Determining what you are eligible for under FERS or CSRS when it comes to your retirement can be confusing. When you have both, it can seem even more complicated. The date of your government hire will determine if you qualify for FERS or CSRS. But what if you fall into the bucket of mixed CSRS and FERS service? This is called FERS with a CSRS Component.
Employees who had five or more years of service under CSRS when they transferred to FERS during one of the open seasons in which that was allowed or who left government, later returned, and elected to be covered by FERS, will have both CSRS and FERS components to their annuities. These employees can calculate their basic annuity by computing their CSRS annuity component and adding this figure to their FERS annuity component.
CSRS and FERS retirement fund calculations are both based on formulas. Those formulas allow you to project what your annuity payments will be when you retire. In order to figure this out, you need to know your projected retirement age and your creditable years of service under both CSRS and FERS. CSRS and FERS time is combined for retirement eligibility.This information is then input into the corresponding formula with the totals being added together for the final combined annuity. The closer you are to retirement, the more exact your calculations will be.
Basic FERS retirement qualification rules will apply, despite having mixed annuities. However at the time of retirement, CSRS and FERS time is combined for eligibility. Under FERS, you become eligible for immediate, unreduced annuity once you reach the age of 62 with 5 years of service, age 60 with 20 years of service, or reach your minimum retirement age (MRA) with 30 years of service. To determine what your MRA is click here.
If you have more than 10 but less than 30 years of service, you may also be able to retire at your MRA. However, the portion of your annuity that comes from FERS will be reduced by 5% each year you are under the age of 62.
There are four other ways in which you can retire early:
- If there is a reduction in force (RIF)
- A reorganization
- A transfer of function
- If you are granted the opportunity to retire under the Voluntary Early Retirement
In each of these four situations, the age and service requirements are lowered to as young as 50 with 20 years of service, or if you have 25 years of service, any age. However, if you are under the age of 55 when you receive one of these four early retirement opportunities, the CSRS portion of your annuity will be reduced by 2% each year you are under the age of 55. Although your FERS portion will not be reduced, you will not receive the special retirement supplement of FERS until you reach your MRA.
Finally if a cost-of-living adjustment (COLA) is authorized it will be applied to the CSRS portion of your annuity, regardless of the age at which you retire. However, you won’t be entitled to any COLA on the FERS portion until the age of 62. There are exceptions as in the case with military reserve technicians, law enforcement officers, firefighters, and air traffic controllers.
Discerning your options is the best way to obtain a satisfying retirement. However, with so many different routes and rules, it can be difficult to navigate this process on your own. If you want to better understand your federal employee benefits or would like help planning for retirement contact MyFED Benefits today.
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