November 11, 2011In honor of Veterans Day and 11.11.11 -- a date blackjack players would consider lucky and those who remember the freak weather events that killed more than 300 on Nov. 11, 1911, would consider unlucky -- I have decided to focus this week's column on retirement tips for federal employees with some military service on their resumes. Here are 11 things to keep in mind if you fall into that category:
1. Eligible veterans receive a leg up over other applicants for jobs in the competitive and excepted services. But if you are a retired member of the armed services drawing retirement pay, you are not eligible for veterans preference unless you are disabled or retired below the rank of major or its equivalent, according to an Office of Personnel Management fact sheet.
2. Veterans hired as civilian federal employees can receive credit toward annual leave for honorable active-duty military service. Generally, for military retirees, this credit is restricted to wartime service or service in a campaign or expedition for which a campaign badge has been authorized. 3. Speaking of leave, employees serving in a permanent federal position are entitled to 15 days of paid military leave annually to perform active duty, active-duty training, or inactive duty training as a member of a Reserve component or the National Guard. 4. Federal employees called to active-duty military service during their civilian careers can make up any contributions to the Thrift Savings Plan that they missed during their service.
5. To receive credit for military service under the Federal Employees Retirement System, you must pay a military service deposit into your retirement funds before leaving the civilian federal service. This is generally 3 percent of your military base pay. Interest on military deposits begins to accrue on a specific date that is at least two years from the date of your first appointment to a civilian position. The interest rate for 2012 will be 2.2 percent, down from 2.75 percent in 2011. Contact your human resources office concerning the computation and payment of this deposit. Keep in mind that you are paying the deposit on your military base pay, but you will receive credit in your retirement benefit at your high-three average salary. Paying the deposit for your military service can yield a very good return on your investment -- something important to consider in these tough economic times.
6. An exception to the advice of paying the military service deposit would be if you retired after a full career of military service and are receiving retirement pay as you are working as a civilian federal employee. In this scenario, you have the option to waive your retirement pay and use the military service toward your civilian retirement benefit. You would not only have to waive the military retirement benefit, but you also would have to pay the military service deposit. Be very careful in your calculations to see which option makes more sense for you. Your HR office can help you determine how much the deposit would be, and how much your retirement would be with and without combining your military and civilian service.
7. Even though service as a cadet or midshipman at one of the military academies isn't used when computing military retirement pay, it still qualifies as active military service. That means service as a cadet or midshipman can be applied when calculating a combined military-civil service retirement or a separate civil service annuity. Keep in mind that the rules for military service credit deposits will apply if you are counting academy service.
8. If you are a Civil Service Retirement System employee who was first hired on or after Oct. 1, 1982, then interest on your military service deposit is compounded on your federal service anniversary date and begins to accrue two years after your appointment (your first interest is assessed on your third anniversary). You will not receive credit for post-1956 military service unless you pay the deposit for it. For CSRS employees who were hired before October 1982, your active-duty military service counts for your CSRS retirement without payment, but if you qualify for Social Security retirement at the later of your retirement age or age 62, then you will not receive credit for your military service unless you paid the military service deposit prior to your civilian retirement. 9. For FERS employees, military service (even with a deposit) is not included in the computation of the FERS Special Retirement Supplement. The supplement is computed only on civilian service under FERS.
10. If you are missing documentation for some of your active duty (such as training while serving in one of the Reserve components), you can contact the National Archives at St. Louis Military Personnel Records. To request a Statement of Active Service for crediting your active duty for training toward your federal civilian retirement benefit, use Standard Form 180.
11. To view some of the 80 million military records at the National Archives dating back to the Spanish American War, or to see how your records are searched, check out this video.
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 Mondays at 10 a.m. EDT on federalnewsradio.com, or on WFED AM 1500 in the Washington-metro area.
November 11, 2011