FERS Special Retirement Supplement Reduction after first calendar year

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Here’s the scenario:
I’m 56 and retire from gov’t in March, 2018 and am eligible for the supplement. I assume I’ll get the full supplement for the remainder of 2018. In April 2018, I become a consultant and earn $2 million through November 2018, then quit. I report those earnings to OPM in January, 2019. I have zero earnings in 2019.
What happens to the supplement in 2019?

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Posted by (Questions: 1, Answers: 1)
Asked on July 10, 2018 9:59 pm
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Technically, it doesn’t happen that way! The FERS Retiree Annuity Supplement earnings test can run up to a year behind because income is reported after it has been earned. There is no test until year 2 of retirement, meaning that even if you retire at your MRA and get a big money job, you might get the RAS for up to a year because under OPM rules the annual earnings reduction cannot exceed the total annuity supplement to which the individual was entitled to in the first year. After your first year, OPM will send you Form RI 92-22, “Annuity Supplement Earnings Report” around March. It’s a simple one-page form with 4 questions. You report to OPM all of your earned income. OPM cross-matches your responses with Social Security’s earnings file.
Should your FERS Retiree Annuity Supplement stop due to excess earnings, but you later stop working before age 62, you will be eligible to start receiving the FERS Retiree Annuity Supplement again after you notify OPM. To apply for a reinstatement of your FERS Retiree Annuity Supplement benefit, you will need to send copies of your most recent tax return and all related Form W2s and Form 1099s, which are part of the return. Mail that information, along with a letter asking for the FERS Retiree Annuity Supplement to be reinstated, to:
Office of Personnel Management
Retired Surveys and Students Branch
1900 E Street, NW
Washington, DC 20415-3562
In the same way that OPM lags in shutting off or reducing the FERS Retiree Annuity Supplement, there is also a lag in starting it back up. Suppose that you earned $50,000 in 2016 and phased out of the FERS Retiree Annuity Supplement for 2017, but on 12/31/2017, you quit your job and had no earnings in 2018. In this instance, with proper submission of proof of earnings (or lack of), OPM would be able to restore the FERS Retiree Annuity Supplement in 2019 after supplying OPM with a 2018 tax return showing your reduced earnings. You need a year of earnings below the income test level, currently $17,040, for the FERS Retiree Annuity Supplement to be restarted because the previous year’s earnings determine the amount of the FERS Retiree Annuity Supplement that can be paid.
Restarting the FERS Retiree Annuity Supplement can be a very time-consuming process that can take 8+ months with plenty of telephone calls and follow-up emails, and possibly a letter from your elected representative. If you qualify, your FERS Retiree Annuity Supplement will eventually be restored, but be very patient. At OPM’s FAQ web page it states: Are you under 62? If so, please give us your name, claim number, phone number, and address (refer the report of contact to Jackie Jenkins 606-4132 or Christal Cephas at 202-606-0363)

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Posted by (Questions: 0, Answers: 483)
Answered on July 11, 2018 2:41 pm