By Tammy Flanagan
September 11, 2009In 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 federalnewsradio.com or on WFED AM 1500 in the Washington metro area.
By Tammy Flanagan
September 11, 2009