Reemployed Annuitant Under FERS and CSRS

Federal retirees have the right to apply for a government job and return to full-time employment status as a reemployed annuitant. However, should you find such a job and successfully apply for it, there will be major changes in the way your current annuity check is handled.

Note: Phased retirement is not a form of reemployment because the individual does not separate from service.

Reemployment in a government job will cause your annuity to stop if:

  • you are a disability annuitant whom OPM has found recovered or restored to earning capacity prior to reemployment;
  • you are a disability annuitant who was not disabled for your National Guard Technician position but were awarded a disability annuity because you were medically disqualified for continued membership in the National Guard;
  • your annuity is based on an involuntary separation (other than a separation that was required by law based on your age and length of service or a separation for cause on charges of misconduct or delinquency) and your new appointment is permanent in nature (for example career, career-conditional or excepted); or
  • you receive a presidential appointment subject to retirement deductions.

If Annuity Stops for a Reemployed Annuitant

If your annuity stops as the result of your reemployment with the government, your status will be that of a regular employee. If your new appointment gives retirement coverage:

  • The coverage will be CSRS if you had CSRS coverage when you retired and you are reemployed within one year of your retirement.
  • The coverage will be CSRS Offset (CSRS and Social Security coverage) if you had CSRS Offset coverage when you retired, you are reemployed more than a year after your retirement or you are appointed to a senior position that is subject to mandatory Social Security coverage.
  • The coverage will be FERS if you had FERS coverage when you retired.

When your reemployment ends, a new determination about your rights to retirement benefits will be made. Your prior retirement benefit generally has no impact on your new retirement benefit.

If you meet all the requirements for an immediate retirement, your benefit will be computed as though you are retiring for the first time.

Note: FERS annuitants who are rehired after receiving only partial credit for unused sick leave at their retirement have the remainder recredited to them. See Credit for Unused Sick Leave, above.

A disability annuity may be reinstated when your reemployment ends if you have not reached age 62, you were reemployed more than one year after you separated for disability retirement, your reemployment lasted less than one year and your disability has recurred or your earnings capacity falls below the 80 percent limitation.

If Annuity Continues

If your annuity does not stop under the rules discussed above, then you will continue to receive it while you are working. Unless you are covered by an exception, your pay will be reduced by the amount of your annuity paid for the period you work. (For exceptions to the general offset requirement, see Dual Employment). If you do not work full-time, the reduction in pay will be adjusted proportionately.

There is no reduction for your annuity during a period for which you have elected to receive injury compensation benefits in lieu of an annuity or when you receive a lump-sum payment of annual leave on separation.

Supplemental or Redetermined Benefits for Rehired Annuitants

Reemployment may increase your retirement and death benefits. As a reemployed annuitant, you can earn either a supplemental annuity or a redetermined annuity. A supplemental annuity is an annuity that is added on to your present annuity. A redetermined annuity is a recomputed annuity that takes the place of your present annuity.

If you work as a reemployed annuitant on a full-time, continuous basis for at least one year, you may be entitled to a supplemental annuity. If you work part-time, you must work a proportionately longer period to earn a supplemental annuity. If your reemployment continues for at least five years, or the part-time equivalent, you may elect a redetermined annuity.

Intermittent service cannot be counted in establishing eligibility for a supplemental or redetermined annuity and cannot be used in the computation of a supplemental annuity. Periods served under an exception to the requirement to offset salary for rehired annuitants continuing to draw an annuity might not be creditable for a supplemental or redetermined benefit; check with the personnel office.

If you die while reemployed, after becoming eligible for either a supplemental or redetermined annuity, your surviving spouse may have his or her survivor benefit either increased or recomputed.

When it comes to crediting reemployed annuitant service, the rules are different under CSRS/CSRS Offset and FERS. CSRS/ CSRS Offset time cannot be credited unless the reemployed annuitants have retirement deductions withheld from their pay or they make a deposit after separation. FERS reemployed annuitants have no such option. Deductions from pay are mandatory.

In either case, the amount of money required to get credit for the service of reemployment is a percentage of your basic pay before it is reduced by the amount of your annuity.

Exceptions

If you are reemployed under any of the following circumstances, you should ask your employing agency about these special retirement rules that may apply to you:

  • under special provisions for positions for which there is exceptional difficulty in recruiting or retaining a qualified employee or there is a direct threat to life or property, or other unusual circumstances warranting emergency employment;
  • on an interim basis, as a consequence of an administrative or judicial body reviewing the grounds for your separation;
  • as a Presidential appointee to a position that is permanent in nature; or
  • under another retirement system for federal employees.

FERS Election Opportunity

If you are a rehired CSRS/CSRS Offset retiree, you will be eligible to transfer to FERS if you are reemployed after a break in service of more than three days and your new appointment is neither temporary nor intermittent. If you want to transfer to FERS, you must do so within six months of your reemployment.

Federal Employees Health Benefits

If your annuity stops upon reemployment, your health insurance coverage as an annuitant stops, too. If your appointment is one that gives you eligibility for FEHB coverage, you can enroll in the program when you are reemployed.

If your annuity continues after you are reemployed, your FEHB coverage as an annuitant continues and withholding of premiums continues to be made from your annuity payment.

Federal Dental and Vision Insurance Program

If you are not already carrying Federal Dental and Vision Insurance Program coverage as a retiree, you will have 60 days after being rehired to enroll as an active employee. FEDVIP premiums must be deducted from pay on a pre-tax basis for employees, while that is not allowed for retirees.

Federal Employees’ Group Life Insurance

If your annuity stops upon reemployment, your life insurance as an annuitant stops without a right to convert to an individual policy. You acquire life insurance coverage as an employee under the same conditions as any other employee who is rehired in the federal service.

If your annuity continues after you are reemployed, you retain the life insurance you have as a retiree. However, if the type of appointment you have makes you eligible for FEGLI coverage as an employee, any Basic Life, Standard Optional and Family Optional insurance you have as an annuitant will be suspended and converted to employee coverage (see FEGLI – Life Insurance).

Federal Long Term Care Insurance Program

If you carried FLTCIP coverage into retirement it will continue upon your rehiring; you may have to arrange to have the premiums taken from your salary as an employee rather than from your annuity, assuming your annuity stops upon your rehiring. If you were not enrolled, you will be given a 60-day opportunity to enroll as a new hire subject only to abbreviated underwriting.

Flexible Spending Accounts

If long as you return to work for a participating federal agency within 60 days and before the end of the same tax calendar year, your previous election will be reinstated. You will not be permitted to change the amount of your allotment. If you return in another plan year, you will be given an opportunity to make a new election. If there has been a “qualified status change” within the 60 days, you may modify your election.

Lump-Sum Payment

The policy for lump-sum payments for reemployed annuitants is the same as for active employees. If you die leaving no survivors who qualify for a survivor annuity, your contributions to the retirement fund, plus any applicable interest, will be paid as a lump-sum death benefit. No interest is payable if you had paid into the fund for less than one year or had fewer than five years of civilian service.

If you leave survivors who qualify for a survivor annuity, no lump-sum death benefit is payable immediately. However, a lump-sum payment may be paid later if the survivor annuities end and what they have received is less than the amount you contributed to the fund.

Buyout Recipients Must Repay

Individuals who retired with a buyout (voluntary separation incentive payment) and return to the government within five years must repay the entire amount of the incentive to the agency which paid it. Employment includes work with any entity of the federal government, under any appointment authority, for any duration of time. This includes all branches of government, independent agencies (such as the U.S. Postal Service), and all work schedules (part-time, temporary, term appointments, etc.).

Thrift Savings Plan

Being rehired as a federal annuitant can have varying effects on Thrift Savings Plan participation rights, depending on several factors (note: generally, if you are rehired under an authority allowing you to draw both your annuity and your full salary for the position, you will not be eligible to make new investments in the TSP; check with the personnel office regarding the terms of the appointment):

  • Rehired employees with a break in service of 31 or more full days—You have 60 days from your date of reemployment to sign up to contribute to TSP. If you are FERS and you were previously eligible to receive agency contributions, the 1 percent agency contribution will begin immediately upon reemployment. The agency matching contributions will start when you elect to contribute your own money. If you were not previously eligible to receive agency contributions, the 1 percent agency contribution will begin after the normal waiting period applying to new hirees. You will be subject to a requirement of investing 3 percent of salary by default unless you opt out or choose a different level; see Reemployed Annuitants.
  • Rehired employees with a break in service of less than 31 full days—If you were previously contributing to TSP, your contributions and, if you are FERS, your agency contributions, will resume upon rehire. You cannot change the amount of your contributions until the next open season. Check your Leave and Earnings Statement to ensure your contributions resumed. If you were not previously contributing to TSP, you must wait until the next open season after reemployment to elect to contribute.
  • Rehired as a CSRS employee and choosing to change retirement coverage to FERS—The 1 percent agency contribution will begin the day your coverage under FERS is effective. You may also elect to begin contributing your own money to TSP within 30 days of the effective date of your transfer to FERS. If you do, your contributions and your agency matching contributions will begin the next pay period. If you wish your TSP contributions to be effective the same date as your transfer to FERS, check with your personnel office for procedures to follow.

 

 

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