Reg Jones Expert's View

Well, we really are down to the wire. The last day on which a FERS employee can retire and be on the annuity roll in January is December 31. For CSRS employees it’s January 3; however, that first month’s CSRS annuity will be reduced by 1/30th for every one of those three days the employee isn’t on the annuity roll.

There are good reasons why so many people choose to retire at this time of year. However, retiring at the turn of the year entails some potential hazards.

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See also, The Best Dates to Retire Under FERS, CSRS

For example, your retirement application may contain errors that will hold up its processing. Or it may be incomplete, keeping you from getting credit for periods of employment that occurred early in your career.

Another hazard is processing time. The later you submit your retirement application, the more likely it is that it won’t get out of your agency until well after the turn of the year when personnel and finance office staff members come back from vacation. And when it lands in OPM’s lap, it will be included in an avalanche of other applications. As a result, their processing-time goals won’t be met.

When your application is finally logged in, OPM will notify you and – if your application is clean – you’ll be put in interim pay. Interim pay is a percentage of what you will likely be entitled to when your case if finalized. Whatever you missed getting while in interim pay will be included with your first full annuity payment (possibly many months in the future, though).

If there are errors or readily apparent omissions in your application, OPM won’t be able to put you in interim pay. It will instead follow up with you. With luck that will only cause a brief delay in putting you in interim pay. If there are greater problems, the back and forth could turn into a ping-pong match. At worst, you could find out that you weren’t eligible to retire in the first place.

Even if your application is accepted, delays in processing time will mean that you’ll have to dip into your last paycheck and other resources. Don’t count on that unused annual-leave check your agency will send you to cover immediate expenses. In all likelihood, it too will be delayed.

One last thing: If you are covered by CSRS, you won’t receive your first cost-of-living adjustment until January 2021. And because you retired after November 30, that COLA will only be worth 11/12ths of the full amount. If you are covered by FERS, you won’t be entitled to any COLA adjustment until you reach age 62 unless you fit into one of the excepted categories of employees, such as law enforcement officers and firefighters. Even if you do qualify, your first COLA also will be in January 2021 and also prorated.

Sorry for focusing on the dark side of an end of year retirement; however, I wanted you to know what delays in applying for retirement can mean to you.

See also, Retirement Eligibility under FERS and CSRS, and Minimum Retirement Age at ask.FEDweek.com