The effect on an annuity if you return to work for the government after retiring depends on how you retired. In certain circumstances, your annuity will continue; in others it will stop.
If you are a CSRS retiree who is reemployed, your annuity stops if you fall into one of four categories. If you are a FERS retiree, only the first two apply.
1. You are a disability annuitant whom OPM has found recovered or restored to earning capacity prior to reemployment; 2. You are a disability annuitant who was not disabled for a National Guard Technician position but were awarded a disability annuity because you were medically disqualified for continued membership in the National Guard; 3. You are an annuitant who was involuntarily separated from your job (unless it was required by law based on age and length of service or for cause) and your new job is permanent in nature, (e.g., career, career-conditional or excepted); or 4. You are an annuitant who receives a Presidential appointment subject to retirement deductions.
When your annuity stops, you have the same status as any other federal employee in an equivalent position and with a similar service history. In general, when you leave government again, your annuity will be reinstated unless you are entitled to either an immediate or deferred annuity based on the new separation.
Most retirees whose annuity stops on reemployment are CSRS employees whose careers were cut short by a RIF, reorganization or transfer of function. Having retired under lowered age and service requirements, these discontinued services retirees are considered to be people who are completing interrupted careers.
On the other hand, most retirees met the age and service requirements for an immediate retirement. As a result, if they return to work for the government, their annuities will continue uninterrupted. However, with rare exception, the salary they receive will be reduced by the amount of annuity they receive while on the job.
A reemployed annuitant can earn either a supplemental or a redetermined annuity. A supplemental annuity is one that is tacked onto your present annuity. As a reemployed annuitant on a full-time, continuous basis for at least one year, you will usually be entitled to a supplemental annuity. If you work part time, you’ll have to work longer. If you work for at least five years, you will usually be eligible to elect a redetermined annuity, which will replace the one you are currently receiving.
Note: Some reemployed annuitants may receive both their annuity and a full salary. These exceptions relate to positions for which there is exceptional difficulty in recruiting or retaining a qualified employee, a direct threat to life or property, or a circumstance that warrants emergency employment. If you are a retiree who is being considered for reemployment, be sure to ask if one of these exceptions applies to you.
Read more on how returning to the federal government under FERS and CSRS can impact your annuity at ask.FEDweek.com