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

Frequently Asked Questions

At the end of October, I did two columns of questions and answers. It turned out they spawned even more questions. Some of these turned out to be the same questions I often get at seminars, so I thought I would take them up this week.

Early Retirement

On Jan. 5, I will be 58 years old and have 29 years service. Can I be approved for early retirement?

The minimum requirements for voluntary early retirement or discontinued service retirement are age 50 with 20 years of creditable service or any age with 25 years. If you were offered early retirement at age 58 with 29 years of service, you would more than meet the minimum requirements, and you would be eligible to apply. Keep in mind that once you have 30 years of service, you do not need special early-out authority, since you have already met the minimum age for "optional" retirement.

Minimum Retirement Eligibility

I am 62 1/2 and have made my military deposit, which gives me 10 years of service this month. I joined my agency in May 2006. This is my first federal civilian position, so I currently have 18 months of service. I have heard that I have to work for a minimum of five years before I can retire with medical benefits for myself and my wife. Can you confirm/correct this please?

The minimum service requirement for basic retirement benefits under either the Civil Service Retirement System or the Federal Employees Retirement System are five years of civilian service. Since you already are 62, once you have completed the minimum civilian service requirement, you are eligible for immediate retirement. As long as you've been enrolled in the Federal Employees Health Benefits Program for the entire five years or since your first opportunity to enroll, you can keep your health benefits as well. Your military service would be credited towards the computation (but not towards the minimum eligibility requirement of five years of civilian service) of your FERS basic retirement benefit since you've paid the military service credit deposit.

TSP Withdrawals

I am a FERS employee eligible for retirement at 55. I plan on doing a rollover of my Thrift Savings Plan into a 401(k) when I retire. I know I can take money out of the TSP without penalty as long as I do it immediately upon retirement. Can I still do that if I move it to my own 401(k)?

Anyone who retires or resigns from federal service before age 59 ½ should understand the following two items regarding withdrawals from TSP accounts:

  • Your contributions to the TSP were tax-deferred. This means you have not yet paid income taxes on your contributions, any agency contributions, or earnings. Instead, you will owe taxes when you receive a distribution from your account.
  • If you receive a TSP distribution before you reach age 59½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of any portion of the distribution not transferred or rolled over. The additional tax generally does not apply to payments that are paid after you separate from service during or after the year you reach age 55; made because you are totally and permanently disabled; paid as substantially equal payments over your life expectancy; annuity payments; ordered by a domestic relations court; made because of death; or made in a year you have deductible medical expenses that exceed 7.5 percent of your adjusted gross income.

If you choose to transfer your TSP to an IRA or other eligible retirement plan, you will need to understand the consequences for withdrawal from that plan. Before moving all of your TSP to an IRA, you may want to consult a tax expert. One suggestion would be for you to take a partial withdrawal from your TSP and transfer it to your IRA. Then you could leave some money in the TSP that you would later be able to receive as a single payment or series of monthly payments.

Re-employed Annuitant

I'm 65 with 37 years service. About 17 years is CSRS and 20 years is FERS. I have built up a large nest egg in the TSP. I am considering retiring at the end of this year. My question is, what are the rules governing re-employment with my current agency as a contract employee?

I've written two previous columns that outline the benefits and some of the rules regarding re-employment in the federal government after retirement. Here are the links: Back to Work and Back to Work Again.

Temporary Service Credit

I'm a FERS employee planning to retire at 62 with what I thought was 20 years of service (one year temporary/term and 19 years FERS). Do those first eleven months count towards my retirement, both for eligibility and financially?

Were you covered by FERS during this time? If not, then you will only receive credit if this service was performed prior to 1989 and you make a civilian service deposit to cover this service under FERS.

To find out if you had retirement coverage during a period of federal service, look at the retirement box on your SF 50 Form (Notification of Personnel Action Statement). If you don't have the SF-50's from that period of your career, the employer copies are filed in your official personnel folder.

Maxed-Out Service

I am 64 with 42 years of service and will be retiring in 2008 under CSRS. What happens to my sick leave since I no longer need it to make time in service? Also what happens to the retirement contributions that are still being deducted from my salary?

First of all, congratulations on your long career of dedicated federal service. Your sick leave will be credited in the computation of your CSRS retirement even though you will have achieved the maximum allowable service credit under CSRS (41 years and 11 months provides a maximum CSRS benefit equal to 80 percent of your high-three average salary). So, for example, if you have 2,087 hours of sick leave (one year), your retirement would be computed at 82 percent of your high-three average salary. The Office of Personnel Management will determine when you reached the 41- year, 11- month, point and any "excess" retirement contributions will be returned to you with interest when your retirement is finalized.

Military Service Credit

I am a 43-year-old federal firefighter. I have 16 years in FERS. I paid back 10 years of active duty military service time. Does this post-56 time count as covered time in a special category? Without the post-56 service, can I retire at 50 with 23 years of service? Can I retire now with 26 years of service?

The only time that qualifies toward the 20-year requirement for the liberalized firefighter retirement benefit is your civilian firefighter service. The military service will be credited under FERS at 1 percent of your high-three per year. There is a chapter in OPM's CSRS and FERS Handbook that covers this issue.

I'm FERS;, I bought my 10 years of military time. At my minimum retirement age, I'll have 25 years of civil service time plus 10 years that I bought back, totaling 35 years. If I retire at my MRA, will I be penalized for not having 30 years of actual civil service work?

When you paid the military service deposit, you made your military service creditable for both eligibility as well as the computation of your FERS basic retirement benefit. You will not be penalized if you retire at your MRA with 10 years of military service plus 25 years of civilian service. Your human resources office should be able to provide you with an estimate of your FERS basic retirement benefit along with the FERS special supplement that you also will be entitled to receive.

National Security Personnel System

Do you still suggest that the beginning of the year (Jan. 3) is the best time for NSPS employees to retire? This year, salary increases and part of the annual pay raise will not be effective until the first pay period in the new year (Jan. 5). I assume annual leave will not be paid out at the higher rate since you do not get an NSPS payout if you are not on the rolls as of Jan. 5.

You will need to make a decision balancing which of the following is more important to you:

  • Getting paid for more than 240 hours of excess annual leave at retirement, or
  • Receiving the performance payout.

To get paid for more than the normal annual leave carry-over of 240 hours, you would need to retire prior to the end of the "leave year," which ends on Jan. 5, 2008, for most civilian federal employees. But under NSPS, to be eligible for a performance payout, you must be in NSPS on the day of the payout, which is the first day of the new leave year -- Jan. 6.

Your decision will depend on how much leave you have versus how much of a performance payout you would give up by leaving prior to the payout date. If you decide to stay to get the payout, you may as well wait until Jan. 31 (FERS) or Feb. 1 (CSRS) to retire so that your benefits will begin the next day. If you retire on Jan. 6, you would not receive a FERS or CSRS retirement benefit for the remainder of January, but instead, your retirement would begin on Feb. 1 (the first payment would be made on March 1 for the month of February).

If it is more important to be paid for the 240 hours of leave you carried over from 2006 plus all of the leave you accumulated and didn't use in 2007 (up to 208 additional hours), then you should stick with Dec. 31 (FERS) or Jan. 3 (CSRS).


I am CSRS and my ex-wife is FERS. In the divorce agreement, she gets 50 percent of my retirement and I get 50 percent of hers. Fair enough for me, so I accept. Now as I approach that date to retire, it appears that the fine print is that she gets my 50 percent now, while she has about five more years before retirement. Where is the equity in that?

I sympathize with you, but the payout begins when the retirement begins. If you want to postpone her payout from your retirement until she is eligible to retire, I guess the solution would be to work five more years. I've known some people to say that they won't ever retire, so that their ex never gets to collect benefits. I'm not sure where the logic in that comes from.

Last Words

If I didn't answer your question this time, I will try to get to it soon. In the meantime, you have the following resources available to get answers to your retirement questions:

  • Your agency human resources office should be your main source of retirement information. Every agency is responsible for providing retirement information to their employees in the form of seminars, retirement estimates and general retirement information. If you're not sure who to contact, start with your agency's benefits officer.
  • Pre-retirement and mid-career planning seminars are available through most agencies. If you cannot attend the one at your agency, there are direct enrollment classes available such as the ones in which I participate.
  • Some agencies are using online training, especially in situations where it is difficult to bring employees together in one location. One of the newest online presentations is available from This video series covers both CSRS and FERS. Long-time federal benefits specialist Joanne McGehrin is the presenter. Check with your HR office to see if this type of training is available.
  • You also can get a variety of valuable information from the National Active and Retired Federal Employees Association.

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.


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 and 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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