Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Time of Transition

When a new administration takes office, there are always a number of federal employees who leave government without enough service to qualify for immediate retirement benefits. This includes the more than 7,000 top agency officials, policy advisers and aides who are subject to noncompetitive appointments to the civil service, along with people who simply decide to move on before they have reached retirement eligibility.

These people, however, eventually can receive some benefits. Let's look at a few of the issues they will need to take into account.

Involuntary Departures

Recently hired employees likely will be covered under the Federal Employees Retirement System. It takes only five years of civilian service to be vested for a retirement benefit under FERS. You may not be able to receive this benefit immediately, but you will be entitled to a deferred retirement when you have met age and service requirements.

Although military service is potentially creditable under FERS, it is not included in the five-year civilian service requirement for basic retirement benefits. All your civilian service must be creditable under FERS, meaning you must have paid FERS (or Civil Service Retirement System) retirement contributions. You should check with your human resources office to find out if you have any "noncovered" service for which you can make a deposit to receive service credit. (For more details, see last week's column, Deposits and Credits.)

During your FERS service, retirement deductions are withheld from your pay at a rate of either 0.8 percent or 1.3 percent, depending on your position. You can apply for a refund of these contributions, but you should not do so if you plan to apply for a FERS retirement benefit some day, or think you might return to federal service. Refunded FERS contributions cannot be redeposited and the service covered by the refund cannot be recredited. Because political appointees' departures are considered involuntary, they may be eligible for immediate early retirement benefits under discontinued service retirement provisions. As the Office of Personnel Management notes in Chapter 44 of its CSRS and FERS Handbook, "The separation of a presidentially appointed policy-making officer, because the president accepted his or her resignation, is involuntary. The resignation is considered involuntary whenever it is submitted and accepted, not just with the advent of a new administration." Likewise, resignations of noncareer SES members or Schedule C-excepted service employees who work for presidential appointees are involuntary for retirement purposes.

For such employees, a discontinued service annuity starts the day after they leave government.

Other Benefits

When you leave government, you can apply for a partial or a full distribution of the funds in your Thrift Savings Plan account. You should wait at least 30 days to do so to allow time for your payroll office to notify the TSP of your separation.

You also can choose to leave your investment in the TSP when you depart, although you will not be permitted to add to or borrow from your account. Your account will stay tax-deferred and you will be permitted to transfer your investment between the available investment funds. For more information, see this TSP publication: Withdrawing Your TSP Account After Leaving Federal Service.

If you are not eligible for an immediate retirement benefit when you leave, you will get a 31-day extension of your Federal Employees Health Benefits Program coverage. Then you have the option to apply for what's known as "temporary continuation of coverage." It lasts for up to 18 months. The coverage is at the same level you had as an employee, including family coverage. But you must pay both the employee and employer share of the premium, plus a 2 percent administration fee.

Most appointees who leave at the end of an administration are not eligible for severance pay. But they may be eligible for benefits under a program known as Unemployment Compensation for Federal Employees. These benefits are provided through the state in which the employee's last duty station was located. More information is available from the Labor Department.

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.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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