of any Social Security disability benefit. At age 62, your disability annuity would be converted to a regular annuity.

If you are also found eligible for both FERS disability retirement and employees compensation, you’d have to choose between the two. Your decision most likely would be based on which of the two provides the better benefit financially.

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Re-enroll in FEHB?

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Q. I accepted a buyout in 1997 under the Federal Employees Retirement System. I had 22 years of continuous service at that time but was under age 50, so I couldn’t retire. In February, I will be 60 and eligible to receive my pension. I was covered by the federal health insurance program for my entire federal career. Can I opt into it when I start receiving my benefits in February?

A. No, you can’t. Anyone receiving a deferred annuity, like you will be, can’t re-enroll in the Federal Employees Health Benefits program.

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Wasted buyback effort?

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Q. I’ve been in federal service a little over a year. If I decide not to stay in federal service, is all the money I’m spending to buy back military time being wasted?

A. If you stay for a full five years and then leave, you’d be eligible for a deferred annuity, and the military service for which you made a deposit would be included in your annuity computation. If you stay for less than five years, you wouldn’t be eligible for any retirement benefit. Therefore, you’d be better off asking for a refund of both your Federal Employees Retirement System contributions and your military deposit.

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Disability time and annuity

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Q. In 1999, I was forced to go on disability retirement by the Postal Service after 13 years of being under the Federal Employees Retirement System. In 2006, I was deemed to be back to full earning capacity by a few hundred dollars. In 2007, I finally obtained another federal position, which I have been in ever since.

What happens to those 7 years I was under disability retirement? I know if I had stayed under disability retirement when I reached age 60 or 62 (I forgot which age it was), all my time including the years on disability retirement would have been counted for the final annuity amount.

A. The time you were on disability retirement cannot be included when determining your total years of federal service.

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Early buyout retirement

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Q: I am 50 with 30 years of service. Will I be penalized if I take the early buyout at age 50 or at any age before my MRA of 56 years? If I draw my retirement at age 50, will I be entitled to receive my FERS supplement at age 56?

A: Yes, as a FERS employee you would be eligible to retire without the age penalty. That’s because you are at least 50 and have at least 20 years of service. As for the special retirement supplement, you’d be eligible to receive that when you reach your minimum retirement age, unless you have earnings from wages or self-employment that exceed the Social Security annual earnings limit.

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