Q. I’m a federal employee with 22 years’ service, GS-15, turning 60 this month, in FERS, and deciding whether to retire Dec. 29, 2012, or Jan. 12, 2013. I understand I will be paid a lump sum for my leave over and above 240 hours in either case (I expect to have an additional 200 or so), but I’m concerned about two Social Security issues: Since my lump-sum payment will exceed the earnings limit for the retirement supplemental, will that payment after Jan. 1 reduce my supplemental SS payment in 2013? Will Social Security taxes be taken out of my lump-sum payment?
A. Your special retirement supplement won’t be reduced because you’ll be covered by the so-called “first year rule.” For more about that, go to www.socialsecurity.gov/retire2/rule.htm. As for your lump-sum payment, Social Security taxes will be deducted from it.
