This is the fourth in a series of columns reviewing the retirement options for federal employees covered by the Federal Employees Retirement System (FERS). Presented in this column is the deferred retirement option.
FERS employees who elect to leave federal service before they are eligible for an immediate (and unreduced FERS annuity) retirement may be eligible to receive their FERS annuity at a later date. These are FERS employees who have not met the minimum age/minimum years of creditable service requirement. As will be discussed, at a later date depends on how many years of service the employee had when the employee leaves federal service.
SEE ALSO:
A FERS employee who left federal service is eligible to receive a deferred FERS retirement annuity if he or she meets the following requirements:
• Is not eligible for an immediate FERS retirement annuity within one month of retirement.
• Meets the minimum civilian service requirement.
• Does not request a refund of FERS retirement deductions after separating from federal service or transferring to a noncovered position, and
• Reached the minimum age to immediately receive his or her FERS annuity given the number of years of creditable service when the employee left federal service.
These requirements are further discussed:
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Not eligible for immediate retirement. In order to be eligible for immediate retirement under FERS, a FERS employee must have reached the minimum age and have a minimum number of creditable years of service. Table 1 presents the three combinations of minimum age and minimum years of creditable service that allows a FERS employee to retire immediately.
Table 1. FERS Minimum Age/Minimum Service Time Combinations for Voluntary, Unreduced Retirement
*MRA is minimum retirement age and ranges from age 55 to age 57 depending on the year a FERS employee was born, as shown in Table 2.
Table 2. Minimum Retirement Age (MRA)
The following example illustrates when a FERS employee leaves federal service before being eligible to retire on an immediate retirement.
Example 1. Felice entered federal service in July 2004 at the age of 32. She worked continuously in federal service until August 2024 at which time she resigned and left federal service at the age of 52 with 20 years of federal service. At the time Felice left federal service, she was not eligible for immediate retirement because she was younger than age 60 with 20 years of service.
Minimum creditable civilian service. Creditable civilian service includes: (1) Service for which full FERS retirement contributions (made via payroll deduction) were made and not refunded; (2) Nondeduction service- temporary or intermittent service – performed prior to January 1, 1989 if a deposit for such service was made before separation; and (3) Service for which full Social Security (FICA) taxes and fully or reduced contributions to the CSRS Retirement and Disability Fund (made via payroll deduction) were deducted and not refunded.
No refund of FERS contributions. When a FERS employee leaves federal service, the employee has the option of receiving a lump-sum payment of the employee’s FERS retirement contributions made to the FERS Retirement and Disability Fund (made via payroll deductions) while the employee was employed under FERS. If the employee requests and receives this lump-sum payment of these FERS retirement fund contributions, then the employee will not be eligible for a FERS deferred retirement.
Employee Procedures for Receiving a Deferred FERS Retirement
A FERS employee who leaves federal service and is eligible for a deferred retirement FERS annuity must file Form RI 92-19 (Application for Deferred or Postpone Retirement), downloadable from www.opm.gov/forms. The departed employee fills out and completes Form RI 92-19. A completed Form 92-19 must be mailed to OPM about two to three months before the month the former employee wants the FERS annuity to start. The mailing address for the completed Form RI 92-19 is:
Office of Personnel Management
Federal Employees Retirement System
P.O. Box 45
Boyars, PA 16017-0045
Note the following:
1. Once OPM receives the completed Form RI 92-19, OPM will adjudicate the retirement application and calculate the deferred annuity.
2. OPM will not adjudicate the retirement application and calculate the deferred annuity until it receives the completed Form RI 92-19. OPM will not automatically adjudicate the retirement application and calculate the FERS annuity without a completed Form RI 92-19.
3. OPM calculates the deferred annuity by using the departed employee’s total years of service at the time the employee left federal service, multiply that by the department’s high-three average salary at the time the employee left federal service, times an accrual factor of 1 percent.
The following three examples illustrate the three deferred retirement types under FERS:
Example 2. (MRA and 30 Years). Frank entered federal service on March 1,1992 at the age of 24. He was born February 10, 1968. He worked for 30 years under FERS and left federal service on February 28,2022 under a deferred retirement. Frank’s MRA is 56 years and 8 months. He reached his MRA on October 10, 2024. In August 2024, Frank filed with OPM the completed Form RI 92-19, requesting that his deferred FERS retirement become effective October 1, 2024, the month he reached his MRA, and that his first FERS annuity check will be dated November 1, 2024.
Example 3. (Age 60 and 20 years). Theresa entered federal service on September 15,1999 at the age of 28. She was born August 10, 1971. Theresa worked for 20 years under FERS and left federal service on September 30,2019 under a deferred retirement. Theresa will become age 60 on August 10, 2031. In order for Theresa to receive her deferred FERS annuity starting when she is age 60, she must file with OPM a completed Form RI 92-19. The completed form must be sent to OPM in June 2031 in order for Theresa to receive her first deferred FERS annuity check dated September 1, 2031, the month after she becomes age 60.
Example 4. (Age 62 and 5 years). Karl entered federal service on June 15,2014 after graduating from law school. He was born July 15, 1988. Karl worked for five years under FERS and left federal service on June 30,2019 under a deferred retirement. Karl will become age 62 on July 15, 2050. In order for Karl to receive his deferred FERS annuity starting when he is age 62, Karl must file with OPM a completed Form RI 92-19. The completed Form RI92-19 must be sent to OPM by Karl in May 2050 in order for Kartl to receive his first deferred FERS annuity check dated August 1, 2050, the month after Karl becomes age 62.
Additional Information Related to Deferred FERS Retirement
FERS employees who leave federal service under the FERS deferred retirement option should be advised of the following:
• Unused sick leave. When a FERS employee leaves federal service and elects a deferred FERS retirement, any unused sick hours on the day that the employee leaves federal service will be permanently lost. This is unlike an immediate retirement in which any unused sick leave hours on the day a FERS employee retires are converted to months and days of service and added to the retiring employee’s existing service time for FERS annuity computation purposes. A departing FERS employee’s unused sick leave hours are permanently lost and not used for FERS annuity computation purposes.
• Federal Employee Health Benefits (FEHB) program, Federal Employee Dental and Vision Insurance Program (FEDVIP) and Federal Employee Group Life Insurance (FEGLI) program insurance. A departing FERS employee enrolled in the FEHB, FEDVIP and FEGLI programs while a FERS employee will permanently lose those insurance benefits when the employee leaves federal service under a deferred FERS retirement. The insurance is not restored when the retiree starts to receive his or her deferred FERS annuity.
• Retirement annuity supplement. Former FERS employees who receive a deferred FERS annuity are not eligible for the FERS retiree annuity supplement.
• Survivor benefits. If a former FERS employee had less than 10 years of creditable service and dies before coming a deferred annuitant, then any FERS retirement contributions made to the FERS Retirement and Disability Fund are paid in a lump-sum in the order of precedence. No survivor annuity is payable.
If the former employee dies before applying for a deferred annuity and had:
1. At least 10 years of creditable FERS service including a minimum five years of creditable civilian service, and
2. Has a surviving spouse who was married to the employee at the time of the former employee’s separation from federal service, or an eligible ex-spouse (married to the employee for at least 9 months while in federal service and divorced) then the surviving spouse or the ex-spouse (who has not remarried) is entitled to a FERS survivor annuity.
No survivor annuity is payable to the children of a former employee who dies before becoming an annuitant.
Edward A. Zurndorfer is a Certified Financial Planner (CFP®), Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019