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Almstot  
#1 Posted : Tuesday, August 10, 2021 9:33:37 AM(UTC)
Almstot

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Is there anybody out there who retired under MRA+10 under the age of 60 with 20-29 years of service who can tell me how the age penalty was calculated? OPM language seems pretty clear the penalty is 5% per year for each year under age 62. But NUMEROUS seemingly authoritative sources whose credentials and experience suggest they would know, including the moderator, Ed Zurndorfer, say that for those with 20 to 29 years of service OPM calculates the 5% penalty relative to age 60, not 62. I have had no luck getting through to OPM. Any assistance appreciated.
kaljor  
#2 Posted : Friday, September 3, 2021 5:50:43 PM(UTC)

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A very interesting question. I thought I had researched everything about MRA +10 when I was still working, but I don't remember hearing this. So I looked it up and I found an OPM page that seems to support your position mostly, if not exactly. Here is the link to the page, and the pertinent part is at the very bottom of the page. It says that there would be no age reduction if you don't begin your annuity until age 60, but doesn't say anything about a smaller than 5% reduction anywhere that I can find. Read it over and see if you think this is good information.

https://www.opm.gov/reti...nt/#url=Early-Retirement
Almstot  
#3 Posted : Friday, September 10, 2021 4:53:45 AM(UTC)
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The OPM language you found is the language my HR person is telling me results in a 5% penalty for each year under age 62 regardless of having 20 or more years of service. However, it is that exact same language that so many seemingly authoritative people are saying OPM interprets as calling for a 5% penalty for each year under 60 for those with 20 or more years of service. One of those sources, Ed Zurndorfer, even makes a point of saying that many, many HR people across government do not know this rule. I am left to hope that my HR person is one of them. By the way, I have been told by HR that they will not take the question to OPM because the rule is clear?! Thanks for responding!
TheRealOrange  
#4 Posted : Friday, September 10, 2021 6:09:59 AM(UTC)
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Originally Posted by: Almstot Go to Quoted Post
The OPM language you found is the language my HR person is telling me results in a 5% penalty for each year under age 62 regardless of having 20 or more years of service. However, it is that exact same language that so many seemingly authoritative people are saying OPM interprets as calling for a 5% penalty for each year under 60 for those with 20 or more years of service. One of those sources, Ed Zurndorfer, even makes a point of saying that many, many HR people across government do not know this rule. I am left to hope that my HR person is one of them. By the way, I have been told by HR that they will not take the question to OPM because the rule is clear?! Thanks for responding!

I think your HR people are correct. Here is the language from the governing Federal regulation:

§ 842.404 Reductions in basic annuity.

The annuity of an employee or Member retiring under § 842.204(a)(1) or § 842.212(b) is reduced by five-twelfths of 1 percent for each full month by which the commencing date of annuity precedes the 62nd birthday of the employee or Member, unless the individual -

(a) Has completed 30 years of service; or

(b)

(1) Has completed 20 years of service; and

(2) Is at least age 60 on the commencing date of annuity; or

(c) Has completed 20 years of service as -

(1) An air traffic controller, except one separated by removal for cause on charges of misconduct or delinquency;

(2) A firefighter and/or law enforcement officer, except one separated by removal for cause on charges of misconduct of delinquency; or

(3) A Member, except one separated by resignation or expulsion.

https://www.law.cornell.edu/cfr/text/5/842.404

So, if you have 20 years of creditable service but have not yet reached age 60, the penalty is the typical 5 percent per year for every year under age 62. It's very clear in the federal regulation, and the OPM language is consistent with the regulatory language. The only way to avoid the penalty, as noted in a previous reply, is to postpone the receipt of the annuity until age 60.
thanks 1 user thanked TheRealOrange for this useful post.
Navy Bubblehead on 9/10/2021(UTC)
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