Ask The Experts: Retirement

By Reg Jones

Retirement penalty

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Q. If a VERA/VSIP is offered next year, will I be able to retire without penalty? I will have 29 years of creditable service as of Jan. 23. I will be 56.

A. Yes.

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VERA/VSIP and retirement benefits

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Q. I am a Defense Department civilian and have met my minimum retirement age. I will not be eligible for full retirement under FERS until September 2015.

By then, I will be 60 and will have 30 years of service.

If I accepted a VERA/VSIP (I am on the offer list), would I get hit with an annuity reduction if the offer is not the result of a reduction in force? If I could take the offer without a reduction, would I also receive the special retirement supplement?

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Service time, deferred retirement and VERA/VSIP

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Q. I’m 46, with 12½ years in civil service. Per ABC, I can do deferred retirement; however, VERA/VSIP has been offered. Will this null and void my deferred retirement since it is a voluntary resignation?

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Nurses and VERA

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Q. Are nurses allowed Voluntary Early Retirement Authority? I have 22 years and am 57 years old.

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RIF, VERA, penalty and SRS

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Q. I was born in 1966 and my organization may undergo a reduction in force. I anticipate that I will have the 50 years of age and 20 years of service by the time they may offer the Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay. Please let me know if the minimum retirement age counts during a RIF if I am a FERS employee because my MRA is 56½, of which I will only be 50 years of age, so I need to know if I will be penalized 5 percent each year under MRA. Hoping that the 50/20 rule is an exception to being penalized.

Also, how can I find out more about the special retirement supplement?

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VERA

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Q. I am a 48-year-old FERS employee with 25 years of civil service. Our organization has offered a Voluntary Early Retirement Authority. If my organization approves my VERA, when would I be eligible to receive an annuity? Immediately or at age 56? What are the near- and long-term pros and cons of accepting VERA?

A. Because you have at least 25 years of service, you would be eligible for an immediate annuity. When you reached your minimum retirement age, you would be entitled to the special retirement supplement. However, if you had earnings from wages or self-employment at the time that exceeded the annual Social Security earnings limit, your SRS would be reduced or suspended. As for any other near- and long-term pros and cons, you’ll have to figure those out for yourself.

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12 questions on VERA

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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?

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Social Security disability and special retirement supplement

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Q. I took the Voluntary Early Retirement Authority on July 31. I am receiving the special retirement supplement. I have since applied for Social Security disability. If I am approved for SSDI, will I lose the supplement even though I did not file for Postal Service disability? And will I have to pay back the supplement for the months I receive back pay from Social Security? And will I need to notify the Office of Personnel Management that I am receiving Social Security disability?

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VSIP and VERA

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Q. I am eligible to retire October 2014 under FERS at age 56 (my minimum retirement age). Are you allowed to take both the Voluntary Early Retirement Authority and Voluntary Separation Incentive Pay? If not, which would be smarter to take?

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Retirement eligibility

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Q. I am 61 years old. I have more than 17 years of civilian service. I would like to retire early by age 62. Is this an option with MRA+10? Voluntary early retirement is not an option yet.

A. At age 62, you could retire on an immediate, unreduced annuity with as few as five years of service.

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Special retirement supplement

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Q. I work for Customs and Border Protection. I am 59 years and eight months old with 20 years and three months of service. If I retire ASAP, can I receive the special retirement supplement? Any information for early buyouts for us? It would make more sense to give us early buyouts and not furlough the front-line officers.

A. If you are a law enforcement officer, you can retire at any time. If you aren’t, you can only retire under the MRA+10 provision unless you are offered an early retirement opportunity by your agency. If one is offered, you’ll learn about it before we do. As for the special retirement supplement, you’d be eligible to receive it as a retired law enforcement officer or as someone who retires under the Voluntary Early Retirement Authority. If you retire under the MRA+10 provision, you won’t.

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Difference between VERA and VSIP

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Q. What is the difference between VERA and VSIP?

A. The Voluntary Early Retirement Authority allows employees to retire early if they are age 50 with 20 years of service or any age with 25. The Voluntary Separation Incentive Payment can be made to any employee who leaves government, whether he is eligible to retire or not. VERAs and VSIPs are often offered at the same time, with the VSIP being narrowly targeted to positions the agency wants to restructure or eliminate.

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Early retirement and annuity reduction

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Q. I am a 45-year-old letter carrier under CSRS with 25 years of service. If I accept an early retirement offer from the Postal Service, will I still be subject to the 2 percent-a-year penalty for being under my minimum retirement age? What other penalties will I face accepting a VERA at an early age?

A. Yes, as a CSRS employee, you’d be subject to the 2 percent per year permanent reduction in your annuity. Another effect would be that your annuity would be based on fewer years of service than if you’d waited until you reached age 55 and were eligible for an immediate unreduced annuity.

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VERA and special retirement supplement

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Q. I will be age 59 in May with 21 years in. How does VERA/VSIP apply? Will I be able to get the special retirement supplement until age 62, and at what age would it start?

A. The Voluntary Early Retirement Authority and the Voluntary Separation Incentive Payment are two different things. If an employee is offered a VERA, he can retire at age 50 with 20 years of service or at any age with 25. If he is offered a VSIP, he can accept the money and leave, regardless of whether he is eligible to retire.

Because you meet the age and service requirements to retire if offered a VERA or a VSIP, you could do so. Because you have already reached your minimum retirement age, you would be immediately entitled to the special retirement supplement, which would continue until you reached age 62.

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VERAs and sick leave

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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.

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VERA vs. immediate annuity

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Q. You recently answered a question that stated there would be no point in accepting a Voluntary Early Retirement Authority offer if already eligible for an immediate retirement annuity. If, however, there is a monetary incentive involved, wouldn’t it be smarter to take the VERA to receive the cash incentive?

A. There isn’t any monetary incentive under the VERA, only with a Voluntary Separation Incentive Payment. So, my answer stands.

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VERA/VSIP offers

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Q. If a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay is offered, how can a Defense Department employee find this info if the agency does not announce the news?

A. You can’t. You’ll learn about it when the offer is made.

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VERA/VSIP and age

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Q. I have 26 years of uninterrupted federal service, am 58 years old, in FERS, no military service.

1. Is Voluntary Separation Incentive Pay ever offered without Voluntary Early Retirement Authority, or VERA without VSIP?

2. Can I, at less than 60 years old, accept the VERA/VSIP and retire if one or the other is offered?

3. If I take VERA and am not 60 years old but have over 25 years of service, will I be eligible to receive the special retirement supplement immediately or have to wait until age 60? How about under VSIP only?

4. If I take VERA and am not 60 years old, will I get a pension reduction for early retirement before age 60 with 5 percent off for each year short of 60? Or, does that get waived and my pension will be based on age 60?

A. VERAs are usually offered without a VSIP. And when both are offered, the positions covered are much broader in scope than the VSIPs, which are normally targeted. Only employees who are eligible for retirement can access a VERA. Anyone who is offered a VSIP can accept it, even if he’s not eligible to retire. CSRS employees who retire under a VERA will have their annuity reduced by 2 percent for every year they are under age 55. The age penalty is waived for FERS employees.

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Post-VERA employment restrictions?

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Q. I am 50 years old with 26 years of government service and I am in FERS. My agency is offering Voluntary Early Retirement Authority. If I were to accept, I would need to seek private-sector employment. Are there any post-VERA employment restrictions?

A. No.

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How are VERA applicants selected?

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Q. I am eligible for and have quickly submitted the interest form for Voluntary Early Retirement Authority three times now. I am a GS-11 with 25 years and seven months of service at 56 years of age. I have been turned down twice and fear being turned down again. I have been told that it won’t save someone else’s job or variably because they can’t hire behind me. How are successful VERA applicants chosen? My job is not so specialized that someone couldn’t backfill. There are plenty of other people at my level with the same job series. I understand the Voluntary Separation Incentive Pay isn’t automatically offered to everyone but thought VERA was approved for those who were eligible.

A. VERA is a mechanism for restructuring the workforce with a minimum of disruption. An agency is required to submit a detailed plan to the Office of Personnel Management, which includes a detailed summary of the agency’s personnel and/or budgetary situation that will result in excess personnel because of delayering, reorganization, transfer of function, reductions in force, etc. The plan must specify the occupations, grades, organization units and geographic areas where VERAs can be offered. As you can see, employees aren’t selected for a VERA, nor can they apply for one. If offered one, they can only accept or reject it.

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