Ask The Experts: Retirement

By Reg Jones

CSRS versus FERS retirement

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Q. I was allowed to go back into CSRS after an 18-year break in service even though I cashed out of it in 1991, with eight years of service. I can pay the redeposit back and have 12 years of service, if that is the wise thing, but I am waiting to see if I get a permanent job when this temporary job expires in 2014. Since I am only 54, I am beginning to wonder if I should have gone back into CSRS, because if I can’t find another federal job, and it is looking difficult with the budget questions, I still have to wait till age 62 to retire in CSRS, whereas if I were in FERS, I could retire at 55. Am I missing something?

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Federal employee re-employment

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Q. I worked for the federal government for 13½ years under CSRS. I left federal service in 1990 and withdrew my contributions because I never expected to go back. However, I was recently offered a job in the federal government that is worth taking and know I would have to go under FERS.

I was fairly young when I left the federal service, so I would work at least five more years before retiring. Can I buy back my previous 13½ years of federal service, and if so, would the deposit to buy back my time be based on what I received when I left in 1990, or would it be based on FERS contribution rates?

A. Because you took a refund before March 1, 1991, you’d get credit for that time in determining your total years of service. To get full credit for those years in your annuity computation, you’d have to redeposit the refund you received, plus accrued interest. If you didn’t, you annuity would be reduced actuarially based on the amount you owe and your age at retirement. If you were re-employed, your years of CSRS service would be treated as CSRS service. Therefore, you would be placed in CSRS Offset (CSRS and Social Security) with the option of transferring to FERS.

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Buying back retirement credits

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Q. I worked for the Postal Service from late 1979 until about 1991. I had a lot of personal and work-related problems and was also given a letter of termination. I decided to quit. I also tried to pursue a disability, but I dropped that because of stress and depression.

I withdrew my retirement to pay an accumulation of four months of bills and rent that I was behind in. I vaguely recall reading that there was a buyback of retirement. Is this true? I am applying for Social Security benefits. I am only 58, but, due to health concerns, am not able to work. I have 31 Social Security credits and need 40 for full benefits. If I could buy back those years of retirement, I would have the full number of credits.  I honestly don’t know how all this works.

A. If you took a refund of your retirement contributions when you left, you wouldn’t be entitled to any retirement benefit nor could you redeposit that money, plus interest, to get credit for that service unless you returned to work for the government. If you left your contributions in the retirement fund, you’d be eligible for a deferred annuity at age 62.

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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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CSRS retirement withdrawal and annuity

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Q. I am with the USPS and am in CSRS. I began working in 1973 and quit in 1977, at which time I withdrew my retirement money. I returned to the USPS in 1983 and am still there. Do I need to redeposit the money I withdrew to get credit for 33 years of service? If I do not redeposit the money, will my annuity be decreased?

A. Because you got that refund before Feb. 28, 1991, you’ll get credit for that time in determining you total years of service. However, if you don’t redeposit that money, plus accrued interest, your annuity will be actuarially reduced based on the amount you owe and your age when you retire.

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Redeposit

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Q. I started employment with the Defense Department in September 1981 under CSRS. In 1995, I took advantage of a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay because my organization was downsizing. I also took a refund on my retirement account, which I tried to invest in buying a home and lost it. I was reinstated in the government in 2004 and came back as CSRS Offset.  I also rolled my 401(k) from the job I had outside the government into the Thrift Savings Plan. I will be 65 on March 7, and was planning to retire in May. Because I did not put my retirement back into the CSRS account, will that hurt my plans for retirement? Will my annuity be greatly reduced because I did not redeposit the funds? If so, by how much?

A. If you don’t redeposit the retirement contributions that were refunded to you, plus accrued interest, you’ll still get credit for that time in determining your total years of service. However, it won’t be used in your annuity computation. In effect, your annuity would be based solely on the time between when you returned to work for the government and when you retire.

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Calculating interest on redeposits

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Q. I left federal service in 1988 after 13 years of service and took out my CSRS money, which was about $20,000 at that time. I have decided to return to federal service and want to be in CSRS Offset. I was told that repayment would include yearly interest and would be about $80,000. How is interest calculated? May I roll over either an IRA, Roth or my personal 401(k) into the CSRS Offset account to repay my debt and avoid paying taxes? What about the taxes on the $20,000 that I paid in 1988? Would they eliminate at least taxes on $20,000 of my IRA, etc., repayment if I cannot roll it over?

A. To find out how interest on redeposits is calculated, go to www.opm.gov/retire/pubs/handbook/C021.pdf.

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CSRS retirement withdrawal and redeposit

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Q. I am with USPS and am in CSRS. I began working in 1973 and quit in 1977, at which time I withdrew my retirement money. I returned to USPS in 1983 and am still there. Do I need to redeposit the money I withdrew to get credit for 33 years of service? If I do not redeposit the money, will my annuity be decreased?

A. Because you took that refund before Feb. 1, 1991, you’ll get credit for those years of service in determining your eligibility to retire.

However, if you don’t redeposit that money, plus accrued interest, your annuity will be actuarially reduced based on the amount you owe and your age on the day you retire.

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Service withdrawal payback

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Q. I withdrew $4,000 after leaving federal service. I returned and plan on retiring after 30 years of service. I intend to pay back the withdrawal. Can I repay after I retire to regain the years I lost when I withdraw? Or do I have to repay while I’m still employed in federal service?

A. You have to complete the redeposit, plus accrued interest, while you are employed by the federal government.

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Resuming creditable service

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Q. I have been working for the federal government for just over two years. I am planning on moving in the next few months. I have applied to federal jobs, as well as private-sector jobs and have, so far, heard back from the private-sector jobs. I read that the Thrift Savings Plan is vested at three years and that employees are entitled to retirement benefits after five years. If I were to leave the federal system at this point, would I be able to return to the system in the future and “restart,” as it were, at my two-year mark?

A. Reg: Yes, you could, if you didn’t take a refund of your contributions when you left. If you did take a refund, you’d have to re-deposit that money when you returned to get any credit for that time.

Mike: Your service credit for use in meeting the three-year TSP vesting requirement will pick up where it left off, but any automatic agency contributions that were forfeited when you separated will not be restored.

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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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Early-out money and refunds

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Q. Can early-out money be used to pay back refunded money? Since the Office of Personnel Management sends you the option either to buy time back or not, you would have the early-out money in hand.

A. Yes, you can redeposit the amount you owe prior to the final adjudications of your claim by OPM.

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USPS FERS refund redeposit

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Q. I am a reinstatement employee with the USPS. On my first go-around, six years, I took the refund of my FERS. Can I buy back this FERS refund?

A. Yes, you can redeposit that money, plus accrued interest.

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NDAA

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Q. I am trying to take advantage of the redeposit and can’t seem to find information to get this done. The current form 3108A does not address this particular subject. Human Resources was not familiar with it.

It is on the Postal Service blue page, but that is as much information that I can get.

I left USPS for eight months, and I took my Thrift Savings Plan and roll into an IRA. I want to find out how to get this redeposit, to receive credit for my annuity computation, and also my eligibility to retire.

I am currently employed with USPS, with 27 years of service.

A. If you withdrew your retirement contributions when you left government, you could use the Standard Form 3108A to redeposit the money and get credit for that period of service in determining your years of service and in your annuity computation. If, on the other hand, you only withdrew the money in your TSP account, that won’t have any effect on your eligibility to retire or in your annuity computation. If you still want to transfer money from your IRA to the TSP, you’ll need to go to their site (www.tsp.gov) and find out how to do that.

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VSIP

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Q. I took my retirement money out in 1990. Can I use Voluntary Separation Incentive Pay money to pay that back? The Office of Personnel Management told me I would have the opportunity to buy back refunded money or time before final annuity payments were calculated, but I worried that if I retired, they would not count that time into my annuity before I had time to pay it back.

A. What OPM told you is correct. And, since you will have your VSIP long before your annuity is finalized, you’ll be able to make the redeposit with time to spare.

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Repaying CSRS as a retiree

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Q. I have 22 years of federal service: 10½ years in the Air Force and 11½ in the Defense Department, leaving as a GM-14 in 1990. I was under CSRS and took the small lump sum when I left. Can I repay into the system and qualify for an annuity? I am 62½ years old.

A. No, you can’t. You would only be able to redeposit that money, plus interest, if you were a current employee of the federal government.

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Deferred retirement

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Q. My husband was employed by the federal government from June 1970 through July 1971and was covered under CSRS. He resigned and withdrew his CSRS contributions. He returned to work in the federal government in 1999 on a temporary appointment for a few months. In January 2000, he was appointed to a permanent federal position and began contributing to FERS. He left that permanent position in the fall of 2004. He left his FERS and Thrift Savings Plan contributions in the system.

With the CSRS time and the FERS time, he is eligible for a deferred retirement now. He will have approximately five years and six months of federal service. He will be 64 this year. Can he receive credit for the CSRS time, or does he have to make a redeposit for the withdrawal to get the credit for time? He was a GS-5 at the time.

I am assuming the Office of Personnel Management will allow him to redeposit the contributions he withdrew in 1971. However, if he chooses not to redeposit the CSRS contributions or OPM advises him that he cannot complete a redeposit, can he still receive credit for the year of employment from 1970 to 1971? He obviously would not receive anything in his annuity for the CSRS time if he does not make the redeposit.

A. He’ll receive credit for that period of CSRS service; however, because he withdrew his retirement contributions, unless he redeposits that refund, with accrued interest, his annuity will be actuarially reduced based on the amount he owes and his age at retirement. When he applies for a deferred annuity, OPM will let him know what he owes and offer him the option of making a redeposit or accepting the reduction in his annuity.

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Service computation date and break in service

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Q. I worked as a GS clinical nurse from Sept. 12, 1999, to Sept. 24, 2005 — a total of six years. On May 10, 2010, I returned to federal service as a GS clinical nurse. My service computation date was determined to be Feb. 8, 2008. How was this date arrived at? I previously worked from February 1991 to January 1996 as a GS worker and foolishly took my retirement monies out. I know I have lost that time. But that should not cause me to lose three years of service time, should it?

A. Unless you re-deposit the refund you took when you left government, with interest, you’ll get no retirement credit for it in determining your length of service and in your annuity computation. On the other hand, your agency appears to have given you some credit for leave accrual purposes. However, why they haven’t given you credit for all of it is something you’ll have to ask them.

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Repay withdrawn funds and re-enroll in CSRS?

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Q. I worked for the Postal Service for two years and eight months, and left in the early 1970s to raise my child. At that time, I withdrew my contributions. When I returned to federal service (not the post office) in 1987, I was told I was not vested in CSRS and therefore had to be enrolled in FERS. I was credited with my post office service, so my service computation date is Dec. 7, 1984, rather than February 1987, when I was hired.

I would like to know if I should have been offered the opportunity to repay my withdrawn funds and re-enroll in CSRS. I believe this would be of benefit to me as I will be retiring within the next two to five years. What is your advice on this?

A. Because you didn’t have five years of service under CSRS, you were automatically placed in FERS. Making a re-deposit wouldn’t change that. You do, however, have a choice. You can either re-deposit the money you took out, plus accrued interest, and get credit for that time in your annuity computation or not make the re-deposit and have your annuity actuarially reduced based on how much you owe and your age at retirement.

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Minimum submission time for retirement application

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Q. What is the minimum submission time for FERS retirement, and what defines retirement application? I currently meet the full FERS retirement criteria (minimum retirement age and 30+ years of service, including 10.5 years military redeposit paid and documented). I plan on retiring in January 2014. My plan is to submit the application in about July or August 2013.

However, Congress is considering various FERS retirement changes, one of which is canceling the special retirement supplement. According to the House version, anyone retiring after Dec. 31, 2012, would not get SRS, whereas the Senate version would apply only to new hires after enacted.

If the House version were enacted (looks unlikely, but after the election, who knows), would I be able to go to my human resources office Dec. 27, 2012, and declare I’m retiring on Dec. 28? If not, what would be the latest date? Would a documented verbal make it “official,” or would the minimum be a filled out and signed application showing Dec. 31, 2012?

A. You can submit your Application for Immediate Retirement (SF 2801 for CSRS; SF 3107 for FERS) as late as the end of the day on which you want to retire. However, be aware that the closer you come to the day you leave, the more likely that your application will have issues that need to be resolved. In addition, there’s an absolute certainty that submission of that application to the Office of Personnel Management for processing will be delayed beyond the normal.

You would be better advised to begin the process several months in advance but hold off the formal submission of the application until you have settled on a retirement date. That way, any potential glitches can be resolved with the help of your personnel office, assuring smooth passage of your application and reducing the time between when you leave and you are put in interim pay status by OPM.

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