What feds need to know regarding rules, eligibility, and the application process for the FERS disability retirement.
First off, if you are a federal employee who is able to take an immediate FERS pension, then that is probably the route to take, even if you become disabled. If you think there is a possibility that you might try to return after you leave federal service, then a disability retirement might be an option for you. In this article, we’ll explore how age, length of service, and Social Security impacts a FERS disability retirement calculation.
Application to OPM
To qualify for a FERS medical retirement, you must have at least 18 months of service under FERS. The application to OPM can be submitted either before leaving your federal position due to your disability, or within one year after. If you didn’t apply in either of these timeframes, OPM will dismiss the application. Before applying however, you must provide complete medical documentation of the disablement to your agency, including details on how the disability prevents you from performing your current duties. In turn, your employing agency must then provide certification showing that it “exhausted all reasonable attempts” to keep you working “in a productive capacity.” After the agency certifies that it was unable to either provide (reasonable) accommodation for the medical condition, or reassign you to a different position with the same salary (that you’re also qualified for) that’s also in the same locality… then you can start filling out forms SF-3107 (retirement application under FERS disability) and SF-3112 (support documents) to submit to OPM for processing.
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If less than 31 days has passed since leaving federal service, your HR specialist is required to assist you in completing the forms. After that, you’re either on your own or need to hire outside help (like an attorney) unless the HR contact at your agency is feeling generous.
FERS Disability Calculation
The age 62 is crucial when calculating disability benefits under FERS. If you’re 62 or older, the FERS calculation is exactly the same as an immediate retirement. With less than 20, but more than 5 years, your pension amount is calculated by multiplying the years of service by the high-3 salary and then multiplying that product by 1%. If you have 20 or more years of creditable federal service, you get a 10% boost because your multiplier is 1.1% instead. Of course, none of that has to do with disability really. If 62 or older, medical retirement is for federal employees who had less than 5 years of service and therefore aren’t eligible for a voluntary FERS pension. With at least 18 months of service, you can still earn a FERS annuity if you become disabled, and the calculation will be exactly the same, with the 1% multiplier.
If under the age of 62, FERS disability is a completely different ballgame. Most importantly, you must submit an application for Social Security disability benefits before submitting your disability retirement application to OPM. You could still be approved for the FERS benefits even if the Social Security Administration rejects your application. It is important to note, though, that if you withdraw your application for Social Security disability, OPM will dismiss your SF-3107 for FERS benefits.
The calculation during the first 12 months of receiving disability benefits, for those younger than 62 is:
- 60% of the high-3 salary
- minus 100% of any social security benefits received.
After this first 12-month period, the calculation is as follows, until reaching age 62:
- 40% of the high-3 salary
- minus 60% of any social security benefits received
Once you reach age 62, the calculation reverts to the typical formula:
- years of service
- x high-3 salary
- x 1% multiplier
And if you had 20 years of service or more when you retired, you’d even get to use the 1.1% multiplier upon turning 62.
Should you return to work at any point, whether with the federal government or not, it is possible that you might remain eligible for at least some of the FERS disability benefits, but only if your current income is 80% or less than the income level you were at prior to taking a medical retirement.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.