Eligibility: Facts and Myths
I remember years ago when I met longtime federal workforce observer Mike Causey, who now toils at Federal News Radio in Washington, he told me about meeting federal employees who would introduce themselves by saying, "Hi, I'm Andy and I have two years, nine months and 15 days left until retirement."
Clearly, many employees have a very good idea of when they will be eligible to retire. Some even have retirement countdown clocks on their computers to remind them. But others aren't so sure. If you fall into the latter category, this column's for you.
The requirements for retirement under the Civil Service Retirement System or the Federal Employees Retirement System are very clear. If you're not familiar with them, here are the basic rules:
|You must be at least this old:||You must have at least this many years of service:||You must be at least this old:||You must have at least this many years of service:|
|Reduced Optional Immediate Retirement||N/A||N/A||MRA*||10|
Special Groups (law
enforcement officers, air traffic controllers, firefighters)
*The earliest a FERS employee may retire with "immediate" optional retirement benefits is when they reach the Minimum Retirement Age (MRA). Use the chart below to figure your MRA.
**Under CSRS, only air traffic controllers are eligible for retirement prior to age 50.
|If you were born||Your MRA is|
|In 1948||55 and 2 months|
|In 1949||55 and 4 months|
|In 1950||55 and 6 months|
|In 1951||55 and 8 months|
|In 1952||55 and 10 months|
|In 1953 through 1964||56|
|In 1965||56 and 2 months|
|In 1966||56 and 4 months|
|In 1967||56 and 6 months|
|In 1968||56 and 8 months|
|In 1969||56 and 10 months|
|In 1970 and after||57|
Facts and Myths
Now that we've covered the basics, let's look at some of the common misperceptions about retirement eligibility. Read each of the following statements and decide whether it is a fact or myth.1. Employees who want to retire early may take a reduced benefit at age 50 if they have 20 years of service or at any age if they have completed 25 years of service.
2. If you add your age plus your service and it adds up to 80, you can retire even if you are younger than age 55.
3. You may be able to retire at age 55 or your minimum retirement age, but you cannot begin receiving Thrift Savings Plan distributions until age 59½ unless you are willing to pay a 10 percent early withdrawal tax penalty.
4. If you haven't completed 30 years of service by the time you reach age 55 (or your MRA), you must wait to retire until age 60.
5. Since Social Security is an integral part of retirement planning under FERS, employees must wait until they turn 62 to fully retire since they won't be eligible for Social Security before then.
6. Unless given a special exemption, federal employees are required to retire at 70.
7. If you have 30 years of service, you may resign and apply for a deferred retirement at age 55 (or your MRA under FERS).
8. There is a maximum retirement benefit that you achieve after 41 years and 11 months of creditable service.
9. If you have completed a minimum of 20 years of covered law enforcement, firefighter or air traffic controller service, you may resign and apply for a deferred retirement at age 50.
10. If you have completed a minimum of 20 years of covered law enforcement, firefighter or air traffic controller service, you may transfer to a noncovered federal job and still qualify for "liberalized" eligibility and computation. You will no longer be subject to mandatory retirement if you retire from a "noncovered" position.
The Answers1. Myth: The only employees who are eligible to retire before age 55 (or at the MRA for FERS) with immediate unreduced benefits are those in special groups (such as law enforcement officers, air traffic controllers and firefighters), those who are offered voluntary early retirement by their agencies and those subject to discontinued service retirement. For more information, see my column, The Early Way Out (May 26, 2006).
2. Myth: I'm not sure where this one started, but every once in a while it comes up. There are some state and probably some local public retirement systems that have this rule, but it does not pertain to CSRS or FERS.
3. Myth: If you leave federal service the year you turn 55 (or later), you are eligible to begin TSP withdrawals without a tax penalty. Those who retire younger than 55 must be careful of the timing and type of withdrawal they choose. The TSP Web site has more information.
4. Myth. You do not have to wait until 60 if you meet the minimum age and service requirements before then. For example, if Paul is covered under CSRS and is 55 with 28 years of service, he will become eligible as soon as he completes 30 years of service. Or suppose Wanda is covered under FERS and is at her MRA, but only has 22 years of service. She can choose to retire with a reduced immediate benefit (under what is known as MRA+10 requirements) or she can continue working until age 60, when she will qualify for an unreduced immediate benefit. She also has the option to resign and postpone her MRA+10 retirement until age 60. See last week's column, Deferred vs. Postponed.
5. Fact, but…: Even though it is true that the earliest age to apply for Social Security retirement is 62, under FERS you may be entitled to a Retirement Supplement that will bridge the years between your FERS retirement and age 62. To learn more, see Supplementing FERS (Jan. 26, 2007) and Supplementary Information (Feb. 2, 2007).
6. Myth: Believe it or not, I still run into people who believe this is true. There is no mandatory retirement age for most federal employees. However, there are limits on employees in special positions. Law enforcement officers and firefighters, for example, must retire at 57. For air traffic controllers, the mandatory age is 56.
7. Fact for FERS, Myth for CSRS: There is only one age for a deferred retirement under CSRS -- 62. FERS employees may apply for deferred retirement benefits as early as their MRA as long as they had at least 10 years of service when they left the government (and did not apply for a refund of their retirement contributions).
8. Fact for CSRS, Myth for FERS: CSRS employees max out after 41 years and 11 months of service. This provides a retirement benefit equal to 80 percent of an employee's high-three average salary. Employees who work beyond this time will be entitled to a refund of excess retirement contributions. They may use their unused sick leave to add to the retirement computation and exceed the 80 percent maximum. FERS employees are not subject to a maximum basic benefit computation. It is possible for them to replace 100 percent of their pre-retirement income when you consider the value of their basic benefit, TSP investments and Social Security retirement benefits.
9. Myth: To be eligible for the "liberalized" benefits for special groups, you must retire after meeting the minimum age and service requirements. Employees who leave early are eligible for a deferred retirement computed as it is for any other separated federal employee. See Chapter 46 of the CSRS and FERS Handbook: Special Retirement Provisions for Law Enforcement Officers, Firefighters, Air Traffic Controllers and Military Reserve Technicians.
10. Fact: An employee must be at least 50 at the time of separation and have at least 20 years of service as a law enforcement officer or firefighter to be eligible for retirement under the special provisions, but does not have to be in a law enforcement officer or firefighter position at separation. Likewise, an employee is not required to separate from a position as an air traffic controller to retire under the special provisions. Once an employee meets the minimum service requirement (that is, 20 or 25 years), he or she may exercise the right to retire under the special provisions even if the employee is no longer covered by these provisions at the time of retirement.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.