Ask The Experts: Retirement

By Reg Jones

Possible re-employment

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Q. Can a GS retired employee work for a Morale, Welfare and Recreation organization or other government agency?

A. There is nothing that would prevent a retired government employee from working again, either in or out of government. However, if you return to work for the federal government, as a rule the salary of your new position would be reduced by the amount of your annuity. You’d need to check with your potential employer to learn if that rule would affect you.

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Retirement pension

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Q. I would like to retire as soon as possible. I have 34 years of service and I am 60-1/2. Since  I am under the FERS system, in order to maximize my pension I would have to stay until I turn 62 to get the additional  .1 percent added to my pension. Is there any other way I can retire before I turn 62 for me to get the additional .1 percent?

A. No, there isn’t.

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Re-employment ramifications

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Q. I retired three years ago under FERS. I am considering applying for another position with the federal government. Will I forfeit any pay or retirement if I am rehired?

A. As a rule, the salary of your new position would be offset by the amount of your annuity.

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Child turning 26

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Q. I am a federal retiree and my wife is a federal employee. I pay for family coverage under FEP Blue. When our only child turns 26, should we both go to individual coverage?

A. That’s entirely up to you. You’ll need to compare the premium costs with the co-pays, deductibles and catastrophic limits which will apply to both enrollments.

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Earning limits

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Q. I plan to retire under CSRS offset well before I turn 62. I know at 62 my retirement will be recalculated and my annuity check will be split between OPM and the Social Security Administration. When I turn 62 and start receiving my retirement pay from both OPM and the SSA, am I bound by the earning limits set by Social Security (currently $15,480.00 annually)?

A. Yes, you are bound by the Social Security earnings limit. That limit applies to anyone who is under full Social Security retirement age and has earnings from wages or self employment that exceed the annual limit.

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BC/BS and VA

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Q. I will turn 65 next May and have retired from the post office after 33 years. I have BC/BS with the post office, and I’m also with the VA. What happens with my coverage from the post office when I turn 65? Do I have to keep the coverage since I’m with the VA?

A. Your BC/BS enrollment is under the Federal Employees Health Benefits program. It doesn’t make any difference which agency you were working for when you enrolled or which one you are working for now.

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Delinquency definition

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Q. Could you please explain what the term “delinquency” refers to with regards to a discontinued service retirement?

A. Delinquency is a term that includes, but is not limited to, failure to do what law or duty require, an offense or a misdemeanor, a debt or other financial obligation on which payment is overdue.

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Military and federal retirement

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Q. I am a federal employee with 21 years military service. I receive military retirement pay and a separate disability from VA. I am considering retiring in five years. If I buy my military time back now, can I keep receiving my military retirement until I retire from the federal government? Do I still receive my VA pay after federal retirement?

A. The answer to both questions is yes.

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Discontinued service retirement

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Q. I have 25 years and three months as a FERS employee. If my agency separated me due to poor job performance, would I be eligible for a discontinued service retirement ?

A. Yes.

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Part time and health care

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Q. I have been permanent part time as a TSO with the TSA for approximately 10 years and have been enrolled in FERS and Blue Cross/Blue Shield for all of my employment. Will I be allowed to carry my health insurance into retirement when I retire at 62 or do you have to be full time? Read the rest of this entry »

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Early retirement

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Q. I have 18 years of service and I am 51 years old. Can I do an early retirement and receive Social Security and pension?

A. No. If your agency was offering early retirement, you would have to meet one of the following age and service requirements: age 50 with 20 years of service or at any age with 25. You don’t meet either requirement.

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Retirement funds

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Q. I was forced into applying for retirement, being on Workers’ Compensation and was “separated in 2002 with 25 years of service. I am 70 and still on Workers’ Compensation. I would like to withdraw my retirement lump-sum. Can  I still keep my life insurance that is deducted? I understand if Workers’ Compensation stops paying me, that I wont be allowed back on retirement if I do this. But I could not live on the amount anyway and I do need the money now. Read the rest of this entry »

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Mandatory removal

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Q. I am a Dual Status Military Technician GS-12 and I will reach my Mandatory Removal Date in 2019 when I am 50 and not eligible for retirement yet. This will end my Federal employment as a military technician. What options are there for me to gain new employment in the federal system and what impact does my previous GS-12 grade have? Read the rest of this entry »

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Military service time

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Q. I served eight years in the Navy Reserve and was honorably discharged. How do those years count toward retirement if I become employed by a federal agency?

A. Only time where you were called to active duty in the service of the U.S. would be creditable, and then only if you made a deposit for that time.

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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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Deposits and redeposits, part 1

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Based on the mail I’ve been getting, there’s a lot of confusion about the rules governing deposits and redeposits to get credit for prior service in determining your eligibility to retire and having that time used in your annuity computation when you retire. In this column, I’ll deal with the rules that apply to Civil Service Retirement System and CSRS Offset employees. In my next column, I’ll do the same for Federal Employees Retirement System employees.

Deposits

The term “nondeduction service” applies to any period of federal government employment where retirement deductions weren’t taken from your pay. If you are a CSRS and CSRS Offset employee, you can make a deposit to get credit for that nondeduction service. The deposit equals the amount of the contributions you would have made to the Civil Service Retirement and Disability Fund if your job been covered by CSRS, plus accrued interest.

Retirement eligibility

If you are covered by CSRS or CSRS Offset when you retire, most kinds of federal government employment that aren’t covered by CSRS count toward the years of service needed to be eligible to retire. That includes federal government employment where only Social Security deductions were taken from your pay. It also includes employment covered by another federal retirement system, such as the Foreign Service, as long as you aren’t receiving any benefits for that time under the other system.

Annuity computation

When you performed that nondeduction service has a significant effect on the way it will be treated.

If you had any nondeduction service before Oct. 1, 1982, you’ll get credit for that time in determining your eligibility to retire; however, unless you make a deposit, your annuity will be reduced by 10 percent of the amount you would have paid into the fund, plus interest.

If you had any nondeduction service on or after Oct. 1, 1982, it, too, will be creditable for determining your eligibility to retire; however, if you don’t make a deposit to get credit for that time, it won’t be used in the computation of your annuity.

Redeposits

With one important exception, if you ever separated from the federal government, took a refund of your CSRS retirement contributions, and later returned, you’ll have to redeposit that money, plus accrued interest, before the time can be used in the computation of your annuity. However, if you don’t make the redeposit, you will still get credit for the time in determining your length of service for retirement, as well as for determining your “high-3.” Your high-3 is the average of your three highest consecutive years of pay, regardless of when they occurred in your career.

Here’s the exception: If you received a CSRS refund covering a period of service that ended before Oct. 1, 1991, you won’t have to pay the redeposit if you don’t want to. You’ll receive full credit for it in your annuity computation (unless you retire on disability). However, your annuity will be actuarially reduced based on your age and the amount of the redeposit you owe, including interest, on the day you retire.

Contribution rates

Beginning with the first pay period in January 1970, the contribution rate for CSRS has been 7 percent (7.5 percent for law enforcement officers and firefighters beginning with the first pay period in January 1975). If the nondeduction service you performed was before that date, the contribution rate will be lower.

Interest rates

Interest for nondeduction service earned before Oct. 1, 1982 (and refunded service if the application for a refund was made on or after that date) equals 3 percent. Interest for nondeduction and refunded service on or after Oct. 1, 1982 equals 3 percent through Dec. 31, 1984. Thereafter, a variable rate is applied. (In 1985 the rate reached an all-time high of 13 percent. In 2014 it’s at an all-time low of 1.625 percent, the same as it was in 2013.)

If you owe any deposits or redeposits, go to www.opm.gov/forms/pdf_fill/sf-2803.pdf and download a copy of Standard Form 2803, Application to Make Deposits or Redeposits. Once you’ve filled it out, take it to your personnel office. When they tell you how much you owe, you can decide if it’s worth the cost.

To help you make that decision, use the following formula: 0.015 x your high-3 x 5 years of service, plus 0.0175 x your high-3 x 5 years of service, plus 0.02 x your high-3 x all remaining years and full months of service.

As you can see, if you have over 10 years of actual CSRS service, each additional month of credit your get by making a deposit or redeposit is worth 1/6 percent. That’s 2 percent per year.

If you decide to make the deposit, you can pay it in a lump sum or set up a payment schedule, with payments as low as $50 a month. Just remember. The longer you wait to complete the payment, the more you’ll have to pay in interest.

Reg Jones was head of retirement and insurance programs at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com, and view his blog at blogs.federaltimes.com/ federal-retirement.

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Unused leave

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Q. How soon would I receive my lump-sum payment for unused annual leave when I retire?

A. Only your agency payroll office can answer that question.

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FERS postponed retirement

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Q. My wife just turned 57 and has a little more than 23 years of service. Her MRA is 56. I believe if she takes a postponed versus a deferred retirement, she will be eligible to get her full retirement annuity when she turns 60. What form should be filled out for a postponed retirement? I only see one for a deferred retirement.

A. The form you saw was for CSRS retirees only. When your wife applies for her postponed FERS retirement, she would need to fill out Retirement and Insurance Form RI 92-19. Deferred/Postponed Retirement FERS, available at www.opm.gov/forms/pdf_fill/ri92-19.pdf.

 

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Retirement age

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Q. If you worked full time for the federal government for six years and part time for four years, and retired at age 62, can you obtain federal retirement then?

A. Yes. In fact, you would only have to have five years of service to be entitled to a retirement annuity at age 62.

 

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Temporary federal work and retirement credit

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Q. I worked as a temporary hire for two years aboard the Thomas G. Thompson, the University of Washington research vessel, and received time stubs for those periods. I also had my merchant marine Z-Card at the time. I am now employed as a federal officer and want to know if this time counts toward retirement.

Read the rest of this entry »

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