Ask The Experts: Retirement

By Reg Jones

Using retirement funds before retiring

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Q. I have more than 42 years of service, and I am still working. Each pay period, federal retirement funds are still being taken from my paycheck. Where are these funds going? Can I use them while still working?

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Spouse’s death and taxable benefits

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Q. My husband was killed in a motorcycle accident after working 16 years for the Department of Defense. I have been receiving a survivor’s annuity since his death. Is the annuity part of his retirement that he had accrued, or is this part of a death benefit? I received a death benefit at the time of his death. Is the annuity taxable income? Is the annuity his retirement that he had earned before his death?

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Retirement funds of deceased spouse

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Q. My deceased wife was a FERS employee for 15 years before resigning.

She passed away four years ago. I rolled over her TSP into mine. (I am retired CSRS.) I did not claim her contribution to FERS. Will I receive any of her retirement annuity once she would have become eligible to retire?

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Options after firing

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Q. I was federally employed as a Border Patrol agent in November 1988, then joined the FBI in June 1991 and was fired May 2011 (no break in service since November ’88). I was 48. I can find no answers regarding retirement benefits. I was told I forfeited everything, but I could find nothing in writing. What are my options?

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Rehired annuitant and supplementing retirement

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Q. I retired from the Department of Defense in 2007 under CSRS. I began employment in 2008 as a re-employed annuitant with another government agency. Since I make no retirement contributions as an annuitant, will I be able to buy this time to supplement my retirement?

A. Yes, you can make a deposit to get credit for that time. If you have between one and five years of additional service, you’ll receive a supplemental annuity. If you have at least five years of service, you’ll receive a supplemental annuity. Note: If you were hired into a position where you received both your annuity and the full salary of your new position, you won’t get any credit for that time and cannot make a deposit to do so.

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Interrupted government service and pension

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Q. I am 54, with five years under FERS. I am taking a job in the private sector but would like to return to federal employment for three to five years. If I do nothing, can I apply for a deferred pension at age 62? If I do return to government service, do the total number of years accumulate? So, for example, if I return and work another five years, is my pension based on 10 years, even though they were interrupted?

A. As long as you don’t take a refund of your retirement contributions when you leave, you could apply for a deferred annuity at age 62. Also, if you left that money in the fund and returned to government employment, you’d be able to pick up where you left off, and all that time would count for determining your length of service and your annuity computation. If you did take a refund and returned to government service, you’d have to repay that amount plus accrued interest to get credit for that time.

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Benefits leaving federal work after nine years

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Q. I have an opportunity to take a private-sector position that would be very rewarding. Can I maintain my federal government benefits when I leave? I’ve been a federal employee for nine years.

A. If you don’t ask for a refund of your retirement contributions, you’d be eligible for a deferred annuity at age 62.

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Leaving federal service, intending to return

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Q. I have been employed with the Department of Homeland Security in the Transportation Security Administration for just under five years. I am planning to leave federal service to obtain field experience in the private sector with ambitions to return to the federal system with the FBI.

1. Are there any specific impacts of leaving service before the five-year milestone?

2. Are there specific do’s and don’t’s when leaving with intent to return to service?

3. Will the time I have invested stay with me when I rejoin the system?

4. Do I need to resume service within a certain time?

Some information that may be needed: I joined DHS on Jan. 6, 2008. I plan to leave before my five-year mark, probably around October. I contribute to a TSP and plan to make a 100 percent withdrawal or roll that into my private sector’s retirement plan if possible. I plan to return to federal service within three to five years, hoping to be employed with the FBI. I am 25.

A. If you leave before you have five years of service, you won’t be vested in the retirement system; therefore, you wouldn’t be entitled to any benefit if you didn’t return. If you did return to federal employment and had left your retirement contributions in the fund, you’d pick up right where you left off. If you had taken a refund, you’d have to redeposit that money to get credit for your previous service.

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Retirement after leaving FERS before five years

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Q. I will be 69 with just three years of service when I leave federal employment. What will happen to my FERS and the government contribution to a 401(k) in my name?

A. You can apply for a refund of your retirement contributions.

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Salary percentage in retirement

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Q. I have 47 years of service under CSRS; I do not plan on retiring for at least three more years. Will I be able to receive more than the 80 percent of my salary, as the law mandates, or can percentage be added to my time?

A. While 80 percent is the maximum amount of an earned annuity, you’ll receive a refund of all the retirement contributions you made after you worked for 41 years and 11 months and be offered the option of purchasing additional annuity that, like unused sick leave, isn’t subject to the 80 percent limit.

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Payback of retirement contributions

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Q. In 1985, after 16 years of federal service with the Department of Defense, I withdrew all my retirement contributions. I am now 64. How can I compute the amount of payback necessary to draw a pension, or is that possible?

A. It would be possible only if you returned to work for the federal government.

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Military buyback

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Q. I’m debating whether buying back my military time is worth the cost with the changes to the current FERS program. I have three years as a federal employee. I will complete the deposit on May 1, which will give me 23 years toward my retirement. However, I am unsure if I will fall under the current 0.8 percent FERS contribution program or the new 2.3 percent contribution program recently approved.  I made my decision to buy back my time base on the old retirement system. Now I think I may have wasted my money. Can you provide some insight on where I will fall in the FERS retirement system?

A. The new law doesn’t apply to currrent employees, only those first hired on or after January 1, 2013, and those returning to federal service that have fewer than 5 years of credtiable service.

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Is survivor annuity taxable?

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Q. Are survivor annuities paid to surviving spouse taxable? Distribution code on 1099-R is 4-Death Benefit and no federal income taxes were withheld.

A. Yes, they are. However, if there are any unexpended retirement contributions in the late spouse’s account, a portion of the annuity would be tax-free. For more information, go to www.irs.gov/publications/p721/index.html.

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Deferred retirement

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Q. I worked for the Department of Veterans Affairs for more than six years. Next year I will reach the age of 62. How do I file for retirement benefits?

A. If you didn’t receive a refund of your retirement contributions when you left, several months before your 62nd birthday you can send an Application for Immediate Retirement to OPM, Retirement Services Management group, P.O. Box 45, Boyers, PA 16017-0045. If you were a CSRS employee, use Standard Form 2801, if FERS, Standard Form 3107. They are available for download at www.opm.gov, click on Find Form(s).

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Option to opt out of FERS?

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Q: With the impending increase to our Federal Employees Retirement System contributions, can anyone opt out of FERS?

A: There isn’t an impending increase in FERS contributions, only proposals. Whether anyone would be able to opt out if such a change were made would depend on the wording in the law. However, such a provision would be highly unlikely.

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Service credit

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Q: I am under FERS. I had a break in service. I left service in 1987. I’m pretty sure I did not draw out any retirement contributions. How can I verify that I didn’t?

A: Begin by looking at your service computation date. If it reflects you earlier period of service, then you have proof that you didn’t get a refund of your retirement contributions. If you haven’t been credited with that time and your official personnel folder doesn’t contain any information about your prior service, you can call the National Personnel Records Center at 314-801-9250.

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Abolished position

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Q: Under CSRS, do you still get your lump sum CSRS contributions back if they completely abolish your position, and are not offered in writing an equivalent position? This would be in addition to your full retirement benefits, minus age penalty. I am 47 1/2, with 31 years of CSRS service, and the only shop planner in my position description. They are talking about wiping out our maintenance department and contracting out. My dad retired about 15 years ago when they abolished his job, and he got his contributions back. Has this changed?

A: Because you’d be eligible for discontinued service retirement — 25 years of service at any age — you wouldn’t be able to receive a refund of your retirement contributions.

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Survivor benefits

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Q: My father retired from the U.S. Postal Service with an annuity in the late 1980s. He passed in August of this year and the OPM retirement person says there are no survivor benefits except to a spouse or disabled child. My father was divorced and never remarried. I am his only child and not disabled. She explained that the annuity was paid out to my father during his life and would be prorated from the beginning of the month he received a check to the date of his death, a monthly health insurance deducted and no other funds are available. I have submitted all the required forms. Is this true? This seems to contradict the explanations on their website.

A: Because your father retired after July 1, 1986, he received a combination of his own retirement contributions and those of the government in his monthly annuity payments. The portion that represented his own contributions was tax free because he had already paid taxes on them. If your father had no one who was eligible for a survivor annuity when he died, his unexpended retirement contributions would be paid in a lump sum according to the standard order of precedence. In this case, it would mean that the money would go to his child or children in equal amounts. On the other hand, if there is a court order on file that granted a survivor annuity to his former spouse, those contributions would constitute a tax free part of her own survivor annuity.

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Redeposits for retirement credit

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Q: My wife is a government employee who was reinstated from former government service (she resigned in 1993). She entered government service in 1980 and was under the old retirement service. She resigned to have a child in 1984 and withdrew her retirement. She was reinstated in 1986 and came under the new retirement system. She again resigned and was reinstated in 2009. She has more than 13 years of government service. Can she pay back the retirement she received plus contributions she would have made over the years to fall back into the old retirement system?

A: She may redeposit the money that was refunded to her, plus accrued interest, to get credit for each of those periods of service. However, she cannot make any contributions for any periods during which she was not employed by the federal government.

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