Q. I am a FERS employee and will reach my minimum retirement age, 56, soon. I am thinking of retiring and taking an immediate annuity to keep health benefits. If I went back to work for the federal government in two or three years, would the 5 percent-per-year penalty remain in force when I stopped work again, or is there a way to negate this penalty? Is it set in stone because those were the conditions under which I retired? Am I correct that this would not apply if I left under a Voluntary Early Retirement Authority, even though I would be eligible for retirement?
A. If you retired under the MRA+10 provision, your annuity would be reduced by 5 percent for every year you were younger than 62. If you retired under a VERA, there would be no age reduction in your annuity. Whether you retired under the MRA+10 provision or a VERA, if you went back to work for the federal government, your annuity would remain unchanged. And, as a rule, the salary of your new position would be offset by the amount of your annuity. If you worked for at least one year, full-time, you’d be entitled to a supplemental annuity. If you worked for five or more years, when you retired again, you’d be entitled to a re-determined annuity. In other words, you’d receive an annuity based on your total years of service.