Q: I recently ran across a copy of your Oct. 4, 2010, article on retirement titled, “These dates key for feds considering retirement.” I am a retired Navy officer. I left in 1999 with 20 years of active duty service as a commander. I collect retired pay annually, increasing from about $32,000 (1999) to a about $40,000 (2010) over the last 11 years. Upon retirement I was selected for the SES on July 6, 1999. I am 53 years old with more than 31 combined years of service. I am a FERS employee with an annual salary of around $172,000. I have paid into Social Security for full-time work since 1979, part time before that. Is there a date I should not leave before as I would be giving up too much? Should I make a deposit before I retire to credit my military service to my civilian account? How big would that deposit have to be? Would it entail paying back all retired pay received? I understand I would forgo my current military retired pay, but I assume it would be for a larger combined annuity. I assume giving up retired pay does not mean I would give up retired military status. Do I wait until I am 62 to collect or is it payable when I leave at some other date? What is the impact of potential Social Security offsets given different courses?
A: If you want to get credit for your active duty military service, you would need to make a deposit to the civilian retirement fund any time before you retire. (The sooner you did that the less interest you’d pay.) You wouldn’t have to waive your military retired pay until just before you retire. The amount of the deposit would be 3 percent of your basic military pay (not allowances or differentials) for all service before Jan. 1, 1999. For service during 1999, the deposit would be 3.25 percent. Making the deposit and waiving you military retired pay would have no effect on any other military benefits to which you are entitled.
Assuming that you have the right combination of age and service, your FERS annuity would be payable when you retire from your federal civilian employment. If, however, you were to retire under the MRA+10 provision (minimum retirement age plus between 10 and 29 years of service), your annuity would be reduced by 5 percent for every year you were younger than 62 (60 if you have at least 20 years of service), unless you delayed the receipt of your annuity to a later date to reduce or eliminate the age penalty. On the other hand, if you weren’t eligible to retire and resigned from the government, you would be able to apply for a deferred annuity, which would be at your minimum retirement age plus 30 years of service, age 60 with 20, or age 62, with as few as five.