Ask The Experts: Retirement

By Reg Jones

Pay back VSIP?

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Q. If you take an early-out with an incentive and, in turn, put in for a medical retirement and it’s approved, would you have to pay back the incentive?

A. No.

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Resignation and FERS benefits

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Q. My son David is a federal employee under FERS who recently suffered severe mental health problems.

1. If David resigns his federal position, will he be eligible to apply for a medical disability retirement after the date of submitting his resignation?

2. Is there any waiver(s) for the requirement of applying for Social Security Insurance prior to submitting an application for a medical retirement?

A. 1. Yes, he can file for disability retirement after he resigns. However, it would be better if he began the application process before that, because his agency has a role to fulfill which would be harder to do after he left.

2. No, the Office of Personnel Management won’t review his application for disability retirement unless he has filed for Social Security disability benefits.

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Medical retirement

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Q. I was told by Customs and Border Protection that I could still get a medical retirement even though I have more than 30 years of service. When I go to the Employee Benefits Information System, it says I can’t apply for medical retirement because I have more than 30 years.

A. Years of service have nothing to do with it. If an employee has at least 18 months of creditable service, there are only two situations in which he’d be unable to receive a disability annuity: First, whether he is covered by CSRS or FERS,  if he is eligible for regular, unreduced immediate retirement. Second, if he is a FERS employee who is age 62 or older, his annuity would be computed using the standard FERS formula. If he is a CSRS employee, he can apply for disability retirement and, if approved, begin collecting a disability annuity. However, if he is 60 years old or older or has 22 or more years of service, his disability benefit would the same as his earned retirement benefit.

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Medical retirement

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Q. I left Veterans Affairs Department service and withdrew my money from CSRS. When I came back after less than a year, I asked human resources to make sure I was under the same retirement system but only part time since I was in school. He told me not to come back part time, changed me to intermittent and said that since I came back after less than a year, it would not change anything. I found out that it threw me into the offset. I became eligible for retirement June 25, 2012, but have some ongoing medical issues and have still been working. A new problem came up that will probably necessitate my taking a medical retirement. When the medical retirement is figured, will my annuity still be decreased like it would if I took a regular retirement?

A. Because you have at least 22 years of service, there wouldn’t be any difference between the amount you’d receive in a disability retirement or a regular retirement.

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Windfall elimination provision exceptions

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Q. I retired with a medical disability from the FSRS in 1975, and I worked until age 62, when I applied for Social Security. I have read that if I medically retired from FSRS, the windfall elimination provision does not apply.

However, Social Security reduced my pension because I lacked 30 years of substantial earnings.

Which is correct?

A. The Social Security Administration is correct. Go to www.ssa/gov/pubs/10045.html. There you’ll find an explanation of the WEP and a list of the only exceptions to it. One of them isn’t medical retirement from the FSRS.

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Social Security quarters

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Q. I worked for the Department of Corrections as an officer for 18 years. I had a private retirement plan, so the department didn’t pay into Social Security. Then I had a medical retirement. Will I still receive any benefits? Prior to working for the department, I had worked and accumulated 38 quarters, which didn’t amount to much money. Do I still also have to get to 40 quarters?

A. No, you won’t receive any Social Security benefit unless you have 40 credits. To get the additional two credits you need, you’d have to earn $2,260 in wages or self-employment in 2012. Next year, that amount will be a little higher.

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CSRS vs. disability retirement

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Q. I am a CSRS employee with 33 years of federal service and I am 54 years old. My agency (the Postal Service) is offering a Voluntary Early Retirement Authority at the end of January. I am a disabled vet with 80 percent rating. Should I take the VERA or apply for medical retirement? I have paid all required quarters for Social Security, and have a daughter still in school. Which method is more beneficial? I plan to apply for 100 percent Veterans Affairs compensation as service-connected injuries are more disabling.

A. Based on your years of service, the only advantage of retiring on disability rather than taking voluntary early retirement is that in the latter case, your annuity would be reduced by 1/6 percent for every month you were under age 55. On the other hand, retiring under the VERA would be trouble-free, while applying for disability retirement not only requires a lot of time and effort, but there’s no guarantee that your application will be approved.

No matter which way you go, the fact that you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes will mean that you’ll be subject to the windfall elimination provision. The WEP will reduce your Social Security benefit if you have fewer than 30 years of substantial earnings under Social Security. Your VA compensation won’t be affected under either scenario.

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Disability retirees and the special retirement supplement

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Q. I am a Postal Service employee who has been injured on the job, and I now have permanent restrictions. My facility is supposed to close early next year. I am a FERS employee, 44 years old with 16 years of service. My manager told me to file for a medical retirement, which I did. Once approved for the medical retirement and when I would reach my normal minimum retirement age of 56.5 years, would I be eligible for the special retirement supplement before I begin receiving Social Security?

A. No, you wouldn’t. Disability retirees aren’t eligible to receive the special retirement supplement.

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Military retirement and FERS

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Q. I work for the Defense Contract Audit Agency. I served in the Guard or Army Reserve or on active duty for 21 years. From 2004-2006, I served in Afghanistan, and was injured during a combat mission. As a result, I was medically retired from the Army in January 2009.

I am a Chapter 61 retiree (a medical retiree with less than 20 years of creditable active service). I am unique in that I had multiple injuries, but the Army board awards a retirement for only one disability. As a result, my VA disability pay exceeds my retired pay, and all of my retired pay is waived. I also receive Combat Related Special Compensation.

When I worked at the Department of Veterans Affairs, the HR personnel said that since I do not receive retired pay, all of my military service time could be counted toward my FERS. Since I came to work at DCAA, DFAS has contacted me and said it will adjust my service computation date to include only the time I was in a combat zone.

Which interpretation is correct? Since I receive no retired pay, I don’t think it’s fair that I am treated as a military retiree. Chapter 61 retirees are already punished enough because we cannot receive full retired pay and full VA disability, and my case is one of the extreme ones.

A. What you were told by the officials at DFAS was correct.

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Health insurance following 6c disability retirement

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Q. I am a federal law enforcement officer with four years of service in a 6c covered position. I was injured in the line of duty and my agency is unable to accommodate me in another position, so I am being medically retired. What are the health insurance options for me and my family after my disability retirement?

A. Assuming that you are enrolled in the Federal Employees Health Benefits program, as a FERS disability retiree you will be able to continue that coverage. Note: When you apply for FERS disability retirement, you must simultaneously apply for Social Security disability benefits. If you don’t, OPM won’t process your case.

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Medical retirement and Social Security application

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Q. I am about to be medically retired. I have seven years of federal law enforcement service and three years of state law enforcement service. I have seen that I have to sign up for Social Security. I am confused about this because I wish to keep working, but because of my job duties, I am unable to continue working at my present job. I know I qualify for the FERS medical retirement. I am pretty sure I do not qualify for Social Security. So what happens to the medical retirement if I am denied Social Security? This is a work-related injury. I will more than likely go back out in the Office of Workers’ Compensation Program after my temporary additional duty is completed, and I also know I will have to pick OWCP benefits or medical retirement benefits that “can only be paid from one at a time.” I’m doing the medical retirement as a backup in case something goes wrong with OWCP; this way I can just switch to medical retirement if I am dropped by OWCP.

What happens to the FERS medical retirement if I am denied Social Security?

A. Because you are a FERS employee, you are required by law to apply for both disability retirement and Social Security disability benefits. If you don’t, OPM won’t process your application. You can qualify for FERS disability retirement even if you aren’t eligible for a Social Security disability benefit.

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Military medical retirement

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Q. I served in the Army for two years and nine months and was medically retired out. I have become a federal employee. I have been told by my HR office that my time in the service will not count toward my leave accrual or retirement because I was retired out. I have been to OPM’s website and looked at the regulations, and from what I can tell, OPM defines military retirement as that for which you are eligible to receive retirement benefits, which I am not. So I am confused.

A. According to OPM, these rules apply:

Under law 5 U.S.C. 6303(a)(A-C), an employee who is a retired member of a uniformed service as defined by section 3501 of title 5 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 Nov. 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.

If you meet the criteria, you’ll get credit for that time. If you don’t, you won’t.

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Workers’ comp

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Q. I have had five surgeries due to work-related injuries. I have four workers’ comp case numbers. I also have a permanent disability on my shoulder and will be receiving a permanent disability on my left forearm and wrist. I recently put in for medical retirement and am awaiting a decision. My workers’ comp doctor has mentioned several times that I should be on workers’ comp after five surgeries, but I don’t know how I am supposed to apply for that, and no one seems to want to answer those questions. Does putting in for the medical disability make me eligible for the workers’ comp disability, which pays more?

A. If you want to apply for workers’ compensation, you’ll need to fill out a copy of Form CA-1, available from your personnel office or downloadable at www.dol.gov/owcp/dfec/regs/complianceforms.htm. Having put in for disability retirement is irrelevant. If you qualify for workers’ comp and disability retirement, you’ll have to choose the benefit you prefer.

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Disability retirement and leave accrual

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Q. I served on active duty from March 1987 to August 1993. I was on the temporary disability retirement list for five years, then placed on the permanent disability retirement list. I was active during the first Gulf War but did not serve in country. I was stationed in Japan. I was told that time does not count for leave accrual because my disability was not caused by instrumentality of war. I was diagnosed with type 1 diabetes in 1992, and that is why the Coast Guard medically retired me.

A. To see the rules on leave accrual for retired members of the armed forces, go to www.opm.gov/staffingportal/vetguide.asp, then scroll and click on Service Credit for Leave Accrual and Retirement.

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5-year rule

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Q. I am looking into medical retirement after 32 years with the federal fire department. At this time, the Air Force doc has not cleared me to work because of some prescription meds that I take on my off days. I’m going in for thumb surgery for arthritis. I also have lower back pain, and four vertebrae are not in the greatest health. I had Blue Cross/Blue Shield before, and when I got married, I dropped it because my wife’s medical insurance was better than mine. But she lost her job and is now disabled, too, and had to get BC/BS for the family. They say I have to wait five years to carry the coverage into retirement. But if I go out with a medical retirement, do I have to have it for five years in a row?

A. Yes, you have to be enrolled for five consecutive years before you retire.

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Military medical retirement

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Q. I am on Title 32 with the Army National Guard approaching my 38th year. I have more than 16 years of active duty during this time, as indicated on my DD 214. I also work for the federal government (Army) as a helicopter flight instructor at Fort Rucker,Ala., and not the National Guard in this capacity, with almost 23 years at this position. I am not a technician, as both jobs are separated. I am also pending more Medical Evaluation Boards resulting from injuries sustained while deployed to Iraq in 2006-2007. Of course, I have my 20-year letter for retirement.

If I get separated from the National Guard for medical reasons due to the combat-related injuries, I have been told that I would be medically retired and start receiving retirement pay and benefits as of the date of discharge. Or would I have to wait until age 60 to receive these?

I am not law enforcement, ATC or any other special retirement plans under the federal government. Is there anything I can read and research regarding this issue?

I am also a disabled veteran rated at 30 percent, with 20 percent due to combat-related issues, with more on appeal.

A. What you were told is correct. For the whole story, go to www.opm.gov/retire/pubs/handbook/C046.pdf.

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Medically retired military buyback

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Q. I was medically retired from the military after about 15 years of service. I was receiving a pension from the Army until I was awarded compensation from the Veterans Affairs Department. The VA compensation was more than the Army pension that is taxable; therefore, I receive a VA compensation that is nontaxable (80 percent). Within the past three or four years, I was awarded combat-related special compensation because the injuries were considered to be combat-related during my military career. My time of service was Sept. 21, 1981, to June 19, 1996. Does the military buyback option apply to me without giving up my military pension?

A. Yes, it does.

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Dual status medically disqualified

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Q. I am a dual-status federal tech (16 years)/Air National Guard (19 years, 6 months) and I just turned 47. There is a very good chance I will be medically disqualified from the ANG within the next few months. I will be unable to pay the bills on 40 percent of my tech base pay. If I get another job, what is the maximum allowable percentage or amount I can earn without being “restored to earning capacity” and losing my annuity? Does that figure include the annuity?

Also, concerning the Air National Guard retirement, if I am a few months short of reaching 20 years, will I lose my military retirement at age 60?

A. The maximum amount you could earn from nonfederal employment in 2012 would be $14,640. If you earned more than that, your disability annuity would be suspended and not reactivated until your earnings fell below that level. Just be aware of the fact that if you took a job with the federal government, your disability retirement would be canceled.

Because this is a site for federal civilian employees, I don’t know what effect having fewer than 20 years of service will have on your military retirement. You’ll have to raise that question with your branch of service.

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Alternate retirement annuity

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Q. I am 60 years old and had emergency major open heart surgery May 16, 2011.  The Mayo Clinic in Jacksonville, Fla., installed a left ventricular assist device.  I had to stay away from my home in Georgia and stay close to the Mayo Clinic following this procedure for several months, which put a strain on my savings. I was forced to have to retire with approximately 37 years of government service. My retirement date was Sept. 2, 2011. I put in for an alternate retirement annuity because of my qualifying medical condition to help me pay my medical bills and pay my house off, etc. I handled all the retirement arrangements from Florida at the Mayo Clinic on a laptop. I am still on an interim retirement from the Office of Personnel Management and on the heart transplant list. If I get called for a transplant, I will need the lump sum for my expenses and medications.

I am confused about the tax treatment on my lump sum. I have approximately $118,000 in lump sum. This money has already been taxed by the government during the last 37 years every two weeks. I contacted OPM recently and was told about holding out money for taxes. In addition, OPM said it cannot issue a check over $100,000. I would have to get two checks minus these taxes. Is this double-taxing me? Can you calculate the present value of my annuity contract based on 37 years at 60 years old or give me a ballpark figure? My wife was 55 years old when I retired, and I put in for full survivor benefits.

I still do not understand the concept of the present value of my annuity contract. I would say it is $118,000 and it should cancel out and I should get my 20 percent back as a refund.

A. Although you have applied for the alternative form of annuity, it would only be granted if the medical evidence established that you have a life expectancy of less than two years. If OPM finds that you are eligible, the methodology they’ll use to make your lump-sum payment and calculate your remaining annuity and the survivor annuity available to your wife is at www.opm.gov/retire/handbook/C053.pdf. However, since that chapter was published, the present value factor for a CSRS retiree who is age 60 has changed to 204.6. Note: Although there is information about the tax treatment of these benefits in the chapter’s appendices, you’d still need to check with the Internal Revenue Service to be sure that it is current.

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Reservist retirement and federal employment

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Q: Will I have to retire from my federal job with Customs and Border Patrol with a medical retirement from the National Guard? I was called up for military duty. I bought back eight years of military service and have seven years with CBP for a total of 15 years.

A: As a rule, medical retirement from the National Guard would have no bearing on your employment by the Customs and Border Patrol. It would only affect that employment if your medical condition were such that it made you unable to provide useful and efficient service there.

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