Let’s talk about dates. No, not the kind found on palm trees or the times when you take someone out. I mean dates on the calendar. More than we like to think, our lives are affected by them. I need only mention birthdays, weddings, anniversaries, and the IRS to prove my point. However, only one of these is a date I want to talk about. It and a few others will determine how you’ll be treated when you retire.
First in line is your birthday, which defines the date on which you will be eligible to retire, at least as far as age is concerned. What you probably don’t know is that you will be eligible on the day before your birthday – not on your birthday. That’s because you will have completed a full year on that day. Your birthday is the first day of the next year.
Next is the date on which you will have enough years of service to retire. Assuming that you haven’t had a break in service along the way, you will have completed the time needed on the day before the one on which you were first employed.
Those two dates are personal to you. The next dates I want to talk about came out of the legislative sky but can have a profound impact on how you are treated. I won’t try to capture them all, just the ones that will be of concern to most of you. I’ll start with military service.
If you served in the military before December 31, 1956, you won’t have to make a deposit to the civil service retirement system to receive credit for that time in determining your eligibility to retire or your annuity computation. If you served in the military after that date, what happens to that time depends on when you were first employed in the federal government. If it was on or after October 1, 1982, you will receive credit for that time only if you make a deposit before you retire. If you were first employed before that date, you have two options. You can make a deposit for that time or you can take your chances. If you retire and won’t be eligible for a Social Security benefit at age 62 (or at retirement if you retire after age 62), nothing will happen. On the other hand, if you will be eligible for a benefit, those years of military service will be eliminated and your annuity recomputed downward.
That date also affects the creditability of any deposit you may owe to the retirement fund. However, the rules are slightly different. If you worked for the federal government on or after October 1, 1982, in a position from which retirement deductions were not taken, you will receive credit for the time in determining your eligibility to retire but the time won’t be used in the computation of your annuity unless you make a deposit to the retirement fund before you retire.
A different date controls what happens if you left the government and took a refund of your retirement contributions. If you received a refund that covers a period of service that ended before October 1, 1990, you won’t have to pay the redeposit to receive credit for that service when you retire. Instead you’ll receive full credit for that time but your annuity will be actuarially reduced based on you age and the amount of the redeposit you owe, plus interest.
On the other hand, if the refund was received on or after October 1, 1990, you’ll receive credit for the time in determining your eligibility to retire but the time will not be included in your annuity computation unless you make a deposit for that time before you retire. Note: FERS employees who take a refund of their FERS contributions may not make a redeposit to recover that time. As far as retirement credit is concerned, it is lost forever.