If you are e 60 or older, there is no restriction on the amount of income you can earn while receiving disability retirement. If you are under age 60, you can earn income from work while also receiving disability retirement benefits; however, your disability annuity will stop if the Office of Personnel Management determines that you are able to earn an income which is close to what your earnings would be if you had continued working.
The retirement law has set an earnings limit of 80 percent in order for you to continue your disability retirement. You reach the 80 percent earnings limit (or are “restored to earning capacity”) if, in any calendar year, your income from wages and self-employment is at least 80 percent of the current rate of basic pay for the position from which you retired.
All income from wages and self-employment that you actually received plus deferred income which you actually earned in the calendar year is considered “earnings.” Any money received before your retirement is not considered “earnings.”
Income from wages includes any salary received while working for someone else (including overtime, vacation pay, etc.). Income from self-employment is any net profit you made from working or managing your own business, whether at home or elsewhere. Net profit is the amount remaining after deducting business expenses and before the deduction of any personal expenses or exemptions as allowed by the IRS. Deferred income is any income you earned, but you did not receive, in the calendar year for which you are claiming income below the 80 percent earnings limitation.
If you are reemployed in the federal service and your salary is reduced by the gross amount of your annuity, the gross amount of your salary before the reduction is considered “earnings” during the calendar year.
Gifts, pensions/annuities, Social Security benefits, insurance proceeds, unemployment compensation, rents/royalties not involving or resulting from personal services, interest/dividends not resulting from your own trade or business, money which you earned before retirement, inheritances, capital gains, prizes/awards, fellowships/scholarships and net business losses are not considered earnings.
Further, if you’re under age 60 and reemployed in a position equivalent to the position you held at retirement, OPM will find you recovered from your disability and will stop your annuity payments when this finding is made.