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Retirement Q & A
Q. I’m a FERS retiree who is receiving the special retirement supplement. I’ll turn 62 in November. When will my SRS end?
A. Your special retirement supplement will end on the earlier of 1.) the last day of the month in which you turn age 62 or 2.) the last day of the month before the first month on which you would be eligible for a Social Security benefit, whether you apply for it or not.
Q. I am 40 years old and have seven years of federal service under FERS. Is it worth my time to keep on working three more years so I’ll qualify for the MRA+10 benefit?
A. Even if you had 10 years of service, you couldn’t retire under the MRA+10 provision because you wouldn’t have reached your minimum retirement age, which is 57. However, because you have at least five years of creditable service, you could leave government at any time. If you didn’t ask for a refund of your retirement contributions, you could apply for a deferred annuity. If you did that before age 62, your annuity would be reduced by 5 percent for every year (5/12ths of 1 percent per month) that you were under age 62.
Q. In November I will have five years of service and I bought back my Army time of three years, which gives me eight years of service. If I pass away, will my spouse be eligible for a monthly annuity check? I’m 58 and would have 10 years at 60, which should be my minimum retirement age.
A. When you have five years of actual FERS service, you’ll be vested in the retirement system. If you die after you are vested, your widow would be entitled to a survivor annuity. If you were to die before that, she wouldn’t. Then she’d only be entitled to receive a refund of your retirement contributions. Note: Active duty service for which you’ve made a deposit doesn’t count toward the five years needed to be vested in the retirement system; however, once you are vested, it would be used in the annuity computation.
Q. I’m a FERS employee who was hired in 2011. If I decide to retire with 10 years of service when I’m 58 and delay the receipt of my annuity until I reach age 62, how will that affect my enrollment in the health benefits program?
A. If you were enrolled in the Federal Employees Health Benefits program for the five consecutive years before you retired, your coverage would end after 31 days. While you’d be able to keep that coverage under the temporary continuation of coverage provision for up to 18 months, you’d be responsible for paying the entire premium, plus 2 percent for administrative costs. When that ended, you’d have no coverage until your annuity begins, at which point you’d be able to re-enroll in the FEHB program.
Q. I’m a FERS retiree. If I die and don’t have anyone who would be entitled to a survivor annuity, what happens to the money that I had deducted from my pay while I was working?
A. Any money that had not already been returned to you in annuity payments would be paid out according to the standard order of precedence found in law:
First, to the beneficiary or beneficiaries designated;
If none, to the widow or widower;
If none, to a child or children, with the share of any deceased child distributed among the descendants of that child;
If none, to the parents in equal shares or the entire amount to the surviving parent;
If none, to the executor or administrator if the estate;
If none, to the next of kin as determined under the laws of the state where the deceased lived.
However, it’s important to point out that under current law, the money you receive in your annuity comes first from the contribution you made to the retirement fund. As a result, if you live longer that 18 to 24 months after you retire, there won’t be anything left to go to anyone listed above.
Q. I’ve made a deposit to get credit for my two years of active duty service. I also spent a good deal of time in the reserves on weekend and annual active duty for training. Will I receive any credit for that time? If so, would the credit go toward leave or retirement?
A. No civilian credit of any kind is given for time spent in the reserves.
Q. I have worked for the U.S. Postal Service for 43 years. I retired in 2011 with a CSRS pension. Prior to USPS, and afterwards, I worked under Social Security. I believe I have the required 40 quarters. Will the Windfall Elimination Program affect my getting Social Security and how will it affect my pension?
A. While the Windfall Elimination Provision will have no affect on your CSRS annuity, your Social Security benefit will be affected by it. The WEP reduces the Social Security benefit of anyone who is receiving an annuity from a retirement system – like CSRS – where they didn’t pay Social Security taxes and has fewer than thirty years of substantial earnings under Social Security. To see how the WEP will affect you, go to https://www.ssa.gov/pubs/EN-05-10045.pdf.
Q. I’m a FERS employee. Can I retire at age 53 with 25 years of service?
A. No you can’t, unless your agency offers you that opportunity because it is undergoing substantial restructuring, reshaping, downsizing, a transfer of function, or reorganization. If they aren’t, you can always resign and apply for an unreduced annuity when you reach age 60. Or you could retire under the MRA+10 provision when you reach your minimum retirement age, which would be 56 and 4 months. However, in that case your annuity would be reduced by 5 percent per year (5/12ths of 1 percent per month) that you are under age 60.
Q. I will be 68 next year when I retire as a CSRS annuitant. I’m having Medicare deductions taken from my paycheck. Will I continue to have them taken from my annuity check?
A. No, you won’t. Premiums for Medicare Part A are only deducted from earnings from wages or self-employment. They aren’t deducted from annuities.
Q. I am a FERS employee who is on disability from the U.S. Postal Service, plus I am getting Social Security Disability Insurance. What will happen when I reach 62 and start getting my pension from USPS?
A. When you reach age 62, your FERS disability benefit will be recomputed as if you had worked to age 62. Therefore, your actual service will be added to the time you spent on disability. The total time will be multiplied by 1 percent (1.1 percent if you have at least 20 years of actual service and time spent on disability). That figure will then be multiplied by your high-3 salary on the day you were found disabled. That dollar figure will be increased by any cost-of-living increases paid to FERS retirees since you retired on disability. Receiving that annuity will have no effect your SSDI payments, which will continue uninterrupted.
Q. I am 43 years and have 20 years of federal service. I’m planning to leave for a job in the private sector but won’t ask for a refund of my retirement contributions. When will I be eligible to retire and receive an annuity?
A. You can apply for a deferred annuity when you reach your minimum retirement age, which is 60. Just be aware that as a deferred retiree, you won’t be eligible to receive the special retirement supplement or re-enroll in the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs.
Q. I’m a FERS employee who is getting ready to retire. I plan to elect a full survivor benefit annuity for my wife. Will it be increased by COLAs or change with age?
A. If you elect a full survivor benefit, your basic annuity will be permanently reduced by 10 percent. If you die, your widow will receive a survivor annuity that equals 50 percent of your unreduced annuity; in other words, the annuity you would have received before you made the survivor election. That survivor annuity will be increased by any cost-of-living adjustments that were made to retiree annuities following your retirement. Any future COLA increases following your death will also be applied to her survivor annuity.
Q. If I get married after I retire and elect a survivor annuity for my husband, I understand that I would need to pay the difference of what I would have paid had we been married at retirement plus 6 percent interest. For example, if I retired in January and married in June, if I understand this correctly, I need to wait 9 months for it to be effective so 9 plus 5 (months I would be married) would equal 14 months. If, for example, the difference in the annuity would be $50, I would owe $50×14 = $700 plus 6 percent interest, which would equal $42 for a total of $742. Would this $742 be paid back over the life of the annuity?
A. If you marry after retiring, there will be two reductions in your annuity. The first will be the standard reduction in your annuity, which will vary depending on whether you elect a full or partial survivor benefit. That reduction will be eliminated if your marriage ends.
The second will be a permanent actuarial reduction to pay the survivor benefit deposit. The deposit equals the difference between the new annuity rate and the annuity paid to you each month since retirement, plus 6 percent interest. That reduction won’t be eliminated if your marriage ends.
Q. I retired in 2011 from the United States Postal Service. I kept BCBS insurance. I only signed up for Medicare Part A. If I choose to sign up for Part B now and drop BCBS, will I have to pay a penalty?
A. Yes, you would have to pay a penalty. And it might be a whopper. Because you didn’t sign up when you were first eligible to do so, the premium you’d have to pay would be 10 percent higher for each year you were eligible to enroll in Part B and didn’t.
Q. I’m a FERS disability annuitant. Assuming that I continue to be disabled, what happens when I reach age 62?
A. When you reach age 62, your FERS disability benefit will be recomputed as if you had worked to age 62. Your actual service will be added to the time you spent on disability and the total time will be multiplied by 1.1 percent That figure will then be multiplied by your high-3 salary on the day you were found disabled. That dollar figure will be increased by any cost-of-living increases paid to FERS retirees since you retired on disability.
Q. I was born in 1967. I’m covered by FERS and want to retire at the age of 55 when I’ll have 34 years of federal service. Will I take a huge hit in my annuity?
A. Because you were born in 1967, your minimum retirement age is 56 years and 6 months. Although you wouldn’t be eligible to retire, you could resign and apply for a deferred annuity when you reach your MRA. However, if you did that, you wouldn’t be eligible to receive the special retirement supplement, nor would you be able to re-enroll in either the FEHB or FEGLI programs.
Q. I’m planning to retire from the U.S. Postal Service in October. I have no spouse who would be eligible for a survivor annuity. However, I do have a daughter. I would like for her to get my retirement pay. I worked hard for it and I don’t want it going back to the post office as unclaimed income.
A. While you cannot name your daughter to receive a survivor annuity, you could elect to provide her with what is known as an insurable interest annuity, but only if you are in good health when you retire. If you make that election, your annuity would be reduced by a percentage that would depend on the difference in your age and her age. Alternatively, you could name her as your beneficiary. Then, if you died before all the money you contributed to the retirement fund had been returned to you in monthly annuity payments, she would receive the balance in a lump sum. Just be aware that, on average, you’ll receive all the contributions you made within 18 months.
Q. I’ve reached my minimum retirement age and have 29 years under FERS. I have more than 2,400 hours of sick leave. Will the sick leave time be added to my actual service and make me eligible to retire?
A. No, it won’t. Sick leave is only added after you have reached the right combination of years and service to retire on an immediate annuity.
Q. I’m a FERS employee and plan to retire at minimum retirement age, which is 56. However, I’ll have fewer than 30 years of service. Is the 5 percent per year penalty based on each year short of 30 years, or is it based on each year short of age 62?
A. The MRA+10 provision allows FERS employees to retire at their minimum retirement age with fewer than 30 years of service. If you retire under that provision, your annuity will be reduced by 5 percent for every year (or 5/12 of 1 percent per month) that you are under age 62.
Q. My husband wasn’t married at the time of retirement in 1993. When we got married, he didn’t provide a survivor benefit for me. Now we’ve been married for 18 years. If he dies will I be able to get a monthly benefit check? If not, can he do something about that now?
A. Unfortunately, it’s too late. To provide you with a survivor annuity, he would have had to agree to a reduction in his annuity to pay for that benefit within two years of the date of your marriage.
Q. I resigned from the U.S. Postal Service 2.5 years ago. At the time I had over 2,500 hours of unused sick leave. My problem with the Post Office was that from day one we were told to bank your sick leave, which I did. I think it is very unfair not to benefit from saving all of those hours, which would have given me an extra boost to my retirement when I apply for it.
A. Employees who retire on an immediate annuity will have any hours of unused sick leave included when calculating their annuity. Employees who resign and later apply for a deferred annuity won’t. If you were to go back to work for the government, those sick leave hours would be restored and, when you were eligible to retire, be used in the computation of your annuity.
Q. When I retired, I was single. Now I’m getting married. Can I add my new spouse to my FEHB plan? If so, when can I do it?
A. You can change your FEHB enrollment from Self Only to Self Plus One beginning 31 days before you get married through 60 days after the event.
Q. I’ll soon be retiring. Will I be paid for any holidays that occur during my accrued annual leave?
A. Yes. When you retire, your unused annual leave will be projected forward as if you were still on the job working eight hours a day, 40 hours a week and 80 hours a pay period.
Q. I am a FERS retiree who elected a 25 percent survivor annuity for my husband. If he dies first, will I get a refund of the amount my benefit was reduced?
A. No, you won’t. However, your own annuity would be increased to what it would have been if you hadn’t elected a survivor annuity.
Q. I’m a FERS employee who is eligible to retire at age 56 with 32 years of service. However, I’m planning to work until age 62. What happens to the special retirement supplement? Do I lose it completely?
A. The special retirement supplement is designed to bridge the gap between when you retire and age 62 when you are first eligible for a Social Security benefit. If you retire at 62 or later, you won’t be entitled to that benefit.
Q. I retired in 2011 with 35 years under CSRS. Am I automatically enrolled in Medicare? Which parts should I enroll in? Does my Blue Cross Blue Shield FEHB coverage continue on?
A. Since you aren’t already receiving benefit from Social Security, three months before you turn age 65 you’ll need to go to https://www.medicare.gov/sign-up-change-plans/get-started-with-medicare and sign up. You’ll automatically be entitled to Medicare Part A at no cost because you paid for that benefit through payroll deductions. If you decide to enroll in Part B, you’ll have to pay the premiums for that benefit. Regardless, your FEHB coverage will continue.
Q. I withdrew my federal TSP in March 2019 and they took the appropriate amount of federal tax. I just received a 1099-R for that withdrawal to file with my taxes for 2019. I know that it is not considered earned income, so will I get taxed again? If not, why am I required to file it with my 2019 return?
A. When you took your withdrawal, the amounts that were withheld were deposits against your tax liability for 2019. When you file your return, you will report the gross amount of your withdrawal as Ordinary Income and it will be used as the basis for calculating your actual tax liability for the year. Your tax liability will then be compared to your withholding and estimated tax payments for the year and the difference will be either due, or refunded to you.