Ask The Experts: Retirement

By Reg Jones

VSIP payout

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Q. I retired Jan. 3 with a Voluntary Separation Incentive Pay. I chose the two-payment option and was told I would receive half in June and the other half in December. It is now June and I have yet to receive the first payment. I would like to know who I would need to contact in regard to this situation.

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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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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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First annuity check

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Q. I took the early-out with a retirement date of Feb. 28. When will I receive my first retirement check? And when will I receive my first incentive check?

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VSIP eligibility

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Q. I will complete nine years of civil service as of August, as well as 22 years of military service. If I apply for Voluntary Separation Incentive Pay, what, if anything, can I expect to receive?

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VSIP and reinstatement

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Q. If a federal employee takes a buyout, but then wants to return to federal service, is he eligible for reinstatement rights, or does he have to compete as though he did not have prior federal service?

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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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Negotiate an early-out?

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Q. I will have 30 years with the U.S. government on May 24 (28 years with the Navy as a civilian employee).

My minimum retirement age of 56 will not be met until Nov. 25. With the budget fiasco going on, might I be able to negotiate an early-out with the following at my 30-year service computation date:

1) A waiver of the MRA and retire in May.

2) Full Voluntary Separation Incentive Pay.

3) Full special retirement supplement.

What do you think of this?

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Pay back VSIP?

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Q. If you take an early-out with an incentive and, in turn, put in for a medical retirement and it’s approved, would you have to pay back the incentive?

A. No.

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Early-out and bonus repayment

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Q. I may be offered an early-out in May. I have been working for the Army Corps of Engineers for the past 34 years. I’m a CSRS employee. If I take the buyout and have a chance to go work for FEMA or the U.S. Forest Service fighting fires out west this summer, can I do this without paying back the bonus?

A. According to the Office of Personnel management, “An employee who receives a [Voluntary Separation Incentive Pay] and later accepts employment for compensation with the Government of the United States 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, must repay the entire amount of the VSIP to the agency that paid it — before the individual’s first day of re-employment.” You’ll have to check with your potential employer to determine if there is any exception to this rule.

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VSIP repayment

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Q. I am about to retire as a heavy equipment operator for the Department of Public Works. I have been offered a job as a property book manager with a contractor. Will I have to repay their Voluntary Separation Incentive Pay?

A. According to the Office of Personnel Management, “An employee who receives a VSIP and later accepts employment for compensation with the Government of the United States within 5 years of the date of the separation on which the VSIP is based, including work under a personal services contract or other direct contract, must repay the entire amount of the VSIP to the agency that paid it – before the individual’s first day of re-employment.” Whether this restriction will apply to you is something you’ll have to check out.

Motto: Look before you leap.

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Deferred VSIP

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Q. I retired under CSRS at Wright-Patterson Air Force Base, Ohio, on Aug. 31 and I deferred my Voluntary Separation Incentive Payment to 2013. The first installed payment is supposed to be six months after retirement. I have not received any notification that a payment will be made. Do I contact the Office of Personnel Management, or does this payment come from another agency?

A. OPM has nothing to do with it. You’ll have to contact your former agency.

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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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VSIP and re-employment

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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.”

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VSIP and Social Security

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Q. I am a FERS employee with 23+ years of federal service and 62 years old. My agency is offering Voluntary Separation Incentive Pay to eligible employees, including those who are retirement-eligible. Would the incentive reduce the amount of Social Security I can draw this year?

A. VSIPs are considered earned income. To find out if accepting one would affect your Social Security benefit, go to www.socialsecurity.gov/retire2/rule.htm and see how the “first year rule” would apply to your situation.

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Unused sick leave

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Q. I’ve worked for the U.S. government as a Department of Defense Dependents Schools teacher for 40 years. I am under CSRS and have 230 days of accumulated sick leave. What would this be converted to should I elect to retire this year at age 65? Also can I, should I wish, work as a substitute teacher once retired, even should I be granted Voluntary Separation Incentive Pay?

A. Because unused sick leave is added to hours of actual service that weren’t included in the initial annuity computation, you’ll have to do the arithmetic. Go to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c050.pdf and scroll to Section 50A2.1-3

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Is VSIP always a lump sum?

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Q. I am 62 with 25 years of service. Since Voluntary Separation Incentive Payments have been offered in my organization, I am thinking about taking one. Do I have to take the lump sum, or can the incentive be taken in installments?

A. How the payments are made is entirely up to your agency, and, with the exception of the Postal Service, they usually make it in a one-time lump sum.

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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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VSIP eligibility

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Q. With 20 years of federal civilian employment at age 50, would I be eligible for Voluntary Separation Incentive Pay if it’s offered? I am under FERS.

A. Yes, because anyone who is offered a VSIP can accept it, whether or not he is eligible to retire. In your case, you have the years and service to both accept the payment and retire.

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