Retirement & Financial Planning Report

Those who have retired from the government and then return to work could see a substantial boost in their annuities.

Unless you are one of the few who will be able to keep both your annuity and the full salary of your new position, what happens depends on whether your retirement was voluntary or involuntary and what retirement system you were in. In general, the annuity of a retiree stops if he was involuntarily separated from his job and the new position is permanent in nature, for example a career, career conditional or excepted service appointment. On the other hand, if the involuntary separation was required by law based on age and length of service (or for cause), then the annuity doesn’t stop and the retiree will be treated as if the retirement had been voluntary.

If you were involuntarily separated and your annuity stops, when you go back to work, you’ll have the same status as any other federal employee in an equivalent position and with a similar service history. In other words, you’ll pick up where you left off. When you leave government again, your annuity will be reinstated unless you are entitled to either an immediate or a deferred annuity based on the new separation.

On the other hand, if your retirement was voluntary, you’ll continue receiving your annuity; however, unless you are one of those few allowed to draw both fully, your salary for the new job will be offset by the amount of your annuity. If you work part time, the reduction will be proportional.

If you were receiving an annuity of $26,000 and the salary of your new position was $75,000, your take home pay for the year would only be $49,000 ($76,000 – $26,000).

If you are reemployed full time for at least one year, you’ll be eligible for a supplemental annuity. On the other hand, if you work for at least five years, you’ll be able to elect a redetermined annuity. In other words, you can have your annuity recomputed based on your combined years of service and your highest salary base, whenever that was earned.

To get those benefits, retirement contributions will be required. They are mandatory if you are covered by FERS, optional if you are covered by CSRS. (CSRS reemployed annuitants can elect to pay the deposit after separation, if they want to.) The amount to be paid is the standard percentage of your basic salary before it is offset by the annuity you receive.