Question Time

It's time for another round of your questions. I've gone through some submitted in response to my recent columns to find topics that are common to many of you contemplating retirement. Retirement Coverage

My leave and earnings statement says I'm enrolled under the FERS K retirement plan. How and where can I get information on this program?

"K" is the code for the Federal Employees' Retirement System. There are many places you can get information on FERS retirement coverage -- starting with the column you're reading right now. FERS is made up of a Basic Retirement benefit (administered by the Office of Personnel Management), the Thrift Savings Plan (administered by the Federal Retirement Thrift Investment Board) and Social Security coverage (administered by the Social Security Administration). In addition, your agency's human resources office is available to answer questions and provide estimates of your FERS basic benefit.

Military Credit

I was in the Air Force for 8½ years. I have been in U.S. Customs for the past 18 years. I am in the FERS K retirement plan (non-law enforcement). I'm 46. I have been told that once I buy back my military time, I can count that toward my Customs time, and I could retire in 2011 with 30 years' service. However, in 1989, when I joined Customs, I was told I had to do the entire 30 years in Customs for it to count toward retirement. I would like to retire at my minimum retirement age.

I think the confusion is in understanding the difference between crediting military service toward meeting the requirements for law enforcement versus "regular" retirement. In your case, as long as you pay a military service credit deposit, you can count your military service toward retirement eligibility as well as in the computation of your FERS basic benefit. If you were covered in a law enforcement position, you would be required to have a minimum of 20 years of law enforcement service to meet the law enforcement retirement eligibility before you could receive additional credit for military service.

Refund of FERS Contributions

I am a FERS employee. I resigned to take care of an elderly parent and had to withdraw my retirement to survive. I have since returned to work, but will not receive credit for my previous service upon retirement. There is a bill, the FERS Redeposit Act, that would allow FERS employees who separated and withdrew their retirement for whatever reason and then returned to service to be able to repay the funds with interest and receive full credit for service upon retirement. Do you know if Congress has any plans to pass this bill?

The latest version of the FERS Redeposit Act (H.R. 2533) was referred to a House subcommittee last June. Never say never, but this measure is probably not a high priority this year. The sticking point will be that it would increase the overall cost of providing FERS basic benefits to retirees. It would be interesting to know how many former FERS employees have received of their retirement deposits without realizing these contributions cannot be repaid.

Social Security and CSRS

It is my understanding that Civil Service Retirement System benefits and Social Security benefits are offset. Is this true and is there a bill to eliminate this? If a CSRS retiree qualifies for Social Security retirement, he or she usually is affected by the Windfall Elimination Provision or the Government Pension Offset -- and sometimes both. Neither reduce CSRS retirement benefits, but they do cause the Social Security benefits of a CSRS retiree to be computed differently. I've written about this issue in two previous columns: Gone With the Windfall (Sept. 1, 2006) and Offsetting Penalty (June 9, 2006).

There are constant efforts by groups like the National Active and Retired Federal Employees Association to lobby Congress to eliminate or reduce the effects of these two provisions -- but so far, to no avail.

Retiring at 60

I will have 27½ years of continuous civil service by my 60th birthday. This is considered my first date of eligibility for full retirement. Since I will not be 62 when I retire, will I take a 5 percent hit for two years? Also, I thought that if I retire at 60 with 20 years of service that I am eligible for the FERS supplemental annuity that is payable until age 62. No?

FERS employees may retire with an unreduced basic retirement benefit at the minimum retirement age (which is between 55 and 57, based on your year of birth) if they have at least 30 years of service. At age 60, the service requirement for unreduced benefits drops to only 20 years -- which is the provision that applies to your situation.

If you qualify for an immediate, unreduced retirement before you're 62, you will also be entitled to receive the FERS annuity supplement that will bridge the years between your retirement and qualifying for Social Security at 62. This supplement is subject to an earnings limit, so if you go back to work after you retire and earn above the limit ($13,580 in 2008), you will begin to lose this supplement.

At 62, the minimum service required for an immediate retirement benefit is only five years. No supplement is payable at 62, since this is the age that you qualify for Social Security.

FERS also offers a reduced immediate benefit payable at the MRA with at least 10 years of service (but less than 30) or at age 60 with at least 10 years (but less than 20). This is called MRA + 10 and would involve a 5 percent penalty to the basic retirement benefit for every year you are under 62. You would not incur this penalty, since you will have more than 20 years of service at age 60.

Timing Your Retirement Date

I am a GS-13, step 10. My retirement date is Feb. 4, 2009, when I will have 20 years of service and be 62 years old. Is it best to retire on that day or wait until the end of February? (I know I will only have 20 years of service, but I have an ace in the hole: My wife has an excellent retirement package, so I am just the candles on the top of the cake.)

Whether you retire on Feb. 4 or at the end of the month, you would receive your first FERS retirement benefit on April 1, for the month of March. The end of February would be better, since then for that month, you would be covered by your federal salary. By the way, if you will be dependent on your wife's benefits for a comfortable retirement, it is important that you sign up to receive a survivor annuity from her, or to be the beneficiary of her life insurance -- just in case her candles go out before yours!

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.