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FERS Annuity Supplement Eligibility and Earnings Limitations + Annuity Projection Update

Many FERS annuitants that retire before age 62 are eligible for an annuity supplement that will end when they reach age 62. You may be eligible for a Special Retirement Supplement if you retire:

  • At age 60 with 20 years of service; or
  • Upon involuntary or early voluntary retirement (age 50 with 20 years of service, or at any age with 25 years of service) after the U.S. Office of Personnel Management determines that your agency is undergoing a major reorganization, reduction-in-force (RIF) or transfer of function. You will not receive the Special Retirement Supplement until you reach your MRA.

The FERS Supplement is often significantly less than your Social Security benefits due to the fact that the formula for the Special Supplement assumes a working life of 40 years, each year of FERS service is worth one-fortieth of the estimated Social Security benefit.

There are income limitations. However, your current earnings before retirement, your annual leave lump sum payment, pensions or annuities, capital gains from investments, interest and dividends not resulting from trade or business, and a VSIP payment if offered do not count towards your income limit and will not affect your supplement payment. Your earnings will be verified through a computer match with the Social Security Administration’s earning file and your annuity supplement will be reduced $1.00 for every $2.00 by which you exceed the exempt amount of $15,120 for 2013. The earnings limit is adjusted yearly and applies to earnings received in the current year after retirement and after you reach the Minimum Retirement Age (MRA).

Here is a list of earnings that apply towards the reduction:

  • All wages from employment covered by social security.
  • All cash pay for agricultural work, domestic work in a private home, service not in the course of your employer’s trade or business.
  • All pay, cash or non-cash, for work as a home worker for a non-profit organization, no matter the amount. (The social security $100.00 tax test does not apply.)
  • All pay for work not covered by social security, if the work is done in the United States, including pay for:

o Family employment,

o Work as a student, student nurse, intern, newspaper and magazine vendor,

o Work for States or foreign governments or instrumentalities and

o Work covered by the railroad Retirement Act.

Regardless of what income is called or who receives it, if it is actually wages for services you performed or net earnings from self-employment you secured, it must be included in applying the earnings test.

We have more information on the social security supplement available online that you will find helpful including links to the Annuity Supplement Earnings Report.

UPDATE: The spreadsheet that we provided in last weeks article titled Projecting Your retirement Annuity and Survivor Benefit was updated by Frank Cullen last week. There were two small calculation errors in the survivors column that were fixed thanks to a readers input. Download the updated spreadsheet and forward it to others in your department that are planning their retirement.

Learn more about your benefits, employment, and financial planning issues on our site and visit our Blog frequently at http://fedretire.net to read all forum articles.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Tony motsenbocker

I am fers employee of postal service. I plan on retiring at age 60 with 20 years service. I have accrued $1120 social security amount at age 62. I also worked for Santa Fe railroad for 13 years and have accrued $1657 railroad retirement at age 62, of course I will take the $1657 at age 62. So when I retire what will my fers special benefit be? No one seems to know I have petitioned opm but have heard nothing back.