Federal Employees Retirement System

Introduction

This webpage is designed to provide you with basic information regarding the Federal Employees Retirement System (FERS). Only regular status employees at Gallaudet University can participate in FERS.

Background

Although Gallaudet University employees are not Federal employees, an Act of Congress in 1949 extended retirement benefits under the Civil Service Retirement System to regular status employees of the University. Contributions from employees’ pay, matching contributions from the University, and direct appropriations from Congress are used for the purpose of paying annuities, refunds, and death benefits to persons entitled to them.

In 1984, a public law changed the retirement system for Federal employees, including employees of Gallaudet. This new law and a subsequent law replaced the Civil Service Retirement System with the Federal Employees Retirement System (FERS) and required all new employees hired after December 31, 1983 to be covered by Social Security. Employees covered under CSRS were given the option to remain with this system or to transfer to FERS.

Employees who were covered under CSRS prior to 1984, left, and later return to Gallaudet or to Federal service, are eligible to reenter CSRS if they had at least five years of creditable service. However, if the break in service is longer than one year, the employee also becomes covered by Social Security. These employees are considered CSRS “Offset,” meaning that CSRS benefits are offset by Social Security benefits. Returning employees eligible for reentry into CSRS, either with or without Social Security coverage, may choose total coverage under FERS as long as the election is made during the first six months after rehire. Employees without five years of creditable service under CSRS are automatically enrolled in FERS with previous service credited under the FERS program.

The Components of FERS

FERS is a three-tiered plan comprised of:

• Social Security Benefits
• A Basic Annuity
• A Thrift Savings Plan

Employees pay full Social Security taxes and a small contribution to the Basic Benefit Plan. In addition, employees are able to make tax-deferred contributions to a thrift savings plan, and a portion is matched by Gallaudet. The Social Security and Thrift Savings Plan keep their full value even if you leave Gallaudet before you retire.

Retirement Eligibility under FERS

Retirement under FERS is primarily Social Security to which other benefits are added. To qualify for Social Security retirement benefits, you must have paid Social Security taxes for at least 10 years (40 quarters) over the course of your lifetime. (This 40-quarter rule applies if you were born after 1928. If you were born before 1929, you need fewer quarters to qualify.) You can receive unreduced Social Security benefits if you wait until age 65 to retire. Starting in the year 2000, this age will gradually increase to 67. Alternatively, you can retire at age 62 and receive a reduced benefit.

Eligibility under the basic annuity portion of your FERS depends on the type of retirement you will receive. There are four kinds of retirement provided under the basic annuity component:

• Optional
• Deferred
• Involuntary (discontinued service)
• Disability

Optional Retirement

You are eligible for an optional, unreduced retirement annuity upon meeting one of the following minimum combinations of age and length of service:

*The minimum retirement age is based on the year when you were born.

You can receive an optional reduced basic benefit as soon as you reach the Minimum Retirement Age and have 10 years of service. The benefit is reduced by five percent per year for each year payment begins before age 62.

Involuntary (Discontinued Service) Retirement

You must separate from service due to the elimination of your position or because of a reduction in force and you are not given another reasonable job offer, or you separate because you are unable to fulfill the requirements of high standards of performance (does not include gross misconduct).

If you involuntarily separate from service at Gallaudet due to the elimination of your position or a reduction in force and you are not given another reasonable job offer, you may be eligible for involuntary (discontinued service) retirement. To be eligible for an unreduced annuity, you must have reached the age of 50 and have completed 20 or more years of service, or you may be eligible if you have 25 years of service regardless of your age. A special retirement supplement begins at the minimum retirement age and continues until age 62. Discontinued service retirement may also apply if you are unable to fulfill the requirements of high standards of performance, perhaps due to a deterioration of capabilities or a significant change in the job.

Deferred Retirement

If you leave service prior to retirement eligibility and leave your funds on deposit with FERS, you may be eligible to receive an unreduced deferred annuity upon reaching the age of 62 if you had at least five years of service, or at age 60 if you had 20 years of service, or at the MRA if you had at least 30 years of service. You can also receive a deferred annuity when you reach the MRA if you had 10-29 years of service; however there will be a reduction for each year payment begins before age 62.

Disability Retirement

You may be eligible for disability retirement if you become totally disabled for useful and efficient service and have completed at least 18 months of civilian service. Total disability means your inability, because of disease or injury, to perform satisfactorily and efficiently the duties of your position or the duties of a similar position. Considerable medical documentation is required, and decisions for disability retirement are made by the Office of Personnel Management. Disability retirement may also be supplemented by the University’s long-term disability insurance. Employees who apply for FERS disability benefits must also apply for Social Security disability benefits or show that they are not eligible for them.

Crediting Civilian and Military Service for Basic Annuity Benefits

When determining your total length of service for basic annuity benefits, all work performed as an employee of the Federal government and Gallaudet University for which FERS deductions were made is considered creditable service.

Types of Annuities

Social Security

Social Security pays you monthly benefits if you are retired and have reached at least age 62. Social Security also pays monthly benefits during your retirement to your spouse and dependents if they are eligible. In addition, Social Security provides monthly benefits if you become disabled and benefits for your spouse and dependents if they are eligible during your disability, monthly benefits for your eligible survivors, and a lump sum benefit upon your death.

The Basic Annuity

When you retire, you will receive an annuity check each month based on your length of service and salary. Cost-of-living adjustments do not begin until you reach age 62. You may elect to receive one of three types of annuities:

• Annuity without a survivor benefit
• Annuity with a survivor benefit to a spouse or former spouse
• Annuity with a survivor benefit to a named person having an insurable interest

You can choose which type of annuity you want; however, if you are married, you are automatically granted the annuity with a survivor benefit unless you and your spouse jointly waive the benefit in writing (notarized) before retirement. A survivor annuity is important if you intend for your spouse to have health insurance coverage following your death.

An annuity without a survivor benefit enables you to receive your full retirement benefit for the duration of your lifetime only.

An annuity with a survivor benefit to a spouse or former spouse consists of two options: you may leave your surviving spouse 50 percent or 25 percent of your full annuity. Your spouse must consent in writing (notarized) to the reduced 25 percent benefit. If you choose the 50 percent benefit, the reduction in your annuity will be approximately 10 percent; the 25 percent benefit results in a 5 percent reduction in your annuity.

Human Resources can provide you with an estimated monthly annuity report. Please reach out to Human Resources if interested.

FERS Supplement

The FERS supplement provides a “bridge” to Social Security entitlement for certain employees who retire younger than age 62. It is equal to the Social Security benefit that they earned while employed by the federal government and enrolled in FERS. Employees meeting certain requirements are eligible for a FERS Supplement which is paid as an annuity until you reach age 62. This supplement approximates the Social Security benefit earned while you were employed by Gallaudet or the Federal government. You may be eligible for a FERS supplement if you retire:

• After the Minimum Retirement Age with 30 years of service
• At age 60 with 20 years of service
• Upon involuntary retirement (effective at the Minimum Retirement Age). You will receive the Special Retirement Supplement beginning at the applicable MRA until age 62.

Thrift Savings Plan

When you retire, you may receive your savings account in the form of an annuity, a single payment, or a series of monthly payments. You can ask to have your payments begin as soon as possible or you can specify a future date. You cannot, however, choose a future date that is later than March of the year following the year in which you turn 70½. Your TSP may also be transferred to an Individual Retirement Account (IRA) or other eligible retirement plan. You are always vested in your own contributions and the agency matching contributions. After three years of FERS service, you are vested in the agency automatic contribution. To obtain more information, please visit the TSP website.

Selecting a Date to Retire

The formulas and example above for your FERS basic annuity are based on full years of service; however, you do not have to work a full year in order to receive credit for time worked in that year. For example, if you were hired in August, you do not need to wait until August to retire. If you retire earlier than August, you will receive credit for months instead of the full year. However, keep in mind that 30 days is considered a month; anything less does not count.

Which day of the month you retire may be an important consideration. All annuities based on voluntary retirement begin on the first day of the following month. For example, if you retire on May 10 or on May 30, your annuity will begin on June 1.

Applying for a FERS Refund 

If you leave the University before you are eligible for retirement, you may apply for a refund of the funds you have contributed to the basic annuity portion of the retirement system. (You may not apply for a refund of Social Security deposits.) To apply, you must complete an “Application for Withdrawal of Retirement Funds.” You may also elect to leave your funds on deposit if you plan to have future service under a Federal retirement system or wish to apply for a deferred retirement at age 62. If you withdraw your FERS contributions, you may not later buy back your time in service.

Applying for FERS Annuity

To apply for your basic retirement annuity, please reach out to Human Resources at least 30 days before your scheduled retirement date. Human Resources will prepare all of the paperwork for you and guide you through the process. After your final paycheck has been processed, the Payroll team will create an “Individual Retirement Record” which contains your work history, salary information, insurance information and final leave balance, if any. Human Resources will then send the application package, including the Individual Retirement Record, to the Office of Personnel Management for processing. It may take up to four to six weeks after they receive the application package before you receive a special payment annuity check, which is an interim payment until the final calculation is verified and completed by OPM. It takes an average six months before OPM finalizes your annuity.  

In order to apply for your Social Security benefits, you will need to go to the Social Security website.

Health, Dental, Vision and Life Insurance Benefits

Following retirement, your Federal Employees Health Benefits (FEHB) may be continued under the group plan as long as you were covered for at least the last five consecutive years prior to retirement. Your portion of the health benefits premiums will be deducted from your annuity check on a monthly basis after it is finalized. You must have elected a survivor annuity and be enrolled in self and family coverage in order for your spouse to be eligible for continued health insurance at the time of your death.

Dental and vision insurance may continue after retirement. Unlike FEHB, you do not need to be enrolled for five years in order to continue the insurance plans after retirement. While you are on interim pay status, BENEFEDS, who manages the dental and insurance program, will send you an invoice. Please ensure you pay directly to BENEFEDS. Once your annuity is finalized, your portion of the dental and/or vision insurance premiums will be deducted from your annuity check on a monthly basis.

Federal Employees Group Life Insurance (FEGLI) also continues (with the exception of accidental death/dismemberment) as long as you were enrolled for at least the last five consecutive years prior to your retirement. FEGLI optional life insurance coverage may also continue. Your portion of the life insurance premiums will be deducted from your annuity check on a monthly basis after it is finalized. 

Reemployed Annuitants

Retirees who are receiving an annuity from OPM may be reemployed at Gallaudet; however, annuity payments and salaries may not be combined. The salaries of reemployed annuitants who retired voluntarily (i.e., excluding discontinued service and disability) will be offset by the amount of the annuity. Check U.S. Office of Personnel Management – Retirement Service for additional information.

Employees who would like to read more about the Federal Employees Retirement System may check out a more detailed handbook from the OPM website. If you have more questions, please contact Human Resources.