What Can Happen to Your Retirement Benefits If You Seek Re-Employment?

by | Aug 1, 2014

Last Updated December 14, 2023
retirement plan re-employment in the federal government

If you retired under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) and are seeking re-employment with the federal government, you need to know how this will affect the retirement benefits you have been receiving.

The following are answers to questions you may have about this situation:

What happens to your annuity?

If you become re-employed by the federal government, your retirement annuity will stop. You will no longer receive that form of income. In some cases, your annuity may continue, but your paycheck will be reduced by the amount of your annuity so that you do not receive “double payment.”

What happens to your retirement and death benefits?

It depends on how long you are re-employed. If you are re-employed for one year but less than five years, then you may earn a “supplemental” annuity benefit. This amount will be added on to your already existing benefits.

If you work for five years or longer, then you may decide to have your annuity completely “re-determined.” If you work only intermittently, then this will not apply.

If you die while you are re-employed, your surviving spouse may have his or her survivor benefits increased accordingly.

What happens to your health benefits and group life insurance?

Becoming re-employed will suspend your health benefits from your annuity. However, you can re-enroll in the Federal Employee Health Benefits Program (FEHB) through your new position. If your new job does not offer coverage through FEHB, then your coverage should continue as it was before. The premiums will be paid from your retirement annuity.

Re-employment will stop your life insurance under the Federal Employees Group Life Insurance (FEGL) as an “annuitant,” or a person who receives benefits through an annuity. However, you will be eligible for life insurance as a federal employee rehire. If your annuity continues while you are re-employed, then you do not have to worry about this. Your life insurance will still be tied to your annuity.

If you die during your re-employment, your survivors will receive the life insurance benefit you had as a rehire or the life insurance benefit you had as a retiree – whichever is greater.

What about dental and vision coverage (FEDVIP)? 

The same applies as above. If your annuity ends, then your dental and vision benefits will no longer be tied to your annuity. You will have to re-enroll as an employee. However, if your annuity does not stop, then your dental and vision benefits will still be tied to the annuity you receive and paid out accordingly.

What if you retired as a disabled worker?

There are special circumstances that may affect your rights if you became re-employed after having been retired as disabled. Re-employment may mean you are now recovered from your disability. This can affect your benefits and future disability retirement eligibility in certain ways.

Will my years in retirement count as time in service once I have returned to work?

The short answer is, “No.” The years you spent in retirement prior to re-employment will not earn you time-in-service credit. Your benefits will be based on your prior time in service before retirement and the time spent during re-employment after retirement.

How can I get more information?

For further information about this topic, we suggest reviewing the Office of Personnel Management’s website. You can also contact your agency representative for more information.

You can also feel free to contact Harris Federal Law Firm to learn more about this topic and other issues concerning your right to federal disability retirement benefits.

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