A federal employee may be eligible to retire but decide to resign instead. Their paycheck ceases, and their retirement doesn’t start until they file for retirement benefits. It’s not a common occurrence but here are some situations in which a federal employee, who is eligible to retire, may decide to resign:
- He/she wants to work for a different federal agency but not continue with their current employment while seeking the new position.
- There is an interest in moving to a new state or different country and they are seeking reemployment afterward.
- He/she wants to prevent an ex-spouse from receiving a court-ordered share of their retirement benefit, even though that keeps the employee from receiving their own share of the benefit.
So, why do this? Why not simply retire and get the benefit? There are several different reasons.
Once you voluntarily retire and then become reemployed in federal service, you are considered a reemployed annuitant. This may mean an offset to your salary in the amount of your retirement benefit, so you’d only be receiving the difference between your salary and your benefit.
Having new service added to your retirement requires at least a one-year commitment to reemployment and having your retirement recomputed would require 5 years of additional service. However, there are exceptions to this salary offset:
- Dual compensation waiver of reemployment of civilian retirees to meet exceptional needs.
- Involuntary retirement under discontinued service.
- If you are found to be recovered from a disability, are under age 60, and have retired under provisions of CSRS or FERS disability retirement.
Employees who leave federal service at their Minimum Retirement Age with less than 30 years of service, but more than 10 years, or at age 60 or 61 with less than 20 years, but more than 10, will incur a penalty of 5% for every year they’re under age 62 at the time they file for retirement. Postponing the application will reduce or eliminate the reduction. If the employee returns to federal service prior to filing for retirement, they will not be considered a reemployed annuitant. They will simply be considered a rehired former employee.
A former employee who is 58 years old with more than 20 years of regular FERS service, separated before reaching their MRA. She wants to find a FERS-covered position but wants to know how she would be treated upon rehire if she wasn’t able to secure that job until after her 60th birthday (at which point she would be eligible for an unreduced deferred annuity). The question is would she be considered a reemployed annuitant if she were to return to federal service after turning 60?
The answer is anyone who separated from federal service without filing a retirement application and is rehired would be treated as a rehire and a reemployed annuitant. This is also true if the employee had been eligible for an immediate retirement, be approved and start receiving payments prior to being rehired, in order to be considered a reemployed annuitant.