Disability retirement and taxes


Q. I am a 52-year-old FERS clerk working for the Postal Service. I was been diagnosed with Parkinson’s disease in November 2005. I am wondering about a disability retirement and how the money I am paid, if approved, is taxed or not?

A. The Internal Revenue Service considers CSRS and FERS disability annuities taxable income. If you were also approved for a Social Security disability benefit and judged by them to be totally disabled for any gainful employment, then your benefits would be tax-free.


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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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