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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

INFORMATION

SESSION


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AGENDA

  • RETIREMENT ELIGIBILITY

  • ANNUITY CALCULATIONS

  • HEALTH & LIFE INSURANCE

  • THRIFT SAVINGS PLAN (TSP)

  • SOCIAL SECURITY & MEDICARE


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AGE

55

60

62

SERVICE

30

20

5

MINIMUM REQUIREMENTS:

5 YRS OF CIVILIAN SERVICE

1 OUT OF 2 RULE

RETIREMENT ELIGIBILITYCSRSVOLUNTARY, OPTIONAL


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AGE

50*

ANY*

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

SERVICE

20

25

INVOLUNTARY SEPARATION (DSR)& VOLUNTARY EARLY


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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


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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


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INVOLUNTARY SEPARATION

  • EXAMPLES:

  • REDUCTION-IN-FORCE (RIF)

  • ABOLISHMENT OF POSITION

  • UNACCEPTABLE PERFORMANCE (UNLESS FOR MISCONDUCT


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  • * 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.


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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


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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


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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


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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


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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


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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)


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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%)


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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


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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


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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


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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


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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


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  • CSRS ON AND AFTER 10/1/82

  • SERVICE NOT CREDITABLE FOR ANNUITY COMPUTATION UNLESS DEPOSIT IS PAID

  • OPM WOULD GIVE OPPORTUNITY TO PAY DEPOSIT


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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)


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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


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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


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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


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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


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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


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Life Insurance cases you will not be permitted to re-enroll at a later date

  • 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


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Amount of Coverage cases you will not be permitted to re-enroll at a later date

  • 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)


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  • Option C cases you will not be permitted to re-enroll at a later date

  • - $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


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Cost After Retirement cases you will not be permitted to re-enroll at a later date

  • 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


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  • 50% reduction cases you will not be permitted to re-enroll at a later date

    • $.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


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  • No Reduction cases you will not be permitted to re-enroll at a later date

    • $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


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  • Option A - Standard ($10,000) cases you will not be permitted to re-enroll at a later date

    • 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


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  • Option C – Family cases you will not be permitted to re-enroll at a later date

    • 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


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Thrift Savings Plan cases you will not be permitted to re-enroll at a later date(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)


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  • Partial Withdrawal (one time only) cases you will not be permitted to re-enroll at a later date

  • 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


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  • Defer until later date cases you will not be permitted to re-enroll at a 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


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Social Security cases you will not be permitted to re-enroll at a later date

  • 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


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  • Windfall Elimination Provision (WEP) cases you will not be permitted to re-enroll at a later date

    • 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


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  • Government Pension Offset (GPO) cases you will not be permitted to re-enroll at a later date

    • 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


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Medicare cases you will not be permitted to re-enroll at a later date

  • 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


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  • Two Parts to Medicare cases you will not be permitted to re-enroll at a later date

    • 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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