Posted on Sunday, 1st September 2019 by

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I often receive questions from retirees desiring to return to work and from agency HR departments interested in hiring former federal employees.  Agency recruiters are trying whatever they can to fill critical positions.  With an unemployment rate of 3.7% the country is at full employment. One of the ways to fill critical positions is to hire those who voluntarily stopped working, including retirees.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Returning to work can supplement your Annuity, Social Security, and TSP payouts down the road. Federal retirees can go back to work in the private sector without any impact on their federal annuity. You will continue to receive your full annuity and all benefits if you decide to work in the private sector after retiring from federal service. This includes working for contractors that provide services to the federal sector. However, if you should return to work with a federal agency your pay will be reduced by the amount of your annuity in most cases. There are exceptions to this for certain critical positions. The rules for rehired annuitants are outlined below for CSRS and FERS retirees.

There are instances where your annuity will be stopped under certain conditions and you will be covered as a regular employee. The rules are complex and if you are considering returning to federal employment review the guidance listed above. Discuss any concerns you may have with the hiring HR department. They can obtain clarifications from OPM if needed.

Agencies can also hire retired federal workers under Personal Service Contracts that will not impact your annuity. These contracts are designed for completing specific tasks for a predetermined compensation rate within a set time limit.

An agency HR department recently hired a retiree and they questioned why the individual couldn’t suspend his FEHB plan he had in retirement and take the FEHB plans they offered. The rehired annuitant wanted to take advantage of the FEHB Premium Conversion feature. Retirees don’t get the same FEHB premium tax break that active federal employees have. Federal employee’s contributions to the Thrift Savings Plan (TSP) and their FEHB premiums are excluded from gross pay before Federal Income taxes are applied. 

If you are reemployed in Federal service in a position that conveys FEHB eligibility, you may have the opportunity to participate in premium conversion. If you participate in premium conversion, your enrollment can be transferred from your Retirement System to your employing agency. Your FEHB premiums will be deducted from your pay on a pre-tax basis as an employee not from your annuity. When you separate from reemployment, your retirement system will transfer in your enrollment. You wouldn’t suspend FEHB coverage you would transfer coverage to your new employer. Review the following reference for additional guidance. 

CSRS / FERS Hanbook Chapter 100  (page 51- 53 and 55 – 57)

You can only suspend FEHB coverage under the following conditions:

If you suspend your FEHB enrollment because you are now covered by a Medicare Advantage plan, TRICARE, CHAMPVA, Medicaid or similar State-sponsored medical assistance program, or Peace Corps Volunteer coverage, you can restart your FEHB in the future. These are the only exceptions that allow retirees to suspend FEHB coverage. The following links provide additional information on the FEHB suspension process:

If you are interested in going back to work for Uncle Sam contact agency HR departments in your area to determine if there are any openings in your specialty. You can return to work at any agency, not just the one you retired from as long as you have the required qualifications for the position applied for. There are other advantages to going back to work, especially for those who wish to start a small business. You can Return to Work and Receive a Tax Break! Use our Jobs Board to explore all opportunities in your area.

Scheduling A Retirement Benefits Seminar

Federal Employee Benefits Advocates (FEBA) provides comprehensive benefits briefings for Federal employees so they can make informed retirement decisions. Briefings include information on CSRS or FERS Retirement Annuities and all insurance programs including Medicare, the Thrift Savings Plan (TSP), Social Security, disability and other relevant retirement planning topics. 

Schedule A Seminar in Your Area

Benefits Administration Letter 11-104 requires agencies to educate employees on how to plan for retirement. FEBA assists Federal agencies to comply with this directive. HR departments can Contact FEBA to schedule briefings for their area.

Helpful Retirement Planning Tools / Resources

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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