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

Pop Quiz

In the spirit of the post-Labor Day return of students across the country to school, this week's column is a pop quiz. It consists of a series of statements, with responses below them. You have to decide which response is correct.

The first three statements pertain to Civil Service Retirement System and CSRS Offset employees. The next three are about those in the Federal Employees Retirement System. The final four could apply to federal employees in either system.

  1. Sally is 50 years old and has completed 30 years of CSRS service.

    a. She must work five more years to become eligible to retire.
    b. She can retire now if she is willing to take a reduction in her benefit.

  2. Joe has 45 years of CSRS service and has saved up 3,131 hours of sick leave.

    a. His retirement will be limited to 41 years and 11 months of service. Joe will be able to donate his unused sick leave balance, since he has more service than needed to receive the maximum CSRS benefit of 80 percent of his high-three average salary.
    b. His retirement will be computed using 41 years and 11 months of service, plus additional credit for 3,131 hours of unused sick leave. Also, he will get a refund of excess retirement contributions from the time that he completed 41 years and 11 months of service until his retirement. Joe's retirement will be computed at 82.5 percent of his high-three average salary.

  3. Janet is ready to retire under CSRS at the end of this year and would like to set up a voluntary contributions account. She wants to take advantage of the opportunity to make contributions up to 10 percent of her lifetime federal salary. Then, she wants to transfer those contributions to a traditional individual retirement account and later to a Roth IRA that will allow her money to grow tax-free.

    a. It's too late; Janet needed to set up this account at least a year prior to her retirement.
    b. Janet can submit form SF 2804, Application to Make Voluntary Contributions, with her retirement application. When the Office of Personnel Management processes her retirement, she will be able to contribute to this account. At the same time, she can submit the form RI 38-124, Voluntary Contributions Election, to direct that her payment be transferred to an IRA. She will then be eligible to shift to a Roth in 2010.

  4. William came to government a little later in life. He is 58 and has completed 14 years of federal service. He wants to retire with a FERS basic retirement benefit.

    a. He must work at least four more years, because he won't be eligible to retire until he's 62. If he needs to continue in the Federal Employee Health Benefits Program, he must stay until he's 62.
    b. He can retire right now, but his basic benefit will be computed on his 14 years of service and then will be reduced because he's not yet 62. He can postpone receiving his benefit to avoid the reduction. If William works until at least 62, he can retire with an immediate, unreduced benefit. No matter what he decides to do, he will be eligible to maintain his health insurance as long as he's been covered for the five years immediately preceding his retirement.

  5. Delores was hired in 2006 as a federal civilian employee under FERS. She previously served 10 years in the Army, and she also worked for three years under CSRS in the 1970s -- but she took a refund of her previous retirement contributions.

    a. She will receive credit toward her FERS retirement benefit for all her prior service as long as she works at least 10 years under FERS.
    b. She will receive FERS retirement credit for all her prior service only if she makes a military and a civilian service credit deposit payment into FERS to cover her prior 13 years of service.

  6. James will have 34 years of service when he turns 57 (his FERS minimum retirement age). He is wondering if he will be able to retire then and receive all three of the benefit components of FERS: the basic retirement benefit, Social Security retirement and Thrift Savings Plan assets.

    a. He will be eligible to receive his unreduced FERS basic retirement benefit. It will include a FERS Supplement that will bridge the years until he qualifies for Social Security retirement at 62. He also will become eligible to begin withdrawal of his TSP without penalty.
    b. He will be eligible for his FERS retirement benefit, but he will have to wait until 62 to become eligible for Social Security, and he must be at least 59½ before taking any money out of his TSP.

  7. Sandra increased her Federal Employees Group Life Insurance coverage during the 2004 open season, adding three multiples of Option B. She is planning to retire and wants to know if she'll be eligible to maintain her Basic FEGLI coverage as well as the additional coverage.

    a. The additional life insurance became effective in September 2005. Sandra will be eligible to keep all her life insurance as long as she retires after September 2010. Life insurance has the same five years of coverage requirement as health insurance.
    b. The only life insurance that retirees can have is the basic coverage. Sandra will not be entitled to have her additional life insurance as a retirement benefit regardless of when she retires.

  8. John, an air traffic controller, was in a serious car accident, resulting in a permanent disability. Due to his impairment, he will no longer be able to successfully perform his duties. His agency has no other position to offer him at the same pay grade. John is 38 years old and has 10 years of government service.

    a. He should consider applying for disability retirement when he is close to using up his accumulated sick leave. He will be approved if OPM finds he is disabled from his federal position and his agency has made a reasonable effort to accommodate him.
    b. John will be forced to accept a position at a lower grade level or he will have to resign from federal service. The federal government does not provide disability benefits.

  9. Anne and her family recently relocated to San Francisco from Memphis, Tenn., due to her husband's job transfer. In Memphis, she worked for a federal agency. She was fortunate to find a new position at the same grade level at her new location. She was relieved, since she will be eligible to retire in three years, at 60.

    a. Anne is luckier than she realizes, since her new salary will benefit from a locality adjustment for working in the San Francisco area. The high-three average salary that both CSRS and FERS retirement benefits are based on includes the adjusted basic pay with locality.
    b. Anne would have the same retirement whether she spent her last three years in Memphis or San Francisco. The basic pay used for retirement computations does not include the locality adjustment.

  10. George recently remarried. He has children from his first marriage, and he wants to be sure his federal benefits are distributed properly when he dies. His divorce decree provides retirement, survivor's benefits, insurance and TSP distributions to his first wife. George's former spouse remarried at age 52, two years after they divorced.

    a. The Office of Personnel Management and the Federal Retirement Thrift Investment Board will honor his divorce decree requirements. He should update his beneficiary designations for FEGLI, TSP, CSRS or FERS retirement and unpaid compensation to show how he would like any remaining lump-sum payments to be distributed. He can name his children from his first marriage as his beneficiary for any of his federal benefits. His current spouse will receive the maximum survivor's annuity, regardless of his beneficiary designation.
    b. Since George has remarried, his new wife will automatically become eligible for all his benefits if he dies before her. Even though he hasn't changed his beneficiary designations, the fact that he is now remarried will provide his new wife automatic entitlement to all his federal benefits. George's children from his first marriage will not be entitled to his life insurance, even though George would like to name them as his beneficiary.

Ready for the answers? Click here. 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.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on or on WFED AM 1500 in the Washington metro area.


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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