A disability annuitant whose annuity is terminated because of an "earning capacity provision,” and whose earnings in any subsequent year fall below 80 percent of the current rate of pay for the retiree’s former position, may obtain reinstatement of benefits if the retiree has not been reemployed in a federal position and "has not recovered from the disability for which he was retired.” Likewise, regulations at 5 CFR subsection 831.1211(a) provide that when a disability annuity stops, "the individual must again prove that he or she meets the eligibility requirements in order to have the annuity reinstated.”

In the case of a disability annuitant whose earning capacity has been restored but who thereafter loses his or her earning capacity, the regulation provides that benefits will be reinstated if the annuitant "has not recovered from the disability for which retired.” The regulations define "disability” to mean "inability, because of disease or injury, to render useful and efficient service in the employee’s current position, or in a vacant position in the same agency at the same grade or pay level for which the individual is qualified for reassignment.”

The statutory and regulatory requirement that the employee prove that he or she "has not recovered from the disability” for which retirement was granted means that the employee must prove not only the existence of a medical condition, but also that the medical condition is disabling in nature–that it prevents the employee from rendering efficient and useful service in the employee’s position or an equivalent position. The retiree is not entitled to resumption or retention of disability benefits simply by showing that his or her medical condition is similar, or even identical to, the condition that resulted in an initial determination of retirement eligibility. The retiree must also show that the medical condition is disabling.

Using an Annuity to Protect Your Legacy

Some tax-deferred annuities offer an irrevocable beneficiary designation option. Here’s how this might work:

* You can change the beneficiary designation during your lifetime.

* After your death, though, the beneficiary designation is locked in, along with the payout method.

Such a feature may be appealing if you’re concerned about your heirs. You can name your daughter as beneficiary, for example, specifying a single-life payout. No matter what happens to your daughter–divorce, lawsuits, business failures–she’ll have that lifetime income. What’s more, some income from an annuity will be a tax-free return of principal.

If you wish, you can specify a "20-year term certain" payout for your daughter. Then, if she dies, say, 12 years after you, her heirs (your grandchildren, perhaps) will receive payments for another eight years. You can’t provide such post-mortem protection with other types of bequests. An inherited IRA, for example, can be cashed in all at once and lost to a con artist. To truly protect your heirs, you’d need to go to the time and expense of setting up a trust.

An annuity, on the other hand, can be a simple, inexpensive way to provide a legacy that always will be there for your heirs.