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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

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skayebs  
#1 Posted : Friday, February 15, 2008 2:37:25 AM(UTC)
skayebs

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This is my first time to post on Federal Soup. I am trying to get a reliable retirement estimate as I am planning to retire in Jan 2009. I have been calling my CBP HR at HQ since July 2007 and they keep saying they are backlogged and cannot provide an estimate. They said call back in Sep. I have done the estimate myself and think that I know about hom much I will receive.

My main concern is regarding a period of temporary service. I initialy started under CSRS in 1975 and worked steadily until March 1983. I left Federal Service and withdrew my retirement. I returned to Federal Service in March 1992 as a temporary employee until Dec 1994 when I received a term appointment. I finally got a permanent appointment in 1997. I made a redeposit for the money I withdrew and a deposit for my time as a temporary employee. When I paid the deposit for the temporary service I paid the full amount for CSRS even though I was in CSRS Offset at that time. Since I paid full CSRS and full Social Security, I do not feel that I should have an offset on my pension for that time. I asked HR about it and the Retirement Specialist just said well, you were in offset weren't you! That is the only piece of information that they have given me and although it may be correct, I don't think it is fair (I know the federal government isn't alway fair). Has anyone come accross theis situation? Is there anyone I could call at OPM to inquire about this situation?

Thank you for any assistance.

Sharon
ncsolutions  
#2 Posted : Friday, February 15, 2008 3:02:30 AM(UTC)
ncsolutions

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Sharon...

I think that CSRS-Offset people are often misled by the label given to that retirement coverage. A better way to look at it is CSRS Plus.

Even without the deposit, you would be getting credit for your wages to determine your eventual SS benefits. By making the deposit for your temporary time from 92 to 94, you're also getting full credit for that time toward your CSRS annuity (a much more generous formula than FERS). Your CSRS annuity will be offset only by the amount of SS benefits you earned while covered under CSRS Offset.

Even after the offset, your combined CSRS annuity and SS benefits will generally be higher than your CSRS annuity alone with no offset, and higher than a FERS annuity plus SS benefits.

For more info on the system read the following pamphlet from OPM's website.

http://www.opm.gov/forms/pdfimage/RI83-19.pdf
unemp13  
#3 Posted : Friday, February 15, 2008 7:55:38 AM(UTC)
unemp13

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I am an off-set retiree about to turn age 62. I understand OPM will contact SSA and obtain the off-set amount. OPM will then reduce my annuity, however what has to be done to receive the SSA off-set amount. Do I have to apply for SSA?
I am currently working and pay the max into SSA from my current employment. Will the offset amount received from SSA be reduced by my current earnings?
The SSA information about this issue on the SSA web site is severely lacking. I posed these questions to various SSA offices and cannot obtain a consistent response.
edalder  
#4 Posted : Friday, February 15, 2008 8:44:41 AM(UTC)
edalder

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if you are an offset retiree and want to get more retirement money. They do not kick in automatically.

Yes, SSA benefits before your full retirement age are subject to an earnings test. The SSA website has the details, but most people who are working on a full-time basis probably would make too much money.

And, yes, OPM reduces your CSRS annuity regardless of whether you are or are not receiving SSA benefits at age 62.
Kivi
LSA  
#5 Posted : Friday, February 15, 2008 8:45:11 AM(UTC)
LSA

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OPM reduces your CSRS determined annuity at age 62 by the CSRS-OFFSET determined at age 62 for you since you are already retired. OPM does this even though you might decide not to collect the Social Security Benefit at age 62. You can wait if you wanted to, to collect your Social Security Benefit until your Social Security Full Retirement Age which could be 65 or more depending on when you were born.
The CSRS-OFFSET at age 62 will be determined by OPM after they contact the Social Security Administration about what your benefit entitlement would be when you are age 62 for all the work that you were paying into Social Security up to that point(Federal employment private sector employment.)
The CSRS-OFFSET formula is on pg 8 of the website BobMcC pointed you to i.e.

http://www.opm.gov/forms/pdfimage/RI83-19.pdf

You plug your Social Security Benefit for all work, both Federal & Private at age 62, into that formula.
Good luck! I believe I am correct if not let someone else challenge it!
unemp13  
#6 Posted : Friday, February 15, 2008 11:10:36 AM(UTC)
unemp13

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according to ed.........
CSRS Offset and Social Security
You are not being penalized as a result of being a CSRS Offset employee. When you retire at age 62, your CSRS annuity will be divided up with most of it coming from CSRS and a smaller portion coming from the Social Security retirement you are receiving at age 62 based on what you paid into Social Security while you were a CSRS Offset employee. You may in fact be entitled to another Social Security retirement check if you have at least 40 quarters of coverage of Social Security that you earned outside federal service. You can choose to receive this retirement check any time after you are age 62; however, if you choose to receive this check before your full retirement age (FRA), it will be reduced.
LSA  
#7 Posted : Friday, February 15, 2008 6:02:54 PM(UTC)
LSA

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TO faaDavid:

I have seen this Zurndorfer response, or some such equivalent, to other CSRS-OFFSET type people before.

I believe it is erroneous and others on this board have expressed this also in the past.

There are only two checks ($) sent to you, at most, after you are 62 YOA.

#1 - from OPM, the CSRS-OFFSET determined annuity as I posted above. OPM applies the CSRS-OFFSET at age 62 to what you are receiving now (your CSRS determined annuity) automatically without you even contacting them. This significantly reduces your CSRS determined annuity check $s(the one you are collecting now.)

#2 - from Social Security, if you apply for it, you get the Social Security Benefit you are entitled to for all work in the Federal and Private sectors. This should more than make up for the above loss ($s) in your CSRS determined annuity in #1 above.

This is consistent with what I have heard from other CSRS-OFFSET people both retired and approaching retirement.

Maybe some other CSRS-OFFSET people can confirm this once again!

Don't hold your breath on the last statement since CSRS-OFFSET is not well understood, at least the calculations, by even the "experts" at the agencies, OPM and the Social Security people (you get total blanks when talking to Social Security.)

I'd be interested if you find out anything different from what I've detailed above from your delving into this matter.

Please post anything else of significance I've missed in response to this thread.

Again GOOD LUCK.

[This message was edited by LSA on February 16, 2008 at 07:40 AM.]
unemp13  
#8 Posted : Saturday, February 16, 2008 10:05:08 AM(UTC)
unemp13

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I think you are correct, however I have written a letter to SSA for some verification. The local offices are worthless.

For me the results are mixed. I calculated my SSA and SSA offset by both methods in the handbook and it looks like I will take a $775.00 per month reduction in retirement income ( the lesser of both calculations). If I applied for SSA, it would be an increase of $674.00 per month in retirement income above what I am getting now, however I am just not ready to "bag it" yet and will continue current self-employment.

Thanks for your interest, and if this comes out any other way in August when I turn 62, I will provide a detailed post.
LSA  
#9 Posted : Saturday, February 16, 2008 11:52:35 PM(UTC)
LSA

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TO faaDavid

I am impressed! You definately know your way around that CSRS-OFFSET calculation!

When you calculated the CSRS-OFFSET by the two methods on page 8 of the following pamphlet:

http://www.opm.gov/forms/pdfimage/RI83-19.pdf

A. Which one came smaller (Method 1 or Method 2) ?

B. When you calculated method 1 how did you perform the calculation for the second term in the calculation i.e the term that is your total Social Security Benefit but without the component due to CSRS-OFFSET Service? What calculator did you use?

C. Do you have more than 10 years paying into Social Security in the private sector (40 quarters ?) If you have less then 10 years in the private sector you are suppose to calculate a hypothetical Social Security Benefit for those years & those years only to be used for the second term in Method 1. This means that if you do not have 10 years in the private sector your hypothetical Social Security Benefit used in Method 1 is not zero! Normally for most Americans not in CSRS-OFFSET who have less then 10 years paying into Social Security the Social Security Benefit is zero w/o any calculation performed.

[This message was edited by LSA on February 17, 2008 at 11:15 AM.]
unemp13  
#10 Posted : Sunday, February 17, 2008 3:11:40 AM(UTC)
unemp13

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and I am not saying it is right.

A. Method 2 yielded an offset of 897.00
Method 1 yielded an offset of 743.00

B. total of 45 years of paying SSA.
total of 8 years CSRS only
total of 23 years CSRS Offset
total of 34 years of substantial earnings

retired Army reserve officer with 38 years of service, 5 of which were active.

have always had some kind of outside business going in which SSA was paid into.

I used the SSA calculator that allows you to estimate your benefit by inputting your earnings each year. For the total SSA, what I inputed came very close to the estimate on the latest SSA statement. For the SSA outside of CSRS offset, I simply inputed the amounts for those years.

Let me know if you see a potential for error. I am skeptical of others doing this calculation, after the issues I had with my Department HR and OPM, prior to retirement. It took a letter writing campaign to settle those issues.
LSA  
#11 Posted : Sunday, February 17, 2008 7:52:12 AM(UTC)
LSA

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TO faaDavid:

What you did looks good to me! It passes the smell test.

Method #1 calculation is no problem for you. You certainly have more than 10 years paying into Social Security in the private sector. No problem calculating the 2nd term in Method #1 for you.

Method #2 calculation is also a piece of cake for you!

Strangely enough you are the first person that I have heard of where Method 1 came out lower than Method #2!!

This is probably because of all your time under Social Security in the private sector!

In the normal plain vanilla CSRS-OFFSET calculation Method 2 usually comes out smaller than Method 1.

Probably because most CSRS-OFFSET types have less than or slightly more than 10 years paying into Social Security in the private sector.

Please follow up with your results when the "official answers" work their way through the system.

GOOD LUCK, GOOD HEALTH AND HAPPY RETIREMENT!!
mcfair  
#12 Posted : Monday, February 18, 2008 6:18:52 AM(UTC)
mcfair

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Maybe one more person's experience will help.

My situation resembles that of the person who started this thread. I had some non-deposit service, then worked under CSRS for almost 18 years, then had a break of 11 years during which I had a little non-deposit service (paying Social Security only), and came back for about 5 1/2 years during which I was under CSRS offset.

I never took out my first 18 years of CSRS contributions and paid the deposit plus interest for both periods of non-deposit service at the full CSRS rate.

I retired shortly before I turned age 62. I did not file for Social Security at that time and still have not done so. However, my CS pension has been reduced since age 62.

Here's how it worked for me.

My CS pension was originally established using all my service, including the two periods of non-deposit service. When I turned age 62, even though I didn't file for Social Security, my CS pension was reduced. The reduction was within a dollar of what I had computed. Here's how I computed it.

- Since I don't have enough years of substantial earnings to avoid the WEP, I used the WEP version of the benefits computation tool provided at the Social Security website to get an estimate of what my SS bens would be at age 62.
- I used method 2 to compute the offset. Since I had only 5 full years under CSRS offset, the reduction in my pension was only 1/8 (5/40) of what my SS bens would be. (Remember that the actual offset is the SMALLER of the amounts from the two methods of calculation.)
- (This is where skayebs' concern is important.) I don't minding paying the full CS deposit amount on those years of non-deposit service, because that way they were not used in the computation of the offset. (Not that I had a choice.) There were about 4 years of non-deposit service, so I would have paid a bit less deposit if they were considered CSRS Offset service, but they would have caused a greater reduction in my CS pension, almost 1/4 of my SS bens instead of 1/8.
- The amount I came up with, 1/8 of my age 62 SS bens, was deducted from my CS pension starting the month I turned 62.
- It's a few years since I turned 62. The SS bens I would receive if I filed have gone up because of COL increases, a smaller reduction for age, and additional work I have done in the private sector. Still, the CSRS Offset amount is a set amount that has not changed.

Yes, those of us under CSRS Offset get a pretty good deal. But we do only get 2 checks - one from OPM and, if we apply for it, one from SSA.

I am one of those who wrote to Mr. Zorndorfer explaining that his answer was not correct. I'm glad it came up again for clarification.

By the way, I'm a former employee of SSA, former HR office employee in several agencies, and have experienced these issues around CSRS Offset myself.

I hope this helps.
unemp13  
#13 Posted : Monday, February 18, 2008 10:40:52 AM(UTC)
unemp13

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Thank you for reading and responding. There is tremendous value in this board as a result of people like you helping others with your experience and knowledge.

I truly appreciate it.
gh1  
#14 Posted : Monday, February 18, 2008 1:08:21 PM(UTC)
gh1

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I am CSRS-Offset. I retired at age 57 with 30 years of service. I also had 26 years of Social Security, 18 of which were in the Federal government. I just turned 62, and my CSRS annuity was reduced by about $500 because of the Offset. I also started receiving my full Social Security benefit of $1300 the next month. The result of these two things was an increase in my retirement income of about $800 per month. I now get one check from OPM for my reduced CSRS annuity at the start of the month, and a second check from SocSec later in the month.

Be aware, that you can delay applying for SocSec, but there is nothing you can do to delay the occurrence of the CSRS-Offset. It didn't take me long to decide between a $500 a month reduction in my retirement income or an $800 net increase.
unemp13  
#15 Posted : Monday, February 18, 2008 11:00:12 PM(UTC)
unemp13

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The additional problem I have is I am still working as a consultant.

SSA deducts $1 for every $2 after the first $13560, if you have applied for SSA. If not, given that and the fact that, being self employed, you also pay 15.3% SSA and 1.45% Medicare, it almost dosen't pay to work.

Your post has supported the conclusion that previous beliefs (getting 2 checks from SSA)are false. OPM reduces the annuity and you don't get SSA unless you apply.
skayebs  
#16 Posted : Monday, February 18, 2008 11:29:57 PM(UTC)
skayebs

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I want to thank all of you for your well thought out replies. The information has been very helpful. It is unfortunate that the Offset Retirement is so complex. I do hope that other agencies are giving employees more assistance as they near retirement.

Sharon
jose53earl  
#17 Posted : Wednesday, March 19, 2008 11:40:40 AM(UTC)
jose53earl

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OK, as a CSRS Offset employee, if I decide to work past age 62 and "SSA deducts $1 for every $2 after the first $13560, if you have applied for SSA. If not, given that and the fact that, being self employed, you also pay 15.3% SSA and 1.45% Medicare", and on top of that I have to pay the normal federal, state and local tax rates, just what is my actual take home pay - percentage wise? Why would any sane person decide to work for wages (AKA EARNED INCOME) under these conditions, unless they were in a totally desperate situation?

Someone please help me out here!!!
unemp13  
#18 Posted : Wednesday, March 19, 2008 7:54:19 PM(UTC)
unemp13

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You have to really do the math to figure out where you would be in each scenario and make your decision based on other additional factors such as health, and other interests.

There is not doubt you do take a hit if you choose to continue working.
OffsetBlues  
#19 Posted : Tuesday, May 06, 2008 5:56:35 AM(UTC)
OffsetBlues

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Posters keep referring to the CSRS annuity being reduced by the amount of SS attributable to FEDERAL earnings. I think this leads to some of the confusion on the calculations of the offset.
Ed Z. used a clearer definition in one answer on the calculation, referring to the offset being based on the portion of SS annuity attributable to "CSRS-Offset service". Don't think of service as federal, or non-federal, but as Offset or Non-Offset.
Many Offset system employees have years of federal service for which they contributed SS, but not CSRS payroll deductions. These years of federal, non-CSRS, non-FERS service, will not be included in calculation of the offset to our CSRS pensions. And that service will add to the CSRS pension only if we made the full, 7% interest, deposit to CSRS.
That just leaves the treatment of "above-base earnings" as the only major inequity in the CSRS-Offset system. I have paid thousands of dollars in SS contributions for "above-base" earnings as an Offset employee. The additional SS benefit resulting from those contributions will just come back out of my CSRS pension. FERS employees would get the extra SS, CRSR employees would not have made the origianl contributions: only CSRS-Offset Employees pay the deductions and effectively get no benefit from the extra contributions.
ChillinOut  
#20 Posted : Tuesday, May 06, 2008 10:55:50 AM(UTC)
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delete

[This message was edited by ChillinOut on October 28, 2009 at 06:10 AM.]
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