Overtime pay in high-three calculation


Q: I am a letter carrier for the U.S. Postal Service with 28 years of service. Is money taken out of my overtime pay for retirement contribution? My retirement is based strictly on my high-three taken from straight time hours only, and does not take overtime hours into consideration. Trying to figure out the taxes and other withdrawals from my check is over my head, but it seems like I don’t pay any less in withdrawals in my overtime hours than I do when I only work straight time. If so, where does the money go? Am I contributing toward some general retirement fund? And, if you don’t mind, why do overtime hours NOT contribute toward my retirement? Other civil service jobs do use overtime hours in their retirement computation. Is it legal not to use all work hours?

A: By law overtime is not included when calculating a high-three. For that reason, retirement contributions aren’t taken from any overtime pay you receive. Despite your assertion, I only know of one occupation where overtime pay is used when calculating average pay for retirement purposes. Law enforcement officers who are receiving AUO pay (administratively uncontrollable overtime) do have that pay included in their high-three.

— Reg Jones


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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