Retirement deductions, penalty


Q. 1) What are all the deductions that are taken out of a federal employee’s check when they retire?

2) Do these reductions stay at the same amount prior to retirement?

3) I have 33 years of service at age 51. I know there is a 2 percent penalty for each year under 55, but what about the three years I worked over 30? What happens to those?

A. 1) Federal income tax; and, depending on your situation, state tax, FEHB, FEGLI and FEDVIP premiums, savings account deductions and allotments to organizations to which you belong. If you are receiving a lump-sum payment for unused annual leave or a buyout, Social Security and Medicare.

2) I don’t understand your second question, so I’ll have to skip it.

3) If you accept an offer of early retirement, your annuity will be reduced by 2 percent for every year you are younger than age 55 (1/6 of 1 percent per month). Your annuity will be based on all your years of creditable service. Since you have 33 years, your annuity would be computed using that amount 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

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