Helping Federal Employees and Annuitants Understand Their Benefits
Rehired Annuitant Guidance for FERS & CSRS Retirees Desiring to Return to Federal Service
There are opportunities for retirees to return to federal service under the rehired annuitant program. In most cases you will keep your full annuity however your new federal salary will be reduced by the amount of your annuity in most cases. The salary reduction is waived for certain critical occupations. There are also opportunities to return to work with your agency as a contractor employee or under a personal services contact.
It is important to note that 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 you retiree from federal service.
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Reemployment in the federal sector may affect your annuitant status and whether you will continue to receive annuity during and after the period of employment.
Reemployment will cause your annuity to stop if -
If your annuity does not stop under the above conditions, then you will continue to receive it while working. Your pay will be reduced by the amount of annuity paid for the period you work. If you do not work full time, the reduction in pay will be adjusted proportionately. However, some pay is not subject to this reduction for annuity. Pay is not reduced for annuity for a period during which you have elected to receive injury compensation benefits in lieu of annuity or when you receive a lump-sum payment of annual leave on separation. Unless your reemployment is on an intermittent basis, retirement deductions will be withheld from your pay. The retirement deductions are a percentage of your basic pay, before it is reduced for annuity.
Not all of the above rules apply to all reemployed annuitants. If you are reemployed -
Section 1122 of the National Defense Authorization Act allowed reemployment of CSRS and FERS annuitants on a limited basis with receipt of both annuity and salary. The provisions apply to Executive agencies (excluding the Department of Defense and General Accountability Office), the Postal Service, the Judicial Branch, and Legislative Branch agencies (other than GAO, which is excluded under both the Executive and Legislative Branch provisions). This act was set to expire and may be extended from time to time. If the act is extended:
The authority may be used by agencies when they determine that use is necessary
to:
(A) fulfill functions critical to the mission of the agency, or any component of
that agency;
(B) assist in the implementation or oversight of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5) or the Troubled Asset Relief Program
under title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5201 et seq.);
(C) assist in the development, management, or oversight of agency procurement
actions;
(D) assist the Inspector General for the agency in the performance of the
mission of that Inspector General;
(E) promote appropriate training or mentoring programs of employees;
(F) assist in the recruitment or retention of employees; or
(G) respond to an emergency involving a direct threat to life of property or
other unusual circumstances.
Individuals reemployed will serve under appointments limited to a year or less.
An annuitant may not serve under the authority for:
Reemployment may not exceed 2.5 percent of the full-time workforce at any time, and if 1 percent is exceeded, agencies are required to provide an explanation and justification to the Congress and OPM. Individuals employed under these provisions will not be entitled to any additional annuity benefits based upon that employment.
Agencies may begin using these waivers now.
Expiration of authority: This authority originall expired on October 27, 2014. Check with agencies of interest to see if extensions were granted.
Reference: Authorized under the National Defense Authorization Act for Fiscal Year 2010”, Public Law 111-84, signed on October 28, 2009, Section 1122 and 1123 – Part-Time Employment, summary from OPM, dated 1/12/2010
Agencies initiate an agreement with a recent retirees to perform specific functions under personal services contracts. Generally the agency includes specific tasks and compensation in the agreement and it is for a defined period of time. The retiree that is reemployed under a personal services contract isn't considered a federal employee and the payment would not effect his/her federal annuity payments. No benefits are included. The agency will send out a 1099 IRS form instead of a W-2 at the end of the year. Contract workers are considered self-employed and would be required to pay both employer and employee FICA taxes.
Employees can also return to work in the same or similar job working for a private contractor company after retiring. The employing company typically provides benefits and the parties sign an agreement about the salary, work schedule, and any other job requirements. The jobs are typically at larger facilities and the retiree is no longer a federal employee. If you work at a facility that has contractor support in your specialty contact them after retiring to explore employment options. Many opportunities exist for those willing to seek them out and employment as a contractor will not affect your federal annuity. Contractors often offer attractive 401K plans for employees that will afford you the opportunity to increase your retirement savings. Working for a contractor can also benefit CSRS retirees if they have less than 40 quarters for Social Security. Many with less than 40 quarters will often be able to accrue enough to qualify for Social Security down the road.
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 federal agency employer. Review the following references for additional guidance.