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Disability Retirement


The federal government allows employees who are unable to work to retire under a disability retirement. It is in the best interest of both employees and the federal government for employees to remain gainfully employed in their current grade or pay level, as long as they can provide useful and efficient service without endangering themselves, others or government property.
Disability retirement should be the very last option and should be used only when attempts have been made to preserve an individual's employment, and those attempts have failed.

Order our Disability Retirement guide to educate yourself on the rules and regulations concerning disability retirement for federal employees.

To read today's top news stories on federal employee pay, benefits, retirement, job rights and other workplace issues visit FederalDaily.com.
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vermonter16  
#1 Posted : Tuesday, January 29, 2013 6:05:09 AM(UTC)
vermonter16

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Hey all, I have a question regarding my husband his disability retirement, etc. He is 60 years old and was approved for FERS disability in February of 2012. On December 31 we were notified that he was approved for SSDI and would receive 5 months of pay. What do we do in regards to taxes? I have read that it is taking months and months for OPM to adjust the rate of the disability retirement.....but I have to file my taxes in the next couple of months....We will have to pay not only partial taxes on the SSDI but full taxes on the federal disability. Does anyone know how this works? It is very confusing and OPM is of no help at all.
oktoots  
#2 Posted : Tuesday, January 29, 2013 7:39:56 AM(UTC)
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As he was approved for SSDI on Dec.31, 2012, I would think that the back pay he receives, which will be in 2013, may not count as 2012 income; he did not receive any SSDI benefits in 2012. For subsequent years, you can elect to have 7, 10, 15 or 20% withheld from the SSDI for Federal taxes, since SSA is not authorized to withhold taxes on its own.
    It might not be a bad idea to call the IRS and explain the situation and they can help you.
multiple identities to 0%
vermonter16  
#3 Posted : Tuesday, January 29, 2013 7:46:22 AM(UTC)
vermonter16

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That's what I'm hoping. We received a letter from Social Security saying the money would be in the account on or around January 3, 2013 but for 5 months in 2012.... It was in the account on December 31, 2012 and since it was for 2012....I'm just not sure what to do. I can go ahead and call the IRS but to be honest, I've called them before about something....and called again just to be sure - and got two completely different answers, lol. Other than that the IRS relationship has been good (knock on wood)
GSBS  
#4 Posted : Tuesday, January 29, 2013 8:44:32 AM(UTC)
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A Tax professional might not be a bad idea? The Tax lady at the KMART sure knew about OPM Disability Retirement, a non qualified retirement plan
oktoots  
#5 Posted : Tuesday, January 29, 2013 1:07:21 PM(UTC)
oktoots

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vermonter16 wrote:
That's what I'm hoping. We received a letter from Social Security saying the money would be in the account on or around January 3, 2013 but for 5 months in 2012.... It was in the account on December 31, 2012 and since it was for 2012....I'm just not sure what to do. I can go ahead and call the IRS but to be honest, I've called them before about something....and called again just to be sure - and got two completely different answers, lol. Other than that the IRS relationship has been good (knock on wood)


Since you didn't get a chance to opt for SSDI tax percentage yet, you may just have to take a most likely small tax hit this time. But for 2013 onward, you should choose which tax amount you want deducted from SSDI. And that is something you can always change at any time.
multiple identities to 0%
GoHuskers  
#6 Posted : Wednesday, January 30, 2013 1:25:32 AM(UTC)
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I'd contact SSA first to see what their records show as the actual payment date. Some banks will credit direct deposits to an account prior to the "official" payment date. So even though the money was shown in the bank account on 12/31, SSA might still consider it to have not been paid until 1/3. They (SSA) are required to issue a 1099 showing the total payments made in a year. If they consider it paid in 2012, they should be issuing a 1099 for last year. Otherwise, the back pay will be reflected on the 1099 furnished you (and the IRS) next January for 2013.
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