Provided by Joseph V. Curatolo
Yes, a phased retirement program is authorized by the Moving Ahead for Progress in the 21st Century Act or MAP-21. In 2014, the United States Office of Personnel Management (OPM) issued final rules relative to the program that provide guidance to agencies and employees about who may elect phased retirement, what benefits are provided, how the retirement pension/annuity is computed during and following phased retirement, and how federal employees may exit the phased retirement program.
Generally, each federal agency has the option of offering a phased retirement program — employees have no right to phased retirement. Otherwise, only employees who have worked full-time for the preceding three years — who meet certain age and years of service combinations for immediate retirement in either the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) — may be eligible. Employees subject to mandatory retirement (law enforcement officers, firefighters, air traffic controllers, etc.) may not participate.
According to OPM regulations, phased retirement program participants must spend at least a fifth of their working time mentoring co-workers. Also, phased retirees continue to be subject to applicable retirement deductions, and Social Security and Medicare payroll taxes. During phased retirement, health and life insurance benefits continue to be provided through the employing agency with no reduction. Phased retirees may exit the program to full retirement at any time without agency approval.
During phased retirement, the employee’s pension/annuity is treated as if the employee fully retired, then one-half of that amount (without reduction for survivor benefits) is paid to the employee while receiving half of his or her pay. When the employee fully retires, the full pension/annuity is paid, reflecting an increase as if the employee had been employed full-time during the phased retirement period. While a survivor benefit election is not available on a phased retirement annuity, a survivor election can be made once the employee fully retires. For more information, visit the Office of Personnel Management website at opm.gov.
Joseph V. Curatolo is president of Georgetown Capital Group, 5350 Main St., Williamsville (phone: 633-9800, toll-free 1 (800) 648-8091, fax 633-9789, www.georgetowncapital.com).
Representatives offer Securities and Advisory Services through Royal Alliance Associates, Inc., Member FINRA/SIPC and a registered investment advisor.
Georgetown Capital Group is independent of Royal Alliance Associates, Inc., with separate ownership, and is not registered as a broker-dealer or investment advisor.
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