By Reg Jones
May 14th, 2013 | Uncategorized
Q. I’m going to be doing charity work for several months in 2014. I’m considering requesting a leave of absence for it (I understand such leaves are at the discretion of management). If I’m not granted the LOA and I resign, how will a few months (seven to eight total) affect my retirement? I plan to rejoin federal service after the charity event. I’ve consulted my local HR department and OPM, but I’ve received conflicting information. My questions: If I’m granted the LOA, is my high-3 affected by such an absence? Then, assuming I’m not granted the LOA and I resign, can I rejoin federal service with the high-3 intact? Lastly, do I lose my high-3 if I withdraw funds from TSP just before the LOA or resignation? That is the big one for me — some people tell me if I touch my TSP, I lose my high-3.
March 31st, 2013 | Uncategorized
Q. I switched to FERS from CSRS. Do you know of anyone who has been permitted to return to CSRS from FERS? At first, CSRS folks were not allowed the Thrift Savings Plan option, and later they were. I think I would have opted to stay with CSRS had I known that. Is there any way to go back?
Q. I am a veteran of the armed forces and a civilian federal firefighter of Hawaii and have about 13 years government time under FERS.
While on duty in 2010, we were in route in the fire engine and an oncoming vehicle lost control and collided with the fire engine, causing substantial injuries to myself and the crew. The majority of the kinetic energy was absorbed by me because the point of impact was where I was seated.
I sustained injuries to my lumbar area in my lower back and injuries to my left limb, for which I’ve undergone a major back surgery, countless doctors’ visits and therapies, etc. I am still recovering from the injuries and presently on modified light duty at four hours a day, five days a week. I was on total disability for about 2 years and noticed that my retirement investment into my Thrift Savings Plan was at a freeze or standstill, where an injured employee could not invest into their TSP while on leave without pay. I also noticed that while on total disability, an injured employee goes into LWOP status, which human resources said affects your within-grade increases to where you are not entitled to move up in step increases.
Is there a new law that helps with retirement benefits for workers hurt on the job? After intensive research, I stumbled across an article by Stephen Barr dated Oct. 10, 2003, informing that President Bush signed legislation that will help make up any shortfall in retirement benefits for federal employees who are disabled or injured while on the job. It mentions the new law will change the way a federal employee’s benefits are calculated during a disability by increasing the pension benefit provided under FERS to cover any shortfall.
Is there also any new law or standard act that helps with entitlements for step increases for workers hurt on the job? Ever since I was injured on the job in 2010, and because of the injuries I sustained I was on total disability in LWOP status not by choice, the opportunity to move up in step increase passed me over twice. As co-workers who were hired the same day as me moved up in step increase, I was denied. Can you advise?
March 28th, 2013 | Uncategorized
Q. I am a 29-year-old federal employee and I may have to move at some point in next few years because of my husband’s work or if I go back to school. I have been working for 2½ years and I am starting to build up my Thrift Savings Plan (all L2050; if I leave, I am hoping to return to a job in the federal government at some point). I am wondering how vesting works for both TSP and my FERS annuity. Will I have to work a consecutive five years to keep both before I can leave, or do I bank that time if I decide to come back? For example, if I work for 3½ years then leave and come back two years later and work for 30+ years, will I keep what was put into the TSP and my annuity during my first 3½ years when I come back?
Q. I am 55 years old and took an early retirement offer with an incentive from the Postal Service in August of last year. I had 26 years of full service. I am considering an opportunity to become re-employed part time with the U.S. Forest Service as a GS4 information receptionist at the local visitor center. This is a seasonal position lasting six months a year. How will this affect my Thrift Savings Plan withdrawals and my special retirement supplement when I turn 56? I retired as an EAS-18 postmaster.
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.
Q. I am a letter carrier, age 52, started in 1985 and have 28 years of creditable service.
If I understand what I’ve gleaned from the posts here and the Postal Service were to offer me a Voluntary Early Retirement Authority this year,
1. Would I begin my annuity immediately?
2. Would I have no reductions in calculations of my annuity? (average high-3 x 1 percent x 28)
3. Would I receive credit for half of my sick leave and all of my annual leave? (How are these applied?)
4. Would I receive the special retirement supplement beginning at age 56 (my minimum retirement age), and receive it until I reach age 62?
5. Would I be able to continue carrying my current health and life insurance at non-USPS rates? (I couldn’t find how long these could be carried. Until death?)
6. Could I begin receiving Social Security as early as age 62?
7. Any withdrawal from my Thrift Savings Plan prior to age 59½ would be penalized 10 percent as per Internal Revenue Service regulations? (Can I continue to contribute to TSP after retirement?)
8. As a FERS annuitant, is there no limit to what I can earn after separation from the Postal Service as it pertains to my annuity payment?
9. At age 56 (my MRA), the special retirement supplement from Social Security would begin and would be subject to yearly income limits. Would supplement payments be reduced by approximately $1 for every $2 I earned above that year’s Social Security income limit?
10. At age 65, I’d be eligible for Medicare parts A and B? (Would this affect my health insurance coverage through Federal Employees Health Benefits?)
11. Would there be cost-of-living increases at any point for my annuity?
12. Is there a date during the year that maximizes the benefits of retirement?
Did I get this right, and are there any other things I should know before considering a VERA if it is offered?
Tags: 401(k), annual leave, annuity, cost-of-living adjustment, creditable service, early withdrawal penalty, enrollment, FEHB, high-3, income, IRA, IRS, LIFE INSURANCE, lump sum, Medicare Part A, Medicare Part B, minimum retirement age, Postal Service, sick leave, SOCIAL SECURITY, special retirement supplement, TSP, VERA
March 18th, 2013 | Uncategorized
Q. I have 27½ years in the Postal Service and I am 52½ years of age. If an early-out comes in the next few months, will I get a penalty for leaving? Do I get my special retirement supplement, or do I have to wait for that? Also, do I get to take my Thrift Savings Plan now, or do I wait for that?
A. Reg: If you were offered an opportunity to retire early, you have the age and service needed to accept it. If you did, you wouldn’t be subject to the age penalty and you’d be entitled to the special retirement supplement when you reach your minimum retirement age, which is 56.
Mike: The early-out has no effect on the Internal Revenue Service early withdrawal penalty. You will be subject to the penalty until you reach age 59½ unless you qualify for one of the exceptions listed on Page 7 of this notice: https://www.tsp.gov/PDF/formspubs/tsp-536.pdf
March 14th, 2013 | Uncategorized
Q. I spent 22 years with the Postal Service and quit in 2010 to take another career. I was under FERS. Do I get a pension from the Postal Service, or is that what the Thrift Savings Plan is? And can I collect it at 55?
A. Reg: If you didn’t take a refund of your retirement contributions when you left, you can apply to the Office of Personnel Management for a deferred annuity at age 60.
Mike: If you left FERS service before the calendar year in which you reach age 55, you will be subject to the early withdrawal penalty rules.
March 11th, 2013 | Uncategorized
Q. I am new to taking a active role in my retirement, as I have been working a government job under FERS and TSP for about 3½ years. I would like to take care of a few small bills. Can I take out a loan against my FERS account and not my TSP? My TSP was set at the minimum to build up enough to borrow what I would like against it.
A. No, you cannot take out a loan against your FERS account.
Q. I worked for the federal government for over 28 years. I retired last year under Voluntary Separation Incentive Pay provisions June 30, 2012.
I am considering re-employing/reinstating. Am I eligible to return to work on July 1, one year after retiring? Can I repay the VSIP in cash or in payments?
I read once that you can make payments for up to 36 months upon re-employment but am not sure whether this is correct. I understand the VSIP must be paid back before I return to work.
Upon re-employing with the government, will I be able to contribute to FERS and the Thrift Savings Plan?
I noticed on the USAJobs website that some Navy notices state you can’t contribute to the retirement or TSP if your a re-employing annuitant. Yet others I read from other government agencies remain silent on this issue.
A. Reg: You can return to work for the government at any time after you accept a VSIP. However, if you accept employment for compensation with the government of the U.S. within five years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, you must repay the entire amount of the VSIP to the agency that paid it before your first day of re-employment.
Both things you read about re-employment are true. As a rule, your salary would be offset by the amount of your annuity and you would be able to contribute to the retirement fund. If you worked for a full year, you’d receive a supplemental annuity; if you worked for five years, you’d receive a redetermined annuity. On the other hand, there are certain limited authorities that would allow you to return to work and receive both your full annuity and the full salary of your new position. However, you would not be permitted to contribute to the retirement fund and, when you retired again, you wouldn’t be eligible for any additional retirement benefits.
Mike: From published Office of Personnel Management materials: “If a re-employed annuitant is performing service covered by FERS or CSRS (i.e., the appointment is made pursuant to 5 U.S.C. § 8468 or § 8344(a), respectively), the re-employed annuitant is eligible to participate in the TSP.
Agency contributions for a FERS re-employed annuitant must begin with the effective date of the reappointment to the FERS position as discussed in Section VI (A) of this bulletin. The re-employed annuitant may make contribution elections as discussed in Section III of this bulletin.
If a re-employed annuitant is not performing covered service (e.g., a FERS annuitant who is re-employed on an intermittent basis or an annuitant authorized to receive full salary and full annuity under P.L. 101-509 or the National Defense Authorization Act of 2004), the re-employed annuitant is not eligible to participate in the TSP.
Generally, re-employed annuitants are performing covered service. In most cases, if the annuitant indicator on the Standard Form (SF)-50, Nature of Action, is coded “1,” “4,” or “5,” the re-employed annuitant is eligible to participate in the TSP. In the case of a FERS re-employed annuitant, this will be reflected in the retirement code (which indicates FERS) because the annuitant is required to have FERS deductions taken from pay.
In the case of a CSRS re-employed annuitant, however, this may not be reflected in the retirement code because the annuitant may not be required to have CSRS retirement deductions taken from pay. Consequently, the retirement code of a CSRS re-employed annuitant may be “4” (i.e., none), though the annuitant is performing service covered by CSRS and is therefore eligible to participate in the TSP.”
February 28th, 2013 | Uncategorized
Q. If I have met the requirements for a Voluntary Early Retirement Authority being offered in 2014 (over 25 years and any age — in my case, 27 years and age 46), would I get credit in my retirement benefit calculation for sick leave. I know after Dec. 31, 2013, the full amount can be used. However, I wasn’t sure if you have to retire under “normal” circumstances and whether it was still applicable in a VERA situation. After meeting the requirement for a VERA, I know you can collect your retirement annuity immediately. Does the same hold true for the Thrift Savings Plan? Are there penalties for being under the minimum retirement age?
A. Yes, any unused sick leave would be used in your annuity computation.
Q. You have stated that to calculate the high-3, OPM will consider only salaries from which the government has deducted retirement contributions.
For which items will they not deduct the contributions? Social Security taxes? Medicare taxes? Medical, dental and vision insurance payments? Thrift plan payments?
I think it is fraud when everywhere it is stated “average of three highest salaries” and the actual amount is way low. Nobody told me that’s how it is calculated.
I was a title 38 physician and have retired under FERS, but I also have CSRS component.
A. First, let’s clear the deck. There isn’t any fraud. A high-3 is based on an employee’s highest three consecutive years of average basic pay, not salary. Second, basic pay is the amount you receive before any deductions are taken out for Social Security, Medicare, medical, dental and vision insurance, the TSP, etc.
January 29th, 2013 | Uncategorized
Q. My wife, who is terminally ill, is covered by FERS and is an employee of the Postal Service. She is running out of sick and annual leave. If she goes on leave without pay and passes away while on leave without pay, will I, as her current husband (25 years +) still be eligible for the basic employee death benefit (50 percent of final salary plus $15,000)?
A. If your wife had more than 18 months service but less than 10 years, you’d receive a lump-sum payment of $31,316.46 plus a lump-sum of the higher of 50 percent on her annual basic pay at the time of her death or 50 percent of her high-3 average salary, plus any Social Security benefit that may be payable, plus any Thrift Savings Plan death benefits. If she had 10 or more years of service, you’d receive all of the above plus a survivor annuity equal to 50 percent of her basic annuity under FERS.
January 24th, 2013 | Uncategorized
Q. I am my sister’s only surviving relative. I have filled out and submitted the required paperwork to FERS. How long will it be before I receive payment from FERS? I have received payment from the Thrift Savings Plan.
A. Only the Office of Personnel Management can answer your question. Call them at 888-767-6738 or 724-794-2005.
January 14th, 2013 | Uncategorized
Q. I am a federal firefighter and a FERS employee. In 2022, I will have 21 years of creditable service and four years of bought-back active military time and be 48 years old.
1. Will I be able to retire under the provisions of 25 years of service at any age?
2. Will I receive the special category retirement percentages (1.7 x high-3 x creditable service, etc.)?
3. Will I receive the special retirement supplement until 62?
4. Will I not be able to withdraw any Thrift Savings Plan annuities until 62?
A. Reg: 1. No, you won’t be able to retire. Only actual service as a firefighter — not active duty for which you’ve made a deposit — counts toward the 25-year requirement.
2. When you are eligible for retirement and do so, your annuity would be computed using the special category percentage for the first 20 years; the remaining time would be computed using the standard multiplier.
3. When you retire, you would receive the special retirement supplement, regardless of your age, until you reach age 62.
Mike: 4. You will have access to your TSP assets, for withdrawal or to purchase an annuity, as soon as you retire.
January 11th, 2013 | Uncategorized
Q. I started employment with the Defense Department in September 1981 under CSRS. In 1995, I took advantage of a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay because my organization was downsizing. I also took a refund on my retirement account, which I tried to invest in buying a home and lost it. I was reinstated in the government in 2004 and came back as CSRS Offset. I also rolled my 401(k) from the job I had outside the government into the Thrift Savings Plan. I will be 65 on March 7, and was planning to retire in May. Because I did not put my retirement back into the CSRS account, will that hurt my plans for retirement? Will my annuity be greatly reduced because I did not redeposit the funds? If so, by how much?
A. If you don’t redeposit the retirement contributions that were refunded to you, plus accrued interest, you’ll still get credit for that time in determining your total years of service. However, it won’t be used in your annuity computation. In effect, your annuity would be based solely on the time between when you returned to work for the government and when you retire.
January 11th, 2013 | Uncategorized
Q. I understand that if you exceed the special retirement supplement earnings limit for the year you retire, you will not be eligible for the special retirement supplement for the rest of that year. Is this correct?
I will be eligible to retire Jan. 22, 2015. I would like to carry into the 2015 year 240 hours of annual leave. There are two pay days in 2015 prior to Jan. 22. Most likely, the lump-sum payment for 240 hours of annual leave and January wage earnings will exceed the special retirement supplement earnings limit for 2015. If I put all of my January 2015 earnings into the Thrift Savings Plan and only collect the lump-sum payment, which by itself is less than the earnings limit, would I be eligible to get the special retirement supplement for the rest of 2015?
A. Relax. You’ll be covered by the so-called “first year rule.” That’s a special rule that applies to earnings during the first year of retirement.
This special rule lets the Social Security Administration pay a full Social Security check for any whole month they consider you retired, regardless of your yearly earnings. If you will be under full retirement age for all of that year, you are considered retired in any month that your earnings are $1,220 or less and you didn’t perform substantial services in self-employment. It also applies to those who have reached full retirement age and are considered retired in any month that your earnings are $3,240 or less and you did not perform substantial services in self-employment.
Note: The dollar amounts cited above are for 2012. They will likely be higher when you retire.
January 10th, 2013 | Uncategorized
Q. I was active-duty Navy (1980-84), then active Coast Guard (1991-2000). I received a tentative offer for employment with Army a few weeks ago (I’ve been a contractor since 2000). All required documents are submitted. Now I wait.
How do I buy my 13 years active duty into FERS? Can I use my existing 401(k) to pay this? How much would it cost me?
I also found out that, as of Jan. 1, the deduction for retirement went up to 3.1 percent. I guess a tentative offer before Dec. 31 doesn’t count for hired, so my pay is decreased. Adding on an increase in the cost of living (D.C. area), increase of health care coverage, retirement, Thrift Savings Plan, Social Security and decrease from my current salary, there’s not much of a paycheck left. What are the benefits of government employment? Any idea why Fort Belvoir does not have a cost-of-living adjustment?
A. Yes, you will be able to make a deposit to get credit for either or both your periods of active-duty service. When you are hired, your personnel office can explain how you do that and what it would cost. While you can use any source of money to make the deposit, I don’t know what the tax consequences of using your 401(k) would be.
The fact that you were made an offer of employment before the change in retirement deductions went into affect won’t change the fact that you’ll be required to pay the higher amount.
Your question about COLAs and Fort Belvoir makes no sense. Employees don’t receive COLAs, only retirees. And whatever COLAs one retiree gets are applied to the annuities of all eligible retirees. On the other hand, if you are referring to annual pay increases, these have been frozen for all employees for the past few years.
January 1st, 2013 | Uncategorized
Q. I’m a Postal Service employee under FERS, eligible for the Voluntary Early Retirement Authority. If I take the early-out, I’ll have 26 years and nine months of service and I’ll be 55 years of age at the time of last day of service. I’ll be 56 in June.
I understand that if I take the early-out, I don’t have to have 30 years of service to get a percentage of the special retirement supplement, based on 26 years of service (that would put me at about 65 percent of what I would get from Social Security at age 62, if I don’t work another job until then).
1. Because I would be turning 56 four months after retirement, wouldn’t my postal salary of $54,257 from my last year of service eliminate my getting any of the special retirement supplement for another six months?
2. I understand that because I’d be 55 years old at the time of retirement, I’d be able to take out all of my Thrift Savings Plan money without the 10 percent penalty for early withdrawal (I would just be taxed on it), but would that lump sum be considered earned income and come under the special retirement supplement/Social Security earning cap?
A. You would be entitled to the special retirement supplement as soon as you reach your minimum retirement age, regardless of the amount of money you earned before retiring.