Ask The Experts: Retirement

By Reg Jones

Government pension offset

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Q. I am under FERS with a CSRS component (10 years CSRS, 15-year break, FERS for the past 20 years). If my spouse receives Social Security benefits based on my work history and I predecease him, and he begins receiving an annuity, will his Social Security payments be reduced or possibly eliminated under the government pension offset? He has enough quarters to qualify on his own record and is receiving payments now. However, under my records, his payments would be higher. I will retire in a year, at age 66, and would like to know before we request that his payments be based on my work history.

A. If he receives an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS, any Social Security spousal or survivor benefit would be subject to the government pension offset.

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WEP

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Q. I retired in 2011 with 30 years and three months employment with the Postal Service at the age of 56 years and six months with a CSRS pension. I had 32 quarters of paying in to Social Security when I retired. I worked part time from June 2012 to October 2012 for an insurance company and earned about $6,200. How many more quarters do I have to go to receive a supplemental Social Security pension, and is it also true that I will only receive about one-third of what I would normally be entitled to?

A. You have already earned four credits in 2012. If you earn $4,640 in 2013, you’d get four more credits and be eligible for a Social Security benefit.

Yes, it’s true that your Social Security benefit would be less than it would have been if you didn’t receive an annuity from a retirement system where you didn’t pay Social Security taxes. Because you do — and because you’ll have fewer than 30 years of substantial earnings under Social Security — you’ll be subject to the windfall elimination provision.

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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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Leave without pay and creditable service

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Q. As of January, I had 36 years of creditable federal service for retirement. This is based on a federal retirement benefits estimate I received from a company contracted by my agency to provide this service. I was on leave without pay while in a master’s degree program from June 23, 1984, to June 7, 1986. The company providing the benefits estimate counted all of this time as creditable for retirement. Is this correct, or would I only be allowed credit for a maximum of six months during each of the three calendar years covered by the leave without pay?

Secondly, I am in the CSRS Offset retirement program. Can I pay into my retirement program for the LWOP period, similar to what I was allowed to do for my military time? If so, where do I start? I am not in CSRS Offset because of the LWOP period but for a period between Aug. 23, 1988, and June 30, 1994, during which I taught two years at a University and completed a Ph.D. in my current field.

A. Periods of LWOP that are less than six months in a calendar year are considered to be creditable service and no deposit is required to get credit for it. LWOP that exceeds six months in a calendar year isn’t creditable service for any purpose, and you can’t make a deposit to get credit for it.

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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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Military buyback

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Q. I will have 39 years of total service as of May 12, of which four years are military service and 35 years civilian service. I have my 40 quarters paid in. Will I have to buy back my military time to achieve my 80 percent at retirement (41 years, 11 months)?

A. Yes, you will. Otherwise, when you retire, those years of active-duty service for which you haven’t made a deposit will be eliminated and your annuity recomputed without them. That will happen at age 62, if you are retired, or when you retire if it’s after that.

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CSRS annuity

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Q. I am planning to retire Aug. 15 with 37 years, two months and 12 days under CSRS. I will be 60 years old. I know if I stay more than 40 years, I will get 80 percent of my salary. What I don’t understand, according to my retirement estimates, is that after age 62, I will be getting less of an annuity each year. How can this be?

A. It can’t be. Something is wrong with either the estimator you are using or the data you are putting into it. Part of the problem may be that you misunderstand how long you have to work to receive an annuity that equals 80 percent of your high-3. It isn’t 40 years; it’s 41 years and 11 months.

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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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Turning down Medicare Part B but taking it later

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Q. I am 65 years old and am employed full time by the federal government. I will continue my federal employment for several years. I am covered under Federal Employees Health Benefits and pay for Blue Cross/Blue Shield insurance. If I decline Part B now and decide to take it later, will I be subject to the Medicare Premium penalty?

A. Yes, you can decline Part B while you are still employed without penalty. When you are no longer employed, you’ll have an eight-month window in which to enroll, penalty-free, which begins the first full month after you retire.

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Credit for sick leave

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Q. It is my understanding that unused sick leave after Jan. 1, 2014, is credited at 100 percent to the employee at retirement. Is it just added to the total annuity, or is it a lump-sum payout like unused annual leave?

A. Unused sick leave has no cash value. Instead those hours are added to any actual service hours that weren’t used in the initial computation of an annuity. For every combination of hours that adds up to 174, an additional month will be added to the actual service time and increase the amount of the final annuity.

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‘Death benefit’ vs. ‘life insurance’

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Q. My mother is a Postal Service retiree residing in a nursing home. She had to use up all of her own assets to pay the nursing home until she qualified for Medicaid. Now, she has nothing left. I’ve been told that as a retired postal worker, when her time comes, there is a Postal Service “death benefit” that will pay out to her beneficiaries and that Medicaid cannot take that money from her estate because it is technically a “death benefit” as opposed to “life insurance.” Is this true?

A. I’ve never heard of such a death benefit and don’t believe there is one. That leaves only two possibilities. First, your mother has a Federal Employees’ Group Life Insurance policy that, at her death, would be paid to whomever she designated on a Standard Form 2808 (CSRS) or 3102 (FERS). If she didn’t make such a designation, the money would be paid out according to the standard order of precedence. Second, if all of the money she contributed to the retirement system had not been returned to her in her annuity payments when she dies, any residual amount would be paid out according to the standard order of precedence.

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Beneficiaries

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Q. I will be retiring this summer, and my ex-husband has remarried, so he has no claim to my annuity when I die. Can I choose to leave my annuity to my children?

A. No. However, if you designate them as your beneficiaries and die before your contributions to the retirement fund have been returned to you in your annuity payments, any remaining amount would be paid to them.

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Calculations for disability retirement

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Q. I am trying to figure my calculations under FERS disability retirement and Social Security. I am receiving Medicare under Social Security Administration without monetary benefits because of workers’ compensation. Would you please calculate a high-3 of $54,000; and Social Security entitlement of $1,700 monthly on a 60% and a 40%. What would be the separate amounts received from both? Also, do I have to fill out both forms, SF 3112 and a SF 3107 for immediate retirement? I am requesting approval of disability retirement.

A. I can’t do your homework for you. What I can do is give you the formulas you’ll need to get the answers you want. For the first 12 months, you’d receive 60 percent of your high-3 minus 100 percent of any Social Security benefit disability benefit. For all remaining years and until age 62, you’d receive 40 percent of your high-3 minus 60 percent of your Social Security disability benefit.

You’ll need to fill out a Standard Form 3112, Documentation in Support of Disability Retirement, and, at the same time, file for Social Security disability benefits. If you don’t, the Office of Personnel Management won’t review your application for disability retirement.

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Medicare Part B

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Q. I will be a CSRS retiree soon enrolled on my younger wife’s FEHB family plan. Does it make sense for me to enroll in Medicare part B being on her plan? Will her premiums be affected if I do?

A. Her premiums won’t be affected one way or the other. Whether you should enroll in Medicare Part B is up to you to decide based on your current and projected health needs. Just remember this: If you don’t enroll in Part B and later decide that you want to do that, the cost of those premiums will be 10 percent higher for each full 12-month period you could have enrolled in Part B and didn’t.

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Annual leave payout

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Q. I’m being retired on medical disability, and I have more than 190 hours of annual leave. Who pays me for this and approximately when?

A. Your agency is responsible for generating a lump-sum payment for any unused annual leave. Usually such payments are made at the same time as your final paycheck is issued. Check with your agency to find out what its payment schedule is.

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Remarriage and survivor annuity

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Q. I have been a CSRS retiree for six years. I am getting remarried shortly. I want to ensure my Federal Employees Health Benefits continue to be available to my spouse after my death. I understand I have two years from date of marriage to elect a survivor annuity. May I select either a full survivor benefit or a reduced survivor benefit and still retain the FEHB from my surviving spouse? If reduced is an option, how much can it be reduced and still retain the FEHB?

A. Because you are a CSRS retiree, with your spouse’s written and notarized consent, you can elect any amount from $1 a year on up. If the amount of your survivor spouse’s annuity isn’t sufficient to pay the premiums, he or she can pay them directly to the Office of Personnel Management.

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Divorce and retirement annuity

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Q. I was divorced from a Postal Service worker in 2000 and he finally retired recently. Where do I go to get my portion of the annuity that was in the settlement?

A. You’ll have to call the Office of Personnel Management at 1-888-767-6738 or 1-724-794-2005 and talk to a benefits specialist.

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Sequestration and unused annual leave

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Q. As a FERS employee retiring at the end of March after 27+ years at age 65. How will the sequestration and continuing resolution affect when I will get my check for unused annual leave? Will there be any effect on the delivery of my first annuity and Social Security checks?

A. There shouldn’t be any delay in the delivery of your annuity and Social Security checks. Whether there would be a delay in your lump-sum annual leave payment is something that only your agency can answer.

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Annuity election

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Q. I am a 59-year-old CSRS employee with 39+ years of service. OPM Form 2801 indicates my spouse needs to sign the Annuity Election section. Is this signature a requirement before I can retire, or can I just ignore it since my spouse isn’t ready for me to retire?

A. I assume you are referring to the section of the SF 2801, entitled, Spouse’s Consent to Survivor Election. That only applies if you aren’t electing a full survivor annuity for your wife. If you are providing less than a full survivor annuity, or none at all, not only is she required to complete that section of the form but her signature will have to be witnessed by a notary.

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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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