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Return to Article: A Great Date to Retire

• 50193
  

  This is wonderful information - but perhaps you could update it to show good dates to retire in 2008 and 2009 rather than 2006? Also, I believe the OPM directive for leave accrual states that in order to accru leave for a pay period, you must be EMPLOYED for the entire pay period, not just perform 80 hours of work???

  CJ Pepin Posted May 7, 2008 12:54 PM
• 43981
  

  I am a FERCCA employee who has been unable to get past SS credit. Does anyone know of a contact at SSA in Baltimore. My agency wants to take my corrected W2-C's and 941-C's so I can get past Social Security credit for my erroneous retirement coverage. I have now been corrected to CSRS-Offset. They asked me if I knew anyone since not many people (SSA) are familar with FERCCA and the regular SS law bars corrections beyond 3 years. Under PL 106-265 (FERCCA) and 5 C.F.R. Section 839 credit for past social security coverage can be given even go back over 20 years. The whole purpose of the FERCCA law was to correct employees' retirement so that they were not disavantaged.

  My agency deals with SSA almost entirely electronically these days.

  Anyone help or contacts would be greatly appreciated.

  Dr. Robert Posted February 21, 2008 5:58 AM
• 42146
  

  How do I calculate the percentage an annuity will be.........of the high-3 I assume? Many thanks.

  clare j. sturgeon Posted January 24, 2008 10:55 AM
• 35997
  

  I am a CSRS employee. I have heard that there is a provision that allows employees at the time of retirement to make an additional deposit to their retirement account. The amount deposited will receive 8 % interest per year and the interest will be added to their retirement benefit. Once the amount is deposited it cannot be refunded. Is this correct? If so, if the retiree dies will the retiree's spouse continue to get that amount or would it be eliminated or reduced to the surviving spouse?

  Douglas Bolton Posted October 26, 2007 12:53 PM
• 22743
  

  I have been in a FERCCA mess for three and one half years and I am no closer to resolution than I was when I retired in 2003, this whole process stinks. I need case law from anyone who has sued OPM over FERCCA. I had 20 years service when I retired and I need help.

  Don Harand Posted May 6, 2007 10:59 AM
• 19283
  

  If one is contemplating retirement at or near the end of a calendar year, is it to their benefit to wait until the full COLA and pay raise take effect (for high 3 calculations?) For example, this year, the full pay raise wasn't in our checks until February.

  I'd also rather take leave and be "earning" my salary at the same time than to be paid for the leave balance in my account at the time I retire. While I'm earning my salary, I'm also contributing to my FERS retirement account pre-tax and TSP with pre-tax dollars. Doesn't it make more sense to run the leave balance down to zero and accumulate the "benefit" of salary and pre-tax benefits instead? Especially if you use the leave to assist with retirement planning and perhaps to visit family that you would have visited immediately after retiring anyway.

  Michael Ungerman Posted October 22, 2006 6:13 AM
• 18923
  

  In 2004 and 2005 I made a mistake and did not contribute the full allowable amount to my TSP. However, I did put the maximum allowed in my age 50 catch-up. Is this going to cause me problems later?

  A. Clark Posted September 26, 2006 4:56 PM
• 18565
  

  When will you be publishing good CSRS retirement dates for 2007? I am tentatively looking at April 2, 2007. This will allow me to receive my April check in May and receive my leave for the pay period that ends March 31. It would also allow me several pay periods to put in my TSP and catchup, and to receive a lump sum for my 288 hours of leave, correct? Did I forget anything?

  Lynn Ennis Posted September 5, 2006 4:21 PM
• 18219
  

  I don't hear about Title 38 employees. As a Title 38 employee (non-MD), it seems the differences are in the AL and SL accrual hours. I assume the best time to retire is the same? Are there recommendations for fist half of 2007? Thank you.

  Ronald Marciano Posted August 14, 2006 11:05 AM
• 17984
  

  As a FERCCA employee with 28 years of service, I recently got the call from the government contractors hired to resolve all FERCCA issues for the government. My interview was at home and I did not have the benefit of a workshop on the matter. I was blindsided by a plethora of information, all pushing me toward signing on to FERS and not CSRS offset. I did not hear a good thing about CSRS offset. All I heard was how much I would lose if I did not sign on as FERS.

  After the call, I wondered what would happen to all the Social Security taxes paid as a FERS employee for about 12 years. This was not addressed. Can anyone help me here? I would appreciate any unbiased input about which plan they're choosing and recommend (knowing that for each case it may be different). Any info will be appreciated. I'm in the Gulf, at sea, and detached from all contacts that could help me with this.

  Rich Griffin Posted July 31, 2006 12:08 AM
• 16668
  

  Your article was quite informative. Do you have someone you can recommend that would consider working with individuals to help sort out the specifics of retirement options based on that individual's situation? Everyone we see provides general info - useless since we now need details (those of us within a year of retirement). I believe my best date to retire would be end of September so that I can maximize lump sum pmt for annual leave without paying the 6.2 percent for SSI. I am a CSRS transferee (11 years) to FERS assigned to a BRAC installation already with over 400 hours AL accumulated. Am I hot or cold? Thanks.

  Gene Sanders Posted May 11, 2006 3:23 PM
• 15403
  

  Could someone please explain to me about COLA's? I'm going in the middle of a pay period regardless, but would it be better to retire July 30, have retirement start July 31, and get the prorated COLA for August? Or would I still receive the prorated COLA for August even if I go August 1, 2, or 3?

  Mike Mack Posted March 13, 2006 12:58 PM
• 15303
  

  I am somewhat in confusion as to why the examples for target retirement dates are on a Friday. Most employees do not complete 80 hours of work during their pay period until late afternoon. Wouldn't Saturday at the end of the pay period or Sunday at the beginning of the pay period be better? Then an employee would still get credit for his/her annual leave for the pay period. An example: a CSRS covered employee working AWS on Fridays. He/she could retire Sept. 2 or Sept. 3 and still receive an annuity in September and get annual leave credit for pay period 19? Am I correct?

  GovExec.com reader Posted March 7, 2006 11:48 AM
• 15230
  

  Tammy, That was an excellent article. Very informative, but I do have one question. I'm under FERS and have 5 years until retirement. I was wondering if I retire at the end of December and sell my annual leave, will I still have to pay social security tax and state tax? I live in Oklahoma. Thank you.

  Rick Posted March 3, 2006 6:35 AM
• 15060
  

  For CSRS employee: # 1 says to retire on the last day of the month. # 2 says to retire on the 1st, 2nd or 3rd day of the month. Which is best? For example: What's the difference if your last day is June 30 (Friday), or July 1, 2, or 3 (Saturday, Sunday, or Monday?)

  GovExec.com reader Posted February 23, 2006 2:29 PM
• 14803
  

  A great day to retire unless you fall under FERCCA! Could you please write a story concerning FERCCA - Federal Erroneous Retirement Coverage Corrections? In 2004 when I inquired about paying retirement into temporary assignments, I was informed my request had to be placed on hold because it was determined I fell under FERCCA. When I asked how long this situation would be on hold, the folks at Ft. Riley told me that it was an indefinite situation. That I would most likely have to contact my congressman because not even OPM knew how to handle the thousands of FERCCA cases. I then wrote to the OPM Inspector General and in September 2005 received a letter from that office stating that someone would contact me shortly. Here it is February 2006, and I have yet to hear from anyone? How desperate is this FERCCA situation? If FERCCAs fall into a forgotten black hole, then the more reason you should have to explore this situation and write a story or several stories.

  Thank you.

  GovExec.com reader Posted February 10, 2006 2:52 PM
• 14753
  

  The reader below is correct: $15,000 plus $5,000 does not add up to $25,000. But, if you also allocate and spend the maximum contribution to a healthcare FSA (also $5,000) before you retire, then you can, in fact, save $25,000 of your 2006 income from federal and state (all but 2 states) income taxes! I should have done my addition after I wrote about the FSA program in the next paragraph!

  Tammy Flanagan Posted February 9, 2006 11:20 AM
• 14696
  

  To Going Out... if you would provide me with your email address and name, I would be happy to assist you in planning your retirement. In my 25 years experience, I have had many occasions to provide information that has increased a retirement benefit by thousands of dollars per year that has nothing to do with working longer -- in fact in most cases I make a case for retiring sooner rather than later.

  Choosing a good retirement date is not just a matter of working longer and getting more money. That has to be done before you choose the date. The purpose of my article is to help you save money by selecting the best individual date after you have done your financial planning (and mental preparation) for what is one of the most important and major decisions of your life.

  Perhaps a re-read of the article will help you understand the point of what is written. Thanks for the feedback!

  Tammy Flanagan Posted February 7, 2006 9:29 PM
• 14691
  

  How do get a $25,000 reduction of taxable income for 2006? Shouldn't it be $20,000 ($15,000 in regular and $5,000 in CUCs)?

  "4. A springtime retirement can provide some tax breaks.

  ... you could elect to contribute your entire salary to the TSP -- tax-deferred -- until you reach the IRS elective deferral limit ($15,000 for 2006). In addition, if you are turning 50 this year or are already there, you can contribute an additional $5,000 in catch-up TSP contributions (also tax deferred). This results in a reduction of taxable income of $25,000 for 2006."

  GovExec.com reader Posted February 7, 2006 4:11 PM
• 14678
  

  To Going Out...

  Hurry-up and go.

  Interested Posted February 7, 2006 1:00 PM
• 14669
  

  This is a stupid article. The greatest date to retire is tomorrow! Of course you get more money if you work longer -- why do we need a "retirement" specialist to tell us that? So far nothing in the articles have been of any help! What about the taxation of IRAs, both traditional and Roth? Tell us what happens to our TSP account after we die and leave it to the kids. We all know that if we keep working we get more money -- so what?

  Going out Posted February 7, 2006 6:26 AM
• 14665
  

  This is response to the question about the lump sum annual leave payment and Social Security taxes. If the lump sum payment is paid in 2006, you would apply the 2006 limit on taxable wages ($94,200), and if your salary had already exceeded this limit, you would not be subject to Social Security withholding on this payment. But if the annual leave payment is paid in 2007, you would pay the 6.2 percent Social Security wage tax on the amount of the payment since it would be the first earned income of the year. Payroll generally pays the lump sum leave payment within 30 to 45 days of the retirement date.

  On another note, for those who are eligible for Social Security benefits when you retire: The lump sum payment for accumulated and accrued annual leave is considered a "Special Payment" for Social Security purposes. After you retire, you may receive payments for work you did before you started getting Social Security benefits. Usually, those payments will not affect your Social Security benefit if they are for work done before you retired.

  Some special payments to employees include bonuses, accumulated vacation or sick pay, severance pay, back pay, standby pay, sales commissions and retirement payments or deferred compensation reported on a W-2 form for one year, but earned in a previous year. These amounts may be shown on your W-2 in the box labeled "Nonqualified Plan."

  Here is an example: Mr. DeSilva retired at age 62 in November 2005 and began to receive Social Security benefits. In January 2006, Mr. DeSilva receives a check from his employer for $17,000 for his leftover vacation time. Because this is for vacation pay he accumulated before he retired, Social Security will consider it a special payment and will not count it toward the earnings limit for 2006.

  Tammy Flanagan Posted February 6, 2006 9:12 PM
• 14664
  

  In response to the reader who wondered why I didn't mention Sept. 30, 2006 as a good retirement date, please re-read the article. I did list Sept. 30 as a good date at the end of the month and at the end of a leave period!

  Tammy Flanagan Posted February 6, 2006 9:00 PM
• 14663
  

  This is in response to the FAA employee who says the leave periods are off in the article. Most Federal employees (but not all) follow the calendar where the "leave year" begins on Sunday, Jan. 8, 2006 and ends on Saturday, Jan. 6, 2007. If you follow a different leave calendar, the advice for retiring at the end of a leave period still applies, although the best dates might be different. A leave year begins on the first day of the first full biweekly pay period in a calendar year. A leave year ends on the day immediately before the first day of the first full biweekly pay period in the following calendar year. However, some agency payroll systems use a different pay period schedule. Employees should contact their agencies to verify the beginning and ending dates of a particular leave year.

  Tammy Flanagan Posted February 6, 2006 8:57 PM
• 14662
  

  This comment is in response to the reader who wanted to know about Jan. 6, 2007 (end of the leave year) as a possible retirement date for FERS. I would not recommend Jan. 6 as a good retirement date because of the "commencing date" of the FERS benefit. See item #1 in the article that addresses why the end of the month is usually best for FERS employees.

  Tammy Flanagan Posted February 6, 2006 8:50 PM
• 14649
  

  Your column was very helpful but I wish under item #2 (retiring at the end of a leave period) you would have used December as one of your examples. Under FERS it becomes somewhat confusing as to what is the best time to retire in December: the 31st or the end of the leave period on Jan. 6, which also goes into a new year.

  GovExec.com reader Posted February 6, 2006 11:41 AM
• 14647
  

  When you retire at the end of the calendar year you can still take advantage of the TSP catch up for the next calendar year since your last two checks are not received until the following calendar year, making you eligible for the TSP CU in the next calendar year. The calculations are somewhat complicated and you need to be accurate as they will not deduct anything for your TSP CU if you specify a dollar amount that exceeds your net pay. You must do the dollar calculations yourself.

  Also, you can't tell payroll to take whatever is left in your net salary for the TSP CU. You need to calculate one amount for your second to last pay period and a second amount for your last pay period as the last pay period generally is less than 80 hours. I set aside all "fixed" deductions like CSRS, FEGLI, FEHB, and Medicare and added back in my federal/state taxes for the max I could deduct from my last two pay periods.

  You have to go into the payroll system twice and specify the amount to be deducted before the pay period begins. The reason this is necessary is few people have a net salary after all deductions that is $2.5k+ a pay period, especially when the last pay period may only be 5 - 7 days and not 10. The second to last pay period is generally a larger check than your last check so you put more of your deduction in that check, less in the last one.

  The taxes you don't pay by taking the TSP catch up can then be used to fund your CU. TSP will not help you in this calculation, nor will your payroll office, but I did find out that payroll can retroactively change the amount if you make a mistake, but they don't like to and it is obviously better to do it right the first time. Also, adjust your FSA so it is for 24 instead of 26 pay periods and that gives you more money for the TSP.

  Stop bonds or anything else not necessary so the base for your TSP CU is greater so you can reach that $5k maximum. I also left a small cushion at the end just in case of mistakes. You need to brace yourself for your last 2 checks being very small and have funds set aside to cover expenses.

  R. Patrick Ashcraft Posted February 6, 2006 9:15 AM
• 14646
  

  If one retired under FERS near the end of the year (e.g. end of November or December) and the social security taxable earnings limit was reached in early December, would most or all of the lump sum payment for leave be exempt from social security tax? If the lump sum leave payment is normally delayed 30-45 days from the retirement date, would all of it be subject to social security tax even though the retiree never worked into the next year? Can some of these taxes be avoided only to the extent payment is received before the end of the year?

  GovExec.com reader Posted February 6, 2006 9:04 AM
• 14633
  

  Why isn't 9/30/06 a good date to retire for CSRS and/or FERS employees? Not only is it the end of a pay period and the end of a leave period, it's also the end of a fiscal year!

  GovExec.com reader Posted February 3, 2006 12:31 PM
• 14629
  

  You need to make changes to your article. Many of the dates and leave periods are wrong in that they are not at the end of a leave period nor at the end of a month. Only one date was correct, however the leave period referenced was wrong.

  The only leave period during the entire year that ends on the last day of the month is leave period 21 that ends on September 30.

  Only two dates during the year fall within the three-day grace period.

• April 1 (leave period 8 ends April 1)
• Sept. 2 (leave period 19 ends Sept. 3)

The reference to leave period 17 in the article is not correct.

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