We get this question all the time, and the answer is a little complicated. Federal Disability Retirement is a benefit offered to federal employees who are unable to continue working because of a disability. If you are approved for Federal Disability Retirement, you will receive an annuity that allows you to live comfortably and the ability to work in the private sector. However, if you decide to return to work in the federal government, your annuity could be reduced or even terminated.
In this article, we will explore the implications of returning to work in the federal government after receiving Federal Disability Retirement benefits.
What Happens if You Are Reemployed in the Federal Government?
While on Federal Disability Retirement you have the option to work in the private sector while staying under an income cap. Federal Disability Retirement annuitants are not often able to return to federal service because their condition is too severe. But if you are able and decide to return to federal employment, you may lose your annuity or have your annuity greatly reduced.
If your new federal position is at the same or higher pay grade than the position from which you retired, your Federal Disability Retirement will be terminated. If your new position is at a lower grade, your salary will be reduced by the amount of your annuity.
If you are reemployed in the Federal service and your salary is reduced by the gross amount of your annuity, the gross amount of your salary before the reduction is still considered earnings during the calendar year.
While working on Federal Disability Retirement, the OPM sets an earning limit at 80% of your previous position’s current salary. If you’re under age 60 and OPM terminates your annuity because you reached the 80 percent earnings limit or you have been found recovered from your disability, your payments will stop on the date you’re reemployed in the Federal service, even if you’re reemployed in a position that is at a lower grade than the position you retired from.
If You Are Over Age 60
If you’re over age 60 at the time of reemployment, your annuity payments will continue, but your salary will still be reduced by the amount of your annuity. There is no limit on the amount of earnings you may receive after age 60, so the OPM cannot terminate your annuity payments.
You will not be found recovered based on your employment unless you specifically request to be found recovered.
Who to Notify if You Are Reemployed in the Federal Government
You must tell the agency in which you are seeking reemployment that you are a Federal Disability Retirement Annuitant and what your work restrictions are, so that you can successfully perform this job.
You must also notify the Office of Personnel Management (OPM) at: U.S. Office of Personnel Management Retirement Operations Center Boyers, PA 16017.
If possible, provide the OPM with a copy of the personnel document showing your job appointment or provide the full name and address of your employing agency. The OPM will begin working on your annuity reduction as soon as possible. Be sure to provide your CSA number anytime you contact the OPM so they can easily find your annuity account.
If You Recover
While Federal Disability Retirement is intended to be a long-term benefit, there are rare cases where annuitants recover from their medical condition and want to return to work in the federal government.
If this happens, you may request to have your Federal Disability Retirement annuity terminated. You must notify the OPM and provide documentation from a licensed medical doctor that states that your condition has improved and that you are able to return to work.
Your annuity will stop at the end of 1 year from the date of the medical examination or report showing your recovery, or your annuity will stop upon your reemployment in the Federal Government, whichever occurs first.
It is almost never recommended to return to work in the federal government if you can avoid it. While you are allowed to return to federal service, there are many implications that could cause you to lose your annuity payments. It is important that you understand these implications before making a decision to return to work in the Federal government.
If you are able to work, there are many private sector jobs available that will allow you to continue receiving your full annuity payment.
If you have any questions about Federal Disability Retirement, our firm has helped over 8,000 federal employees apply for this benefit– and we are passionate about educating all federal employees on their options for the future.
Schedule a FREE consultation today to see how we can help you.