No matter what your work history is, you must have 5 years of actual federal service to be vested in the retirement system. Image: IhorL/Shutterstock.com
By: FEDweek StaffMany federal employees have learned recently, or might be yet to learn, that the federal government is not necessarily the job for life that it often is pictured to be. In some cases, voluntarily and in others involuntarily, they are looking at an earlier departure and are wondering what retirement benefits they might be entitled to.
One first issue often overlooked is “vesting.” No matter what your work history is, you must have 5 years of actual federal service to be vested in the retirement system. And those 5 years must either be full-time or their part-time equivalent. For example, if you worked a part-time schedule of 20 hours a week, it would take 10 years to be vested.
Here’s a key consideration often overlooked: Other kinds of employment – even active-duty service in the armed services for which you may make a deposit to have it credited in your federal annuity – won’t count toward that 5-year requirement.
If you leave before completing 5 years, you won’t have any title to an annuity. If you don’t intend to return to government service, you can take a refund of your retirement contributions. Should you change your mind and later return, you would have to pay that back to get credit for that prior service time.
Once you’re vested in the retirement system, you can turn to the question of when will you be eligible for a retirement benefit. To qualify for an immediate, unreduced annuity, you can retire at age 62 with as few as 5 years of service, at age 60 with 20 years or at your minimum retirement age with 30. MRAs range between 55 and 57, depending on your year of birth.
If you want to leave before being eligible for an immediate, unreduced annuity, you have options.
* You can retire at your MRA with between 10 years and 29 years of service. However, your annuity would be reduced by 5 percent for every year you were under age 62. You could reduce or eliminate that age penalty by postponing the receipt of your annuity to a later date. However, the amount of that annuity would be fixed on the day you leave. It wouldn’t be increased by any retiree cost-of-living increases that occur between the day you left and when your annuity begins.
* On the other hand, if you just want to put in your 5 years and leave government, you could apply for a deferred annuity at age 62. That annuity would be based on your total years of service and your highest three years of average basic pay – your high-3 – on the day you left.
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