Ask The Experts: Retirement

By Reg Jones

FEGLI

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Q: I am a recent federal retiree. I chose to keep basic life insurance only. I read there have been changes regarding election options for FEGLI as of Oct. 1, 2010. Does that mean I can now get Option C for my spouse after I dropped it when I retired?

A: No.

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Retiree health insurance

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Q. Is it true that in 2012 retirees will not be able to receive Blue Cross federal coverage?

A. No

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Retirement contributions

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Q. I have recently retired and understand that a portion of my annuity is tax-free when filing my federal tax return next year. Per the OPM website calculator to determine the tax-free amount, a person needs to know the total amount of retirement withholdings from their paychecks over their career. How do you obtain this figure, as my paystubs while working did not show an accumulated amount for retirement withholdings?

A. You will receive that information on a Form 1099-R, which will be sent to you each January by OPM.

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Federal insurance policy

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Q: My husband payed into a civilian federal employee insurance policy for 28 years. He was riffed and retired in July 2001, but the insurance was still taken out of his retirement check on a monthly basis. He was notified by the federal insurance plan that he was no longer on the insurance plan as of age 65. He is now 67. What happened to the insurance policy and/or it’s value?

A: At age 65, his premiums stopped and the value of his Basic insurance began to decline at the rate of 2 percent per month. It will continue to do that until it reaches 25 percent of its face value.

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Benefits eligibility

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Q: I used to work for the U.S. Postal Service, first as a mail handler, clerk, then a letter carrier. I served for about 10 years. I am 55. What would I do to find out if I have benefits and how could I get them?

A: If you didn’t take a refund of your retirement contributions when you left government, you would be eligible for a deferred annuity at age 62. To apply for it, two months before you reach age 62, you’d need to complete OPM Form 1496A, Application for Deferred Retirement (available at http://opm.gov/froms/pdf_fill/opm1496a.pdf), and send it to the address on the form. If you did take a refund of your contributions, you wouldn’t be entitled to any benefit.

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Re-employed annuitant

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Q: How do I terminate a retired annuitant from the agreed-upon year of service needed at the time? Will paperwork be needed? What if the service provided by the retired annuitant is not working out for the organization, are we just stuck with the situation or is there a regulation that I can reference to ensure we are not faced with stiff penalties later?

A: Re-employed annuitants serve at the will of the appointing officer and can be terminated at any time.

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Buying back military time (updated)

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Q: I am retired military with 20 years of active duty. I am a GS-14 with two years of federal service. I am 47 years old. What would the benefit be to buy back my military time?

A: If you made a deposit to the civilian retirement system for your 10 years of active-duty service, it would be added to your actual service time in determining your eligibility to retire and, when you retire, your annuity would be 10 percent higher than if you didn’t make a deposit. The deposit required would be 3 percent of your basic active-duty pay, not including differentials or allowances. If you were to do that before the third year after entering government, no interest would be charged; after that, there would be. Finally, at retirement you would have to waive your military retired pay. You’ll have to do the math to see which way is best for you financially.

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Medicare deduction for CSRS retiree

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Q. I am a federal CSRS retiree and my 2010 monthly Medicare deduction increased from $96.40 to $110.50. My husband is a Social Security retiree only and his Medicare deduction remained the same for 2010 as was withheld in 2009, which was $96.40. In trying to find an answer to this disparity, one Web site tells me: “If you make less than $85,000.00 per year, it will be $96.40 per month. If you make more per year, see the link below for those amounts:” Since my gross monthly annuity is $3514.00 (annual total annuity of $42,168.00), is far less from the $85,000, I don’t understand this deduction. I only have Part B Medicare coverage since my federal Blue Cross and Blue Shield covers my prescription costs.

A. Because your husband is receiving a Social Security benefit and this year’s cost-of-living adjustment was zero, his premium was frozen under the “hold harmless” provision in the Social Security Act. The premiums of those who weren’t receiving a Social Security benefit, like you, went up.

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Transfer of CSRS time

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Q. I am a postal employee with 27 years of service. My retirement plan is CSRS. Can I transfer to another branch of the government and transfer this time with me? Will it count toward my civil service retirement?

A. Yes, if you transfer to another government agency your service record will transfer with you and that time will count toward the total years needed to retire. A rare exception to that rule would be if you were to transfer to an agency that had its own retirement system and didn’t recognize your prior service.

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Retirement contributions

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Q. I need to know the percentage I contributed toward my pension as a retired law enforcement officer ( I retired in 2008), and what percentage the government contributed.

A. When you retired, the amount of your own contributions was reported on the package sent to you by OPM. You could also find it on your final pay voucher. To find out what your agency contributed, you’ll have to get that from your former agency. The amount depends on your retirement system and, in the case of FERS, varied over time.

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It’s not too late to retire in 2009, or plan for 2010 or 2011

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It’s not too late to retire in 2009, and it’s not too soon to at least begin planning to retire in 2010 or 2011. For this year and the next two years, the calendar is working in favor of many of you. Let me explain.

As my regular readers know, my position is that there is no one best date to retire. However, each of you can pick the best one for you if you know how.

First, you must figure out if you are ready to retire. To do that, you have to answer three questions: Do you meet the age and service requirements to retire? Are you financially able to retire? Are you emotionally prepared to retire?

The first question is an easy one to answer. You either meet the requirements spelled out in law or you don’t. However, the other two questions are ones that only you can answer. The first requires the computer-age equivalent of paper and pencil; the next two require a good deal of soul searching and reflection.

If you’ve decided that you are ready to retire, here are the tools you’ll need to pick your date:

* Know when your annuity begins. Ideally, you’ll want to retire on a date that affords a seamless break between work and retirement. To come as close as possible to achieving that, you need to know the law.

If you are a Federal Employees Retirement System employee, you must retire no later than the last day of a month to be on the annuity roll in the following month.

If you are a Civil Service Retirement System employee, you have more flexibility. You can retire up to the third day of a month and be on the annuity roll in the same month; however, your annuity for that month will be reduced by 1/30th for each of those three days that you are still on the payroll.

* Get credit for unused leave. If you retire before the end of a pay period, you won’t get credit for any annual or sick leave you would otherwise have earned. Gaining additional hours of annual leave is important because they are paid to you in a lump sum at your hourly rate of basic pay.

* Get credit for “use or lose” leave. If you have accumulated more annual leave than you can carry forward into the next leave year, you’ll want to retire no later than the day before the new leave year begins. Otherwise, that excess leave will be lost along with the dollars you would have received in your lump sum payment.

Therefore, if you are leaning toward retiring at the end of a year, it’s important to know when the leave year ends. In 2008, it ended on Jan. 3, 2009, and many CSRS employees took advantage of that fact, giving up three days of their January annuity payment in order to gain the annual and sick leave they earned in that final pay period.

In 2009, the first-month annuity reduction will be even less, because the leave year ends on Jan. 2, 2010. The same is true in 2010, when the leave year ends on Jan. 1, 2011. (And yes, you can retire on a holiday.)

Dec. 31, 2011, the end of the leave year in 2011, is a magic date for both FERS and CSRS employees.

FERS employees can walk off the payroll and onto the annuity roll without losing a day of pay, and any CSRS employee can do the same without losing a day of annuity.

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Selling back military time

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Q: I am retired from the Army and receive retired pay and disability pay. I am also a civilian employee under the Federal Employees Retirement System. When I am eligible to retire, will I be paid my military retired pay, disability pay, retirement pay as a civilian employee and also receive my Social Security? Would it be advantageous to sell back my military time to incorporate it into my civilian time under FERS? If I do sell back my military time, do I forfeit continuance of my military retired pay?
A: If you retire without making a deposit to the retirement fund and waiving receipt of your military retired pay, you would receive a FERS annuity based solely on your FERS service, your military retired pay, your disability pay, and a Social Security benefit based on all your Social Security-covered employment. If you do make a deposit for that time and waive your military retired pay, you would receive a FERS annuity based on your active duty and FERS service, your disability pay, and a Social Security benefit based on all your Social Security-covered employment.

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Offsets upon retirement

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Q. I would like a clarification. Would I receive separate payments for my Federal Employees Retirement System retirement, military retired pay, military disability and Social Security? Or will some or all potentially be offset? This is with the scenario that I do not sell back my military time and waive retired pay. Reading the below, I believe the answer is yes, but I just want to make sure for my long-range planning.
Selling back military time
Question: I am retired from the Army and receive both retired pay and disability pay. I am also a civilian employee under the Federal Employees Retirement System. When I am eligible to retire, will I be paid my military retirement pay, disability pay, retirement pay as a civilian employee and also receive my Social Security? Would it be advantageous to sell back my military time to incorporate it into my civilian time under FERS? If I do sell back my military time, do I forfeit continuance of my military retirement pay?
Answer: If you retire without making a deposit to the retirement fund and waiving receipt of your military retired pay, you would receive a FERS annuity based solely on your FERS service, your military retired pay, your disability pay and a Social Security benefit based on all your Social Security-covered employment. If you do make a deposit for that time and waive your military retired pay, you would receive a FERS annuity based on your active-duty and FERS service, your disability pay and a Social Security benefit based on all your Social Security-covered employment.
A. If you didn’t make a deposit and waive your military retired pay, you would receive separate payments with no offsets.

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