When do penalties apply?


Q: Thank you for your recent article on key dates for retirement  in the Oct. 4 edition of Federal Times. I have a question that wasn’t completely answered by the article. 

I am a veteran with more than 22 years of active-duty service. I joined the Food and Drug Administration two years ago, so I am under the Federal Employees Retirement System. I turned 51 this year and plan to retire sometime between age 62 and 65. I will not have 20 years of service at age 60, but I certainly will have five years of service at age 62. From my understanding of the article I fall into the category of between 10 and 30 years’ service at minimum retirement age, and there is simply no way I’m working until age 81. You mention there is a 5 percent per year penalty for retirement unless I postpone payment of the annuity, but there is no explanation of how long that postponement would have to be.  In my case, how long would the postponement be to negate the penalty, or would it better for me to pay the penalty and collect the annuity right away?  

A: If you retire at age 62 with at least five years of creditable service, there won’t be any age-based reduction in your annuity. The age penalty applies only to those who retire under the MRA+10 provision of law (minimum retirement age plus between 10 and 29 years of service).


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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