Expert's View

Last week, I wrote about the rules governing the retirement benefits of employees whose agencies offer them an opportunity to retire early. This time I want to do the same for FERS employees who are offered the unique option of retiring under the MRA+10 provision.

Unlike CSRS employees who can retire at age 55 if they have 30 years of service, FERS employees have to wait until they reach their minimum retirement age. If you were born before 1948, your MRA is 55. However, if you were born after that, it’s higher. The chart below will let you find your own MRA.

If you were born Your MRA is

1948 55 and 2 months

1949 55 and 4 months

1950 55 and 6 months

1951 55 and 8 months

1952 55 and 10 months

In 1953 through 1964 56

1965 56 and 2 months

1966 56 and 4 months

1967 56 and 6 months

1968 56 and 8 months

1969 56 and 10 months

In 1970 and later 57

Unlike CSRS employees, FERS employees can retire when they reach their MRA and have at least 10 but fewer than 30 years of service. While that’s a real plus for anyone who wants to leave before completing a full career, it can be a costly decision.

If you retire under the MRA+10 provision, your annuity will be calculated using the standard formula: 0.01 x your high-3 x your years and full months of service. However, it will be reduced by 5/12 percent for every month you are under age 62. That’s 5 percent per year. You can reduce or eliminate that penalty by retiring and postponing the receipt of your annuity to a later date.

As I pointed out last week, if you have at least five years of consecutive coverage under the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs on the day you retire, you’ll be able to carry that coverage into retirement, with the premiums being deducted from your annuity payments. If you retire and postpone the receipt of your annuity to a later date, your coverage will stop; however, you’ll be able to reenroll when your annuity begins.

During the period before your annuity begins, you’ll receive a 31-day extension of coverage at no cost to yourself. You’ll also be able to continue your FEHB coverage for up to 18 months by paying the full premiums plus 2 percent to your former agency. You may also elect to convert your FEGLI to a private life insurance policy, for which you’d pay the premiums.

Next time I’ll fill you in on the rules governing deferred retirement.