If you are a FERS employee who served in the armed forces, you’ll need to make a deposit to get credit for your active-duty time in your annuity computation. Image: Daniilantiq/Shutterstock.com
By: Reg JonesLeaving with style not only makes a good impression on those you leave behind, but it also means that you can feel secure in your decision. This week I want to point out a few things that can mess it up if they aren’t taken care of before you retire.
Health benefits
As I’ve often pointed out, one of the most valuable benefits the government provides is access to health insurance. If you’ve been enrolled in the Federal Employees Health Benefits program for the 5 consecutive years before you retire (or from your first opportunity to enroll), you can carry that coverage into retirement.
If you haven’t, you’ll receive a 31-day extension of coverage at no cost to yourself. After that you’ll be granted the opportunity to continue your coverage in a plan of your choice for up to 18 months. However, you’ll have to pay 100 percent of the premiums, plus an additional 2 percent to cover administrative costs. When your coverage ends, you’ll be on your own.
If you are one of those who will lose entitlement to continuous health benefits coverage when you leave, you may want to reconsider your retirement date. However, if your agency offers you the opportunity to retire early, the 5-year or first opportunity to enroll rules won’t apply. That’s because you only need to be enrolled in the FEHB program when the early retirement offer is made to you.
Retirement benefits
There are two things that may affect your ability to retire when you want to. First, if you left government and took a refund of your retirement contributions. Second, if you served in the armed forces and haven’t made a deposit to get credit for that time.
Refunded service
If you left government service, got a refund of your retirement contributions, and later returned to work for the government, that fact could have a major impact on your eligibility to retire and in your annuity computation. Because the rules differ for FERS and CSRS, you’ll need to meet with your agency’s retirement counselor to find out which ones apply to you. Only then can you make an informed decision about whether to redeposit the money you took out. Because interest is added annually to the refund you received, the longer the time between when you left and returned could be a deciding factor.
Military service
If you are a FERS employee who served in the armed forces, you’ll need to make a deposit to get credit for your active-duty time in your annuity computation. If you are a CSRS employee who served in the armed forces before October 1, 1982, you won’t have to make a deposit to get credit for that service. However, if you served in the armed forces after that date, you will. And accrued interest will be added to the amount you owe.
If you are a FERS employee who doesn’t make a deposit to get credit for that time, it won’t be used in the computation of your annuity. If you are a CSRS employee who is required to make a deposit and doesn’t do that, when you retire and are eligible for a Social Security benefit at age 62, your annuity will be reduced by 2 percent for every year (5/12ths of 1 percent per month) that is covered by that period of active-duty service. If you retire after age 62, the reduction will take place when you retire.
So there you have it. Several things that can be impediments to a trouble-free transition into retirement. If any of them apply to you, now is the time to examine your options and decide which decision is the best for you.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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See also
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