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RETIREMENT. INFORMATION SESSION. AGENDA. RETIREMENT ELIGIBILITY ANNUITY CALCULATIONS HEALTH & LIFE INSURANCE THRIFT SAVINGS PLAN (TSP) SOCIAL SECURITY & MEDICARE. AGE 55 60 62. SERVICE 30 20 5 MINIMUM REQUIREMENTS: 5 YRS OF CIVILIAN SERVICE 1 OUT OF 2 RULE.

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retirement

RETIREMENT

INFORMATION

SESSION

agenda
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

RETIREMENT ELIGIBILITYCSRSVOLUNTARY, OPTIONAL
involuntary separation dsr voluntary early
AGE

50*

ANY*

*PERMANENT REDUCTION = 2% FOR EACH YR UNDER AGE 55

SERVICE

20

25

INVOLUNTARY SEPARATION (DSR)& VOLUNTARY EARLY
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

RETIREMENT ELIGIBILITYFERSVOLUNTARY, OPTIONAL
involuntary separation dsr voluntary early6
AGE

50

ANY

NO AGE REDUCTION FOR UNDER AGE 55, UNLESS A CSRS COMPONENT IN ANNUITY COMPUTATION

SERVICE

20

25

INVOLUNTARY SEPARATION (DSR)& VOLUNTARY EARLY
involuntary separation
INVOLUNTARY SEPARATION
  • EXAMPLES:
  • REDUCTION-IN-FORCE (RIF)
  • ABOLISHMENT OF POSITION
  • UNACCEPTABLE PERFORMANCE (UNLESS FOR MISCONDUCT
slide8
TRANSFER OF FUNCTION OUTSIDE COMMUTING AREA*
  • REASSIGNMENT OUTSIDE COMMUTING AREA* (NO MOBILITY AGREEMENT)
slide9
* 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 separation10
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 separation11
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
slide12
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
ANNUITY COMPUTATIONCSRS
  • 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
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
ANNUITY COMPUTATIONFERS
  • 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
slide16
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
SIMPLE FORMULACSRS
  • 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
SIMPLE FORMULAFERS
  • 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
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
SURVIVOR BENEFITSCSRS
  • ANY BASE = TO OR LESS THAN FULL ANNUITY*
  • REDUCTION = 2 ½% OF FIRST $3,600 AND 10% OF BALANCE OVER $3,600
  • SPOUSE’S SURVIVOR RATE = 55% OF BASE ELECTED
slide21
NO ELECTION NEEDED FOR CHILDREN
  • COURT ORDER FOR FORMER SPOUSE MAY AFFECT
  • *SPOUSAL WRITTEN CONSENT REQUIRED IF BASE ELECTED IS LESS THAN FULL ANNUITY
survivor benefits fers
SURVIVOR BENEFITSFERS
  • 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
deposits for non deduction service
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
slide24
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 service25
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)
slide26
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
Redeposit for Refunded ServiceCSRS
  • 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
slide28
For service on and after 10/1/90
  • - Must pay redeposit to receive credit for service
  • - OPM will give you the opportunity to pay
slide29
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
Post ’56 Military ServiceCSRS
  • 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
slide31
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
Post ’56 DepositFERS
  • 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
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
slide34
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
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
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)
slide37
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
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
slide39
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
slide40
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
slide41
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

slide42
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
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 ½)
slide44
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
slide45
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 ½ (if retired)
  • If no election made, Thrift Board will purchase an annuity for you
social security
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
slide47
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
slide48
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
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
slide50
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
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