Expert's View

By Reg Jones

Wednesday, March 5, 2008

 

Last time I talked about retirees who left on a discontinued service retirement and whose annuities stop when they go back to work for the government. This time I want to talk about those of you who met the age and service requirements for an immediate retirement or who retired voluntarily under an early retirement authority. When you return to work for the government, your annuity will continue without interruption. However, with rare exception, the salary you get will be reduced by the amount of their annuity. On the other hand, you can earn either a supplemental or a redetermined annuity.

 

A supplemental annuity is one that is added to your present annuity. As a reemployed annuitant working on a full-time, continuous basis for at least one year, you will usually be entitled to elect a supplemental annuity. (If you work part time, you’ll have to work longer.) This additional benefit is based on the average rate of basic pay you had during your period of reemployment multiplied by 0.02 (if covered by CSRS) or 0.01 (if covered by FERS). The product is then multiplied by your total years of reemployed service. If you elect an additional survivor annuity benefit, your supplemental annuity will be reduced by 10 percent.

 

If you work for at least five full years, you will usually be eligible to elect a redetermined annuity. That annuity will replace the one you are currently receiving. In other words, your annuity will be recomputed using either the CSRS or FERS formula and based on your total years of service and your highest three years of average salary.

 

Of course, if you decide to elect either a supplemental or a redetermined annuity, you’ll have to contribute of your salary to the retirement fund, either while employed or before you retire again.

 

Because there are a lot of nuances and subtle variations to the reemployment of annuitants and the payment of supplemental and redetermined annuity, if you are considering going back to work for the government, I suggest that you go to OPM’s Web site chapter on reemployed annuitants: http://opm.gov/asd/hod/pdf/C100.pdf.

 

Next time I’ll talk about those rare situations in which a reemployed annuitant can keep both his annuity and the salary of a new position in the federal government.