ThoroughlyReviewed.com

4 Things You Need to Know About Retirement Rules

They’re complicated and have changed a lot over the years.

On many occasions, someone tells me that they’re worried that there is something about their retirement that they may not realize that they don’t know. Often, this is why they attend a retirement seminar or end up hiring a professional to provide advice.

There are good reasons for federal employees to be concerned about gaps in knowledge about their retirement benefits. Let’s look at a few.

The rules have changed many times over the years.

Civilian employees have had retirement benefits for almost 100 years. In that time, the rules that apply to it have been overhauled and amended many times. Here’s just one example: differences between the newer Federal Employees Retirement System and the old Civil Service Retirement System. Under FERS, civilian service that was not covered by retirement deductions is not creditable towards eligibility or computation of the basic retirement benefit if it was performed after 1988. This includes most temporary service, such as seasonal work for the National Park Service. However, if such service was performed before 1989, it can become creditable by making a contribution to FERS (with interest) prior to retirement.

Under CSRS, this type of service counts towards eligibility and calculation of the retirement benefit without paying a deposit if the service was performed before Oct. 1, 1982. There’s a slight reduction in the retirement benefit if the deposit is left unpaid, but the time would be used in the initial computation and counted towards retirement eligibility.

There are so many rules relating to retirement benefits that it’s hard to know which ones apply and which ones are irrelevant.

For example, mandatory retirement for most federal workers was abolished almost 40 years ago a result of civil service reform and amendments to the 1967 Age Discrimination and Employment Act. Most federal employees can work as long as they are able to perform “useful and efficient service.”

However, there are exceptions to this rule. There are mandatory retirement regulations for federal law enforcement officers, firefighters, air traffic controllers, most foreign service officers, and most intelligence officers.

In addition, there are rules that apply to some federal employees who are involuntarily separated from service. Those who meet certain requirements can retire under discontinued service retirement. Involuntary separations can involve political appointees, employees who are subject to a “directed reassignment” outside of their commuting area and aren’t willing to relocate, employees affected by a reduction in force.

Interpreting the rules can be tricky, because a lot hinges on definitions of key terms.

For instance, is a deferred retirement the same thing as a postponed retirement? Look in a thesaurus, and you’ll probably find them treated as synonyms. But they have distinct meanings in the federal retirement world.

An employee who is 57 and has 20 years of service can postpone immediate FERS retirement to avoid an age reduction penalty. An employee who is 47 with 20 years of service would be eligible for a deferred FERS retirement at their minimum retirement age, but could postpone the benefit to avoid an age reduction. To make things even more complicated, CSRS employees can’t postpone retirement, but if they leave federal service before becoming eligible for an immediate CSRS retirement benefit, they can defer their retirement.

Although retirement benefits are interrelated, it is often difficult to determine how one benefit can affect another.

Consider health insurance. Most federal employees and retirees get coverage through the Federal Employees Health Benefits program. But many also have coverage through TRICARE or CHAMPVA (if eligible through military service or a family member’s service), Medicare (if 65 or older or qualified as a result of a disability), or via a spouse’s private sector health plan. If you are eligible for more than one health plan, which one should you use? Can you get coverage under more than one plan at the same time? If so, is it a good idea?

It can be complicated to figure out if it’s worthwhile to pay for dual coverage. And if you do, it can be difficult to determine which plan is primary and secondary payer and how each plan’s benefits are affected by the other.

In addition, you may want to carry unnecessary coverage now to avoid a penalty later.

This is the case with Medicare. Many federal retirees are in good health at 65 and probably will not get their money’s worth out of Medicare Part B (which covers outpatient care). However, if you don’t enroll when you become eligible at 65, your premiums go up by 10 percent for every year you delay enrolling (unless you qualify for a Medicare special enrollment period).

A similar situation can arise with FEHBP.  Some federal workers are offered coverage under a non-federal spouse’s health plan at little or no extra charge. But carrying FEHBP coverage into retirement requires five years of coverage before leaving. So some employees pay for FEHBP coverage even if they have adequate coverage under another health plan.

All of these situations show that it’s important stay educated about the retirement process throughout your career. Attend retirement training sessions if they’re available at your agency. There’s always something new to learn. I’ve been studying federal retirement benefits since 1985, and there are still things that I don’t know that I don’t know. I’m  happy to continue learning.

Photo: ThoroughlyReviewed.com

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.