Retirement & Financial Planning Report

If you go back to work as a rehired federal annuitant, your TSP benefits will be subject to certain special rules.

If your break in service is less than 31 days, you are not allowed to withdraw your TSP account. If you are rehired into FERS, the agency should begin making its automatic 1 percent of salary contribution immediately. Regardless of your retirement coverage, your own investments should continue automatically upon your rehire. If either or both type of investments aren’t continued, contact your personnel office.

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If your break in service is more than 31 days, you may withdraw the amount of your account attributable to your prior employment. However, you are not required to do so. If you began receiving withdrawals under the substantially equal monthly payments option, those payments will stop upon rehire. An annuity will continue to be paid regardless of rehire.

Upon rehiring, you also would be able to make the special “catch-up” contributions to the TSP allowed for investors age 50 and above. The TSP can only accept catch-up contributions for the current year; retroactive contributions are not allowed, nor do catch-up contribution elections carry over from one year to the next.

In general, if on rehiring your salary is reduced by the amount of your annuity, you are treated as an active employee for eligibility to invest in the TSP. However, if you are rehired under one of the exceptions allowing rehired annuitants to draw both a full salary and a full annuity, you generally will be treated as still separated and ineligible to make new investments in the TSP. Check with the employing personnel office.

If you are eligible to participate in the TSP, you will be subject to a TSP policy requiring an automatic 3 percent of salary personal investment, unless you choose a different level or opt out entirely, if the break in service was 31 days or more. That policy does not apply to shorter breaks in service; in that case, you must opt in. If rehired under FERS, agency automatic and matching contributions will begin immediately.

Rehired annuitants, like other TSP investors, may invest through either the TSP’s traditional design, its Roth design, or a combination of the two, up to the standard annual dollar limits for the two types of investing combined.