Q. I have 44 years and eight months with the U.S. Postal Service. Having suffered a heart attack and stroke two years ago, I am currently on sick leave which will expire in November.
My concern is disability retirement versus regular retirement. My understanding of disability retirement is that there are no federal and state taxes to pay. I live in California, which has high state taxes. Should I apply for disability.
A. Under current law, there is no federal tax benefit for retiring on disability under either CSRS or FERS unless you are totally disabled for all gainful employment, a determination that can only be made by the Internal Revenue Service. Because this is a federal benefits site, we have no information about state tax practices.