The FERS and You:

What You Should Know About Your Federal Employee Retirement (FERS) Benefits

As an employee of the federal government, you have great benefits through the Federal Employee Retirement System (FERS). But those great benefits are also convoluted, often making it difficult to understand how they can and should be applied to achieve a comfortable life in retirement.

This article will cover your FERS basic benefit plan. You will learn everything from how to determine your retirement eligibility to how your FERS income will be taxed.

We have been helping federal employees make a smooth and confident transition into retirement for many years at Minerva Planning Group, and we hope that this information can help you make a similar transition into the retirement you have worked so hard to attain.

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HOW DO I KNOW THE AGE AT WHICH I CAN RETIRE?

When you retire from federal service, you will receive three forms of income.

THREE INCOME SOURCES FOR FEDERAL GOVERNMENT EMPLOYEES

FERS basic benefit plan payments

Thrift Savings Plan distributions

Social Security benefits

The government calls your Federal Employee Retirement System benefit plan an annuity, but since its structure is similar to private-sector defined benefit pensions, we will refer to it as a pension in this article.

When determining the age at which you can retire and collect your FRS pension, you can use the formula that the government provides. At first glance, the formula seems simple; however, as with many of your federal benefits, once you delve deeper, the apparent simplicity becomes complex. The formula is:

Retirement Eligibility = Your Age + Number of Years of Creditable Service*

*Your creditable service is the length of your federal employment that is eligible for the FERS retirement. For a fuller explanation of creditable service, visit the OPM’s webpage on the topic.

DETERMINING MRA

In some cases, you must have reached a minimum retirement age (or MRA) to receive benefits. Your MRA depends on your birth year. You can use the following chart to determine your MRA.
In addition to determining your MRA, you should know the four categories of FERS benefits: immediate retirement, early retirement, deferred retirement, and disability retirement.

It pays to be diligent in determining your eligibility date. You may be eligible for two or more options, which can really give you the opportunity to maximize your retirement income!

Immediate Retirement

An immediate retirement can be likened to a regular private-sector retirement. Under the Federal Employee Retirement System, immediate retirement starts 30 days from the date you stop working. You are eligible for an immediate retirement if you meet one of the following age and service requirements:
*If you retire at MRA with at least 10 years of creditable service but less than 30, your benefit will be reduced by 5% a year for each year you are under 62. This does not apply if you have at least 20 years of service and you do not start receiving benefits until age 60 or older.

Early Retirement

In times of downsizing, you may be offered early retirement; or you may involuntarily retire—either way, you must meet the following requirements to be eligible:

Deferred Retirement

If you leave federal service before you retire, you may be able to delay your benefit payments. You must have completed at least five years of creditable civilian service, plus meet the following eligibility rules:
*If you retire at MRA with at least 10 years of creditable service but less than 30, your benefit will be reduced by 5% a year for each year you are under 62. This does not apply if you have at least 20 years of service and you do not start receiving benefits until age 60 or older.

Disability Retirement

If you become disabled due to disease or injury, you may be eligible to retire if you meet the following criteria:
Also, your disability must be expected to last at least one year. Your agency must certify that it cannot accommodate your condition and that it has considered you for any vacant position at the same grade and pay level, within the same commuting area, for which you qualify for reassignment.

Free Ebook: The Ultimate Retirement Guide for Federal Employees

Retiring from the federal government can be complicated. Although our article covers the FERS portion of your retirement, you may have questions about a broad range of issues.

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