Officers’ Options

A look at special retirement provisions for law enforcement officers and firefighters.

Last week I had the honor of being a presenter at the annual Women in Federal Law Enforcement leadership and training conference.

This gathering of more than 750 female federal law enforcement personnel was an inspiring event. It is amazing to think that when I started my own federal career at the FBI in 1980 (though not in a law enforcement position), one of the first black female FBI agents was still on the job. Her name was Johnnie Mae Gibson, and she retired in 1999. In the 1970s, females only held 2 percent of the law enforcement positions in the country. Today they hold more than 12 percent. Women have become heads of federal law enforcement agencies, including the Drug Enforcement Administration and the U.S. Marshals Service.

Law enforcement is a rewarding and challenging career for both women and men in the federal government. And it comes with special retirement benefits. Under the Federal Employees Retirement System, law enforcement officers (and firefighters) can retire at age 50 with 20 years of service in a qualified position or at any age with 25 years of covered service. (Here's more information from the Office of Personnel Management.)

If an employee completes 20 years of covered service, he or she can switch to a noncovered position and still take advantage of the special retirement provisions. But those who remain in covered positions are subject to mandatory retirement when they turn 57. Employees who resign or transfer to noncovered positions before completing the 20 years of covered service lose their entitlement to the special retirement benefit provisions.

Under FERS, law enforcement officers and firefighters don't just get to retire earlier, they also receive more generous benefits. That includes an immediate cost-of-living adjustment, unlike standard FERS benefits, which are not subject to COLAs until after the retiree turns 62.

But law officers and firefighters pay for this benefit. They must contribute 1.3 percent of their basic pay toward retirement throughout their careers, while most FERS employees kick in only 0.8 percent. Their agencies also must make much larger contributions to the retirement fund to pay for the enhanced benefits.

After serving the minimum 20 years in a covered position, law enforcement officers get 34 percent of their high-three average salary as their basic FERS retirement benefit. If they work an additional five years, the percentage goes up to 39 percent. After 30 years, the figure is 44 percent. Other Benefits

Law enforcement officers and firefighters under FERS also are eligible for Social Security retirement benefits. At retirement, they will be too young to collect the benefits, but they will be entitled to receive a FERS supplement designed to bridge the gap between when employment ends and the eligibility for Social Security retirement begins -- generally at age 62. The supplement -- which is subject to an earnings limit if the employee takes another job -- is worth about $30 to $35 per month for every year the employee worked under FERS. For 20 years of service, this adds up to $600 to $700 a month. Employees who retire under the special provisions will not be subject to the earnings test until they reach the FERS minimum retirement age (55-57, depending on year of birth). That means they'll receive this benefit if they are under the MRA, regardless of their second income.

Like other federal employees, law officers can contribute to the Thrift Savings Plan, and under FERS they get agency-matching contributions. Those officers who receive special law enforcement availability pay get matching contributions on this additional salary, because it is considered basic pay for the purpose of TSP contributions, retirement and life insurance benefits.

Law enforcement officers and firefighters must be cautious of how they use their TSP balances after they retire. The savings will have to last them the rest of their lives, and for someone who is retiring around age 50, that could be a very long time away. Another thing to be careful about is the 10 percent tax penalty on money withdrawn from a retirement savings plan prior to age 59 1/2. (Exceptions to that general rule are outlined in this publication.)

Retired public safety officers also receive tax breaks for premiums paid for federal employees' health insurance or long-term care insurance, up to $3,000 per year. A recent change in the law provides that the enhanced computation for law enforcement officers and firefighters be used when computing disability and survivor's annuity benefits even when the employee did not complete the 20 years of covered service.

Federal law enforcement officers serve all of us by enforcing the laws of our country and investigating crimes that affect our safety. That can involve putting their lives on the line, and for that they get the well-deserved reward of enhanced retirement benefits.

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.

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