Q: I work for the U.S. Postal Service, which has always had substantial overtime available. I have been told that overtime worked does not contribute to my retirement annuity. Why does it not contribute toward my retirement annuity as other civil service jobs do? It appears that the same amount is still taken out in taxes, so where does the money go? Do I theoretically get it back at the end of the year in my tax return?
A: By law, federal annuities are calculated using basic pay, and retirement deductions are only taken out of that amount. They aren’t taken out for overtime. On the other hand, federal taxes are taken out of all your earnings, including overtime.
— Reg Jones