CIVIL SERVICE RETIREMENT SYSTEM
CSRS ELIGIBILITY TYPES OF RETIREMENT: AGE YEARS OF SERVICE OPTIONAL 55 30** 60 20 62 5 DISABILITY ANY 5 DEFERRED 62 5 EARLY OPTIONAL 50 20* (Agencies must have approval Any 25* from OPM to offer Early Out) DISCONTINUED 50 20* SERVICE (DSR) Any 25* *Age Reduction: Annuity is reduced 2% for each year retiree is under age 55 1/6 percent for each full month under age 55. **The 85 rule doesn t always apply. Example: Retiree age 53 with 32 years of service = 85, however, retiree is still not able to retire under an optional retirement due to not being age 55.
CSRS ANNUITY COMPUTATIONS BASIC COMPONENTS OF THE ANNUITY The amount of the annuity benefit is based upon: High 3 years average salary, and Length of creditable service GENERAL FORMULA 1.50% x High 3 X (first) 5 years + 1.75% X High 3 X (second) 5 years + 2.00% X High 3 X # of years and months of service over 10 = BASIC ANNUITY SHORTCUT FORMULA (Years of Service 2) X 2 = Basic Annuity Expressed as % of High 3
CSRS UNUSED SICK LEAVE CSRS RETIREES: Unused sick leave is not included for determining eligibility Unused sick leave is added to length of service in computing the annuity benefit. Unused sick leave is credited in immediate and Vera retirements. Disability retirees are given a choice to depleted sick leave balance prior to effective date of separation for disability retirement or have it credited for computing annuity benefit. Unused sick leave is computed on the basis of a 2080 hour work year for USPS employees.
MAXIMUM ANNUITY CSRS RETIREES: The maximum annuity benefit is 80% of the High 3 based on service. 41 years and 11 months of service earns the maximum annuity of 80%. Unused sick leave is credited in addition to the 80% maximum. Excess CSRS contributions are refunded to the annuitant.
LEAVE WITHOUT PAY LEAVE WITHOUT PAY (LWOP) is fully creditable for retirement purposes for up to six (6) months per calendar year. Examples: LWOP 1/1/70 RTD 7/1/70 = 6 months LWOP in 1970 = Full Credit in 1970 LWOP 1/1/92 RTD 8/1/92 = 7 months LWOP = 1 month excess LWOP = 5 months of service + 6 months creditable LWOP = 11 months credit in 1992
SURVIVOR ELECTIONS Regular Survivor Benefits Spouse Former Spouse Children s Survivor Benefits Children who are unmarried and Under age 18; Under age 22 if a full time student; At any age if the child became disabled before age 18 Insurable Interest Survivor Benefits Spouse Former Spouse Insurable Interest Survivor (Financially dependent) Lump Sum Benefit Remaining retirement contributions, if any
SURVIVOR ELECTIONS Within 30 days after the date of the first regular monthly annuity payment, a retiree may name a new survivor if marriage at time of retirement ended in death or divorce. Retiree may change the survivor election by filing a new election in writing. (Must have consent of current spouse ) Within 18 months after the commencing date of the annuity, a retiree may elect a survivor annuity or increase the amount of the survivor annuity for a spouse by submitting the request for change in writing to OPM.
SURVIVOR ELECTIONS Entitlement to survivor benefits terminate A current spouse future entitlement is terminated by divorce or death. A widow/widower s benefits is terminated upon death or remarriage prior to age 55. A former spouse future entitlement is terminated upon death or remarriage prior to age 55. A former spouse receipt of survivor benefits is terminated upon death or remarriage prior to age 55.
SURVIVOR ELECTIONS A retiree who marries after retirement may elect regular survivor benefits for his/her spouse. Survivor elections available after retirement for new spouses are: Full survivor annuity; Partial survivor annuity; No survivor annuity The monthly reduction for this retroactive survivor election is equal to: Retroactive reduction in annuity plus 6% interest Divided by an actuarial factor plus the continuing reduction for survivor benefit
CIVIL SERVICE OFFSET A Civil Service employee with at least five years of creditable civilian service who separates and returns to the Federal service after 1983 and has a break of one year or more returns as a Civil Service offset Employee. A CSRS Offset employee contributes 7% of his/her salary toward retirement. Of this 7%, 6.2% is the Social Security tax and the remaining.80% is contributed to the CSR Fund. A CSRS Offset employee s annuity is computed using the CSRS General Formula but the annuity is reduced (offset) when the retiree becomes eligible for Social Security benefits. The amount of the offset is the amount of Social Security benefit attributable to the employee s CSRS offset service.
CIVIL SERVICE OFFSET The amount of the offset is the lesser off: The difference between the total SS benefit payable to the employee for all Federal and non Federal employment and the amount of Social Security benefit payable when the office service is excluded; or The total SS benefit payable for all Federal and non Federal service multiplied by the number of years of offset service divided by 40. The offset begins at age 62 (or at earliest entitlement to Social Security) even if the retiree chooses not to apply for benefits until a later date.
CSRS CREDITABLE CIVILIAN SERVICE CAREER APPOINTMENT (Contributions Withheld) Contributions Not Refunded Contributions Refunded Credit for Eligibility (RCD) and Annuity Credit for Eligibility (RCD) and Credit for Annuity if refunded service ended before 10/01/90 (annuity actuarially reduced). Otherwise, not creditable for annuity, unless redeposit is made
CSRS CREDITABLE CIVILIAN SERVICE NON-CAREER APPOINTMENT * (Non-deduction Service -- Deductions Not Withheld) Non-deduction Service prior to 10/01/82 Non-deduction Service on or after 10/01/82 Deposit Made Deposit Not Made Deposit Made Deposit Not Made Credit for Eligibility (RCD) and Annuity Credit for Eligibility (RCD) and Annuity. Annuity reduced by 10% of deposit due Credit for Eligibility (RCD) and Annuity Credit for Eligibility (RCD) no credit for Annuity..
Computation for Part Time Employees Part time Service is service with a pre arranged, regularly scheduled tour of duty which is less than fulltime. Full credit is granted for part time service in determining eligibility for retirement. Service on or after 04/07/86 by the CSRS Proration Factor. The results of the following two computations are added together to obtain the basic annuity Pre 4/7/86 annuity Actual salary rates for the high 3 years average salary and full time credit for service through 4/6/86 plus credit for unused sick leave are used in computing the annuity under the General Formula Post 4/6/86 annuity Deemed full time salary rates for service are used in computing the high 3 average salary. This average salary is multiplied by the appropriate % in the CSRS General Formula (1.5%, 1.75% or 2%) and full time service factors. This figure is then multiplied by the following ratio Actual Hours Worked from 4/7/86 to Date of Separation Total Full Time Hours possible from 4/7/86 to Date of Separation
MILITARY RETIRED PAY IN RECEIPT OF MILITARY RETIRED PAY Based on Non-Combat Disability or Service Based on Combat Disability or Chapter 67, Title 10 No Credit for Eligibility (RCD) or Annuity Treatment as if not in receipt of Military Retired Pay
CSRS CREDITABLE MILITARY SERVICE NOT IN RECEIPT OF MILITARY RETIRED PAY, OR PAY WAIVED Military Service Before 01/01/57 Military Service On or After 01/01/57 Credit for Eligibility (RCD) and Annuity Employee Subject to CSRS before 10/01/82 Employee Subject to CSRS On or After 10/01/82 Deposit Made Deposit Not Made Deposit Made Deposit Not Made Credit for Eligibility (RCD) and Annuity Not Eligible for Social Security Eligible for Social Security Credit for Eligibility (RCD) and Annuity No Credit for Eligibility (RCD) or Annuity Credit for Eligibility (RCD) and Annuity Credit for Eligibility (RCD), No Credit for Annuity
MILITARY BUYBACK Credit for Post 56 Military Service for Persons first employed under CSRS Before 10/01/82. n Post 56 Deposit is Made n If a deposit for post 56 military service is made prior to retirement, post 56 military service can be credited for Civil Service annuity purposes regardless of Social Security entitlement. n Deposit is Not Made n If a deposit for post 56 military service is not made prior to retirement, no credit will be given for the post 56 military service in the Civil Service annuity computation IF and WHEN the annuitant becomes eligible for non disability benefits from the Social Security Administration at age 62 or date of retirement, whichever is later.
MILITARY BUYBACK nprocedures for Payment of the Post 56 Deposit nrequest Base Pay Earnings from Personnel Office along with a copy of your DD 214. Response will be received within approximately 3 weeks. nhrssc will calculate the deposit due, plus interest. npay deposit before retirement nyou may pay this deposit by check or by payroll deduction. All deposits must be made to the employing office prior to retirement.
VOLUNTARY CONTRIBUTIONS Voluntary contributions are optional payments to the Retirement fund made in addition to the regular CSRS contributions withheld from salary. All employees covered by CSRS (including CSRS offset) may make voluntary contributions unless 1. The employee received a refund and has not made a redeposit. 2. The employee owes a deposit for service during with no CSRS retirement contributions were withheld. 3. The employee previously received a refund of voluntary contributions and has not had a break in service of 3 days or more since the refund.
VOLUNTARY CONTRIBUTIONS Voluntary contributions earn an additional lifetime annual retirement benefit in the amount of $7.00 plus an additional $.20 for each full year that the employee is over age 55 on date of retirement, for each $100 in the voluntary contributions account. Interest is paid on the voluntary contributions account at a variable interest rate set by the Department of Treasury. The 2002 variable interest rate is 5.5%. The interest earned on voluntary contributions account is tax deferred. Total voluntary contributions cannot exceed 10% of the total basic pay received during civilian Federal service. Voluntary contributions may be made directly to OPM in $25.00 multiples.
Continuation of Health Insurance A retiring employee is eligible to continue FEHB coverage into retirement if he/she: Is insured on date of retirement, and Was covered by FEHB under his/her own enrollment or as a family member under another Federal enrollment, for five (5) years of service immediately preceding retirement or since his/her first opportunity to enroll. Cost Retirees are required to pay the same premiums for FEHB as all other Federal employees. Premiums are withheld on a monthly basis. Changes after Retirement Open Season every year, allowable life status changes. Generally annuitants are not permitted to enroll in FEHB after retirement. Survivor eligibility for Continuation of Health Insurance Survivor benefit must be elected for the spouse to be eligible for Health Insurance.
MEDICARE Medicare is a Federal health insurance program for people age 65 or older. Medicare Part A (hospital insurance) was mandatorily extended to all Federal employees on 1/1/83. All Federal employees who were in Federal service on 1/1/83 or worked for at least ten years in Medicare covered employment may enroll with no premium. Almost anyone who is age 65 or older is eligible to enroll in Part B medical insurance.
Continuation of Life Insurance A retiring employee is eligible to continue FEGLI coverage into retirement if he/she: Is insured on date of retirement, and Was covered by FEGLI under his/her own enrollment or as a family member under another Federal enrollment, for five (5) years of service immediately preceding retirement or since his/her first opportunity to enroll. Does not convert to a private policy. To calculate the premium cost for continuation of FEGLI, visit the FEGLI Calculations Website: www.opm.gov/calculator/index.htm
Thrift Savings Plan If you participated in the Thrift Savings Plan, your contributions and investment earnings are reported to you every 6 months by the Federal Retirement Thrift Investment Board. As an annuitant, this report or statement will continue to be provided twice each year in mid May and mid November. TSP loans must be paid in full prior to retirement. If not, TSP will contact you within 30 days requesting a response to pay back the loan or making the withdraw taxable. Based on age, a 10% penalty may apply at tax time.
Thrift Savings Plan Depending on your eligibility for basic retirement benefits, you have four distribution options available for your TSP account: Transfer your account balance to an IRA or other eligible retirement plan and close the account. Receive a lump sum payment and close the account. Taxes are due in the year the payment is issued. Receive your account balance in equal monthly payments. You may choose payments in a dollar amount of your choosing (min. $25/month) until your account is depleted. Taxes due each year distribution is received. May change the $ amount received each year. Receive a combination lump sum (partial) and equal monthly payments on the balance of the account. Receive a partial lump sum and deal with the balance at a later date. Receive a life annuity. You may request an immediate or deferred life annuity based on the balance of your account. There are a number of annuity options.
Thrift Savings Plan Visit the Thrift Savings website this provides current information. www.tsp.gov for Calculators Menu www.tsp.gov/calc/index.html Projecting Account Balances this calculator allows you to estimate the growth of your TSP account. Annuity Calculator This calculator allows you to estimate what your account balance would provide in a monthly annuity payments under a variety of TSP annuity options. Retirement Planning This page links you to the Ballpark Estimate calculator, which allows you to estimate how much you will need to save each year to meet your retirement goals. The National Finance Center notifies recently retired employees with information regarding payment options upon retirement.
SOCIAL SECURITY BENEFITS To qualify for Social Security Administration (SSA) benefits, you must be age 62 or older and must have at least 10 years of work under Social Security. Benefits are payable based on your earnings shown on the individual Social Security wage record and the age at which you retire. The receipt of a civil service annuity does not prohibit anyone from receiving Social security benefits. However, the calculation of these benefits may be affected.
SOCIAL SECURITY BENEFITS Two provisions in the Social Security law may cause your civil service annuity to reduce your Social Security benefits. These provisions are referred to as the Windfall Elimination Provision and the Government (Public) Pension Offset. These provisions apply only to postal and federal workers who were employed before January 1, 1984 and who receive their entire pension or a portion of their pension under CSRS rules.
SOCIAL SECURITY BENEFITS Windfall Benefits Elimination Provision is a modified Social Security Formula that reduces the Social Security benefit if you are eligible for a retirement benefit from employment which was not covered by Social Security (such as CSRS) and you have less than 30 years of substantial earnings under Social Security. Employees who transferred from CSRS to FERS are not exempt from the Windfall benefits Elimination Provision.
SOCIAL SECURITY BENEFITS Government Pension Offset The Social Security widow/widower s benefit for a Federal retiree is offset if the Federal retiree receives a government pension from work not covered by Social Security. The Social Security widow/widower s survivor benefit is reduced $2.00 for every $3.00 in government pension. Exemptions 1) Employees who transfer to FERS after 06/30/88 and work for five years under FERS before retiring. 2) Employees who transferred to FERS between July 1987 and June 1988 were immediately exempt from GPO. 3) Civil Service Offset employees are exempt.
SOCIAL SECURITY BENEFITS The Social Security Administration is responsible for providing information and assistance regarding Social Security benefits. Specific inquiries and questions should be referred to your local Social Security Office.
CSRS Annuity Commencing Dates Optional retirements commence on the first of the month following the month of separation or on the day following the last day of pay if you have three days or less in pay status during the month of separation. You should plan your retirement for the last day of the month (or near the last day) or for the 1st, 2nd, or 3rd of a month to avoid a gap in pay.
TAX INFORMATION www.opm.gov Use the calculator figure the tax free portion of your annuity payment. Use the calculator to figure the amount of your monthly federal income tax withholding. Use Services Online to change the federal tax, initiate state tax (if applicable), allotments, bonds and union dues to be withheld from your annuity payment.
TAX INFORMATION Federal Income Tax will be withheld from your annuity at the rate for a Married Person with three (3) exemptions. If you want something different, a W 4P Form is required. State Income Tax must be requested by the Employee OPM will only take out deductions in dollar amounts.
DIRECT DEPOSIT DIRECT DEPOSIT You may have Direct Deposit as an Annuitant. That information can be submitted on your Application for Retirement (SF 2801)
DEDUCTIONS AUTOMATIC DEDUCTIONS (Annuity check) Health Insurance Premiums Life Insurance Premiums OTHER DEDUCTIONS (Paycheck) Allotments, Direct Deposits, Union Dues, etc. will stop at time of Retirement
Preparing for Retirement Review your own records Official Personnel Folder (on line) Verify that you have paid Military Buyback if applicable Verify if deposit or redeposit is required for any service. Review your survivor benefit options Verify that you are eligible to continue Health and Life Insurance coverage as a retiree. Check any designations of beneficiary you may have on file to be sure that they reflect your current needs. Ask your Personnel Office or go on line for an annuity estimate Contact Social Security to see if you are eligible for Social Security benefits Request for Earnings and Benefit Statement to get a record of your earnings under Social Security and, if you will be eligible, an estimate of payment you may receive. Contact your Personnel Office (HRSSC) 1 877 477 3273 three months prior to your retirement date.
Jean Almond Independent Federal Retirement Counselor When you are ready to retire and would like a one on one retirement session, please call me at 812 637 2871 or email me at: jean.almond@yahoo.com