Ask The Experts: Retirement

By Reg Jones

Federal, state annuity offset

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Q. I am CSRS and worked 20 years between 1983 and 2004. I am considering taking a job in a Texas school district.  Will there be any offset between my CSRS annuity and my Texas state annuity?

A. No, there won’t.

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Severance pay

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Q. I am 52 with 17 years in the federal government (FERS). I am not eligible to retire yet and am not eligible for a discontinued service retirement. My agency field office is closing, and I have decided to decline their directed assignment outside of my state. I am eligible for severance pay due to the fact that it is not a reasonable job offer (it is outside of my commuting area, and I am not subject to a mobility agreement). I have submitted my information and found I am eligible to receive one year’s worth of severance payments. I know that if I receive severance payments but soon after get hired into another federal job, the severance payments will stop. Read the rest of this entry »

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Re-employment

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Q. I am a FERS retiree since 2003. May I work as a temporary fire lookout for the same agency?

A. There is nothing that would prevent you from being rehired by your former agency if it wanted to do so. However, you need to find out what the effect of taking that job would be. As a rule, the salary of a re-employed annuitant would be reduced by the amount of his annuity. If that turns out to be the case with the temporary lookout position, you’d end up working for nothing.

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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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Early-out and bonus repayment

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Q. I may be offered an early-out in May. I have been working for the Army Corps of Engineers for the past 34 years. I’m a CSRS employee. If I take the buyout and have a chance to go work for FEMA or the U.S. Forest Service fighting fires out west this summer, can I do this without paying back the bonus?

A. According to the Office of Personnel management, “An employee who receives a [Voluntary Separation Incentive Pay] and later accepts employment for compensation with the Government of the United States within five years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it — before the individual’s first day of re-employment.” You’ll have to check with your potential employer to determine if there is any exception to this rule.

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VSIP repayment

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Q. I am about to retire as a heavy equipment operator for the Department of Public Works. I have been offered a job as a property book manager with a contractor. Will I have to repay their Voluntary Separation Incentive Pay?

A. According to the Office of Personnel Management, “An employee who receives a VSIP and later accepts employment for compensation with the Government of the United States within 5 years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it – before the individual’s first day of re-employment.” Whether this restriction will apply to you is something you’ll have to check out.

Motto: Look before you leap.

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VSIP and re-employment

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Q. I worked for the federal government for over 28 years. I retired last year under Voluntary Separation Incentive Pay provisions June 30, 2012.

I am considering re-employing/reinstating. Am I eligible to return to work on July 1, one year after retiring? Can I repay the VSIP in cash or in payments?

I read once that you can make payments for up to 36 months upon re-employment but am not sure whether this is correct. I understand the VSIP must be paid back before I return to work.

Upon re-employing with the government, will I be able to contribute to FERS and the Thrift Savings Plan?

I noticed on the USAJobs website that some Navy notices state you can’t contribute to the retirement or TSP if your a re-employing annuitant. Yet others I read from other government agencies remain silent on this issue.

A. Reg: You can return to work for the government at any time after you accept a VSIP. However, if you accept employment for compensation with the government of the U.S. within five years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, you must repay the entire amount of the VSIP to the agency that paid it before your first day of re-employment.

Both things you read about re-employment are true. As a rule, your salary would be offset by the amount of your annuity and you would be able to contribute to the retirement fund. If you worked for a full year, you’d receive a supplemental annuity; if you worked for five years, you’d receive a redetermined annuity. On the other hand, there are certain limited authorities that would allow you to return to work and receive both your full annuity and the full salary of your new position. However, you would not be permitted to contribute to the retirement fund and, when you retired again, you wouldn’t be eligible for any additional retirement benefits.

Mike: From published Office of Personnel Management materials: “If a re-employed annuitant is performing service covered by FERS or CSRS (i.e., the appointment is made pursuant to 5 U.S.C. § 8468 or § 8344(a), respectively), the re-employed annuitant is eligible to participate in the TSP.

Agency contributions for a FERS re-employed annuitant must begin with the effective date of the reappointment to the FERS position as discussed in Section VI (A) of this bulletin. The re-employed annuitant may make contribution elections as discussed in Section III of this bulletin.

If a re-employed annuitant is not performing covered service (e.g., a FERS annuitant who is re-employed on an intermittent basis or an annuitant authorized to receive full salary and full annuity under P.L. 101-509 or the National Defense Authorization Act of 2004), the re-employed annuitant is not eligible to participate in the TSP.

Generally, re-employed annuitants are performing covered service. In most cases, if the annuitant indicator on the Standard Form (SF)-50, Nature of Action, is coded “1,” “4,” or “5,” the re-employed annuitant is eligible to participate in the TSP. In the case of a FERS re-employed annuitant, this will be reflected in the retirement code (which indicates FERS) because the annuitant is required to have FERS deductions taken from pay.

In the case of a CSRS re-employed annuitant, however, this may not be reflected in the retirement code because the annuitant may not be required to have CSRS retirement deductions taken from pay. Consequently, the retirement code of a CSRS re-employed annuitant may be “4” (i.e., none), though the annuitant is performing service covered by CSRS and is therefore eligible to participate in the TSP.”

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Reinstatement to civil service job

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Q. I quit my civil service job after 29 years. Can I be reinstated?

A. You could check with your former agency to see if it would be willing to either reinstate or hire you. Or you could go to www.usajobs.gov, find a position for which you are qualified, apply for it and, if hired, pick up where you left off. However, if you withdrew your retirement contribution when you left, you’d have to redeposit that money plus accrued interest to get credit for those 29 years of service.

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Rehire retirement

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Q. I have been re-employed under CSRS since Jan. 22, 2006. I have more than 30 years of civilian government service and I am over 55 years old. I am going to retire a second time next month. My annuity continued during my re-employment, it was withheld from my pay for the entire re-employment, and I paid into CSRS at 7 percent of the total amount (pay plus withheld annuity).  It is my understanding and that of my personnel office that I will get a re-determined annuity based as if I had never retired. I want to make sure all of the correct forms are submitted. At present, I have completed an SF 2801 application for immediate retirement, a W-4p, and an SF 2818 (FEGLI). They have given me an estimate that appears correct. I am supposed to review the part of the SF2801 that they completed next week. I want to make sure there is nothing else for me to do.  Also, what is the next step after I check out from this employment? What should I expect from the Office of Personnel Management?

A. Your personnel office has advised you well. I’m not aware of anything else you have to do. As for OPM, your current annuity will continue until OPM has determined the amount of your new annuity. Assuming that your new annuity will be higher than the old one, when OPM determines the amount, you’ll be given a retroactive payment that covers each month before the new annuity amount was set.

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Buyback

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Q. I am 54 years old and was employed with a federal agency for 17 years from 1979 to 1996. Upon resignation to enter the private sector, I withdrew 100 percent of my CSRS contributions. If I return to full-time federal employment this year, do I have the option of buying back the creditable service of 17 years for the same amount that I withdrew in 1996? Secondly, would I be able to continue with CSRS rather than FERS upon re-employment? Would I be eligible to retire after eight more years of federal employment service?

A. 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. On your return, you would be able to redeposit the money you took out and get credit for your prior service. However, it wouldn’t be the amount that was refunded to you; it would be that amount plus accrued interest. If you made the redeposit, you’d get credit for your prior service in determining your total service and in your annuity computation; if you didn’t, you’d only get credit for it in determining your length of service. Either way, you’d be able to retire at age 62.

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Wait before re-employment

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Q. I plan to retire this year under CSRS. I am interested in obtaining a seasonal position with the Internal Revenue Service. I will not receive a buyout. How long do I need to wait to be re-employed by the federal government?

A. You would have to be off the rolls for three days. FYI: If you take a federal job after retiring, the salary of your new position may be offset by the amount of your annuity. Before taking a seasonal job with the IRS, you’ll need to check with their personnel office to see if that rule will apply to you.

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Retiree returning to federal service

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Q. I am thinking about returning to work for the federal government. I retired in November 2010, with 35 years of federal service at the GS-12 level. I have a 17-year-old graduating for high school, and he will need financial assistance. If I got a job at the GS-6 level, how would that affect my annuity? I would be under the old retire system CSRS.

A. Your new salary would be offset by the amount of your annuity. Therefore, taking a job at the GS-6 level would reduce your new salary to the point where it might not be worth the effort.

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Retirement pay

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Q. I retired from the Postal Service after 30 years in June 2010. At the time, I did not repay my military service, which was 2½ years. I receive my Civil Service pension based on a combined civil service of 33 years.

I also do not qualify for Social Security, as I have fewer than 40 credits (39). I also know that if I do not qualify for Social Security at age 62, after that point the Civil Service will always remain for a 33-year retirement that they do not continue to check eligibility. If I get re-employed with the post office as a relief postmaster part time, will this change my civil service retirement by taking the military time away from my civil service retirement and putting it into Social Security? If this does affect my retirement, how much of a hit on the Civil Service will I take, versus how much will I make in Social Security? I know that once I qualify for Social Security, my pension will reduce the amount I receive from Social Security due to the windfall elimination provision.

A. If you were re-employed by the Postal Service, the pay of your new position would be reduced by the amount of your unreduced annuity. As a result, you might be working for peanuts or even nothing. Assuming that you received enough pay to make it worth your effort, you’d be covered by CSRS and Social Security, unless you elected to be covered by FERS. In either case, you’d be earning Social Security credits. If you later became eligible for a Social Security benefit, it would be impacted by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system, such as CSRS, where he didn’t pay Social Security taxes and has fewer than 30 years of substantial earning under Social Security.

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Redetermined annuity and sick leave

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Q. I am a re-employed FERS annuitant, and my salary is offset by my annuity. I have a CSRS component to my FERS retirement. When I first had my discontinued service retirement in March 2009, the CSRS portion of my sick leave was credited to my annuity. My FERS sick leave portion was not. When I returned to federal service in 2011, I was credited the unused FERS portion of my sick leave to my employee account. When I am eligible for a redetermined FERS annuity, after five years, what will happen to the original sick leave credited to the CSRS part of my annuity? Does it go into the calculations of the redetermined annuity, or is it gone? Does my current FERS sick leave balance go into the redetermined annuity calculations?

A. When you retired, you were given credit for any sick leave you still had to your credit when you transferred to FERS. That leave was added to your actual CSRS service and used in the computation of the CSRS component of your annuity. When your annuity is redetermined, that computation will be based on the total CSRS service with which you were credited (actual and sick leave). The FERS component computation will include your current sick leave balance.

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Re-employment and sick leave carryover

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Q. My husband was a temporary federal employee for the Defense Department for five years. He was laid off in August. He had two years of military service, which he bought that time back, so in essence he has seven years of federal service. He is 60 years old. He put 10 percent of his salary in the Thrift Savings Plan. Should he leave that money in TSP or put it in another vehicle?

Also, when he reaches retirement age (62), will he receive a pension for the seven years of federal service? He left DoD with a sick leave balance — his annual leave he was paid for. Is it true, if he receives another government position within three years, his remaining sick leave will carry over?

A. Reg: He would be eligible for an annuity at age 62 if he had five years of full-time service from which retirement deductions were taken and he didn’t take a refund of those deductions when he left. The unused sick leave he had to his credit when he left wouldn’t be included when his annuity was computed. On the other hand, if he returned to work for the federal government, his sick leave would be restored.

Mike: He should leave his money in the TSP for as long as possible, and manage it there. Its costs and investment options are superior to those he’ll find anywhere else.

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High-3 and re-employment

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Q. I have a little more than 20 years of CSRS and resigned in 2001, leaving my contributions in place. I am considering re-entering and will be covered under CSRS Offset. If I work for three to four years and resign, will my deferred annuity at age 62 be based on the new high-3? I’ve heard conflicting information about how many years I would have to stay under CSRS Offset for a new high-3 calculation.

A. Your high three is always the highest three consecutive years of average salary, regardless of when they occur in your career. For example, it could be based on the two years before you left plus one year after you returned to work, one year plus two or the three most recent years. In fact, if you returned at a lower salary than you’d been earning leading up to 2001, it would be based on the three years before you left government.

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Re-employment and retirement earnings

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Q. I retired under CSRS on April 30. What are the rules on my re-entering the federal workforce part time? I would like to keep earning my full retirement.

A. Unless you were hired into one of those rare positions that allowed you to receive your annuity and the full salary of your new position, your salary would be offset by the amount of your annuity. If that was the case, being hired as a part-time worker could reduce your salary to a handful of small change.

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Rehired annuitant and leave

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Q. I have been employed as a rehired annuitant under FERS for more than three years and will retire again. While re-employed, I received both my annuity and the salary of my new position. What is the procedure in reference to my annual leave? Will I be given a lump-sum payment for it? And as far as sick leave, will my hours incurred be added to my time as an annuitant.

A. While you will receive a lump-sum payment for your annual leave, you won’t get credit for unused sick leave, nor will you be eligible for a supplemental annuity. No one hired into a position where he receives both his annuity and the full salary of his position receives retirement credit.

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Retired annuitant and rehire

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Q. I am a retired FERS annuitant with less than 20 years’ federal service. I retired as a GS-13 in December 2004 with 13 years’ service. Can I be rehired if I agree to give up my FERS annuity?

A. Here’s what will happen if you are rehired. As a rule, the salary of your new position will be offset by the amount of your annuity. Thus, the total amount you receive will be the same; it will just come from two places. Note: In rare circumstances, you may be hired into a position that allows you to keep your annuity and the full salary of your new position.

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Military buyback and redepositing FERS contributions

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Q. I have returned to federal service and want to redeposit my FERS contributions that were returned to me.  Neither the Office of Personnel Management nor the Air Force Personnel Center can tell me whether the nine years of military time I bought back while I was previously a federal worker was returned along with the FERS contributions. Now that I have returned to federal service, the nine years of military service is not showing as credible time so I was hoping one of the experts here could shed some light on this for me. Would the bought-back military time be returned to me as part of the FERS return? If not, shouldn’t I be allowed to re-buy my military time back?

A. When you left government and asked for a refund, you received both your retirement contributions and the deposit you made to get credit for your active-duty military service. Now that you have returned to work for the government, you can redeposit your retirement contributions and once more make a deposit to get credit for your active-duty service.

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