Retirement & Financial Planning Report

The government is encouraging retired federal employees to return to work for Coronavirus-related positions—not just in health care but others, including many that don’t require being on the front lines. Even apart from the present situation, some federal retirees choose to go back to work, and in many cases they naturally look to the government as a potential employer.

A major consideration is what would happen to their annuity. In some cases, it will continue, in others it will stop.

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The standard policy is that if you voluntarily retired and go back to work, you’ll continue to receive your annuity; however, the salary of your new position will be offset (reduced) by the amount of your annuity. For example, if your annuity was $40,000 and your new salary was $90,000, you’d only be paid $50,000 ($90,000 – $40,000).

However, if your retirement was involuntary as a result a reduction-in-force (RIF), job abolishment, transfer of function, or reorganization, your annuity would stop and you’d receive the full salary of your new position. In other words, you’d have the same employment status as any other federal employee in an equivalent position with a similar service history.

Also, there are several separate sets of authorities under which a rehired retiree can receive both the full annuity and the full salary of their new position. The Office of Personnel Management has signaled that it will be flexible in approving agency requests to rehire retirees without an offset for virus-related work, and has given blanket permission to the Department of Veterans Affairs. If you are a retiree who is being considered for reemployment, be sure to ask if that or one of the other exceptions will apply to you.

The impact on your benefits from work as a re-employed annuitant also varies:

• If your annuity stopped when you took the new job, you’d have to meet standard age and service requirements to be eligible to retire again.

• If you worked on a full-time, continuous basis for at least one year – or its equivalent if you worked part time – you’d usually be entitled to a supplemental annuity. That annuity would be added to your original annuity. However, if you worked for at least five years, you’d usually be entitled to elect a re-determined annuity, which would replace the one you are currently receiving. In either case, you’d need to have retirement deductions taken from your pay or make a deposit for that time when you retire again to be eligible for those additional benefits.

• If you received both your annuity and the full salary of your new position, the time can’t be used to qualify you for either a supplemental or a re-determined annuity. When you retire again. you’ll just continue to receive the annuity you had all along.

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