Q. I am 62 and have been with the Postal Service for 26 years. I am hoping to retire this summer. I have a job-related permanent disability and have qualified for workers’ compensation. I have not yet started receiving compensation, but my payout figure on workers’ comp is significantly higher than my FERS pension and is also significantly higher than my Social Security pension, which will also begin this year. Are there any “offsets” to either my FERS pension or Social Security pension if I take the workers’ comp payment? Am I correct in understanding that I am entitled to all three figures, and is it true that workers’ compensation is nontaxable?
A. Yes, there are offsets. First. you must choose between a FERS annuity and workers’ compensation. You can’t receive both. Second, although you may be eligible for a Social Security benefit, when combined with your workers’ compensation, the total of the two can’t exceed 80 percent of the average current salary of the position you occupied before you became disabled. Workers’ comp benefits are fully nontaxable as long as you remain unemployed.
