Countdown to COLA

would she collect a reduced amount from Social Security because of my CSRS pension, or vice versa?

AYour spouse is not a government employee, so the Social Security benefit she earned for herself will not be affected by your receipt of a government pension. If she becomes entitled to spousal Social Security benefits based on your work record, she would be entitled to these benefits if they are larger than the benefit that she has earned for herself from Social Security.

However, once you retire under CSRS, your entitlement to Social Security retirement benefits that you may have earned for yourself may be reduced by the modified benefit calculation of the Windfall Elimination Provision (WEP). If you claim a spousal or a widow’s benefit based on your wife’s Social Security record, those benefits will be offset by twothirds of your CSRS retirement due to the Government Pension Offset (GPO) and, in most cases, completely offset any spousal benefits that your wife may have earned for you.

If you predecease your spouse and you elected to provide her with the maximum CSRS survivor annuity, she will receive the full benefit in addition to her own earned Social Security retirement benefit. If you outlive your spouse, then you should report her death to OPM so that your unreduced CSRS retirement can be restored, as you would no longer need the spousal survivor benefit election reduction.

If you retired under CSRS Offset, keep in mind that your CSRS retirement benefit may be reduced when you become eligible for Social Security benefits (generally at age 62) by the value of the Social Security benefit you earned while you were employed under the CSRS Offset retirement coverage.

You can get more information on the WEP and GPO from these resources on the Social Security website, www.ssa. gov: Publication 05-10007, “Government Pension Offset,” and 05-10045, “The Windfall Elimination Provision.” You can also request these pamphlets from Social Security by telephone at 1-800-772-1213.

MID-CAREER SEPARATION AND MILITARY DEPOSITS

QI’ve been working as a federal employee with retirement coverage under FERS for seven years. I’m thinking about separating from federal service mid-career to pursue an employment opportunity in the private sector, although I might consider returning to federal service later. I’m in the middle of paying the military deposit for four years of active-duty service. If I don’t finish paying my military deposit before I separate, will I be allowed to finish paying it later? A Military deposits can only be paid to your agency payroll office while you are federally employed. If you don’t finish paying the deposit before you separate, you would only be allowed to finish paying the deposit if you returned to federal employment with FERS coverage.

It’s a good idea to finish paying your military deposit before you separate. It could save you money by not having to pay additional interest if you returned to federal service later. Interest would continue to accrue on the deposit amount due even after you separate, even though you couldn’t finish paying the deposit until you returned to a FERS-covered position.

Second, if you don’t finish paying your military deposit before separation and you never return to a FERS covered position later, then the deposit amount that you previously paid would be refunded when you apply for your deferred retirement, and your military

MONTH CPI-W Monthly % Change

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.4% percent in October 2022. To calculate the 2024 cost-of-living adjustment (COLA), the 2023 third- % Change quarter indices will from 291.901 be averaged and OCTOBER 2022 293.003 0.40 0.38 compared with the NOVEMBER 2022 third-quarter average of 291.901. DECEMBER The percentage JANUARY 2023 increase determines the FEBRUARY COLA. October’s index, MARCH 293.003, is up 0.38% APRIL percent from the base. MAY The CPI represents purchases of food and JUNE beverages, housing, apparel, JULY transportation, medical care, AUGUST recreation, education and communication, and other SEPTEMBER goods and services. For FECA COLA updates, visit narfe.org and search for FECA.

service years would not count towards your FERS pension.

Finally, if you are married, paying the military deposit could preserve a spousal survivor benefit for your spouse if you were to predecease your spouse before returning to federal service or before applying for your deferred retirement. If a married FERS employee separates mid-career with a minimum of 10 years of creditable service under FERS, the spouse will be eligible to apply for a monthly spousal survivor benefit as early as what would have been the deceased individual’s FERS minimum retirement age if the Fed dies before returning to federal service or before applying for his/her retirement.

RETIREMENT

FEDERAL TAXES AND YOUR PENSION

QHow does the money that I put into the Civil Service Retirement and Disability Fund (which has already been taxed) affect the federal taxation of my annuity?

ASince you already paid federal income tax on your retirement contributions while federally employed, you are entitled to receive an amount equal to those contributions as tax-free income. Under the IRS Simplified General Rule, a portion of each monthly payment is tax-free, and represents the recovery of your previously taxed contributions. The remaining portion of each monthly payment is fully taxable.

You continue to claim this tax-free amount until the total tax-free amounts claimed equal your retirement contributions. At that time, all your benefit becomes taxable. This amount is typically provided to you when you receive your final adjudication booklet from OPM shortly after you retire from federal service. The 1099R form that OPM provides to you each January should also include information regarding the total amount of annuity that was distributed to you during the previous tax year and the total amount that was taxable. Refer to IRS Publication 721 for more details regarding the federal taxation of your federal annuity.

OPM RETIREMENT PROCESSING TIMEFRAME

QI retired on December 31, 2022. How long does it typically take for OPM to process my retirement application?

AA good rule of thumb is to expect the best but prepare for the worst. Typically, your agency has 30 days from the date of your separation from federal service to complete their portion of the retirement processing. Your payroll office also has a part in the processing of your retirement, as they will separate you from the rolls of your agency by paying out your unused annual leave lump-sum payment and then forwarding your Individual Retirement Record to OPM. OPM’s Retirement Services strives to complete retirement claims within 60 days from the date that they receive your retirement application package from your agency.

The process may take more time than average if, for example, your retirement claim has special circumstances (e.g., retirement under special provisions such as law enforcement retirement, evaluating a court order). It may also take more time if OPM needs to contact you to make a benefit election (e.g., a civilian service credit deposit). Delays may also be due to missing information from your former employing agency or from another agency such as the Social Security Administration if a benefit from them affects your claim. Sometimes delays occur due to the volume of work waiting to be processed at OPM. See the publicly available link that OPM updates monthly to review their rolling two-year window of average processing times at www. narfe.org/opm-processing.

SOCIAL SECURITY DUAL ENTITLEMENT

QNow that my spouse is drawing Social Security, can I apply for just my spousal benefit and delay filing for my own earned Social Security benefit to earn delayed retirement credits?

ANo, under current Social Security law, if you were not born prior to January 2, 1954, you are “deemed” to file for both your own retirement and for any benefits you are due as a spouse, no matter what age you are. Deemed filing means that when you file for either your retirement or your spouse’s benefit, you are required or “deemed” to file for the other benefit as well, and you would automatically receive the higher of the two.

An exception would apply if you were to outlive your spouse. If you hadn’t started drawing a Social Security benefit upon the death of your spouse, you may restrict your application to the survivor benefit that your spouse earned for you while allowing your own work record to continue earning delayed retirement credits until you were ready to switch to your own larger benefit later.

Another example would be if your deceased spouse had a larger Social Security work

record and you haven’t yet reached your full retirement age; you could restrict your application to your own earned benefit first and later switch to your maximum survivor benefit upon reaching your Social Security full retirement age.

For more information regarding “Filing Rules for Retirement and Spouse’s Benefits,” refer to www.ssa.gov/ benefits/retirement/planner/ claiming.html

OPM AND STATE TAX WITHHOLDING

QI recently retired, and I’ve noticed that OPM did not withhold any deductions from my annuity for state taxes. What is the best method for me to contact OPM and have the proper amount of state taxes withheld from my monthly annuity payment? A If you have created your online account with OPM, you can login to your account and specify the dollar amount of state tax you want withheld from your monthly annuity payments. The withholding must be in whole dollars. The minimum amount cannot be less than $5.

Log in to your online account with OPM at www.servicesonline. opm.gov/ to start, change, or stop the withholding of state taxes from your annuity payment.

If you don’t use the internet or have online access to your account with OPM, you can call or write OPM to start, change or stop the withholding of state taxes from your annuity payment. If you write to OPM, be sure that your letter includes your CSA or CSF number. 1-888-767-6738

TTY: 711 Hours: Monday through Friday, 7:40am to 5:00pm ET OPM’s busiest time is between 10:30am and 1:30pm ET

Retirement Operations Center

U.S. Office of Personnel

Management

Post Office Box 45

Boyers, PA 16017

If you do not know the monthly amount that you should withhold for state tax purposes, you should contact your state tax office for information or assistance.

To obtain an answer to a federal benefits question, NARFE members should call 800-456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

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