Disability versus immediate retirement


I have been approved for disability retirement. Am in final audit at this time. Just got letter from OPM that said I was eligible for immediate retirement. I was 58 yrs and 6months may last day of work. With 21 yrs 9 months of service. Would I be penalized the 5% per year before age 62 if I went immediate retirement? Can I request immediate retirement at age 60 to avoid the 5%?

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Posted by (Questions: 1, Answers: 0)
Asked on September 4, 2018 3:34 pm
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To properly answer your question, I would need additional information. If you were removed for reasons other than misconduct or cause and you were at least 50 with 20 or more years of service or any age with 25 of more years of service, you might qualify for the Discontinued Service Retirement Option. More information on DSR can be found at the following link: https://ask.fedweek.com/federal-retirement/retirement-eligibility/ If you were approved for disability retirement, you can continue to draw that retirement option until such time as you lose it due to becoming medically recovered or restored to earning capacity (more detailed information can be found at https://ask.fedweek.com/federal-retirement/disability-annuity/). Since you are FERS, your disability computation would exceed your earned annuity not only in year one but in year two forward and since the years you are collecting disability will be included in the re-computation at age 62. As long as you remain disabled, it would probably be in your best interest to remain on disability retirement. If you are not eligible for DSR, with your age and years of service, the MRA+10 retirement option does have the age penalty unless you converted over to that option once you turn age 60, then there is no age penalty because you have more than 20 years at the time you turn age 60. FYI, in this instance, the years on disability will not add to your years of service in the computation of your annuity at age 60.

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Posted by (Questions: 0, Answers: 356)
Answered on September 4, 2018 7:07 pm