Ask The Experts: Retirement

By Reg Jones

Reduced hours and high-3

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Q. I am a full-time Postal Service employee covered under CSRS. I have more than 30 years of service (active Postal Service + military buyback). I am still too young to retire, and will probably work another seven to 10 years. Recently, I changed to a nontraditional full-time position (NTFT) of 35 hours per week. Can you tell me how this reduction in weekly hours will effect the calculation of my high-3 in regards to my retirement? How far out from my retirement date would I need to change back to a full-time (40 hours per week) position to regain any benefit lost by the reduced hourly position?

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Re-employed annuitant

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Q. I am 55 years old and took an early retirement offer with an incentive from the Postal Service in August of last year. I had 26 years of full service. I am considering an opportunity to become re-employed part time with the U.S. Forest Service as a GS4 information receptionist at the local visitor center. This is a seasonal position lasting six months a year. How will this affect my Thrift Savings Plan withdrawals and my special retirement supplement when I turn 56? I retired as an EAS-18 postmaster.

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Part-time federal job after retirement

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Q. I have a question that follows up on a question and answer from Nov. 19, 2012. Could you explain in a bit more detail what is meant by the following statement?: “There are limited opportunities for a retiree to go back to work for the government either full time or part time while receiving both his annuity and the full salary of his position.”

Do you mean, for example, that, in most cases, the law prohibits a retiree of one federal agency from working part time for another federal agency, or imposes a negative consequence upon such a retiree who works part time for another federal agency?

I’m currently a FERS-transfer employee of the Defense Department. I’m wondering whether I could retire from a DoD position and work part time for the National Park Service while getting a full retirement annuity from the DoD job, and, if I could, whether I would nevertheless be penalized in some way.

A. What I meant is that there are only a few appointing authorities that would allow a retiree to receive both his annuity and the full salary of his new position. Further, agencies may only use such an authority under limited circumstances. For example, DoD’s authority is confined to hard-to-fill positions; when the position is critical to the accomplishment of the agency’s mission or to complete a project; or where the candidate has unique or specialized skills. The same is true of the FBI and the intelligence community.

On the other hand, most agencies, with OPM approval, can hire someone on a case-by-case basis, where there is an emergency or a severe recruiting difficulty. Further, there are limited-time appointments under Section 1122 of Public Law 111-84, when certain criteria are met.

To the best of my knowledge, the use of these authorities has been limited because the criteria are hard to meet. Instead, where agencies are re-employing an annuitant, they are doing so by offsetting the salaries of his new position by the amount he is receiving in his annuity. Note: If you should be hired into a position that allows you to receive both your annuity and the full salary of the position, the time spent there wouldn’t be creditable for either a supplemental or redetermined annuity.

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Retirees working part time

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Q. Has the Office of Personnel Management written the implementing instructions that allow federal retirees to retire part-time? I am interested in doing this with the Veterans Affairs Department but don’t know where to apply. I plan to retire Jan. 3, 2014.

A. Only your current agency personnel office can tell you that.

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VERA/VSIP and part-time work

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Q. Our installation is offering a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay. My service computation date is in November 1988, and I will be 52 this May. I have 15 years of part-time employment. A majority of these years were at 40 hours, biweekly. Approximately three to four years were 48 hours, biweekly. How can/do I calculate my estimated retirement pay, other than contacting ABC and requesting calculation? I’m afraid they will not be able to provide info before the deadline to apply for the VERA/VSIP.

A. You’ll find out how to do that by going to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c055.pdf and scrolling to Subchapter 55B.

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OASDI and taxes

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Q. I recently started working part time. I requested taxes be deducted from my payroll.  I note that I am being taxed old age, survivors and disability insurance. Is it a mandatory tax if I’m already retired?

A. Yes. Anyone who has earnings from wages or self-employment is required to pay that tax, even if he or she is already receiving a Social Security benefit.

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Health insurance payments in retirement

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Q. I am transitioning to part time from a full-time position. I plan to continue to work 0.6 FTE from age 53 until age 60, when I would like to retire. I will have 20 years and nine months at age 60. At what percentage will I pay the premium for my health insurance in retirement?

A. You will pay the same premiums as all other employees and retirees.

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Social Security computation

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Q. I’m a CSRS/FERS hybrid federal retiree receiving Social Security and working part time. My earnings come close to but do not exceed the $14,000 limit. My employer withholds Social Security taxes from my earnings. Will my Social Security benefits ever increase because of my earnings? What if I earn in excess of the applicable yearly amount?

A. If you are under full Social Security retirement age, your Social Security benefit would be reduced by $1 for every $2 you earn through wages or self-employment. In 2012, that limit is $14,640. In the year you reach full retirement age, your benefit will be reduced by $1 for every $3 earned above a different limit. In 2012, that limit is $38,880. There won’t be any limit beginning in the month you reach full retirement age.

Even if you are subject to the earnings limit, the amount of Social Security benefit you are entitled to will grow every year based on your earnings and contributions to Social Security.

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CSRS Offset

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Q. I am under CSRS Offset. My retirement plan has always been to retire and get a non-civil-service job. My idea was that the CSRS, even Offset, pension would be my bread and butter and the other job, probably part time, would be a supplemental. What I have read about CSRS Offset seems to indicate that it won’t work. As of age 62, I will get some money from CSRS and some from Social Security. But if I am working, won’t that stop me from getting the Social Security?

A. If you are retired before age 62, when you reach age 62, your CSRS annuity will be reduced by the amount of Social Security benefit you earned while a CSRS Offset employee. If you receive earnings from wages or self-employment that exceed the annual Social Security earnings limit, your Social Security benefit will be reduced by $1 for every $2 you receive above the limit. In 2012, that limit is $14,640. In the year you reach your full Social Security retirement age, the reduction will be $1 for every $3 you earn above a different limit. In 2012, that limit is $38,800. There is no reduction beginning in the month you reach full retirement age.

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Part-time work and annuity computation

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Q. I have been in CSRS for 30 years as a Veterans Affairs Department employee. The first 24 years, I had a 5/8 VA appointment, the last six, I have been 8/8. For CSRS annuity purposes, do the part-time years count as 24 years or 5/8 of 24 years?

A. You’ll get full credit for that time in determining your total years of service. However, your annuity will be prorated to account for that period of part-time service.

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Unscheduled hours and creditable service

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Q. I was informed that unscheduled hours that were/are worked while being a part-time employee are creditable toward years of service.

I am a CSRS employee. I began my service as a full-time nurse in 1983. I changed my status to part time in 1995. I returned to full-time status in 2011. From 1995 to 2011, I worked many unscheduled hours. How are unscheduled hours computed toward my creditable service time?

A. Only hours of work from which retirement deductions were taken are creditable for retirement purposes. You’ll have to check with your personnel office to see if they can establish whether that happened.

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Military buyback, Social Security, high-3 and TSP

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Q. I have 33 years in and am under CSRS. I will be 60 years old in May. I served less than two years in the Army in my 20s. I am a WG-8 making almost $25 an hour. I receive correspondence statements from Social Security that if I retire at age 62, I would be eligible for approximately $300 based on a second job 12 years ago and jobs before joining the government in the 1980s.

1. Should I buy back the time I have in the Army?

2. Will the buyback help increase my Social Security? Or will the money from Social Security lower my pension?

3. Should I get a part-time job to increase my Social Security benefit? I know I am not eligible for disability based on not having 40 quarters, but will the small amount of time I have paid into Social Security help or hurt me when I want to retire at 62?

4. Is there anything current on whether the top three years will be changed to top five? And, if it gets changed, should I retire before it is implemented?

5. Are there any ways to increase my pension other than saving with the Thrift Savings Plan or getting a second job (see above question)? I have reservations with TSP because of the taxes. I have money in it but am not saving. My understanding is I can’t touch it without penalty until age 62. Is this correct?

A. Reg: Because you were first employed before Oct. 1, 1982, you’ll get credit for your active-duty service in determining your eligibility to retire and in your annuity computation. If you aren’t eligible for a Social Security benefit at age 62, your annuity won’t be affected. The Office of Personnel Management only checks once, at age 62, if you are already retired, or when you retire if it’s at age 62 or later.

If you take a job after retirement and earn enough credits to be eligible for a Social Security benefit, it will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS, and has fewer than 30 years of substantial earnings under Social Security.

Mike: You’ll have access to your TSP money, without any early withdrawal penalty, as soon as you retire from federal service.

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Part-time re-employment

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Q. I am a federal employee under FERS and plan to retire from my current job at full retirement age and then continue working. Would I be able to work full time or part time for another federal entity without negative consequence? I’ve heard that there are new provisions being contemplated to allow retired federal employees to return to work part time in federal employment?

A. There is a new law, but it doesn’t apply to someone retiring from one agency and moving to another. It only applies to an employee who retires and continues as a part-timer in their same job, generally in a mentoring capacity. Since it is an agency option, you’d need to find out from your agency if such an arrangement would suit them. Note: There are limited opportunities for a retiree to go back to work for the government either full time or part time while receiving both his annuity and the full salary of his position. Only the agency with whom you’d like to be employed can tell you if a position in which you are interested is one of them.

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Phased retirement

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Q. Who is eligible for phased retirement under the bill that Congress passed that will allow retirement-eligible federal employees to work part time?

A. The law applies to anyone who has met the age and service requirements to retire on an unreduced annuity except for law enforcement officers — including Customs and Border Protection, Capitol Police and Supreme Court officers — firefighters, nuclear materials couriers and air traffic controllers, all of whom face a mandatory retirement age. However, the decision on whether to use the new authority rests solely with the employee’s agency.

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Disability retirement and part-time work

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Q. I am retired through a federal disability retirement system. Can I work for a state or local agency without it affecting my disability status or annuity payments? The job is part time; will not go over the 80 percent rule of income; and is totally different from the job I had when I was approved for federal disability.

A. Yes, as long as you don’t exceed the 80 percent limit and your reports in response to requests from the Office of Personnel Management don’t reveal that you’ve sufficiently recovered from your disabling condition to no longer be considered disabled.

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Windfall elimination provision

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Q. I worked 30 years under CSRS and when the judge for whom I worked retired, our office was “abolished,” and the law clerk and I lost our jobs. I then worked in the civilian sector for six years. I returned to federal court under CSRS Offset for 1½ years. Because of part-time jobs and the six years I worked in the civilian sector, I was eligible for Social Security. I retired after 31½ years of CSRS and the necessary quarters for SS.

When SS sent projections before I turned 62, it indicated I would receive about $700 a month in SS. However, at age 62, when I applied for SS, I was penalized 25 percent because of age and another 40 percent due to CSRS retirement. Now I get about $400 a month and $97 deducted for Medicare. Since I qualified for my 40 quarters of SS, please explain what is fair about my being penalized 40 percent because of government retirement.

A. You are subject to the government pension offset provision of law, which reduces the Social Security benefit of anyone who receives an annuity, in whole or part, from a retirement system, such as CSRS, where he or she didn’t pay Social Security taxes and has fewer that 30 years of substantial earnings under Social Security.

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RIF

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Q. I am a Postal Service employee involved in a reduction in force. Could I transfer to a permanent part-time position with the Transportation Security Administration and maintain my current retirement benefits as a civil service employee?

A. Yes.

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Part-time re-employment and annuity

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Q. I will be 64 this year and am considering retirement as a Senate employee. If I retire and begin my annuity from FERS, can I be employed part time and not lose any of my annuity or benefits if I earn less than the earnings limit set by Social Security?

A. With rare exception, if you retire and are re-employed by the federal government, the salary of your new position will be reduced by the amount of your annuity. So, before you accept another position, you’ll need to find out if it is exempted from this basic provision of law. If it is, you’ll be able to receive both your annuity and the full salary of that position. However, you’ll get no credit for that period of service when you leave it. In other words, you won’t be eligible for either a supplemental or a redetermined annuity.

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Survivor annuity

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Q. My husband worked for the federal government for about 40 years under CSRS, and he is now receiving a generous monthly pension. I worked various part-time jobs over the years, and I currently work for the federal government. When I retire, I will have worked less than 20 years under FERS, so I will be entitled to a small federal pension, and Social Security. Our primary source of income is my husband’s CSRS retirement.

If my husband should predecease me, I know I will receive a widow’s pension of approximately 55 percent of what he is currently receiving. Would there be any offset? In other words, let us say that I am entitled to receive $4,000 a month from CSRS widow’s benefit + $1,000 a month from my FERS retirement + $1,000 a month in Social Security benefits. Since my husband is under CSRS, would there be any government offset, or would I be entitled to the entire $6,000 per month?

A. You would be entitled to the entire amount.

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Annuity calculation for part-time work

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Q. I was hired in 1985 as rural carrier relief, then converted to rural carrier associate. I became full time in January 1995. I was allowed to buy back time for 1985-89. Do I receive full credit for four years toward retirement? How is the time from 1985-89 counted?

A. You’ll find the method used to compute an annuity that includes part-time service at www.opm.gov/pubs/handbook/C055.pdf.

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