READ
THIS! 
Retirement
Calculations May Be Affected by PTF Status After April 7, 1986.
by Marsha Breitling [03/16/03]
Errors
Identified in the Retirement Article by John Smith, APWU Retiree Director
[1/14/03]
Tips on
filing for CSRS or FERS Disability Retirement
by Robert McGill, Esq. [10/25/02]
Points To Consider If You're Thinking About
Retiring.
by Marsha Breitling [4/17/01]
CSRS and FERS seminar recap
by Marsha Breitling [4/17/01]
Update On Activities of National
Association of Retired Federal Employees (NARFE)
by
Marsha Breitling [4/17/01]
IMPORTANT
CONSIDERATIONS BEFORE PLANNING YOUR RETIREMENT
CSRS
or FERS
by Marsha Breitling [3/16/03]
If
the time you have been with the Postal Service or another other retirement
credited agency you were a PTF on or after
on
two sets of formula - one, before April 7th based on the three year formula and
second; after April 7th based on hours worked.
Time in the Postal Service before that date will be calculated at the
base pay three year formula. If you
remained full time after the April 7th date your retirement annuity will still
be based on the three year formula. However,
if you became a PTF anytime on or after April 7th the time for your annuity will
be calculated based on the hours worked the remaining years you are with the
Postal Service.
A
postal employee who becomes a full time regular after being a PTF after April
7th will still have their annuity determined by the work hours formula.
According
to Kathy McDermott a PTF working 40 hours or more each week will not be
adversely affected because you will be fulfilling as many hours per week as you
could acquire. If you have become a
PTF and are working less than 40 hours per week your annuity will be
calculated on hours worked and that will affect your annuity.
The
chapter dealing with this subject is 123 pages long.
The formula is done is steps.
It
is complicated. If this condition
affects your eventual retirement annuity determine its affect upon that annuity
before making a committed decision to leave the Postal Service.
EARLY
RETIREMENT IN 2003
by Don Cheney, Auburn WA Local
Whether a man dies by a single thrust, or by a thousand small cuts, the end result is the same. (Anonymous)
In Disability Retirement law for CSRS and FERS, the main thrust of an application are twofold: proper medical documentation and resolution of all accommodation issues. However, you must also be aware of the hundreds of little "pothole" issues which unexpectedly appear in the course of filing for disability retirement, and it is often such smaller issues which hinder a successful filing.
Three such issues, out of many more, are briefly discussed below:
Under FERS, must you first file for Social Security disability benefits before you file with OPM? Whether intentionally or through innocent ignorance, many HR managers are informing Federal and Postal workers that they must first file for, and receive a determination from, the Social Security office before they can file for disability retirement with the Office of Personnel Management. This is categorically untrue. While an applicant does need to file for Social Security disability benefits at some time during the process, all that is needed is the receipt that he or she has filed for it. Do not allow for misinformation to delay your filing.
The danger of cashing a $5.00 check: Under 5 C.F.R. 844.301, the Federal Regulations state in relevant part: A disability annuity under this part commences on the day after the employee separates or the day after pay ceases and the employee meets the requirements for title to an annuity. I once represented a client who had filed for disability retirement on his own, got it denied, then came to me at the reconsideration stage. Prior to coming to me, he had not worked for over a year, but had recently received a check in the amount of $5.00, which he promptly deposited into his bank account. After successfully reversing OPM’s denial and securing his disability retirement, the Office of Personnel Management began paying him his disability annuity "the day after pay ceases" — meaning, the day after he was paid the $5.00. Fortunately, I was able to have the Agency accept back the $5.00, and backdate the annuity to when he last worked. However, not all cases will necessarily end with such success. You must be aware of the laws which govern disability retirement, or you are in peril of being at the mercy of your own ignorance.
If at first you don’t succeed, try again with the assistance of an attorney before the statute of limitations runs out: I have had many people over the years call me and tell me that they were denied at the initial stage, the reconsideration stage, and at the MSPB stage — and would I be willing to file for a Petition for Full Review — and, by the way, in the meantime, it has been over a year since he or she was separated from Federal Service. In such a case, you have limited your options by allowing the one-year rule to run its course, leaving only a shot at the appellate level to win your case. While I almost never advise an individual to forego his or her administrative right of appealing a denial decision, in certain special circumstances, it is prudent to withdraw one’s ill-prepared disability retirement application and to re-file all over again, before the one-year statute of limitations runs out. This decision, however, must obviously be made before the one-year statute of limitations has already run its course. Furthermore, such a decision must be made on a case-by-case basis, but this is precisely why it is important to view your disability retirement application as a lifetime investment, to be fully aware of the laws which bind you, and why competent legal representation is important.
There are many, many more issues surrounding disability retirement for CSRS and FERS employees. If you believe that you need to consult an attorney concerning disability retirement, please contact me at 1-800-990-7932, or email me at mcgill@lightdog.com My ad also appears weekly in the Federal Times.
Sincerely, Robert R. McGill, Esquire
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An employee must be enrolled in a Federal Health Benefits Plan for
5 years prior to retirement |
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41 years, 11 months of contributions
is 80%. Any contribution
after that is refunded to you. THERE
IS NO FURTHER GAIN IN PAY |
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If an employee has enough annual to
cover a time period which includes holidays those holidays will be paid
ones |
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Annuity is based on highest 3
consecutive years-base salary |
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More than 6 months of LWOP in a
calendar year will affect you retirement date |
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Paperwork needed for reporting IRS
retirement annuity |
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Give your Personnel Office two months
notice to have paperwork ready for you to discuss the details. (In
the Harrisburg District, contact: Kathy McDermott
or Josephine Palmore) |
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The Office of Personnel Management
receipt of all your paperwork prevents complications later. |
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TSP funds can be deferred when you
retire or transferred to another fund without payment of taxes if it is
done from Custodian to Custodian |
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Your final check from the Postal
Service cannot be a Direct Deposit |
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Your retirement annuity can be Direct
Deposit |
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Make sure the Social Security
Administration has all your information correct. |
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One can pay paid all but a small
percentage of Military Time owed. If
at the time of retirement you decide not to buy back the time the amount
you paid will be returned |
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A divorce decree at the Office of
Personnel Management stating a percentage or amount to a former spouse
will be enforced and affect your annuity. |
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A break in Postal Service where retirement funds were taken out
upon separation under CSRS can be redeposited. |
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A break in Postal Service where
retirement funds were withdrawn upon separation under FERS cannot be
redeposited. |
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Though few, some states require
payment of taxes on retirement annuities |
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It makes a difference what day of the
month you retire. And on top
of that whether you are a CSRS or FERS employee also makes a difference. |
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Remember to make an appointment with a
USPS Personnel Department official who handles retirement in your District
two months before you wish to retire . In the Harrisburg District, contact Kathy McDermott or
Josephine Palmore. Their
numbers can be found at the conclusion of this article. |
*******
by Marsha Breitling, Secretary-Treasurer KAL
On April 17th I attended a Retirement Seminar presented by Kathy McDermott from the Harrisburg Post Office at the Sheraton Inn East. The Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) were addressed during the morning session. Representatives from the Social Security Administration and the Internal Revenue Service spoke in the afternoon. I found it to be an excellent forum for those who are planning to retire soon and for us who have a few more years to go. The retirement systems are distinctly different. CSRS has many options to the employees throughout its process. In the case of FERS there are almost no options for the employee during the process.
From the very beginning the retirement plans are different.
CSRS
7% employee contribution
0% Social Security
FERS
6.2% by employee
into Social Security
.80% Basic FERS
1% Thrift Savings
As in all things in the Postal Service all calculations are based on formulas and charts. For our purposes here I will present examples and generalities. Please take advantage of your access to Personnel Managers who specialize in retirement matters for exact figures.
For computing your CSRS annuity an employee takes the highest 3 consecutive years base salary.
Example: 1998 $38,000 base salary
1999 $40,000 base salary
2000 $40,000 base salary
$118,000
Take total years of service times 2 and subtract 4
30 years times 2 = 60 and subtract 4 = 56
56 now becomes a percentage - 56%
Take the total 3 years base salary , which we have computed as $118,000 and divide by 3
$118,000 divided by 3 =$39,333
$39,333 times 56% = $22,026
$22,026 per year divided by 12 months = $1836
For computing your FERS benefit an employee takes the highest 3 consecutive years base salary.
Example: 1998 $38,000 base salary
1999 $40,000 base salary
2000 $40,000 base salary
$118,000
Take the total 3 years base salary, which we have computed as $118,000 and divide by 3
$118,000 divided by 3 =$39.333
$39,333 times 1% = $393.33
$393.33 times 30 (creditable years of service) = $11,800
$11,800 divided by 12 months = $983.33
Note: A supplement may be available to some FERS employees. An employee would be required to have 30 years of service and be 55 years of age or have 20 years of service and be 60 years of age. The years of service would be based on years under the FERS system. This supplement would balance out what an employee’s benefit would be at age 62 under Social Security.
An employee’s Thrift Savings Plan (TSP) is available upon retirement from the Postal Service regardless of age. You do not have to wait till you are 59 and a half. Loans from your TSP plan must be paid back before retirement. For FERS employees this is a major component of your retirement system. For CSRS employees it is in addition to CSRS benefits. In either case because your contribution is tax deferred when withdrawing funds taxes are due. These taxes are due in the year of the withdrawal. If upon retirement from the Postal Service an employee wants to defer withdrawal to a future age one can. A transfer of funds from TSP to another retirement fund is possible. If at any time the employee takes a withdrawal in their name taxes are due. But if an employee requests the CUSTODIAN of the TSP to transfer the funds to the CUSTODIAN of a designated retirement plan there are no taxes due till future withdrawal in the employee’s name. TSP can be taken in a lump sum, fixed payments at 5 years, 10 years, etc., or fixed monthly amount till there is no balance.
The Windfall Elimination Provision affects CSRS employees. This was designed to separate a person who paid into the Social Security System and a person who did not - usually a government worker. Employees who are in the CSRS did not pay into Social Security and often are not eligible for benefits. Social Security eligibility is based on dollar amount not a value of weeks in a year. We always hear about having 40 quarters to be eligible for Social Security Benefits. This appears to be a misnomer.
Example: In 2001 $830.00 represents one credit (quarter). If an individual earns $2000.00 per month beginning in January he/she would have earned their 4 credits by March.
Four (4) credits can be earned per year. An individual needs to accumulate 40 credits (quarters) in 10 years to qualify for Social Security Benefits.
FERS employees would compute their Social Security Benefits as those who worked any job where they had paid into the Social Security system.
2001
Computation of Monthly Earnings:
Example: Monthly
earnings determined to be $2000.00 per month
90% of the first $561= $505.00
32% of the next $2820 (or whatever is left of the $2820) = $460.00
$965.00
Those CSRS
employees who had contributed to Social Security on a limited basis fall into
the Windfall Elimination Provision. The
following illustrates the differences.
2001
Computation of Monthly Earnings under the Windfall Elimination Provision
Example: Monthly earnings determined to be $2000.00 per month
40% of the first $561 = $224.00
32% of the next $2820 (or whatever is left of the $2820) = $460.00
$684.00
Note: In either example if the determined monthly earnings is greater than the example 15% of the remainder will be added to the monthly benefit.
An individual may
apply for Social Security Benefits at the age of 62.
However, if one does there is a penalty of
5/9th of 1% for each month Social Security is taken before the age of 65
for the first 36 months. After 36
months it will be 5/12 of 1% for each month.
Because of the new sliding scale for retirement age the months between
the age 62 and one’s full retirement age will increase. For
example, I was born in 1950
so my full retirement age is 66 years and 3 months.
Military Service and the buying of its time is a complex issue which needs to be explored with a USPS Personnel Retirement Specialist (in Harrisburg: Kathy McDermott or Josephine Palmore.) Depending on the years you were in the service determines if an employee had paid into the Social Security system or not. Also what the cost would be to buy back the time and what interest had accrued. CSRS employees have many options to weigh regarding this issue.
Both CSRS and FERS employees can buy back Military Time if they served after January 1957. It is important to note that the Social Security Administration will visit your file one time - at the age 62 or when you retire. If you have years of military service not paid at that time you could lose part of your CSRS benefits at that time.
The election of Survivor Benefits provides an income and health benefits for your spouse if you should die before he/she. Providing Survivor Benefits will reduce you monthly annuity. If one does not elect to have Survivor Benefits the remaining spouse will also lose health benefits as well as a monthly income at that time. In order to eliminate Survivor Benefits the Postal Service requires a notarized written statement from the spouse.
CSRS Survivor Benefits
Example: An employee elects
to designate 55% of $12,000 annual base salary to survivor benefits.
Cost to Retiree per year $930.00
Benefit to Spouse per year $6600.00
One can elect to designate up to 55% of ones base salary to Survivor Benefits. There is a reduction of 2 1/2% of the first $3600 base plus 10% any amount over $3600.
FERS Survivor Benefits
An
employee’s annuity is reduced by 10% to give a spouse 50% of your unreduced
benefit and a supplemental annuity payable till age 60 if spouse is not eligible for Social Security Survivor Benefits until age 60.
Continued Life Insurance is an option upon retirement. All plans are available to carry into retirement from Basic to Option C. They all will cost a monthly fee and will reduce in value at age 65. One can choose to reduce the value of the life insurance and will then pay a monthly fee accordingly.
Basic Life has a reduction till 25% of pre-retirement value is reached
Option A -Standard has a reduction till pre-retirement value is reached ($2500)
Option B - Additional has a reduction of 2% per month for 50 months, then coverage ends
Option C - Family has a reduction of 2% per month for 50 months, then coverage ends
The choice of plan and reductions will determine if there are any monthly payments after the age of 65.
Sick Leave
A Postal Service computation chart calculates any sick leave you have left at retirement under CSRS that be usable. This can be factored into your time for retirement. It is based on an approximate 30-day period. The rest is lost.
FERS employees have no redeemable sick leave available.
During the seminar it was stated that it takes 4 to 6 weeks to receive your first check. It is important to take advantage of your individual retirement counseling in order to be prepared. Two months notice provides the District Personnel office with the time to have all pertinent information available. In order to receive your first check as anticipated it is important to make sure that all paperwork needed by the Office of Personnel Management (OPM) is correct and in your file when it leaves the District Office.
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Update On Activities of National
Association of Retired Federal Employees (NARFE)
John M. Dwyer spoke at a recent Postal Retirement Seminar on behalf of the National Association of Retired Federal Employees (NARFE). Mr. Dwyer was enthusiastic and committed to the group’s focus on “your retirement dollars and cent issues.” They are a group actively involved in legislative issues that continue to affect federal employees and their families. NARFE fought to have hearings to repeal the Social Security Government Pension Offset and Windfall Elimination Provision, which affects postal employees who have not paid into the Social Security Fund during their government employment.
Some of the current issues they are keeping an eye on are:
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Ÿ Excluding Civil Service Retirement & Disability Fund from the U.S. Budget |
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Ÿ Group Long Term Care Insurance |
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Ÿ Retain the Federal Employees Health Benefits Program (FEHBP) |
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Ÿ Oppose Reduction in COLAs and Increase in Retirement Age |
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Ÿ Oppose Privatization of All or Part of Social Security Contributions |
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Ÿ Working to Equalize National Guard Employee Retirement Benefits |
They have social activities throughout the year as well as business meetings. For your convenience they have many local chapters. Mr. Dwyer can be reached at 717-564-3767.
Harrisburg 717-761-7533
Harrisburg 717-774-5042
Adams-Hanover 717-637-9467
York 717-848-8250
Lancaster 717-464-0725
Lebanon Valley 717-272-5725
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Social Security Administration
1-800-772-1213
TTY 1-800-325-0778
www.ssa.gov
OPM Retirement Information
1-888-767-6738
www.irs.gov
National Association of Retired Federal Employees
1-800-627-3394
info@narfe.org
Divorce and Your Federal Benefits
1-800-989-3363
www.fendonline.com
Harrisburg Post Office
717-257-2280
Harrisburg Post Office
717-257-2239
Federal
Retirement Calculator
With this calculation model you can
compute an estimate of your CSRS, CSRS Offset and FERS retirement benefits --
normal, early or disability retirement -- as well as an estimate of your future
TSP savings and Social Security benefits.
FERS
Benefits Handbook
OPM Guide to your federal retirement
benefits under the FERS program
Benefits
For Federal Employees In Career Transition
Thinking about a career change and
worried about what will happen to your benefits? This OPM handbook gives
you all the details you need to know to make a well informed decision and
protect your hard-earned benefits.