Social Security is one of the three components of the FERS retirement. When a FERS employee retires before age 62 under the immediate retirement rules, the FERS employee will receive the first of lifetime FERS monthly annuity checks one or two months after the day the employee retires. The following table summarizes the several types of immediate retirement.
| Type of Retirement | Age | Service (Years) |
| Regular
Reduced Reduced |
MRA
60 62 MRA MRA |
30
20 5 10 20 |
|
Early (VERA and VSIP) |
50
Any age |
20
25 |
| Disability | Any age | 18 months |
| Special Provisions | 50
Any age |
20
25 |
When a FERS employee retires under the regular retirement rules between his or her minimum retirement age (MRA, age 55 to age 57, depending on which year the employee was born) the FERS employee will immediately receive his or her FERS annuity. The retired employee has the option of making penalty-free withdrawals from his or her traditional TSP account. However, the earliest age a retired FERS employee can start receiving Social Security retirement benefits is age 62.
Since many FERS employees retire before age 62, the Office of Personnel Management (OPM) automatically pays the Special Retirement Supplement (SRS) annuity to a FERS employee who retires before age 62 under the immediate retirement rules.
Calculation of the SRS Annuity
OPM calculates the SRS annuity by obtaining the amount of the retired FERS employee’s estimated Social Security monthly retirement benefit at age 62 and then adjusting that amount by a percentage equal to the employee’s total years of FERS service divided by 40. The following is the formula for calculating the SRS annuity is:
Estimated employee’s estimated annual Social Security retirement benefit at age 62.
times
[employee’s total years of FERS service/40].
The following example illustrates:
Example 1. Florence retired from federal service on December 30,2023 at 57 with 35 years of federal service under FERS. Her estimated annual Social Security retirement benefit at age 62 (obtained from her Social Security online statement) was $15,000/year. Florence’s estimated SRS annuity was calculated as:
$15,000/year x (35/40) = $13,125 (Florence’s SRS annuity)
Note the following:
- OPM retirement office automatically sends the SRS annuity to an eligible retired FERS employee. The retired FERS employee can decline the SRS annuity by notifying OPM not to send it.
- The SRS annuity does not get a COLA.
- The SRS annuity automatically stops the month in which the FERS retiree reaches age 62.
One reason that a FERS retiree may decline the SRS annuity is that the FERS retiree is returning to work. A retiree who is employed after retiring from federal service under FERS may lose a portion or all of the SRS annuity if the amount that the retiree earns exceeds the maximum permissible “exempt amount” of earnings. Note the following with respect to the reduction to the SRS annuity:
- The reduction applies only to the SRS annuity and not to the FERS annuity.
- The reduction for excess earnings does not apply to employees who retire under the Special Provisions (Law Enforcement Officers, Firefighters, Air Traffic Controllers and Custom Border and Patrol Officers) until they reach their MRA.
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Exempt Amount of Earnings
The exempt amount of a FERS retiree’s earned income (wages/salary and/or net self-employment income of a FERS retiree receiving the SRS annuity) is the same as the amount established by the Social Security Administration for the purpose of calculating the earnings reduction for Social Security benefits.
During 2024, the exempt amount was $22,320. That means a FERS retiree receiving the SRS annuity during 2024 could earn (in salary/wages and/or self-employment net income up to $22,320 during 2024 without losing any portion of the SRS annuity to which he or she may be entitled.
Amount of the SRS Annuity Reduction
If a FERS retiree’s earned income exceeds the annual exempt amount, the SRS annuity will be reduced by $1 for every $2 earned above the exempt amount. Earned income for the purpose of calculating the earnings reduction consists of the sum of wages for service performed during the year, plus all net earnings from self-employment for the year, minus any net loss from self-employment for the year.
When the Reduction Is Assessed
A reduction in the SRS annuity in a given year is based on excess earnings in the previous year.
The reduction is assessed beginning with the year immediately after the first year during which a FERS retiree became entitled to the SRS annuity or reached the MRA if already receiving the SRS annuity before the MRA. The following examples illustrate:
Example 2. Phyllis retired in June 2020 at age 57 with 30 years of FERS service. She was immediately eligible for the SRS annuity. Her post-retirement earnings after June 30,2020 were subject to the “earnings test”. If her post-retirement earned income exceeds the 2020 exempt amount of $18,240, then her SRS annuity will be reduced.
Example 3. Donald retired in May 2019 at the age of 52 as a federal firefighter. He started receiving his SRS annuity immediately after he retired. Donald also started working after he retired from federal service. Since he retired as a special provision employee, Donald’s SRS annuity is not subject to the “earnings test” until the month he reached his MRA. Donald reached his MRA in July 2021. Starting August 1, 2021, Donald’s SRS annuity was subject to the “earnings test”.
Reporting Earnings to OPM
OPM’s Retirement Office asks each FERS retiree who has reached his or her MRA for a statement of earned income each year he or she is eligible to receive the SRS annuity. Earned income must be reported by FERS retirees using Form RI 92-22 (Annuity Supplement Earnings Report).
OPM should send out Form RI 92-22 to each FERS retiree who has reached his or her MRA and who received the SRS annuity. For the year 2024, the FERS retiree will report his or her earned income received during 2024. Age income may be obtained from the FERS retiree’s 2024 W2 statement (in particular, on the W2, Box 3 – Social Security wages). Self-employment net income may be obtained from the FERS retiree’s 2024 Form 1040, Schedule SE (Self-Employment Tax).
The completed form should be mailed to:
U.S. Office of Personnel Management
Retirement Surveys and Students Branch
FERS Annuity Supplement Survey
1900 E Street NW, Room 2416
Washington, DC 20415-0001
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. CC All Sent Messages to KWS
The investment profiles above are hypothetical, and the asset allocations are presented only as examples and are not intended as investment advice. Please consult with your financial advisor if you have questions about these examples and how they relate to your own financial situation,
Insurance policies have exclusions and /or limitations. The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges, In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company.
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Ed Zurndorfer, EA, ATA, CFP®, CLU®, ChFC®, CEBS®, ChFEBC℠: Federal Employee Benefits Expert
A former career Federal employee, Ed has published a staggering 1,200+ separate articles on Federal Benefits and Retirement!
Just “Google” his name, and you are likely to find a plethora of sites that contain his writings. Drawn to its mission to reach, teach
and serve Feds, Serving Those Who Serve is the only financial planning practice with which Ed has chosen to affiliate in over
20 years teaching. In addition to conducting Federal Benefits seminars for Serving Those Who Serve, you can find Ed’s
writings here on our blog in the FedZone, and on Fed-Soup, MyFederalRetirement, FederalNews Radio and NITP.
He is a member of the Maryland Society of Accountants, the National Association of Enrolled Agents, the International Society of Certified Employee Benefits Specialists, the Financial Planning Association, the National Association of Health Underwriters,
and the Society of Financial Service Professionals. Since 1999, Ed has taught many thousands of Federal employees about
their benefits, in person and at Federal agencies all over the country. Ed is a true national treasure.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.