The Office of Personnel Management (OPM) has provided an online “retirement quick guide.” The “retirement quick guide” is designed to help recently retired federal employees as to what to expect as their retirement application is processed and their final retirement benefits are determined. This column summarizes and explains the important parts of the “retirement quick guide.”
The retirement process is composed of five stages:
Stage 1 – Retirement date. This is referred to as an employee’s official date of separation from federal service for retirement.
Stage 2 – Agency and payroll processing. The retiring employee’s agency prepares the retired employee’s retirement application package including sending it to OPM’s Retirement Processing Office. This process may take anywhere from 30 to 45 days.
Stage 3 – OPM intake. OPM’s Retirement Processing Office sets up the retired employee in the system, including making arrangements for “interim” annuity payments. This process may take 10 to 15 days.
Stage 4 – OPM processing. OPM’s Retirement Processing Office reviews and calculates the retired employees’ benefits. This process may take 10 to 90 days.
Stage 5 – Retirement finalized. Direct deposit of retired employee’s first full annuity check. This process should occur anywhere from five to 10 months after the retirement date.
During Stage 4 (OPM processing), the retired employee should receive “interim” annuity payments, typically 60 to 80 percent of the retired employee’s estimated net CSRS or FERS annuity. These “interim” annuity payments should help the retired employee pay their monthly expenses while they are waiting for their first full annuity check. During this period, the retired employee will have full access to their FEHB program health insurance coverage that the employee is eligible to keep into retirement. During the OPM processing stage, the retired employee will also have access to Retirement Services Online (www.servicesonline.opm.gov) in order to track their retirement application processing.
Four Tasks That Retiring Employees Should Do Before They Retire
In order to accelerate and to make their retirement application process as efficient and “uneventful” as possible, retiring employees are advised to perform the following tasks before they retire:
- Download their personnel records if their agency uses eOPF and the employee wants their own copies. Employees lose access to their eOPF once they retire.
- Complete payments for any open service credit accounts for CSRS or FERS eligible deposits or service redeposits. Honorable post-1956 Military service deposits must be paid in full to the employee’s agency before an employee retires.
- Check supplemental documents. Include all documentation required for the retirement application. This includes marriage certificates, military service records, court orders, etc.
- Review eligibility requirements and options to continue federal health insurance offered through the Federal Employees Health Benefits program, and life insurance, offered through the Federal Employee Group Life Insurance program, into retirement.
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Retiring Employees Should Understand Their Retirement Benefits Choices
Retiring employees are advised to make sure that they understand the prerequisites to keep throughout retirement the following employee benefit categories. Their choices of which benefits to keep in retirement can significantly impact the amount of their monthly CSRS or FERS annuity.
- Health benefits. The Federal Employees Health Benefits (FEHB) program can help retiring employees and their families meet their health care needs throughout retirement. Federal employees, retirees and their survivors enjoy the widest selection of health plans in the country. Federal retirees like employees pay on average 25-28 percent of the FEHB program health plan premiums with the federal government paying the remaining 72 to 75 percent. FEHB program plan brochures show retirees what services and supplies are covered and the level of coverage. Retiring employees are encouraged to review the brochures carefully. They are also encouraged to learn how Medicare coordinates with FEHB program health plans. Federal retirees are eligible to enroll in Medicare once they become age 65.
- Pharmacy Incentive Programs and FEHB. OPM does not prohibit the FEHB program from participating in pharmacy-sponsored incentive programs, or pharmaceutical company co-pays reimbursement programs. OPM does not have authority over promotional incentive programs or what retail pharmacies choose to offer customers. OPM cannot direct retail pharmacies to provide the incentives to FEHB program members.
- Life Insurance. The Federal Employees’ Group Life Insurance (FEGLI) program is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as many of their family members. Retiring federal employees enrolled in the FEGLI program are advised to check with their Human Resources Office or their Personnel Office concerning their eligibility to retain FEGLI coverage in retirement. Federal retirees pay the full cost of FEGLI premiums.
- Survivor benefits. Various survivor benefits are offered to family members of federal retirees. A federal retiree’s monthly annuity check is subject to reduction in order to pay for some of these survivor benefits.
Factors That May Delay Retirement Processing
Certain circumstances and events can significantly delay retirement processing and include:
- Court orders such as a divorce or a property settlement. Court orders usually require an additional step in OPM’s retirement process and are sent to the OPM’s Court Order Benefits Branch for review.
- Service as a Law Enforcement Office, Firefighter, Air Traffic Controller, Capitol Police, Supreme Court Police, or Nuclear Materials Courier are granted a special annuity computation.
- Service as a part-time or intermittent federal employee.
- Federal service in multiple federal agencies.
- Missing documents and forms, or incomplete or incorrect information in a retirement application.
- Moving without updating one’s address with OPM.
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.
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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.