# Presentation: 211961

##  RETIREMENT

**INFORMATION**
**SESSION**

## AGENDA

**RETIREMENT ELIGIBILITY**
**ANNUITY CALCULATIONS**
**HEALTH & LIFE INSURANCE**
**THRIFT SAVINGS PLAN (TSP)**
**SOCIAL SECURITY & MEDICARE**

## RETIREMENT ELIGIBILITYCSRSVOLUNTARY, OPTIONAL

- _AGE_
- 55
- 60
- 62

- _SERVICE_
- 30
- 20
-  5
- MINIMUM REQUIREMENTS:
- 5 YRS OF CIVILIAN SERVICE
- 1 OUT OF 2 RULE

## INVOLUNTARY SEPARATION (DSR)& VOLUNTARY EARLY

- _AGE_
- 50*
- ANY*
- *PERMANENT REDUCTION = 2% FOR EACH YR UNDER AGE 55

- _SERVICE_
- 20
- 25

## RETIREMENT ELIGIBILITYFERSVOLUNTARY, OPTIONAL

- _AGE_
- MRA*
- 60
- 62
- MRA*
- *MINIMUM RETIREMENT AGE: 55 IF BORN BEFORE 1948; GRADUALLY INCREASES TO 57

- _SERVICE_
- 30
- 20
-  5
- 10**
- **ANNUITY REDUCED 5% FOR EACH YR UNDER AGE 62 AT RETIREMENT
- MINIMUM REQ.: 5 YRS CIVILIAN SERVICE

## INVOLUNTARY SEPARATION (DSR)& VOLUNTARY EARLY

- _AGE_
- 50
- ANY
- NO AGE REDUCTION FOR UNDER AGE 55, UNLESS A CSRS COMPONENT IN ANNUITY COMPUTATION

- _SERVICE_
- 20
- 25

## INVOLUNTARY SEPARATION

- EXAMPLES:
- REDUCTION-IN-FORCE (RIF)
- ABOLISHMENT OF POSITION
- UNACCEPTABLE PERFORMANCE (UNLESS FOR MISCONDUCT

- TRANSFER OF FUNCTION OUTSIDE COMMUTING AREA*
- REASSIGNMENT OUTSIDE COMMUTING AREA* (NO MOBILITY AGREEMENT)

- * COMMUTING AREA IS DEFINED AS THE GEOGRAPHIC AREA THAT USUALLY CONSTITUTES ONE AREA FOR EMPLOYMENT PURPOSES.  IT INCLUDES ANY POPULATION CENTER (OR 2 OR MORE NEIGHBORING ONES) AND THE SURROUNDING LOCALITIES IN WHICH PEOPLE LIVE AND REASONABLY CAN BE EXPECTED TO TRAVEL BACK AND FORTH DAILY IN THEIR USUAL EMPLOYMENT.

## INVOLUNTARY SEPARATION

- CONDITIONS:
- EMPLOYEE MUST RECEIVE SPECIFIC WRITTEN NOTICE OF AN INVOLUNTARY SEPARATION
- NOTICE MUST BE DIRECTED TO AN INDIVIDUAL EMPLOYEE
- NOTICE MUST INFORM EMPLOYEE THAT HE/SHE FACES INVOLUNTARY SEPARATION FROM POSITION OR FEDERAL SERVICE
- IT MUST SPECIFY REASON FOR ACTION AND EFFECTIVE DATE OF THE ACTION

## INVOLUNTARY SEPARATION

- MAY NOT DECLINE A REASONABLE JOB OFFER
- OFFER MUST MEET FOLLOWING CONDITIONS:
- OFFER MUST BE IN WRITING
- EMPLOYEE MUST MEET QUALIFICATION REQUIREMENTS FOR POSITION
- OFFERED POSITION MUST BE IN EMPLOYEE’S AGENCY

- OFFERED POSITION MUST BE WITHIN EMPLOYEE’S COMMUTING AREA
- OFFERED POSITION MUST BE OF SAME TENURE
- OFFERED POSITION MUST NOT BE LOWER THAN THE EQUIVALENT OF 2 GRADE/PAY LEVELS BELOW EMPLOYEE’S CURRENT GRADE OR PAY LEVEL

## ANNUITY COMPUTATIONCSRS

- BASED ON:
- HI-3 AVERAGE SALARY
- CREDITABLE CIVILIAN AND MILITARY SERVICE (INCLUDING UNUSED SICK LEAVE)
- FORMULA:
- 1.5%  OF HI-3 X 1ST 5 YRS OF SERVICE +
- 1.75% OF HI-3 X NEXT 5 YRS OF SERVICE +
- 2% OF HI-3 X REMAINING YRS OF SERVICE

## CSRS OFFSET

- SAME FORMULA
- ANNUITY REDUCED AT AGE 62 IF ELIGIBLE FOR SOCIAL SECURITY
- REDUCTION BASED ON AMOUNT OF SOCIAL SECURITY BENEFIT EARNED WHILE COVERED UNDER CSRS OFFSET

## ANNUITY COMPUTATIONFERS

- 1% OF HI-3 X ALL SERVICE
- TRANSFEREES:
- CSRS SERVICE COMPUTED UNDER CSRS FORMULA
- FERS SERVICE COMPUTED UNDER FERS FORMULA
- 1.1% OF HI-3 FOR FERS SERVICE IF AGE 62 WITH 20 YRS OF TOTAL SERVICE

## NOTE

- UNUSED SICK LEAVE (USL) IS ADDED TO CSRS COMPONENT = LESSER OF USL AT TIME OF TRANSFER OR AT TIME OF RETIREMENT
- FERS SUPPLEMENT:
- $25-$30/MONTH ADDITIONAL ANNUITY FOR EACH FULL YR OF FERS SERVICE (UNTIL AGE 62)

## SIMPLE FORMULACSRS

- YRS OF SERVICE MINUS 2 X 2 = % OF HI-3
- EXAMPLE:
- 30 YRS OF SERVICE – 2 = 28 X 2 = 56% OF HI-3 (ACTUAL FIGURE IS 56.25%)

## SIMPLE FORMULAFERS

- YRS OF SERVICE X 1 = % OF HI-3
- EXAMPLE:
- 30 YRS OF SERVICE X 1 = 30% OF HI-3
- NOTE: FOR TRANSFEREES, USE CSRS FORMULA FOR CSRS SERVICE (INCLUDE FROZEN SICK LEAVE) AND FERS FORMULA FOR FERS SERVICE

## RETIREMENT DATES

- CSRS: LAST DAY OF MONTH OR 1ST, 2ND, OR 3RD OF FOLLOWING MONTH
- ANNUITY STARTS NEXT DAY, OTHERWISE 1ST OF NEXT MONTH
- FERS: LAST DAY OF MONTH
- ANNUITY STARTS 1ST OF FOLLOWING MONTH

## SURVIVOR BENEFITSCSRS

- ANY BASE = TO OR LESS THAN FULL ANNUITY*
- REDUCTION = 2 1⁄2% OF FIRST $3,600 AND 10% OF BALANCE OVER $3,600
- SPOUSE’S SURVIVOR RATE = 55% OF BASE ELECTED

- NO ELECTION NEEDED FOR CHILDREN
- COURT ORDER FOR FORMER SPOUSE MAY AFFECT
- *SPOUSAL WRITTEN CONSENT REQUIRED IF BASE ELECTED IS LESS THAN FULL ANNUITY

**Notes:**
Children’s rates as of 12/1/2000 = $369 and $442/month

## SURVIVOR BENEFITSFERS

- MAY ELECT 50% OR 25% OF YOUR ANNUITY *
- REDUCTION = 10% OR 5% OF YOUR ANNUITY
- NO ELECTION NEEDED FOR CHILDREN
- * SPOUSAL WRITTEN CONSENT REQUIRED IF ELECT 25% OR NONE

**Notes:**
Children’s rates as of 12/1/2000 = $369 and $442/month

## DEPOSITS FOR NON-DEDUCTION SERVICE

- CSRS: SERVICE PRIOR TO 10/1/82
- CREDITABLE, BUT ANNUITY REDUCED BY 10% OF DEPOSIT DUE AT RETIREMENT
- DEPOSIT = AMOUNT OF RETIREMENT DEDUCTIONS THAT WOULD HAVE BEEN WITHHELD + 3% INTEREST/YR

- CSRS ON AND AFTER 10/1/82
- SERVICE NOT CREDITABLE FOR ANNUITY COMPUTATION UNLESS DEPOSIT IS PAID
- OPM WOULD GIVE OPPORTUNITY TO PAY DEPOSIT

## DEPOSITS FOR NON-DEDUCTION SERVICE

- FERS: SERVICE PRIOR TO 1/1/89
- NOT CREDITABLE FOR ELIGIBILITY UNLESS DEPOSIT PAID
- DEPOSIT = AMOUNT OF RETIREMENT DEDUCTIONS THAT WOULD HAVE BEEN WITHHELD + INTEREST (VARIABLE RATE SINCE 1985)

- FERS SERVICE ON AND AFTER 1/1/89:
- NOT CREDITABLE FOR ELIGIBILITY PURPOSES
- DEPOSIT _NOT_ ALLOWED
- CREDITABLE FOR SOCIAL SECURITY PURPOSES ONLY

## Redeposit for Refunded ServiceCSRS	

- For service prior to 10/1/90
- - OPM will “deem” redeposit paid and reduce monthly annuity by actuarial factor based on your age at retirement
- - Redeposit amount=refund + interest
- - Interest rate is 3% if service prior to 10/1/82; variable rate applies for service on or after that date

- For service on and after 10/1/90
- - Must pay redeposit to receive credit for service
- - OPM will give you the opportunity to pay

## FERS

- Cannot ever pay redeposit for refunded FERS service
- - Service _NOT_ creditable for title to an annuity
- May pay redeposit for a prior CSRS refund

## Post ’56 Military ServiceCSRS

- If covered by CSRS prior to 10/1/82
- - Pay deposit if will be eligible for SS at age 62
- - Don’t pay if will not be eligible for SS at age 62
- Don’t pay if drawing military retired pay unless you plan to waive retired pay

- If first  covered by CSRS on or after 10/1/82
- - Must make deposit to get credit
- Deposit = 7% of military earnings after 1956 + interest (variable rate)
- See your personnel office for details

## Post ’56 DepositFERS

- Must make deposit to get credit for retirement purposes
- Deposit = 3% of military earnings +interest (variable rate)
- See your personnel office for details
- NOTE: Military service prior to 1957 is creditable _without_ deposit

## Health Benefits

- Must be currently enrolled and continuously enrolled or covered under spouse’s family enrollment for the last 5 years of service prior to retirement
- If 5-year rule not met, must have been enrolled since first opportunity to enroll
- Cost is the same as now, except premiums are withheld monthly

- If you cancel your enrollment after retirement, in most cases you will not be permitted to re-enroll at a later date
- Spouse _MUST_ be eligible for a survivor annuity in order to continue coverage after retiree’s death

## Life Insurance

- You must have had basic coverage for the 5 years of service prior to retirement _**or**_ since your first opportunity to enroll if less than 5 years
- This applies to each of the optional coverages:
- - Option A – Standard
- - Option B – Additional
- - Option C – Family

## Amount of Coverage

- Basic – Based on final salary rounded up to next $1,000 + $2,000
- Option A - $10,000
- Option B – Based on final salary rounded up to next $1,000 x number of multiples (1,2,3,4,or 5)

- Option C
- - $5,000 per multiple on spouse (maximum of 5 multiples)
- - $2,500 per multiple for each dependent child under age 22 (maximum of 5 multiples

## Cost After Retirement

- Must make choice on basic
- - 75% reduction
- $.325/month/$1,000 of coverage until age 65.  No cost after age 65 (if retired)
- Reduces 2%/month after age 65 until = 25% of original amount

- 50% reduction
- $.925/month/$1,000 of coverage until age 65 and $. 60/$1,000 thereafter
- Reduces 1%/month after age 65 (if retired) until = 50% of original amount
- NOTE: Premium after age 65 is based on amount of coverage at retirement, not reduced amount

- No Reduction
- $2.155/month/$1,000 of coverage until age 65 and $1.83/$1,000 of coverage thereafter
- Amount of coverage at time of retirement remains the same after age 65

- Option A   - Standard ($10,000)
- You pay premiums until age 65 (and retired)
- Reduces 2%/month after age 65 until = 25% of original amount ($2,500)
- Option B – Additional
- 	- You pay premiums until age 65 (and retired)
- 	- Reduces 2%/month until = 0
- 	- May elect unreduced and continue to pay

- Option C – Family
- You pay premiums until age 65 (and retired)
- Reduces 2%/month until = 0
- May elect unreduced and continue to pay
- May cancel any or all coverage at anytime
- If elect 50% or no reduction for basic, may change to 75% reduction at anytime

## Thrift Savings Plan(TSP)

- Withdrawal Options
- Transfer to IRA or other eligible retirement plan
- Receive lump-sum payment
- 20% tax withheld
- 10% tax penalty if under age 55
-  Series of equal payments
- 20% tax withheld
- 10% tax penalty if under age 55 (until 59 1⁄2)

**Notes:**
401(K) or 403(a), but not 403(b), e.g., TIAA/CREFF
10 or more years = married with 3 exemptions unless file w-4P

- Partial Withdrawal (one time only)
- Mixed Election (can mix single, monthly & annuity options)
- Accounts less than $200 will receive automatic cashout
- If more than $3,500 may elect one of several annuity options

- Defer until later date
- May not add to account
- Account continues to earn
- May still do interfund transfers as often as want
- May leave money in until April 1 of year following year turn 70 1⁄2 (if retired)
- If no election made, Thrift Board will purchase an annuity for you

## Social Security

- If you have necessary quarters or credits (40 for those born after 1928) eligible for reduced benefit at age 62
- Earnings limitation if under 65
- $11, 640 in 2004
- Benefit reduced $1 for each $2 earned above limit

**Notes:**
1-800-772-1213
www.ssa.gov
Qtr of coverage earned for each $830 in 2001

- Windfall Elimination Provision (WEP)
- Reduction in SS benefit if have less than 30 years of substantial earnings under SS
- Does not apply if you were eligible to retire from Federal Gov’t before 1/1/86 or were first hired 1/1/84 or later
- Full benefit in 2004= 90% of 1st $612 of AIME
- Reduced= 40% of 1st $612 of AIME

**Notes:**
90%x$561=$504.90
40%x$561=$224.40
Difference=$280.50

- Government Pension Offset (GPO)
- Usually eliminates spouse or surviving spouse SS benefit if you are eligible for CSRS annuity
- SSA subtracts 2/3 of annuity from SS benefit
- CSRS Offset, FERS & FERS transferees are generally exempt
- Those who transferred in 1998 must be under FERS for 5 years to be exempt

## Medicare

- You are eligible at age 65
- If you are 65 and still working, FEHB is the primary payer & Medicare is secondary
- After age 65 and retired, Medicare becomes primary & FEHB is secondary payer
- FEHB plan usually waives deductibles & co-payments

- Two Parts to Medicare
- Part A is hospital insurance
- No premium
- You pay 1.45% of salary until you retire, even if after age 65
-  Part B is medical insurance (doctor visits, etc.), but does not pay Rx
- Premium is $66.60/month in 2004.  Don’t sign up until after you retire

**Notes:**
May wish to switch to standard option under FEHB after sign up for Medicare
If spouse under 65, wait until he/she reaches 65 to switch