Ask The Experts: Retirement

By Reg Jones

Retirement eligibility

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Q. I am 50 years old and have over 30 years of service (bought back my military academy and military time) and am in FERS. My minimum retirement age is 56. Is there a penalty for retiring now (or, more specifically, in November, when I turn 51) in that I will not have reached my MRA?

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Deferred retirement

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Q. I’m considering resigning from federal service because I’ve been unable to find a federal job at my husband’s new job location across the country. I have career status with 18 years of total federal service, six of which was bought back military time. I was born in 1959, so my minimum retirement age is 56; I’m 53 now. If I resign now with the intention of taking a deferred annuity when I reach 62, do I do anything in the process of separating that might affect my ability to return to the federal workforce? It’s my understanding that I don’t apply for the deferred retirement until I’m ready to receive it.

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Resignation and pension

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Q. I am 45 years old with 13 years of service under FERS and will be resigning this month to pursue other activities. I understand that I would eligible for a full pension (computed on my high-3) at age 62. That is 17 years away and, in the meantime, my defined benefit pension would remain static and thus be seriously eroded by inflation. Is there a way to protect myself against this within the pension system, or can I take a lump sum on separation and roll that into an IRA? If I take the lump sum, must I do it as of my separation, how is it computed, and does it represent only my contributions to the basic pension, or also those of the government? I have a separate Thrift Savings Plan, which I plan to roll into an IRA.

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Deferred annuity

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Q. My husband resigned from a Defense Department agency (non-civil service) after 29 years to work in the private sector. He was under CSRS, never converting to FERS. Before his resignation 10 years ago, he spoke to the agency’s personnel retirement representatives and was told he would still be able to collect retirement but only after he reached the age of 62. They told him that he should start the retirement paperwork six months from his 62nd birthday. Is this information correct? Does he lose the 2 percent for each year under the age of 62 he was when he resigned? He’s within a couple of months of that six-month target.

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Withdraw or defer

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Q. I have a little over 13 years of FERS service. I am 51 years old. I originally planned on retiring at 56 (MRA+10) but I have recently been contemplating retiring now under a deferred retirement.

1. If I retire now (deferred), will I be able to draw the retirement at 56, or will I have to wait until age 62?

2. If I choose to withdraw my retirement versus defer it, is there a calculator somewhere that can give me a general idea of how much I would get?

A. You can’t retire. What you can do is resign from the government, leave your retirement contributions in the fund and apply for a deferred annuity at age 62. There isn’t any calculator that would tell you what you’d receive if you took a refund of your retirement contributions. What I can tell you is that you’d receive every penny you contributed to the fund plus accrued interest based on variable market rates set by the Department of the Treasury.

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FEHB re-enrollment

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Q. Before retirement under FERS, I canceled my Federal Employees Health Benefits to be covered by my wife’s FEHB. Now my wife is resigning. She has no minimum retirement age with 25 years. She will not be allowed to continue FEHB. Am I allowed to re-enroll in self and family (code 2F) as a retiree with 35 years (33 self, two under wife) of FEHB? If I am, how soon can I re-enroll?

A. Yes. And you can do it from 31 days before the loss of coverage through 60 days after.

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FEHB re-enrollment

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Q. I was a federal employee for 26 years and, from 1987 onward, was under FERS. I left my last federal job in June 2009 at age 58, after having passed the minimum retirement age and having been enrolled in the Federal Employees Health Benefits plan over the entire 26 years of my federal employment. In June 2009, I said that I intended to take a postponed retirement, some time after I reached age 60. It is my understanding that my enrollment in FEHBP was suspended at the time I left my last federal employment, in June 2009.

I had health insurance coverage under temporary continuation of coverage, ending in December 2010.

I applied to the Office of Personnel Management for a postponed retirement on Dec. 28, 2011, by filing Form RI 92-19. OPM acknowledges having received my application in February 2012, and I have been in interim status since that time. I began receiving interim payments in March 2012.

In a phone conversation I had with OPM in February 2012, I was told that I would not be able to re-enroll in FEHBP until my retirement was finalized.

Another year has passed, and my retirement is still not finalized. I am still in interim status. Is it really impossible for me to re-enroll with FEHBP before my retirement is finalized? Does the word “annuity” apply to my interim pay? If so, it seems that I can re-enroll in FEHB now.

An article by Reg Jones on your website says, “…if you were enrolled in FEGLI or FEHBP for the five continuous years before you retired, you may re-enroll in them when your annuity begins.” This suggests that the statement made to me on the phone in February 2012 was incorrect. Could you please clarify this? If I am eligible to re-enroll in FEHBP, what procedure should I follow to re-enroll?

A. You could only have re-enrolled in the Federal Employees Health Benefits program if you retired and postponed the receipt of your annuity to a later date. You didn’t do that. Instead, you resigned from the government and later applied for a deferred annuity. Deferred annuitants cannot re-enroll in the FEHB program.

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Age 62 or 61?

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Q. I am FERS-covered and eligible to retire this year with 20 years but at age 61. Can I separate (or resign) first at age 61 this year and postpone the start of my annuity to 2014, when I am 62 to get the higher 1.1 annuity (instead of 1.0 at 61)?

A. No, you can’t. The only FERS retirees who are eligible to get the higher multiplier are those who retire on an immediate annuity at age 62 or later with at least 20 years of service.

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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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Termination and disability retirement

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Q. I saw this exchange on your site:

“Q. I am 60 and was hospitalized in March. I used all my sick and vacation leave because of a medical condition that will last more than a year, used all my [Family Medical Leave Act time] and have applied for disability retirement. I got a call from the nurse executive that if they don’t receive a letter from me within five days that I am resigning, they will have to terminate my federal service, since they say I am AWOL. This same executive in May completed the supervisor portion of my disability retirement application. Can they fire me even though I have applied for disability retirement?

A. Yes. However, whether you resign or they separate you, it won’t affect your application for disability retirement.”

Can you tell me if, when the retirement application is approved, the termination is then converted to a retirement action?

A. No, it wouldn’t. The SF-50 action would have already been effected, so whether it was a termination or separation, etc., if you later receive a disability retirement, this wouldn’t affect the SF-50 action that was already done.

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Retirement eligibility

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Q. I am 52 years old and have 22 years of federal employment. Can I retire? If so, how soon can I receive monthly payments, and how much would they be reduced by?  How would this affect my Social Security benefits later? Also, how would this affect my medical insurance?

A. Unless you are a special category employee, such as a law enforcement officer or a firefighter, you don’t meet the age and service requirements to retire.

For FERS employees, these are: age 62 with five years of service, 60 with 20, at your minimum retirement age (MRA) with 30, and at your MRA+10, but with a 5 percent-per-year age penalty for every year you are under age 62. Your MRA is 56.

There is an option. Because you have at least 20 years of service, you could resign and apply for a deferred annuity at age 60. After 31 days of free health benefits coverage, you’d be able to continue it for up to 18 months under the temporary continuation of coverage provision of law. However, you’d have to pay the entire premium plus 2 percent.

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Retirement application

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Q. I am an Air Force retiree who has 13 years as a federal employee. I am eligible for MRA+10 on March 24. If I apply to retire, how long does it take to process my application for approval or what is the earliest date I can actually resign? I am considering a private sector job and they want to start in 30-45 days.

A. When you fill out the Standard Form 3107, Application for Immediate Retirement, you’ll put the date you are retiring in Section B2. It doesn’t matter how long it takes to process your application, that’s your last day of employment. I suggest that you inform your management well in advance and give your personnel office time to review the 3107 to make sure that everything is in order. Note: Since you’ll be retiring under the MRA+10 provision, you have the option of accepting an immediate annuity, which will be reduced by 5 percent for every year you are under age 62, or postponing the receipt of your annuity to a later date to reduce or eliminate the age penalty.

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Five-year rule and break in service

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Q. I enrolled in Federal Employees Health Benefits on April 26, 1987. Resigned March 21, 1992. Temporary appointment Aug. 26, 2001, to Oct. 19, 2002. Re-enrolled Nov. 3, 2002. Resigned Sept. 27, 2008. Temporary appointment, not eligible to enroll Dec. 7, 2008, to July 3, 2010.  Re-enrolled July 18, 2010, until present. Had COBRA between enrollments. My human resources department says I should be able to continue health benefits into retirement if I work through June 20. I am planning on retiring in December. I know the Office of Personnel Management has the final say but wanted to know if this response sounds correct.

A. To be eligible to carry your FEHB coverage into retirement, you need to have five consecutive years of coverage. Those periods don’t have to be continuous. They can be broken by times when you weren’t a federal employee or when you weren’t eligible to enroll in the program. What’s important is that you be covered each time when you left and re-enrolled immediately each time that you were eligible to enroll. You need to recheck your employment records to be sure that you met the requirements and that the total time you were covered adds up to at least five years.

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Military buyback and postal retirement

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Q. I have been a postal Service employee for 19 years and a member of the Air Force, Air Force Reserve and Air National Guard for 26 years. I have approximately three years of active-duty time. If I buy back my military time to put toward my postal retirement, will that affect my military retirement? Also, when is the earliest I can retire/separate from the Postal Service and keep my pension, and what effect will retiring early have on my benefits?

A. First, making a deposit for your active-duty service will have no effect on your reserve retired pay. Second, the earliest you could retire is at your minimum retirement age with at least 10 years of service. Under the MRA+10 provision, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. MRAs range between 55 and 57, depending on the year in which you were born. Note: You could, of course, resign from the government at any time and apply for a deferred annuity. If you had 20 years of service (actual and bought back), you’d be eligible at age 60. I you had fewer than 20, you’d be eligible at age 62.

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Retirement and reinstatement

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Q. I am 64 and plan on retiring out of civil service so that I can move back home. Even though I am not ready to retire, can I leave in my FERS annuity so, if and when I can find another position with another government agency and get reinstated, I can continue with my retirement fund? I plan on working part time, since I have over 40 credits in Social Security to help out.

A. If you simply resigned, left your contributions in the retirement fund, and found another job at a later date, you could be reinstated. However, if you retired, you couldn’t be reinstated. Instead, if you found a job, you would be a re-employed annuitant. As such, with rare exception, the salary of your new position would be offset by the amount of your annuity.

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Unused sick leave

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Q. I am retired military with 27 years in. Since that time, I have been a civil servant and am coming up on my 10-year anniversary under FERS. My service computation date is Aug. 10, 2003. I am planning to resign from my civil position Dec. 31, prior to my 62nd birthday. (I was born Dec. 11, 1952.) I plan to ask for a lump-sum check for my unused accrued leave. But it looks like I will not gain anything for having been such a healthy individual and that my many days of sick leave will simply go wasted. Is my sick leave balance used in any form to accrue additional deferred benefits or can I get paid for my unused balance?

A. If you leave your retirement contributions in the fund when you leave, you’ll be eligible for a deferred annuity. However, deferred annuitants receive no credit for their unused sick leave. FYI: If you stayed on until your 62nd birthday, you’d receive full credit for that unused sick leave in the computation of your annuity.

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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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Deferred annuity

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Q. I am a letter carrier with the Postal Service and am 58 years old. I have 25 years of service and am considering deferred retirement due to health issues. As I understand it, I should be able to start my retirement annuity at age 60 with no reduction in benefits. Is this correct?

A. Yes. Your annuity would be computed using the standard formula and based on your high-3 and years of service on the day you resigned.

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Deferred retirement

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Q. I am a full-time letter carrier with 25 years of service at 50 years of age. I am having health issues and have trouble completing my job. I am considering deferred retirement this month. As I understand, I’ll lose my health insurance, but I can apply for my FERS retirement at my minimum retirement age of 56 with no penalty. What is your opinion?

A. Unfortunately, you are mistaken. If you resigned and applied for a deferred retirement at age 56, your annuity would be reduced by 5 percent for every year you were under age 60 (5/12 percent per month). If you wanted to receive an unreduced deferred annuity, you’d have to wait until you were age 60. If health issues are making it difficult for you to carry out the essential elements of your job, you should apply for FERS disability retirement. If you do that, you’d also need to apply for Social Security disability benefits, otherwise the Office of Personnel Management wouldn’t review your application.

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VSIP

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Q. Is Voluntary Early Retirement Authority offered to those who are already eligible to retire? Does VERA apply to your high-three calculation for retirement?

A. It’s clear from your questions that you are asking about the Voluntary Separation Incentive Payment, not VERA.

According to OPM, “The Voluntary Separation Incentive Payment Authority, also known as buyout authority, allows agencies that are downsizing or restructuring to offer employees lump-sum payments up to $25,000 as an incentive to voluntarily separate. When authorized by the Office of Personnel Management (OPM), an agency may offer VSIP to employees who are in surplus positions or have skills that are no longer needed in the workforce who volunteer to separate by resignation, optional retirement, or by voluntary early retirement, if approved.” As such, a VSIP can be offered to someone who is already eligible to retire.

Receiving a VSIP would have no effect on your high-3, which is based solely on your three highest consecutive years of average basic pay.

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