Contributors

Postal Retirement Q&A January 2016 by Roseanne Jefferson

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Roseanne is a retired USPS employee with an extensive background in USPS retirement, disability retirement, OWCP, EEO, Labor Relations and HR. She conducts individual and group counseling and is able to comprehensively discuss the pros and cons of employees who are on OWCP, disability retirement and regular retirement. Roseanne will be happy to answer your postal retirement questions. Contact Roseanne at roseanne.jefferson@icloud.com. Click here for prior Q&As and Click here for Q&As prior to July 2014.

Good Day Postal Employees……Happy New Year 2016!!!

 
Q 1.Hi Roseanne,  I am a RETIRED letter carrier (CSRS), my spouse is (CSRS/offset) & will be retiring April 1, 2016.  We both had always decided to take no survivor benefits, on each of our postal retirements, so when I retired I selected ” no spousal benefit” and maintained my own single health benefits.
 
Recently my spouse was diagnosed with cancer, and now insists on taking a survivor benefit for me.  I know with CSRS/Offset at age 62, my spouse will have to take social security and the remaining will be from the post office pension. My question is, if something was to happen after my spouse after turning 62,  where does her survivor benefit come from?  Does it come from a combining the pension and social security or just the pension. She will be 58 when she retires and also took only single health. Thank you LT
 
A 1. Hi LT,  I am very sorry to hear about your spouse’s illness.  A great first start, was the decision that you both made by taking single-single coverage, so that each of you are carrying your own FEHB.  That alone makes the transition of the health benefits (working) to health benefits (retired) very very easy.   When a CSRS/offset employee turns 62, then yes the CSRS component or (monthly pension check) is reduced because then Social Security plays a larger “financial” role in THAT particular retirement system (at age 62).
When you ask where does her survivor annuity come from…if she did the same as you did with your retirement paperwork, and not selected you for a spousal annuity, it would only come from one source…Social Security.  There wouldn’t be a combination of anything because you signed off on her retirement, because she signed off on yours.  As it stands right now, if you pre-decease her, she does not get any portion of your annuity at all.  
 
Since both of you are federal/postal employees, that means that BOTH of you have “Individual” eligibility”” for benefits (life insurance & health insurance) under your “own” individual employment.  In THIS case, (and only in this case….because of all of the factors you have disclosed) you retired without leaving a spousal annuity for your spouse.  These are complex questions that I think I will use in the column……and I will try to explain the why’s of it….candidly, respectfully….but candidly.
 
When you don’t select the maximum spousal annuity, (regardless if FERS or CSRS), your spouse has to sign in front of a notary the form SF2801-2 (a part of your retirement paperwork) and it was notarized.   So if you pre-decease her, she has no spousal annuity with CSRS.  If she does the same, and you sign the 3107-2 then you also have no spousal annuity with CSRS/offset.   So the only “spousal monies” that would be available would be her Social Security check (after she turned 62). The same paperwork is required in her retirement package, as was in yours, when you don’t select the maximum spousal annuity. 
 
When the CSRS/offset annuitant turns 62, OPM is going to recalculate the CSRS/offset annuity (monthly pension check) – it is going to be dramatically reduced at age 62, because she is then eligible to collect Social Security.  Not collecting Social Security will NOT stop the reduction by OPM.  Because THIS system: CSRS/offset,  SHE and the USPS paid full deductions into the Social Security fund….and as a CSRS/offset annuitant, she will receive a Social Security check that WILL NOT be affected by Windfall Elimination reductions.
 
CSRS annuitants – if eligible for a Social Security check, it is subject to the Windfall Elimination, but your CSRS annuity is not reduced.
CSRS/offset annuitants –  YOU ARE eligible for a full Social Security check at 62 – NOT subject to Windfall Elimination  BUT – OPM will reduce your CSRS/offset annuity check.  
 
Keep in mind that YOU will fall under the “Windfall Elimination” any time that a CSRS (full CSRS), begins to collect their OWN Social Security check.  Even if you, defer, delay (your own SS because it is affected by the Windfall…,  should you begin to collect your wife’s Social Security (should she pass away))….. In that scenario, then another little money grabber comes along called “Government Pension Offset”  or GPO.  Let me read to you what it says about GPO.   “THE SOCIAL SECURITY SPOUSE’S BENEFIT IS OFFSET IF THE SPOUSE RECEIVES A GOVERNMENT PENSION FROM WORK NOT COVERED BY SOCIAL SECURITY.  THE SOCIAL SECURITY SPOUSAL OR SURVIVOR BENEFIT IS REDUCED $2.00 FOR EVERY $3.00 IN GOVERNMENT PENSION”
 
In real money…. just raw figures…if your CSRS annuity is gross $3000 per month, and your deceased spouse’s Social Security is $2000 per month, that looks like $1000 per month.  And if you have your own Social Security check that falls under Windfall Elimination, then in that case, if you were given the option to take your SS or her SS, typically…. her SS would be far more than your own, even with Windfall Elimination (for you) or the Government Pension Offset (for you).  I sure hope this was helpful to unwind this very complex process…whew!!  I mean just trying to explain it…..hey….you can’t make this #&%* up !!!  Roseanne
 

AND THEN WHEN YOU THINK YOU HAVE REALLY ANSWERED AND HELPED……

 
QQ 1. Hi Roseanne, Thank you for the information you supplied.  After the age of 62 is the survivor benefit only based on what CSRS is paying her or is it based on the combination of CSRS and social security.  And just one more question my spouse worked for the Dept. of Navy as a civilian when we first got married.  Worked from 1973 – 1977.  She resigned, and we filed for a refund of her retirement contributions… we needed the money, so the CSRS retirement deductions were REFUNDED to my spouse.  It was a bit over $1900, and we did not repay that to OPM to the CSRS fund.  
 
From what I read if we don’t pay it back her pension would only be reduced by $18-$23 dollars.   Thank you again for all your information.  We will have a combine 70+ years of service and after all that time I just want to get it right.
 
AA 1. I guess if you keep referring to that statement “combination of CSRS/offset and Social Security”, that would mean, that you are NOT going to sign off on her retirement, and you going to go forward as a spousal annuitant?  Because that could be the only reason you keep referring to a combination of CSRS/offset and SS combination pension!!  I have narrated, that if she does what you did: you pass away,  NO spousal annuity for her, if she does the same as you did, she passes away, NO  spousal annuity for you. (And this all along was your plan.)   Now – you think that due to this medical condition, this may cause you to reevaluate your decisions. And that is a very wise thing to do.  I never find that it is a good idea to voluntarily “give up” a benefit that you have worked for, and the spousal annuity is a HUGE benefit.  
As far as the survivor benefit for the spouse of a deceased CSRS/offset employee at age 62, as it relates to the Social Security portion, that complex figure really could only be calculated by someone at the  Social Security Office.  Since the CSRS monthly pension check is going to reduce dramatically when she turns 62, without knowing the “real” (in dollar figures) deduction for that….(SS would know), there is nothing for me to calculate from, and moreover, its the Social Security Office where this information is housed….all your postal employment.   Yea I know its a pain in the rear, but you just got to go to the Social Security office…..they have ALL the employment you have ever done and it gives you a better understanding of what the real dollar figures you are working with in retirement.  Get off your behind and do it…..no one can do this for you…no one!!!


As far as the retirement contributions that were “refunded” from the Dept of Navy…paying it back now would make NO sense, it would cost too much for too little return.  ESPECIALLY since your spouse is CSRS/offset, and will have her monthly check reduced anyway when she turns 62.  It’s just not worth it.   I hope this is enough to give you either insight or clarity.  Roseanne

Q 2. Hi Roseanne, I have read your column for many years and find you very helpful.  I have a few questions to ask you. Based on my RCD I intend to retire within two years. My question is “is there a better time of the year to minimize taxes in a year to retire, when I intend to carry 440 hrs of annual leave?” I know that retiring with 440 hrs of annual leave, the government will tax a large portion of my annual payment…. any suggestions?
 
2nd question:  I know every case is different but is it really expensive to choosing the annuity option in retirement pension and my TSP? What is generally the percentage from my  funds  taken from me? Would it be better to take  life annuity  on my TSP and pension or take it out incrementally  and  risk of running out of money. i do have longevity in my family.
 
3rd question:   I will be retiring with about 2400 hrs of sick leave how much more or less would I get per month extra,  because of this amount on my pension?  Is it at least 2 percent more on my pension yearly? I know i get more value for my time if I use it!! Thank you for your time.  MJ
 
A 2. Hi MJ  It is better to retire towards the end of the year…..especially if you are collecting Social Security. My personal favorite is November 30th.   As far as “is it better to choose an annuity option”….take a look at the monthly payment option with TSP (versus) an annuity, with or without a spousal “reduction”.  And by all means don’t confuse FERS pension/annuity with TSP annuity, they are so very different, BOTH a part of your retirement plan, but very different. And here too, in both retirement plans, if the employee is married,  a spousal annuity is the law unless that spouse signs a SF2801-2 (CSRS) or 3107-2 (FERS) and TSP-70.
 
As far as minimizing your taxes on that “Terminal Leave” pay check…..there is A-B-S-O-L-U-T-E-L-Y NOTHING you can do about it, even someone I know (I won’t mention any names) changed her normal Single zero, federal and state taxes that last month of her employment-prior to retirement to Married 7….to do….just exactly what she thought would HELP minimize the THAT tax…wrong, wrong and wrong.
 
The taxes are “relative” to how much you made in a particular “2 week time frame”.  Clearly that much money (if made every 2 weeks) would typically suffer the same exact taxes as what you see on the last pay stub. And it is NOT just Federal and State that are inflated, Medicare, Social Security….all that….(better said…”who makes that much money every two weeks”) and if you do, that is what you would be taxed. It’s a tax chart, its not personal!!
 
As far as sick leave…each month for a FERS employee is about $4.12 added.  So if your sick leave converted to a year, then you are looking at $48.-$53. per month more for an additional year of sick leave added.  Roseanne
 
QQ 2. Hi Roseanne, thank you for your prompt response. I would like to clarify my question and to make sure i gave you all my facts.  
 
1.   When you say I should retire late in the year to maximize my annual leave lump sum and minimize my tax liability …. do you mean that I should retire the last day in December.  I am a CSRS employee. will that mean I will receive my lump sum for the following tax year and not the year I worked?
 
Concerning sick leave:  you mentioned that I will receive about $50 extra a month if I have a year sick leave saved,  if I were FERS, but I am not, FERS I am Civil Service, will it be the same monthly amount, as it is for FERS?   Just to mention:   I will be 64 years old by the time I retire… I have a small part time job now in which I can collect social security when i reach 66.  Thanks for your time,    
 
AA 2. Retirement dates should be geared for the end of the month.  In the case of a CSRS or CSRS/offset, as a CSRS employee, you are able to retire, either the 1st, 2nd or 3rd of A month and still be eligible for annuity THAT month….that is NOT THE SAME with FERS.
 
But my analogy is the same, retire the end of November…again, remember your asked me what I thought the best month was to retire, and the answer is still the same.  So you lose 2 maybe 3 days of annual that were advanced to you in the beginning of the year, you lose one holiday….but its probably the first holiday in years you will spend peacefully..and be able to miss out on all the BS at Christmas time.  Your Terminal Leave check comes in December….so if you are collecting SS, then you are sure to not have gone over the “earnings limit” for collecting Social Security, even with big time annual leave. As far as the monthly difference, for CSRS it’s about $8-$9 more per month for each month worked.  Roseanne
 
Q 3. Dear Roseanne, Thank you for all the information you provide. It’s good to have the advice of someone who isn’t trying to influence us to line their own pockets.  I have just retired and chose to keep the medical insurance I had while working.  It’s expensive, over $217 a month for just me.  Could you explain about having the medical insurance for 5 years before you retire.  I thought I  had to keep the exact company or policy, but I see I had a choice of Blue Cross Blue Shield, NALC,  GEHA etc, does that mean as long as it is FEHB insurance I can choose one of those during my next open season. I ordered the brochures so i can read and compare and check on providers before next year so I will be able to make an informed choice. Hope the question is clear. Thank you in advance for your help.  CC
 
A 3. Hi CC,  For some reason, I think that STILL so many of YOU ALL OUT THERE think that you have to have the SAME EXACT insurance 5 years prior to retirement.  NO that is NOT true!!  You just must be “Covered by an FEHB insurance plan”…five years IMMEDIATELY PRIOR to retirement.  As a retiree, you can change during open season just like being an employee.  Us annuitants have the same open season dates as employees, we just deal with OPM for Health Insurance changes (during open season) versus as an employee, HRSSC/Shared Services.  AND $216 a month is NOT expensive…when you consider that amount of money you pay as an annuitant for federal health benefits is the exact same as every WORKING (other) FEDERAL EMPLOYEE, and you see how much Medicare is going cost….I think you will appreciate the fabulous benefit of FEHB.  I hope that this has helped.  Roseanne
 
Q 4. Hello Roseanne, I have a question about health insurance after a postal employee retires. Does a wife need to get health insurance after her husband turns 65 and  starts getting medicare? I am 60 and my wife is 45 . Can she  carry my health insurance after I start getting medicare? Thanks WA
 
A 4. Hi WA,  As long as you have had your federal health benefits 5 years immediately prior to retirement, (regardless of which plan…even if you changed every single year for the last 5 years….)  you are eligible to carry your health insurance into retirement, and of course you can carry the family plan, you have as an employee.  And provided you select a “spousal annuity benefit” for your spouse in the retirement paperwork, that will give her eligibility to be covered by FEHB Health Insurance, even if you were to pass away, and a monthly spousal annuity to move than cover the costs.  Roseanne
 
Q 5. Roseanne,  If you could assist me with a few question regarding buying back my casual time. I was on the USPS retirement website and saw your name and info regarding assistance with answering questions employees have regarding buy back of casual employment time.   I worked as a  casual for 10 months in 1975. I planned to retire 1/1/2016. I have 40 years and 5 months of total service time including my 10 months of casual time. I have 1 year and 9 months of sick leave accrued. For a total of 42 years and 2 months time , as of 1/1/2016. 
 
My question is how much will it cost me to buy back my casual time back, for the period of time in 1975 where I made $8.00 per hours for about a 35 hour work week , for the 10 month period? Can you give me a guess of what the dollar amount may be?  My goal  is  achieve the 41 years, 11 month time for 80 % annuity level of pay which I will achieve, if I buy back the leave. If I don’t buy back the leave, then I will have a decrease in my annuity, less than 80%, for less years if service credited.
 
If the buy back cost  is too expensive, then I may have to make  a decision to work until 7/1/2016 . I would appreciate your advice on this matter.G
 
A 5. Hi G You really need  to order an annuity estimate to get a better idea of what you are really looking at. Call Shared Services at 1-877-477-3273. Once you get (unless you have one), that estimate, I’d be better able to answer that question, and tell you some things you may not know before you venture out to do this. Roseanne 
 
QQ 6. Roseanne,  I have the annuity estimate and I have had the retirement counseling a few weeks ago. The employee was as lost as everyone else was….and she could not answer all of my questions. G
 
AA 6. Hey G,  Let me tell you what each month gains you….about $8-$10 dollars a month.  So killing yourself to get to 41 / 11 (or any month that makes you go OOOHH…) is kind of crazy, because you get paid for all years and full months.  So as an example, if you did work 41/11, but decide to retire a month sooner,  you would lose about $8.00 per month! OMG RETIRE!!!
 
As far as buying back your casual time…just the time frame alone for all of that to be completed, you would probably be well beyond July 2016.  That process takes quite a while.  Some employees have waited a year or more for those types of actions to even be addressed, let alone processed.  And processed to the point that it shows in your Form 50 history, where it adds to your overall years of service (for retirement calculations) ( I know !!)  which is what you are trying to do in the first place. My opinion –   move on without it.  But if you are going to pursue that avenue to buy back this casual time, you need to get started now.  HRSSC/Shared Services is who you need to call to initiate this action.    Roseanne
 
Q 7. I am a retired USPS city carrier (CSRS annuitant) and was hired back as a city carrier assistant  (holiday term) under the National Defense Authorization Act.  If I was injured during this four week period and it involved a claim with OWCP, would my retirement status or pay be affected?  Thank you for any insight on this question.MAB
 
A 7 Hi MAB, I am not sure how that would affect your CSRS annuity.  But if it is an accepted OWCP claim, then they probably would only pay for the medical aspect of the injury….I wouldn’t rock the boat by trying to go for “compensation” that to me is opening up a can of worms that may NOT turn out good for you.  Roseanne
 
QQ 7. Thank you Roseanne for your quick response. Your last line addresses my concern, in the case I was severely injured (posssibly permanent) and recovery goes beyond the four week period, that can of worms may be opened even against my wishes. With the amount of driving, along with the number of parcels I am delivering on slippery steep driveways and several stairsteps to the door injury is a possibility, especially for someone in their 60’s.
 
AA 7. You began the email with IF I was injured…..and so I would imagine my last line ought to concern you……Ok so not to be an ass here, WHY….WHY… WHY…would you do the same thing you retired from, knowing better than ANYONE the risks of being a carrier? And the added risk of your age, by your own admission!!?   I am always baffled why retirees go back as a TRC…or any holiday casual. I know you going to say it’s Christmas and the wage is decent. You retired to get away from the “crazy”….but you went back for “Christmas crazy”….and that ALONE just blows my mind….because everyone of us, in every position, in any place, city, town…postal anything…whatever…..employee…all of us KNOW what Christmas crazy is in their working postal environment….who goes back for that!!!! 
 
But this is one of the reasons I always say if you want to work after retirement, any job ANY JOB but federal…..you can’t really know from what perspective OPM will come with should you, your doctor, the postal service & OWCP, have a difference of opinion as it relates to your injury.   Good luck, I hope everything works out for you.  Roseanne
 
Till we speak again…………. Roseanne

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  • AuntBubba

    Again…..You Da Bomb~

  • Steve

    When it comes to taxe I would also remind people this is an election year. If taxes are your most important issue know where the candidates stand. We know Hillary said she will raise taxes but has no set plan. Under Bernie taxes would go through the roof, Trump says they would go down about 10% and Cruz would lower them 20%. Choose wisely.