Ask The Experts: Retirement

By Reg Jones

Pre-MRA retirement annuity, and where sick leave goes

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Q. I am 51 and was born in 1961. I work in FERS. My MRA, I believe, is 56. I have 28 years in federal service. Will I get an annuity if I retire now before my MRA? If I do get an annuity, how big a reduction will it be from the pension I would get if I retired at 56?

Also, I have seven months of sick leave. Do I lose it all when I retire, or does it get applied as service credit?

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Retirement and rehiring under FERS

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Q. I am a 51-year-old Defense Department employee with 13 years of continuous service under FERS and am considering relocating out-of-state and working in the private sector. Since my MRA is 56, I am not eligible for the optional (voluntary) retirement or MRA+10. My plan is to apply for a deferred annuity and leave my FERS retirement untouched after separation to avoid benefit reductions. However, I plan on returning to federal service.

Having recently attended the FERS midcareer retirement planning workshop, I am aware of the pros and cons of each retirement option.

More specifically, under MRA+10, FEHB and FEGLI are terminated upon separation and can be reinstated when the postponed annuity begins; however, under the deferred retirement option, FEHB and FEGLI are not reinstated.

My questions are: 1. If I return to federal service at age 56, is there a minimum duration I need to work before I can retire under the MRA+10 option? 2. Once I return to federal service, will my contribution to FERS remain at 0.8 percent? (I realize employee contributions to FERS may be increased based on recent proposals in D.C.) 3. Is there any other scenario where, upon returning to federal service, I would not simply be picking up where I left off?

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FERS combined employment time

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Q. I left civil service with just shy of 21 years of combined time (bought back 14 years of military) in November 2011 at age 44 (1967).

I did not withdraw any money from FERS, but I moved my TSP to an annuity. My intent was to just apply for a deferred retirement at age 62 to avoid penalties.

However, if I returned to Civil Service before 62, how many years would I have to work to be eligible for full health benefits under FERS? I also assume that if I returned by age 47 and worked until 56, I would have 30 years and could retire with an immediate annuity at my MRA, correct?

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Law enforcement job, other jobs and retirement at 50

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Q. I am an 1811 criminal investigator with 21 years of covered law enforcement service. I am 48. Have I locked in my law enforcement retirement such that I can pursue another noncovered federal job while maintaining the option to retire when I turn 50?

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Special category employee retirement and new income

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Q. I am 51 and retired with 22 years with the Federal Bureau of Prisons. In our agency, we could retire at age 50 with 20 years of service or at any age with 25 years of service. Our maximum retirement age is 57. I thought I understood from retirement training that in our special circumstances, earnings rules did not apply until we reached age 57, or when we would have been forced to retire. In other words, after early but full eligibility retirement, we could work and we would not be penalized or limited with new income, in that it would negatively affect our current retirement annuity. That includes a Social Security supplement that law enforcement retirees receive. A retired co-worker/friend says I am wrong about that. He says we actually are limited until age 57, at which time we can earn as much as we are able without it affecting our retirement and Social Security. Please advise. I am being offered a job with which I would really like to be involved, but I am concerned that it will pay me too much if my co-worker is correct.

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Retirement age and fund eligibility

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Q. I plan to retire at age 57 (MRA) with 25 years of service. I want to avoid the yearly 5 percent penalty by postponing the receipt of annuity. Will I start receiving my annuity and Social Security supplement at age 60?

A: No, to both questions. To avoid the age penalty, you’d have to postpone the receipt of your annuity to age 62, when you would no longer be eligible for the special retirement supplement.

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Military service and federal service and retirement

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Q. I served on active duty (Army, O-4) for 12 years and had four years in the Guard enlisted time during college. Do my 16 years qualify me for any benefits under FERS once I reach 65? Does it make sense for me to try to get a job in the federal government to work for five more years and reach the magic 20?

A: First, if you got a civilian job, you would have to work for 5 years to be vested in the retirement system. Second, to get credit for active-duty service, you’d have to make a deposit to the civilian retirement system. Third, the age and service requirements to retire are: age 62 with five years of service, 60 with 20, at your minimum retirement age (MRA) with 30 or at your MRA with 10 to 29 years. It’s up to you to decide if it makes sense to go to apply for a job in the federal government.

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VERA, MRA and special retirement supplement

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Q. I work for USPS. I heard from one of my supervisors that there was an article in Federal Times about postal employees told by OPM that if they took the 2009 VERA before reaching their MRA, the employee would not be eligible for the special retirement supplement at the time they take the VERA, but that when they reached their MRA, they would be able to receive it.

She said that after these employees who hadn’t reached their MRA took the 2009 VERA reached their MRA, they were being told that because they took the VERA before they had reached their MRA, they would not be able to get the supplement. She also said that a nationwide class action lawsuit had to be filed by the American Postal Workers Union, which resulted in a “one-time exception” being granted by the Social Security Administration to get those retirees their supplement.

I was also told the problem was with the Social Security Administration, which I was told governs the supplement program, and that OPM overstepped its authority in telling employees who took the VERA before they reached their MRA that they would still be able to get the supplement after retirement when they reached their MRA. Is there any truth to this?

A. Your supervisor is so full of it that it’s a wonder she can still breathe. Employees who retire on a VERA before reaching their MRA will begin receiving the special retirement supplement when they reach their MRA. OPM didn’t overstep its bounds and, as a result, there isn’t any class action suit in the works.

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MRA requirement

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Q. I am a federal employee with 23 years of service and have just turned 56 years old (my MRA). If I am involuntarily separated before I have a year in under my MRA, will I be able to opt to continue my Blue Cross/Blue Shield, which I have carried my entire career, with the government continuing to pay the portion it has always paid? What if I choose to take an early retirement before I have a year in under my MRA?

A. I have no idea what you are talking about when you mention needing to have a year in under your MRA. There is no such requirement. If you are involuntarily separated, you have the age (at least 50) and the service (at least 20 years) to retire. And, because you have been enrolled in FEHB for the five consecutive years before you retire, you can keep that coverage in retirement, with you and the government sharing the premium costs, just as you did when you were an employee.

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Military and federal service and retirement

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Q. I am looking at a job with the USPS. I have 10 years of active-duty service in the Air Force and three or four good years in the Reserve. I never reached 20 years to receive military retirement. How do these years in military service apply toward retirement and benefits if I get a job with the USPS? Do I have to buy back these years if I never received retirement, and how does that work? Then how long would I need the USPS job to gain retirement from the USPS?

A. If you worked for the federal government, you would only receive credit for you active-duty service if you made a deposit to the civilian retirement system. To be vested in the civilian retirement system and eligible for a retirement benefit, you’d have to have five years of full-time service. Any active-duty service for which you made a deposit would be added to that. To retire, you’d need one of the following age and service combinations: 62 and 5, 60 and 20, your minimum retirement age (MRA) and 30 or your MRA+10, but with a 5 percent reduction for every year you were younger than age 62.

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Military buyback and Social Security

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Q. I am a VA employee with 31 years of VA service and three years in the Marine Corps.

I am 60. If I qualify for a FERS MRA+30 retirement (which I believe I do), would it make a significant difference in the monthly SS portion of my benefits if I bought back my three years of military time before I actually retired?

A. Making a deposit for that time would increase the amount of your annuity; however, it would not affect your special retirement supplement or your actual Social Security benefit.

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Special retirement supplement

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Q. I am confused about the supplement. I am 55 with 27 years in. My minimum retirement age is 56; reaching that mark would qualify me for the supplement, but how much will that be? My Social Security statement says $1,400 projected at age 62.

And if I take the supplement, I understand I can only make, in addition to that, some $14,000. What happens at 62? Is my Social Security reduced for taking it at 56, or is this a nonpenalized benefit I am receiving?

A. To be eligible for the special retirement supplement, you would have to retire on an immediate annuity with one of the following combinations of age and service: age 62 with five years of service, 60 with 20 or at your minimum retirement age with 30. If you were offered and accepted early retirement, you’d be eligible to receive the SRS when you reached your MRA.

An individual cannot determine the exact amount of the SRS. However, you can estimate it by taking your Social Security estimate at age 62, multiplying it by your years of FERS service rounded to the nearest whole number and dividing the product by 40.

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Returning to federal work

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Q. I am 48. I was active-duty enlisted Navy from 1983 to 1993, so I have 10 years’ active duty. I got out as an E-6 with an honorable discharge. I am also 10 percent disabled, which happened when I applied for the CAVET program. I live in California. I took an early-out special separation bonus lump sum to get out after 10 years. President Reagan was drawing down the forces at the time and offered the early out.

I don’t see any money because I understand I have to pay back the SSB lump sum.

I have been working in the civilian community (nonfederal jobs) since I got out in 1993.

I am employed with a good company and have been so for more than five years, so I am vested.

Lately, I have had the bug put in my ear that I should get a federal job because I can continue the 10-year tenure I started in the Navy.

1. Is this true?

2. If this is true, I have also been told I would have to buy back my military time to continue my tenure? ‘Is this true too?

3. If questions 1 and 2 are true, what should I do? If I can get a federal job and buy back my time, would it be worth it to quite my current stable (knock on wood) job? I would like to just understand my choices. I care more about using the 10 years I have in the Navy than making more money.

A. If you went to work for the federal government, you could make a deposit to the civilian retirement system to get credit for your active-duty service. If you did it within two years, no interest would be charged. After you worked for five years full time for the federal government, you’d be vested in the retirement system. Here are the age and service requirements to retire: age 62 with five years of service, 60 with 20, at your minimum retirement age with 30 or at your MRA with 10 but fewer than 30. MRAs range between 55 and 57 depending on your year of birth. In general, your annuity would be based on the following formula: .01 x your highest three consecutive years of average salary (your high-3) x your years and full months of service (actual and military service for which you made a deposit).

Further benefits that might help you make up your mind include getting credit for your active-duty service in setting your annual leave accrual rate; participation in the Thrift Savings Plan, where contributions you make would be matched up to a certain level by your agency; health benefit and life insurance coverage, with the premium costs shared by you and the government; and the opportunity to take those two benefits into retirement.

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Early retirement options

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Q. If and when the phased retirement takes effect, will it be possible to combine it with an early out, if announced, so that you could go half time earlier than otherwise? I’m 57 with 25 years’ service and am in FERS.

A. No. To participate in the program, you must be eligible for immediate retirement. In other words, age 55 with 30 years of service or age 60 with 20 (CSRS) or at your MRA with 30 years of service or age 60 with 20 (FERS).

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MRA

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Q. I served in the Marine Corps active duty from 1975-1987, then in December 1987 became a civil servant under FERS as a special agent (1811) until I retired in 2009 with 21 years of civil service. I bought back my 12½ years of active-duty military time, giving me 33½ years of federal service at age 51 (I was 17 when I joined the Marines).

I stayed in the Marine Corps Reserves with 20 good years and will start to draw my military retirement annuity at age 60.

I am 55. What is my MRA? I receive the special retirement supplement now (retired under the law enforcement/firefighter special provision); will it end when I am 56? Or if my MRA is 62, will it end then and will I begin to draw my full Social Security annuity?

A. You were born in 1968, so your minimum retirement age is 56 years and eight months. However, because you were a law enforcement officer, you were entitled to receive the special retirement supplement on the day you retired. The SRS will stop when you reach age 62, at which time you’ll be eligible for a Social Security benefit. If you apply for it at that time, the benefit will be 30 percent less than it would be if you had waited until you were older. Because you were born in 1968, your full Social Security retirement age is 67.

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Retirement options under FERS

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Q. I am a 43-year-old federal employee, and I had seven years of military time and so far 15 years of service under FERS. I have made a deposit for my military time, so I am at 23 years. I just made GS-11. What is the option for retiring at the end of that three-year period as a GS-11 for my high-three?

A. There is no option because you won’t meet the age and service requirements to retire on an immediate annuity: age 62 with five years of service, 60 with 20, at your minimum retirement age with 30 or at your MRA with 10 but fewer than 30. If you don’t want to stick around until you meet one of those combination, the only thing you could do is leave government and apply for a deferred annuity when you reach age 62.

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Law enforcement officer retirement

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Q. I am employed with the federal prison system, which gets law enforcement officer coverage. With five years of civilian service and eight of military paid for, I will have 13 years of total service. I’m only 34 now, but if I leave to pursue other employment, will I qualify for an MRA+10 annuity at 57 or deferred annuity at 62? Also, what will be used to compute my annuity —1.7 percent or 1.0?

A. If you left, you’d be eligible for either an MRA+10 annuity at age 57 or a deferred annuity at age 62. If you elected to retire at your MRA, your annuity would be reduced by 5 percent for every year (5/12 of 1 percent per month) that you were under age 62. In either case, your annuity would be computed under the standard 1.0 percent formula.

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Age, service for federal retirement

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Q. I am a retiree from the military after 20-plus years. As a civilian, I plan to work in the federal government. What is the federal government’s vested time? What is the early (minimum) retirement time — i.e., service time and age?

A. You would need to work for five year to be vested in the retirement system. The age and service requirements to retire are: 62 and five, 60 and 20, at your MRA (minimum retirement age) with 30 or at your MRA+10, but with a 5 percent reduction in your annuity for every year you were younger than age 62.

Note: If you wanted to, you could make a deposit to the civilian retirement system and get credit for your years of active-duty service in determining your years of civilian service and in your annuity computation; however, when you retired, you’d have to waive your military retired pay.

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Disability retirement

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Q. I am 51 (I turn 52 in April) and have been a law enforcement officer for 23 years, plus four years of military time that I bought back. Because of torn retinas, I have lost all depth perception permanently and have been placed on light duty pending further medical review. I will likely be ruled unable to perform in a law enforcement position and unfit for duty. I wasn’t planning on retiring, but now it might be forced on me with a FERS disability retirement. If that is the case, what is better — to just retire voluntary, before they rule on me, or wait and go out on a disability retirement? I’m also confused on the SS supplement, unless you lose that because you’ll get SS benefits too.

A. Retiring voluntarily is a certain thing. Applying for disability retirement isn’t. There’s more paperwork involved, a longer wait for a determination and uncertainty about whether your application will be approved.

Assuming that either way would result in your retirement, you can check the math to find out which one makes better financial sense. As a regular retiree, you’d receive 34 percent of your high-3, plus the special retirement supplement once you reached your minimum retirement age. As a disability retiree, during the first 12 months you’d receive 60 percent of your high-3 minus 100 percent of any Social Security disability benefit you were entitled to. From that point forward, you’d receive 40 percent of your high-3 minus 60 percent of any Social Security disability benefit.

You wouldn’t be entitled to the special retirement supplement, even if you weren’t approved for a Social Security disability benefit.

Note: The standards for a Social Security disability benefit are much higher than those for FERS disability retirement. In the latter case, you only have to be sufficiently disabled that you can’t perform useful and efficient service in your own job or one of similar grade and/or pay. In the former, you have to be completely disabled for all gainful employment.

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Earnings test for FERS retiree

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Q. For a FERS retiree at 50, working air traffic controller, so no earnings test applies to FERS supplement until MRA of 56:

Assuming the retiree earns significant income, and birthday is June 1, when does the earnings test apply? There is some confusion about Social Security earnings test beginning at the end of the year in which they turn 56, and others say it would apply at the end of the month in which they were born.

A. The answer is at www.opm/gov/retire/pubs/handbook/C051. Scroll to Section 51A3.1-1D.

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