Is retirement all that it’s cracked up to be? Benefits strategist John Elliott has been-there-done that, and he says there is life after retirement. Here are some valuable insights and tips whether you are already retired or just thinking about it.
“‘Before summer had wilted completely, life in the hut came to an end in a way they had not imagined.’ Hermann Hesse, Narcissus and Goldmund
“Is retirement less than the glorious medley you imagined? Is your spouse driving you nuts? Do you miss your friends at work? Is another agency in need of your special skills? Maybe a return to the federal workforce is just what you need. Retired feds can and do come back to the government as reemployed annuitants, which I realize begs the question, why did one retire in the first place, but that’s another story.
“Some of your colleagues will scratch their heads at your return, and while perhaps happy to see you, your reemergence will for many of them be a puzzlement. Nevertheless, you tell them that you have important work to do; there is such a thing as an indispensable person, duty calls, etc.
“Reemployed annuitants do not lose their annuity. It continues to come in full to your bank on the first business day of each month. But, unless an agency is inclined to waive salary offset, your salary as a returning fed is offset by the exact amount of your annuity.
“Back in the day, agencies had to clear waiver of salary offset with the Office of Personnel Management before a returning annuitant could collect the full salary of the position and collect the full annuity. The reason for a waiver request had to demonstrate that the appointment was to meet an exceptional need in recruiting and retaining qualified candidates for particular positions or under unusual circumstances.
“Years later the Department of Defense was given authority to waive salary offset, and as of last October, all executive agencies have been given the authority to waive salary offset, under certain conditions more restrictive than those for the Department of Defense. According to OPM, those conditions are: ‘Individuals reemployed will serve under appointments limited to a year or less. An annuitant may not serve under the authority for more than 520 hours of service during the period ending 6 months following the individual’s annuity commencing date; for more than 1040 hours of service during any 12-month period; or for more than a total of 3120 hours. Individuals employed under these provisions will not be entitled to any additional annuity benefits.’
“And what do they mean by no additional annuity benefits? If you are reemployed and your salary is offset by the amount of your annuity, and you elect to be covered under CSRS or FERS, you will be entitled to a supplemental annuity if you work the equivalent of at least one year. This supplemental or additional annuity is calculated under a different formula than your original annuity. If you work an equivalent of five years, you may elect to have your annuity redetermined, which would add the five years or more to your original annuity. After five years you may choose a redetermined annuity or the supplemental annuity; OPM will send you an election letter explaining the difference in benefits. If, however, you are reemployed with a waiver of salary offset, you will not be able to be covered under FERS or CSRS, nor will you be eligible for a supplemental or redetermined annuity at the end of the reemployment.
“Other arcanum: You cannot contribute to the Thrift Savings Plan as a reemployed annuitant unless you are covered under CSRS or FERS. So, if you come back with salary offset waived, you cannot be covered under CSRS or FERS and could not then contribute to the Thrift Savings Plan. If you come back under salary offset, you may elect to be covered under CSRS or FERS. If you originally retired under CSRS, and return after a break in service of more than three days, you may elect to be covered under FERS. By doing so, you would be eligible for matching funds if you contributed to the Thrift Savings Plan. If you retired under CSRS and came back after one year or more, you would be covered under CSRS-Offset, and again you could transfer to FERS to get matching funds on Thrift Savings Plan contributions. If you originally retired under FERS, and come back under salary-offset provisions, you could only elect FERS coverage.
John Elliott is a federal benefits strategist who does retirement planning seminars. He’ll also be our guest tomorrow at 10 a.m. EDT on our Your Turn with Mike Causey radio show. Listen if you can.
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