Welcome to Branch 693  

 

The Postal Book

The Postal

Book

By David Fielder

2012 Postal Benefits Group Page

2

Copyright  2012 David Fielder. All rights reserved

worldwide. No part of this book may be copied or sold.

2012 Postal Benefits Group Page

3

Table of Contents

Introduction ................................................................... 7

Chapter One: Federal Employees Group Life Insurance 11

Basic Insurance .................................................................12

Extra Benefit .....................................................................13

Basic Life Insurance in Retirement.....................................15

Living Benefits Act.............................................................17

Filing a Claim on Your Postal Life Insurance .......................25

Frequently Asked Questions..............................................26

Chapter Two: Health Insurance..................................... 33

Maintaining Coverage .......................................................33

Surviving Spouses..............................................................34

Cost...................................................................................35

Chapter Three: Civil Service Retirement........................ 37

Social Security ...................................................................38

Survivor’s Benefit ..............................................................40

Windfall Elimination Provision ..........................................42

Government Pension Offset ..............................................48

Chapter Four: FERS Employees ..................................... 55

Why was FERS created?.....................................................56

Three Pieces of the FERS Employee Pie..............................57

What Every FERS Employee Needs To Know......................58

Pension .............................................................................60

Early Retirement without Early Out...................................62

Social Security ...................................................................64

2012 Postal Benefits Group Page

4

FERS Special Supplement...................................................64

When is the FERS Special Supplement Payable? ................67

Chapter Five: Social Security Strategies........................ 71

Claim & Suspend ...............................................................72

Restricted Application.......................................................76

The Need for a Social Security Consultant .........................80

Disability Retirement ........................................................84

Chapter Six: Thrifts Savings Plan ................................. 103

G Fund ............................................................................ 104

F Fund ............................................................................. 105

C Fund............................................................................. 105

S Fund ............................................................................. 107

I Fund.............................................................................. 107

Lifecycle (L Funds) ........................................................... 108

Accessing Funds in the TSP .............................................. 111

Cashing Out..................................................................... 111

After Retirement ............................................................. 112

Should You Annuitize Your Tsp And Convert It To Monthly

Payments? ...................................................................... 115

When can I rollover my TSP? ........................................... 117

Chapter Seven: Military Time and the Postal Employee

................................................................................... 121

CSRS................................................................................ 121

Should You Buy the Time?............................................... 123

FERS and Military Time.................................................... 124

When to Buy the Time..................................................... 125

Chapter Eight: Procedures for Making Military Deposits

Post56 Military Service.............................................. 127

FERS ................................................................................ 130

Required Actions............................................................. 131

2012 Postal Benefits Group Page

5

Appendix A: FEGLI Election (Change) form ................. 134

Appendix B: FEGLI Designation of Beneficiary............. 136

Appendix C: Unpaid Compensation Designation of

Beneficiary ................................................................. 138

Appendix D: TSP Designation of Beneficiary ............... 140

Appendix E: FERS Pension Designation of Beneficiary . 144

Appendix F: CSRS Pension Designation of Beneficiary 146

2012 Postal Benefits Group Page

6

2012 Postal Benefits Group Page

7

Introduction

Congratulations. If you are holding this book,

you are about to step out of the darkness and

take a big step towards understanding your

benefits.

Our goal in writing this book is to empower you

to make good decisions. Most Postal employees

go through their entire career not

understanding the most basic aspects of their

benefits. While this isn’t a problem in the shortrun,

it can cause significant problems later.

Small misunderstandings can compound into

major problems over a 30year career.

One of the most important things we wanted to

accomplish in putting THE POSTAL BOOK

together was to make sure everyone could

understand the basic concepts. The Postal

2012 Postal Benefits Group Page

8

Service expects you to read the 554page

employee manual AND determine what parts of

it apply to you. What good is a source of

information if you can’t understand what it

means to you?

Wherever possible we have used examples from

real situations we have encountered in our

seminars and conventions. There aren’t many

situations we haven’t seen, so we have a pretty

good handle on how this stuff works. In the

event you have a question about something we

did not cover, please email me at

[email protected] I’ll do my best

to get in touch with you as quickly as possible.

Postal Benefits Group’s sole purpose is to

bridge the gap that was created when you lost

your local HR representation. We specialize in

offering “Postal Specific” retirement seminars

2012 Postal Benefits Group Page

9

across the country. If after reading this book

you feel the information was helpful and would

like to set up a retirement seminar in your area

please email me directly.

Whether you are two years into the job or you

only have two years left, we hope you find the

information in THE POSTAL BOOK helpful. After

reading the book, we would appreciate you

introducing it to your coworkers—odds are

they needed the information just as badly as

you did.

David Fielder, President

Postal Benefits Group

[email protected]

www.postalbenefitsgroup.net

2012 Postal Benefits Group Page

10

The views expressed in this book are opinions

of the author and based upon his expertise in

the federal benefit plan and actual employee

situations. Each employee should take time to

review the information and consider their own

personal situation in determining what is best

for them. If an employee needs further guidance

on what is best for them, please contact the

author through www.thepostalbook.com.

2012 Postal Benefits Group Page

11

Chapter One: Federal Employees

Group Life Insurance

This chapter will discuss your Federal

Employees Group Life Insurance (FEGLI)

Coverage. FEGLI Life Insurance is very

important and we believe you need to know

everything there is to know about this most

important coverage.

FEGLI coverage is available to all Career

Employees. We will discuss all coverage

available to you. If you are not sure what

coverage you have or what you are paying

please call our office at 8887701287. A Benefit

Specialist will be more than happy to help you.

2012 Postal Benefits Group Page

12

Basic Insurance

Basic Coverage is very easy to calculate. You can

calculate your Basic Coverage using the

following formula:

Example 1: Basic Coverage

Base Pay

Round up to the next thousand

Add $2,000

Total Basic Coverage

Let’s take a look at an example to make sure you

understand how to calculate your Basic

Coverage. Joe has a Base Pay of $45,300. Joe’s

Basic Coverage would be as follows:

2012 Postal Benefits Group Page

13

Example 2: Basic Coverage

$45,300 (Base Pay)

$46,000 (Round Up)

$48,000 (Total Basic Coverage)

As you get raises and Cost of Living Adjustment

(COLA), your Basic Coverage will also increase.

Use the same formula except insert your new

base pay after the raise.

Extra Benefit

Your Basic Coverage has an additional feature

called the Extra Benefit. The Extra Benefit is

basically a bonus on your Basic Coverage for

being under the age of 45.

Employees who are under the age of 45 will get

Table 1: Extra Benefit Coverage

35…2.0 39…1.6 43....1.2

36…1.9 40....1.5 44…1.1

37…1.8 41…1.4 45....1.0

38…1.7 42....1.3

2012 Postal Benefits Group Page

14

a multiple of their Basic Coverage depending on

their age. The ages and applicable multiples are

listed in Table 1: Extra benefit Coverage.

Here is an example of how the Extra Benefit

works. Let’s take Joe from our previous example

who has a Basic Coverage of $48,000. Assuming

Joe is 38 years old; he is under 45 and qualifies

for the Extra Benefit. Joe’s Extra Benefit would

be calculated by taking his Basic Pay and

multiplying that amount by the Extra Benefit

Factor of 1.6 from Table 1.

Example 3: Extra Benefit

$48,000 (Base Pay)

Multiplied by 1.6 (Extra Benefit Factor)

$76,800 (Total Basic & Extra Benefit)

It’s important to understand that when Joe

turns 39, his Extra Benefit will be reduced to 1.5

and will continue to reduce as he gets older. At

2012 Postal Benefits Group Page

15

the age of 45, Joe will not have an Extra Benefit.

Met Life (the government’s life insurance

contractor) is willing to extend this additional

Extra Benefit at no cost because younger

employees are less likely to pass away.

Postal Employees do not pay for Basic

Coverage. All other divisions of the government

do pay for Basic.

Basic Life Insurance in Retirement

As we just covered your Basic Life Insurance is

free while you are employed. This changes

when you retire and change to an “Annuitant”

according to the government. As soon as you

retire your Basic Life insurance is no longer

free. Let’s look at the cost of keeping your Basic

Life Insurance in retirement.

2012 Postal Benefits Group Page

16

Option #1: The first option you will see in

your retirement paperwork is “No Reduction” in

basic life. This coverage will cost you almost

$200/month for what amounts to about

$50,000 for most employees. Unless you are

uninsurable this is not a good option.

Option #2: The second option will be a 50%

reduction in your Basic Life Insurance. This

option is expensive as well and about

$100/month for $25,000 in coverage.

Option #3: 75% reduction in Basic Life

Insurance: This is what we suggest every

employee to keep into retirement. The reason

you want to keep this coverage is when you

turn 65 you won’t have to pay for it anymore.

The cost is less than $10/month and you will

pay that from your retirement until you turn 65.

Once your 65 the coverage stays with you the

rest of your life but it’s free. You never paid

anything for your Basic coverage while you

2012 Postal Benefits Group Page

17

were working so you’ll only pay for a few years

and end up with about a $14,000 policy for free

once you turn 65.

Living Benefits Act

The Living Benefits Act was passed in 1995. It is

very important if you are ever in this

unfortunate situation. If you are diagnosed with

the terminal illness and physicians document

that you have nine months or less to live, you

can access your full Basic Coverage, plus any

applicable Extra Benefit

AT THE TIME YOU SUBMIT DOCUMENTATION

OF YOUR CONDITION. In other words, if you are

terminally ill you can collect $50,000 or more in

taxfree cash BEFORE you pass away.

Hardly anyone knows about this benefit;

therefore, it is rarely used. This is also a great

2012 Postal Benefits Group Page

18

example of how important it is to understand

ALL of the details concerning your Postal

Benefits.

Option A

Option A is the first of the Optional Coverages

we will review. You will have elected to pay for

this coverage when you were hired. Option A is

a very straightforward coverage under your

FEGLI.

Option A provides a $10,000 Death Benefit to

your beneficiaries in the event of your death.

This coverage is not expensive and some

employees refer to this coverage as an

affordable Burial Policy. The price increases

every five years, but because the coverage is so

small the cost is not an issue.

2012 Postal Benefits Group Page

19

Option C

Option C is your Family Coverage. It is another

optional coverage that you elected to pay for

when you are hired on with the government.

Family Coverage places you as the beneficiary

should something happen to your family

members.

Family Coverage is offered in units. An

employee can take 15 units of Family Coverage.

Each unit of Family Coverage represents $5,000

on your spouse and $2,500 on each dependent

child.

Let’s look at an example of an employee who

took five units of Family coverage. With five

units of Family Coverage, the spouse will be

2012 Postal Benefits Group Page

20

covered for $25,000, and each dependent child

will be covered for $12,500.

It is important to note that there is no limit to

the number of dependent children that can be

covered under your Family Coverage. Another

important aspect of your Family Coverage is

that you cannot drop part of the coverage. For

example, if your children are no longer

dependents, you cannot drop the coverage on

your children and keep the coverage on your

spouse. When it comes to Family Coverage, you

either have it or you don’t.

Option B

Option B within government Life Insurance is

very popular among postal employees. This

option allows an employee to pay for one to five

times their Base Pay in additional Life

2012 Postal Benefits Group Page

21

Insurance. In most cases, this decision is made

when the employee is first hired.

Example 4: Option B

If Joe has a $50,000 Base Pay and he takes

five units of Option B, he would have an

additional $250,000 of Life Insurance Coverage.

The cost of this coverage is based upon his age.

Below is the government and Met Life’s plan for

pricing (prices per thousand dollars of

Insurance Coverage):

Table 2: Option B Pricing Schedule

Pay Period Cost

Under 35 $0.02/th $250,000 cost $5.00/pd

3539 $0.03/th $250,000 cost $7.50 /pd

4044 $0.05/th $250,000 cost $12.50/pd

4549 $0.08/th $250,000 cost $20.00/pd

5054 $0.13/th $250,000 cost $32.50 /pd

5559 $0.23/th $250,000 cost $57.50/pd

2012 Postal Benefits Group Page

22

6064 $0.52/th $250,000 cost $130.00/pd

6569 $0.62/th $250,000 cost $155.00/pd

7074 $1.14/th $250,000 cost $285.00/pd

7579 $1.80/th $250,000 cost $450.00/pd

As you can see, the rates increase with the

employee’s age. They don’t increase very fast

until the age of 50, and then the price rises

exponentially. The cost increases because the

employee never had to get a physical exam to

receive this additional coverage. The only thing

Met Life knows about you is your age, so that is

the basis they use to increase coverage. As you

get older, you are more likely to pass away. As a

result, they charge you more and more as you

age.

As a general rule, if you are healthy you are

better off getting your Life Insurance through a

private company. This will protect you from the

increases that the federal program allows. If you

are unable to obtain approval from a private

2012 Postal Benefits Group Page

23

company, you are better off keeping the Federal

Life Insurance because you would not have had

the coverage otherwise.

Very few people in the federal government

understand the details of their Life Insurance

program. The cost of not understanding how

the program works can be thousands of dollars

in lost premiums. This can be avoided by simply

learning the facts.

If you just learned that your Postal Life

insurance isn’t as good a deal as you thought

AND your loved ones are depending on that

coverage if you should pass away prematurely

you owe it to them to look into better options

where the prices NEVER increase.

2012 Postal Benefits Group Page

24

HOW MUCH ARE YOU

PAYING FOR LIFE INSURANCE?

If you are a nonsmoker it is very easy for you to get life

insurance coverage outside of the Post Office. We can

review the codes on your check and tell you what you are

paying now and then determine if we can find a better option.

LIFE INSURANCE BUILT FOR

POSTAL EMPLOYEES

• No physicals

• Pay premiums out of your paycheck just like you do now.

• We help with the paperwork in cancelling your Postal Life

Insurance

• Approval in less than 10 days

• No one visits your home

• ShortTerm Disability Benefit Available in some cases

• LongTerm Care Benefit comes with every policy

• Cash Value Whole Life Policies Available upon request

All we need is 5 minutes to

potentially save

You thousands of dollars

Call us today: 888-770-1287

2012 Postal Benefits Group Page

25

Filing a Claim on Your Postal Life Insurance

Order of Precedence of payment:

Upon the employee’s death, the government

will pay benefits in this order:

1. Beneficiary on file.

2. Widow or widower.

3. The deceased’s child(ren). If a

guardian is not available, they will pay

the child(ren)’s surviving parent. If no

parent exists, they will open an

account in the child(ren)’s name and

hold the benefit until the child(ren)

become 18yearsold.

2012 Postal Benefits Group Page

26

4. If none of the above applies, the

executor of the employee’s estate will

receive the benefit.

5. Next of kin are then entitled under

your home state’s laws.

It is very important for you to review the

beneficiaries listed on your Postal Life

Insurance. This is especially important if you

have had a divorce or your spouse has passed

away. If you would like to change your

beneficiaries, please see the FEGLI Designation

of Beneficiary form in Appendix B.

Frequently Asked Questions

How will I receive benefits?

If you are receiving $5,000 or more, the

government opens a money market account in

2012 Postal Benefits Group Page

27

your name and then sends you the checkbook.

You can write a check for some or all of the

balance as soon as you get the checkbook. If the

benefit is less than $5,000, the government will

send you a check.

What documentation do I need to

submit if an employee dies while they

are an active employee?

Those who are entitled to receive benefits will

need to notify the employing office. The

employing office will provide form FE6 (FEGLI

Claim for Death Benefits form found in

Appendix C).

The Post Office is responsible for sending the

Agency Certification of Insurance Status

SF2821, plus all of the original enrollment,

2012 Postal Benefits Group Page

28

designation of beneficiaries forms, divorce

orders, etc.

A copy of the death certificate must also be

provided.

How do I report the death of a retired

employee?

The employee needs to report the death to OPM

by calling 8887676738. Upon notice of the

claim, OPM will mail form FE6 (FEGLI Claim for

Death Benefits form found in Appendix C) to the

person who reports the death.

Beneficiaries (all who are entitled to receive

benefits) need to complete form FE6, plus

provide a proof of death certificate. The

documents should then be mailed to the

following address:

2012 Postal Benefits Group Page

29

Office of Federal Employees Group Life

Insurance (OFEGLI)

P.O. Box 6512

Utica, NY 135046512

Special Note: OPM will provide Agency

Certification of Insurance Status to the Office of

Federal Employees Group Life Insurance.

I am an employee. How can I file a

claim on one of my family members

under my Family Coverage?

If you are not sure if you have Family Coverage,

please contact Postal Benefits Group and a

certified specialist will review the codes on the

employee’s check stub to confirm coverage and

the amount of benefit. If you are an employee

and an insured family member dies, you must

complete Parts A through C of the Statement of

2012 Postal Benefits Group Page

30

Claim, Option C Family Life Insurance (FE6

DEP), and a certified copy of the death

certificate to your employing office. Your

employing office must complete Part D

(Certification of Insurance Status) and send the

completed form with the death certificate to

OFEGLI.

I am retired. How can I file a claim on

my deceased spouse under my Family

Coverage?

You will need to refer to your retirement

package to see if you elected to keep Family

Coverage. If you are retired or insured as a

compensationer, you must send the FE6 DEP

claim form and a certified copy of the death

certificate to OPMT the following address:

2012 Postal Benefits Group Page

31

Retirement Operations Center

P.O. Box 45

Boyers, PA 160170045

OPM will complete Part D of the claim form and

send the completed form with the death

certificate to OFEGLI.

I am an employee. How can I claim the

benefit for the death of my child

incapable of selfsupport?

OFEGLI can only pay Option C Benefits for a

child 22 years old or over if the deceased child

was incapable of selfsupport because of a

mental or physical disability that existed before

she/he reached age 22. If you do not have an

employing office determination of incapability

of selfsupport on file or if the determination

has expired, you must provide your employing

2012 Postal Benefits Group Page

32

office with the information necessary to make

this determination. This determination is made

by your employing office, not OFEGLI.

2012 Postal Benefits Group Page

33

Chapter Two: Health Insurance

Everyone is concerned about Health insurance.

The Federal Health Plan is a great plan, and it’s

important you know how to keep this coverage

in force into retirement for both the employee

and spouse.

Maintaining Coverage

To be eligible for health insurance in

retirement, the employee must be enrolled in

the Federal Health Plan for the immediate five

years preceding retirement or 100% of the time

they have been with the Postal Service if it is

less than five years.

We want to be very specific about who this

pertains to and what you should do. The classic

2012 Postal Benefits Group Page

34

situation we see is where the Postal employee is

on their spouse’s health coverage because the

cost was less or it was better coverage. This is

no problem until the Postal employee starts to

consider retirement. The Postal employee must

enroll in the Federal Health Plan five years

before they retire in order to carry health

insurance into retirement.

Surviving Spouses

This one is very simple. In the event of the

employee’s death, the spouse can still remain on

the Federal Health Plan as long as the Postal

employee elected a Survivor’s Benefit for the

spouse at retirement. If there is no Survivor

Benefit elected, the spouse will NOT be eligible

for health insurance after the employee’s death.

WE STRONGLY SUGGEST EMPLOYEES ELECT

SURVIVOR BENEFITS FOR THIS REASON

2012 Postal Benefits Group Page

35

UNLESS THE SPOUSE HAS AMPLE HEALTH

COVERAGE FROM OTHER SOURCES.

Cost

Postal employees while active receive a subsidy

to their Health Insurance premiums from the

Postal Service. You receive this benefit for your

entire career, and it represents a significant

benefit.

The bad part about this subsidy is you lose it

when you retire and when you are looking at a

reduction in income. A lot of people ask us how

much Health Insurance will increase. The most

accurate number can be found on the Annuity

Estimate you receive from the Postal Service. If

you are not far along enough in your career to

receive one of these, you can estimate your

Health Insurance cost at about double what you

are currently paying.

2012 Postal Benefits Group Page

36

2012 Postal Benefits Group Page

37

Chapter Three: Civil Service

Retirement

This chapter will cover those employees who

were under the Civil Service Retirement System

(CSRS). CSRS employees were hired prior to Jan

1, 1984 or have had at least five years of CSRS

service before returning to work between 1984

and 1987.

A Civil Service employee could fully retire at age

55 with at least 30 years of service. If the

employee worked past the 30year minimum,

they could earn a higher annuity (pension) in

retirement of 2% more per year. With 40 plus

years of service, a CSRS employee could earn as

much as 80% of their High 3 as a pension. The

CSRS employee pays 7% of their income toward

their CSRS retirement. (The total of your

2012 Postal Benefits Group Page

38

contributions to your CSRS retirement is listed

in the bottom right hand corner of your check

stub. This amount increases every year, and you

can see your biweekly contribution to that

number by looking at the Retire 1 deduction on

your check stub).

An easy way to determine how much your

pension will be as a CSRS employee is to take

your years of service, subtract two from it, and

then multiply it by two. For example, if an

employee has 28years of service, you subtract

two from it to get 26. Then when you double it,

you get 52%.

Social Security

CSRS employees did not pay into Social

Security. Those employees who earned their 40

quarters of Social Security credits prior to their

federal service could earn a social security

2012 Postal Benefits Group Page

39

check on top of their pension check; however,

because of the Windfall Elimination Provision,

their Social Security checks would be cut in half.

The government viewed a CSRS employee as

double dipping by getting a full pension and

Social Security from the government.

CSRS employees have challenged this provision,

but as of today it is still in effect. There are

employees who have Social Security credits, but

not a full 40 quarters. People ask us if they

should get the extra quarters to qualify. The

answer is yes. If you have 37 quarters of SSI, you

are not getting paid for those quarters. If you

work the additional 3 quarters, it gives you 50%

of a Social Security check. And that is better

than nothing!

Special note: If you were hired under CSRS on or

after October 1, 1982, you will automatically get

credit for military time served post 1956. This

2012 Postal Benefits Group Page

40

“free credit” will be taken back if you qualify for

Social Security under the “catch62” reduction. If

you have questions about “Catch62” and how

this can affect your retirement, please contact me

[email protected]

Survivor’s Benefit

One important choice or option for CSRS

employees pertains to the Survivor Benefit. A

Survivor Benefit is a benefit paid to your

surviving spouse in the event of the employee’s

death. A CSRS employee can elect as much as

55% of his/her pension check as a benefit. The

employee can also select any amount smaller

than 55% and will see a corresponding

reduction in their pension check depending on

that amount.

There are instances where the employee’s

spouse will not need a Survivor Benefit. Maybe

2012 Postal Benefits Group Page

41

the spouse has a pension of his/her own and

the employee wants the largest pension check

possible. In this instance, the employee can

elect (0) Survivor Benefit. By choosing this

option, the spouse will have to sign and notarize

forms within the retirement package confirming

this decision.

One important thing to keep in mind when

electing Survivor Benefits as a CSRS employee is

Health Insurance. An employee’s spouse is

eligible to maintain Health Insurance in

retirement as long as the employee elected a

Survivor Benefit for their spouse. This means if

an employee does not elect a Survivor Benefit,

the spouse will not be eligible for Health

Coverage under the Federal Health Plan. This

election will allow the spouse access to health

coverage for the rest of their life in the event of

the employee’s death.

2012 Postal Benefits Group Page

42

CSRS employees, who want Health Coverage for

their spouse and the largest pension check

possible, should elect a $3,600 annual Survivor

Benefit. This election will allow the spouse to

access Health Coverage. The cost will reduce the

employee’s pension check by $90/year. With

the $3,600 benefit annually, there is enough of a

check coming to the spouse to cover Health

Insurance Premiums. In the event of the

employee’s death, it is much easier on the

spouse if the pension check covers the cost of

the Health Insurance. This way, the spouse

won’t have to remember to write a check each

month.

Windfall Elimination Provision

One of the most common questions we receive

in our seminars is from CSRS employees on

their Social Security. While there aren’t a lot of

CSRS employees who qualified for Social

2012 Postal Benefits Group Page

43

Security there are enough that we felt it

necessary to write this article. We have tried to

simplify a very complex subject and explain it in

a way you can understand.

The Windfall Elimination Provision was passed

by the government because they felt CSRS

employees were getting Social Security checks

that were higher than they should be. We don’t

agree with this logic, but this is why the law was

passed. In a nutshell, the Windfall Elimination

Provision reduces CSRS employees Social

Security benefits based on how many years they

had “Substantial Earnings” per the Chart below:

Year Substantial

earnings

193754 $ 900

195558 $1,050

195965 $1,200

196667 $1,650

196871 $1,950

2012 Postal Benefits Group Page

44

Year Substantial

earnings

1972 $2,250

1973 $2,700

1974 $3,300

1975 $3,525

1976 $3,825

1977 $4,125

1978 $4,425

1979 $4,725

1980 $5,100

1981 $5,550

1982 $6,075

1983 $6,675

1984 $7,050

1985 $7,425

1986 $7,875

1987 $8,175

1988 $8,400

1989 $8,925

2012 Postal Benefits Group Page

45

Year Substantial

earnings

1990 $9,525

1991 $9,900

1992 $10,350

1993 $10,725

1994 $11,250

1995 $11,325

1996 $11,625

1997 $12,150

1998 $12,675

1999 $13,425

2000 $14,175

2001 $14,925

2002 $15,750

2003 $16,125

2004 $16,275

2005 $16,725

2006 $17,475

2007 $18,150

2012 Postal Benefits Group Page

46

Year Substantial

earnings

2008 $18,975

2009  2011 $19,800

2012 $20,475

If you made at least the amount shown on the

chart in a given year that year would be

counted. If a CSRS employee worked 10 years

from 19721982 and paid social security in

those years and earned $7,000 in each of those

years then the employee would have 10 years of

“Substantial Earnings”.

Now that we know how many years of

substantial earnings we can find out how much

our Social Security will be reduced by referring

to another Social Security Chart. The following

chart has years down the lefthand side. This is

the year in which you turned 62. Find the year

where you turn 62 and then find the years of

2012 Postal Benefits Group Page

47

substantial service and you will see the amount

your Social Security is reduced.

Maximum Monthly Amount Your Benefit May Be Reduced Because

Of The Windfall Elimination Provision (WEP)*

Years of Substantial ELY Earnings

20 or

less

21 22 23 24 25 26 27 28 29 30

1990 $178.0 $160.2 $142.4 $124.6 $106.8 $89.0 $71.2 $53.4 $35.6 $17.8 $0.0

1991 185.0 166.5 148.0 129.5 111.0 92.5 74.0 55.5 37.0 18.5 0.0

1992 193.5 174.2 154.8 135.5 116.1 96.8 77.4 58.1 38.7 19.4 0.0

1993 200.5 180.5 160.4 140.4 120.3 100.3 80.2 60.2 40.1 20.1 0.0

1994 211.0 189.9 168.8 147.7 126.6 105.5 84.4 63.3 42.2 21.1 0.0

1995 213.0 191.7 170.4 149.1 127.8 106.5 85.2 63.9 42.6 21.3 0.0

1996 218.5 196.7 174.8 153.0 131.1 109.3 87.4 65.6 43.7 21.9 0.0

1997 227.5 204.8 182.0 159.3 136.5 113.8 91.0 68.3 45.5 22.8 0.0

1998 238.5 214.7 190.8 167.0 143.1 119.3 95.4 71.6 47.7 23.9 0.0

1999 252.5 227.3 202.0 176.8 151.5 126.3 101.0 75.8 50.5 25.3 0.0

2000 265.5 239.0 212.4 185.9 159.3 132.8 106.2 79.7 53.1 26.6 0.0

2001 280.5 252.5 224.4 196.4 168.3 140.3 112.2 84.2 56.1 28.1 0.0

2002 296.0 266.4 236.8 207.2 177.6 148.0 118.4 88.8 59.2 29.6 0.0

2003 303.0 272.7 242.4 212.1 181.8 151.5 121.2 90.9 60.6 30.3 0.0

2004 306.0 275.4 244.8 214.2 183.6 153.0 122.4 91.8 61.2 30.6 0.0

2005 313.5 282.2 250.8 219.5 188.1 156.8 125.4 94.1 62.7 31.4 0.0

2012 Postal Benefits Group Page

48

2006 328.0 295.2 262.4 229.6 196.8 164.0 131.2 98.4 65.6 32.8 0.0

2007 340.0 306.0 272.0 238.0 204.0 170.0 136.0 102.0 68.0 34.0 0.0

2008 355.5 320.0 284.4 248.9 213.3 177.8 142.2 106.7 71.1 35.6 0.0

2009 372.0 334.8 297.6 260.4 223.2 186.0 148.8 111.6 74.4 37.2 0.0

2010 380.5 342.5 304.4 266.4 228.3 190.3 152.2 114.2 76.1 38.1 0.0

2011 374.5 337.1 299.6 262.2 224.7 187.3 149.8 112.4 74.9 37.5 0.0

2012 383.5 345.2 306.8 268.5 230.1 191.8 153.4 115.1 76.7 38.4 0.0

*Important: The maximum amount may be overstated. The WEP reduction is limited

to onehalf of your pension from noncovered employment.

Using our example and assuming our employee

turned 62 in 2011 they would have a reduction

of $374.50 (using the 20 or less for years of

substantial earnings). The more substantial

earnings years you have the less the deduction

from your social security.

Government Pension Offset

This provision affects CSRS employees who

have lost a spouse who was vested in Social

Security. You are entitled to a spousal social

2012 Postal Benefits Group Page

49

security benefit in the event of your spouse’s

death. The math on this one is much easier than

figuring the Windfall Elimination Provision:

Your Social Security Spousal benefit will be

reduced by 2/3 of your government pension.

Let’s look at an example:

Jane a widowed retired CSRS employee receives

a pension of $1,000 a month. Her Social Security

Spousal benefits will be reduced by $666.67 (2

thirds of the gross pension). If the spousal

benefit was $1,000 then the CSRS employee

would receive $333.33 as s monthly benefit

from Social Security.

CSRS OFFSet Pension Calculation:

CSRS Offset Annuity Reduction

Your CSRS Offset annuity is reduced by the

portion of your total Social Security benefit that

2012 Postal Benefits Group Page

50

is payable based on federal service performed

after 1983 while covered by both the CSRS and

Social Security.

Your annuity will not be reduced by any portion

of your Social Security benefit that is based on

service other than CSRS Offset employment.

When Will the CSRS Offset Annuity Be

Reduced?

Normally, OPM will contact SSA when you are

close to age 62 (the normal age of Social

Security eligibility), to obtain an entitlement

determination. If you are eligible to receive

Social Security benefits, SSA will provide OPM

with information concerning your benefits.

Please note that even if you do not apply for

Social Security benefits when first eligible, the

reduction in your annuity must still be made if

you are eligible for Social Security benefits.

2012 Postal Benefits Group Page

51

If you retire at age 62 or later and already are

entitled to Social Security benefits, the offset in

your annuity will be made at retirement. If you

never become eligible for Social Security

benefits based on your own employment, there

is no offset.

How is the Offset Computed?

The Social Security Administration takes the

Federal earnings in the period(s) when you are

covered by both Social Security and CSRS and

computes a Social Security benefit with those

earnings included, and then without those

earnings included. These two amounts are sent

to OPM so that we can determine the CSRS

Offset amount.

Your CSRS benefit is computed as explained

above. The offset reduction is then subtracted

from the annuity rate to become your new gross

annuity rate.

2012 Postal Benefits Group Page

52

The offset reduction is the lesser of:

1. The difference between the Social

Security monthly benefit amount with

and without CSRS Offset service (service

after December 31, 1983, covered under

the interim CSRS provisions or the CSRS

Offset provisions); or

2. The product of the Social Security

monthly benefit amount, with federal

earnings, multiplied by a fraction where

the numerator is the employee's total

CSRS offset service rounded to the

nearest whole number of years and the

denominator is 40.

Social Security

Benefit

X

Total Years of Offset

Service

40

2012 Postal Benefits Group Page

53

Example:

In this example, the employee is age 62, and has

3 years and 8 months of offset service.

Computation 1

Social Security monthly benefit with offset

service

$600

Social Security monthly benefit without offset

service

$550

Difference $ 50

Computation 2

Social Security amount with federal earnings:

$600 X 4 years* = $2400 divided by 40 = $60

(*Nearest whole year to 3 years 8 months)

In this example the offset to the CSRS annuity

would be $50, since that is the lesser amount.

2012 Postal Benefits Group Page

54

2012 Postal Benefits Group Page

55

Chapter Four: FERS Employees

The Federal Employee Retirement System

(FERS) affects employees who were hired on or

after January 1, 1984. The only exception to this

rule applies to CSRS employees who switched

from CSRS to FERS when FERS was rolled out.

This chapter will explain FERS, but also how an

employee can effectively use the program to

retire successfully. Very few FERS employees

understand how the program works, and as a

result they will be in for some serious surprises

when they get ready to retire. Please pay close

attention to the sources of income for a FERS

employee. If you understand what the sources

are and how much those sources can be, you

will ensure success for you and your family.

2012 Postal Benefits Group Page

56

Why was FERS created?

While you will never find a direct answer from

the government to this question, there are some

obvious facts that cannot be ignored.

1. The government wanted to save money

compared to the CSRS: After 30years of

service, FERS employees earn a 30%

pension compared to 56.25% for a CSRS

employee. Obviously, the government

saved a ton of money by redesigning the

program this way.

2. Social Security: FERS employees pay

into Social Security. About the time the

FERS program was rolled out was when

Social Security was underfunded. The

government decided to put all federal

employees in Social Security and that

2012 Postal Benefits Group Page

57

created four million federal payers into

the Social Security System.

In a nutshell, the reason for FERS is saving

money for the government. The program saved

so much money that the government even hired

people to call CSRS employees to convince them

to switch to FERS.

Three Pieces of the FERS Employee Pie

FERS employees receive their retirement

income from three different sources. These

three sources include the following:

1. Pension

2. Social Security

3. Thrift Savings Plan

TSP

2012 Postal Benefits Group Page

58

What Every FERS Employee Needs To Know

When the government created the FERS

program, they never intended FERS employees

to get any more money than CSRS employees.

All they wanted to do was take the same pie and

divide it three ways. Then two of the pieces

would be your responsibility, while at the same

time the government reduced their obligation.

What are we talking about? Let’s

look at an example:

Example 8: FERS Employee with 30years of

Service

Joe is going to retire after 30years with a High

3 of $50,000. If he elects to take the full

FERS PILLARS

PENSION SSI TSP

2012 Postal Benefits Group Page

59

Survivor Benefit, his numbers will look

something like this:

Net Pension Check*........................ $850

Social Security.............................. $1,200

TSP................................................???????

....................................................... 56.25%

*Net check assumes Health Insurance and

taxes will deduct $275/month. The gross

check is $1,125.

The example above shows FERS employees

what they can count on from the government

during retirement. In this case, a little over

$2,050/month. Any additional money the

employee needs will have to come from the

Thrift Savings Plan (TSP). Many employees

think the TSP is “bonus” money or something

that is elective.

Many Postal employees contribute 5% to their

TSP because this allows them to get the full

2012 Postal Benefits Group Page

60

matching. In most cases, this is not enough! Just

like

the old rule you heard when you were young,

“Put 10% of your money away, and you’ll be

able to retire comfortably.” We believe this

statement

can be used as the golden rule for TSP as well,

as long as an employee is planning on working a

full 30years. If you are like a lot of employees,

you became a career employee later in life and

do not plan on working 30years. If you are one

of those employees, the 10% number won’t be

enough because you don’t have the same

amount of time. To make up for lost time, you

should consider contributing 1520%.

Pension

The calculation for a FERS pension is pretty

simple. FERS employees earn 1% for each year

of service if they are retiring at an age under 62.

2012 Postal Benefits Group Page

61

If you retire after 62 your pension is calculated

at 1.1% per year of service. There are three

opportunities to retire with an unreduced

annuity:

1. Minimum retirement age with 30years

2. Age 60 with at least 20years service

3. Age 62 with at least 5years of service

Minimum Retirement Ages are based on your

year of birth.

Table 3: Minimum Retirement Ages provides

this information.

Table 3: Minimum Retirement Ages

If you were born: Your MRA is:

Before 1948 55

In 1948 55 and 2 months

2012 Postal Benefits Group Page

62

In 1949 55 and 4 months

In 1950 55 and 6 months

In 1951 55 and 8 months

In 1952 55 and 10 months

In 19531964 56

In 1967 56 and 6 months

In 1968 45 and 8 months

In 1969 56 and 10 months

In 1970 and after 57

Special Note: The only exception to the eligibility

requirements above is in the event of an Early

Out. The Early Out allows you to retire without

meeting these requirements.

Early Retirement without Early Out

We meet with a lot of employees who want to

retire no matter what because they are just

tired of working for today’s Post Office. There is

2012 Postal Benefits Group Page

63

another way to retire but you will be penalized

on your pension.

An employee can retire as long as they have met

their MRA and have at least 10 years of service

(MRA +10). Let’s look at an example:

Joe is 57 (MRA) and has 15 years of service. If

he has a pension of $15,000 for his 15 years of

service he will be penalized 5% for every year

he is under age 62. That would be 5 years x 5%

per year so his pension would be reduced by

$3,750 a year.

2012 Postal Benefits Group Page

64

Social Security

Social Security for FERS Employees is just like

any private employee. If you have earned 40

quarters, you have the right to collect SSI at age

62 or later. The longer you wait, the more the

check will be. THERE ARE NO REDUCTIONS IN

SSI FOR FERS EMPLOYEES. CSRS employees do

see substantial reductions in their SSI, but not

FERS employees.

FERS Special Supplement

Very few FERS employees know about this

supplement, much less understand how it

should be considered in their retirement

decisions. Through our training, we have taken

a very complex subject and boiled it down to a

very basic explanation that we hope each of you

can fully understand.

2012 Postal Benefits Group Page

65

In almost every case FERS employees are

eligible to retire under the age of 62. Almost

everyone knows that you don’t qualify for Social

Security until the age of 62. Social Security is a

major part of FERS, so what is an employee

supposed to do between their Minimum

Retirement Age and when they turn 62?

Answer: FERS Special Supplement.

Think of the FERS Special Supplement as a

“bridge” that gets you from Minimum

Retirement Age to age 62 when you will qualify

for Social Security. You do, however, have to

qualify for the Supplement. There are two

milestones that must be met in a normal

retirement situation.

1. Minimum Retirement Age with 30

years of Service

2. Age 60 with 20years of service

2012 Postal Benefits Group Page

66

Special Note: The exception is during an Early

Out. In this instance, if the employee is retiring

under an Early Out these two requirements are

waived.

Let’s look at an example to make things more

clear.

Example 9: FERS Special Supplement

Joe is retiring with 30years of service at his

Minimum Retirement Age of 56. His Social

Security Check at age 62 is projected to be

$1,200 (from his Social Security statement).

Joe’s Supplement will be calculated as follows:

30years of service

Divided by 40 total years possible service

Equals 75%

2012 Postal Benefits Group Page

67

This percentage gets applied to the Social

Security check at age 62 ($1,200), and

now Joe is eligible to receive $900/month

Supplement ($1,200 x 0.75=900).

If Joe had only worked for 20years, it

would be 20/40 and he would get 50% of his

age 62 Social Security benefit.

**Military time you have bought is not used in

the FERS supplement calculation**

When is the FERS Special Supplement Payable?

This is very important if you are retiring under

Early Out and you do not meet the Minimum

Retirement Age and 30years of service or age

60 with 20years of service. As we stated before

under an Early Out, you will qualify for the

Supplement even though you did not meet the

two normal retirement objectives. However, the

2012 Postal Benefits Group Page

68

Supplement will be payable starting at either

your Minimum Retirement Age or age 60,

whichever is next.

Let’s look at an example to make sure you

understand how an employee

retiring under an Early Out can influence the

FERS Special Supplement.

Example 10: Influence of Early Out on FERS Special

Supplement

Let’s take Joe again, and he is going to

retire at age 53 with 18years of service.

Remember without the Early Out he

would not be eligible to retire. Joe’s

Minimum Retirement Age is 56. His Social

Security check at age 62 is $1,200.

Joe’s Supplement would be 18/40 or

45%. We apply that 45% to the $1,200

2012 Postal Benefits Group Page

69

and come up with $540/month

Supplement.

Joe won’t be able to start drawing the

supplement for three years (Current age

53 MRA 56). Just because you are eligible

for the supplement doesn’t mean you can

start drawing it immediately after you

retire. We’ve heard stories of people who

retired thinking the Supplement check

started right away; they found out after

the fact, it wasn’t going to start until years

later.

Take the time to understand the FERS Special

Supplement and how it can affect your

retirement. Don’t trust Shared Services to get it

right—they have a long history of getting it

wrong.

2012 Postal Benefits Group Page

70

Another important note to make on the FERS

Supplement pertains to working part time in

retirement. The government treats the FERS

Supplement just like Social Security with

respect to the Earnings Test. If you make more

than $14,160 under age 65 you will be

penalized $1 off you FERS Supplement for every

$2 over $14,160 you make. This amount

increases substantially when you turn 65 to

over $30,000. Your pension is not factored

into the $14,160 only earned wages count.

Special Note: Taking the Supplement has no

impact or penalty on employees who do not want

to file for Social Security until age 66 for a higher

check.

2012 Postal Benefits Group Page

71

Chapter Five: Social Security

Strategies

Many Postal employees over simplify their

decisions surrounding Social Security. We want

to give you access to the information you need

to make the BEST decision for you and your

family. We feel we have found the foremost

experts in Social Security in Premiere Social

Security Consulting. It is very hard to find one

company with such a broad understanding of

Social Security. Jim Blair worked for the Social

Security Administration for 35 years and

understands everything there is to know about

Social Security. Marc Kiner is a CPA and

understands the financial issues that surround

Social Security. We feel there is no better place

to go to get advice surrounding your social

security and invited them to write a few pages

2012 Postal Benefits Group Page

72

in this book. We encourage all of you to invest

in a Social Security Consultation with them. The

consultation will pay for itself 10 times over

through higher and broader benefits from

Social Security for you and your family. We

encourage you to visit their website at

www.premiersocialsecurityconsulting.com or

call them at 8005180761.

Claim & Suspend

An option available to everyone who has

reached their full retirement age is claim &

suspend. This option has two very distinct

purposes. The first purpose of claim and

suspend is to create a safety net for benefits if

the need for a lump sum of cash is needed. The

Social Security Administration has rules about

retroactivity of benefits. The Social Security law

and regulations state for retirement benefits

filed before a persons full retirement age there

is no retroactivity. Benefits will begin no earlier

2012 Postal Benefits Group Page

73

than the month the application is filed and all

factors of entitlement are met. If you file for

your benefits after you reach your full

retirement age there is a possibility of

retroactivity for benefits but the period is

limited to 6 months and cannot go back any

farther than the month you reached your full

retirement age. This is where claim and

suspend can be useful.

You have the option to file and suspend your

benefits any time starting with the month you

reach your full retirement age. Currently, full

retirement age is 66 for individuals born during

the period 1943 through 1954. You would claim

& suspend if you wanted to earn delayed

retirement credits and postpone drawing your

benefits past your full retirement age up to the

age of 70. The request to suspend your benefits

can be wither written or oral and the request

does not have to be signed. If you change your

mind and want to have your benefits reinstated

2012 Postal Benefits Group Page

74

before you reach age 70, you may request to

have your benefits reinstated effective for any

month you choose during the suspension

period. Social Security will accept a written or

oral request and there is no requirement for a

signature.

This option allows you to earn delayed

retirement credits while creating a safety net.

You will have a large amount of benefits

available to you should the need arise. Social

Security will not pay you interest on your

money and you will lose the delayed retirement

credits earned for the months you take the

payment but you are looking at as many as 47

months of benefits payable if the need for cash

arises. If you don’t need the cash you can begin

your benefit payments at age 70 and you will

have earned all of your delayed retirement

credits and increased you monthly benefit by as

much as 32%. This is an option that can work

well for single beneficiaries or couples.

2012 Postal Benefits Group Page

75

The second option for claim & suspend is to

allow your spouse or any children who are

eligible to receive benefits from your work

record to do so while you earn delayed credits.

Suspension of your benefits only affects your

benefits. If you have a spouse or children

eligible for benefits on your work record they

will draw their monthly benefits even while

yours are suspended. You can claim & suspend

at your full retirement age and your spouse, if

they are age 62 or older can file for spousal

benefits if they are eligible for those benefits. If

you have a child under the age of 18, between

age 18 and 19 and still in high school, a child

who became disabled before the age of 22 may

draw a monthly benefit check from your work

record. Spousal benefits and children’s benefits

can only be paid from your record if you have

filed an application for benefits. Claim &

suspend fulfills that requirement. This is one of

the options available to couples that will allow

2012 Postal Benefits Group Page

76

them to maximize their Social Security benefits.

This option alone or in conjunction with the

restricted application provision allows

individuals to increase monthly benefits by

postponing their own monthly benefit and draw

a monthly benefit as a spouse.

Claim and suspend is an option all folks should

consider. The only drawback is if you contribute

to a Health Savings Account (HAS) and you

claim & suspend, you will be automatically

enrolled in Medicare Part A (Hospital

Insurance). You cannot contribute to an HSA

when enrolled in Medicare. You can use the

funds you have in the account but cannot add

any additional funds.

Restricted Application

An option that is often overlooked is the

restricted application. Normally, when an

2012 Postal Benefits Group Page

77

individual files an application for a Social

Security benefit the application covers all types

of benefits you may be eligible for on any Social

Security number. The Social Security deems an

application for one type of benefit an

application for all types of benefits.

Individuals who have reached their full

retirement may restrict their applications to a

specific type of benefit. You can restrict your

application to exclude a class of benefits you

may be eligible to receive for any reason. This

includes filing for spousal benefits instead of

your own, widows/widowers benefits instead

of your own and filing for your own benefit

instead of widows/widowers benefits. You

would restrict your application to maximize

your total benefits over a period of time. This

includes earning delayed retirement credits or

receiving maximum benefits between your own

work record and that of a deceased spouse.

2012 Postal Benefits Group Page

78

Your statement to restrict your application

must be specific and done before the Social

Security Administration processes or

adjudicates your application.

The question is why would you want to restrict

your application for benefits? This means you

may be electing to receive a smaller benefit

payment each month. This option isn’t for

everyone but you need to consider the affect of

using this option. Often you can take less now to

receive more at a later date to maximize you

and possibly your spouse’s benefits over your

lifetimes. This affects of this option can be

greatly reduced for individuals entitled to a

pension from work not covered by Social

Security. The effects of the Windfall Elimination

Provision and the Government Pension Offset

need to be considered. That doesn’t mean you

should not consider using this provision.

2012 Postal Benefits Group Page

79

Everyone’s situation is different and while it

may not work for some it could work for others.

One example is someone who works beyond

their full retirement age. The Government

Pension Offset does not apply until you begin to

receive your pension. After your full retirement

age you can apply a restricted application for

spousal benefits and receive one half of the

amount your spouse is eligible to receive at

their full retirement age without suffering the

effects of the Government Pension Offset. Your

own benefit will increase by 2/3rds of 1 percent

or 8% a year. Therefore, when you do retire, the

spousal benefit may be totally offset but your

own benefit was increased.

Many options exist and should be considered

before you file for Social Security benefits.

While the Windfall Elimination and Government

Pension Offset greatly reduce or eliminate

2012 Postal Benefits Group Page

80

options, there are still some you need to

consider. Be sure to make a plan before you file.

It may be to late after you file.

The Need for a Social Security Consultant

Complicated Social Security laws combined

with Social Security being a joint lifetime

benefit and you can see why future retirees

should meet with a Social Security consultant

prior to applying for benefits. It is imperative

that Social Security recipients "Make a Plan" to

take control and to maximize their Social

Security benefits. Single folks have 35 options,

surviving spouses have 46 options and married

couples may have up to 12 options. Married

couples are leaving up to $10,000 a year on the

table by not taking the time to "Make a Plan". If

you are contemplating beginning Social Security

benefits at 62, take a timeout and "Make your

Plan". Our friends at Premier Social Security

2012 Postal Benefits Group Page

81

Consulting have identified 10 reasons why

recipients must "Make a Plan".

1. Social Security is a lifetime benefit. A decision

made today will impact recipients for life. Thus,

taking benefits at age 62 and the 25% haircut

may have a significant impact to benefits paid

over your lifetime.

2. Social Security may be a joint lifetime benefit.

Your surviving spouse may step into your shoes

and receive the same benefit you were receiving

at death. Again, taking benefits at age 62 or

even age 66, (Full Retirement Age), may

significantly reduce Social Security benefits

paid over two lifetimes.

3. More than 90% of all Social Security

recipients leave money on the table as they are

not aware of available options.

4. CPAs, financial advisors and other

professional advisors are not familiar with

2012 Postal Benefits Group Page

82

many of the Social Security options. Your

advisors may be familiar with the reduction if

benefits begin prior to Full Retirement Age and

that you will receive Delayed Retirement

Credits of 8% per year by waiting to age 70.

However, very few advisors are aware of the

"restricted application" and "claim and

suspend" strategies. Nor are advisors familiar

with “filing a protective claim”.

5. Around 40% of all SS recipients rely solely on

their monthly income. It is imperative for all

Social Security recipients to "Make a Plan" and

to review all of their options.

6. Through proper planning and exploration of

options a Social Security recipient can increase

monthly income by $150$800 per month. This

additional income is not magic or voodoo, but is

due to the available options.

7. With 10,000 people turning 65 per day, the

Social Security administration and offices are

2012 Postal Benefits Group Page

83

stretched too thin. The good folks at the SS

offices cannot be expected to explain and

explore the various options available to

recipients. As 2030 year veterans of the Social

Security Administration are retiring, the

younger Social Security representatives lack the

basic understanding of Social Security options.

8. Social Security benefits at age 70 are 75%

greater than benefits at age 62.

9. Taking benefits early will permanently

reduce an individual’s benefits for the rest of

their life. Delaying until the age of 70 will result

in a permanent increase in benefits.

10) Children under age 18 are entitled to Social

Security benefits when a parent begins

collecting. A child under age 19 and still in high

school is also entitled to benefits. Additionally,

if a child is under age 16, then the spouse is also

entitled to benefits.

2012 Postal Benefits Group Page

84

Disability Retirement

There are thousands of Postal employees who

are eligible for a Disability retirement but are

unsure if they qualify or they are intimidated of

the process. Our goal in putting this chapter

together is to give you a detailed description of

what is involved as well as how to provide your

documentation in a way that gives you the best

chance at being approved.

Applying for a Disability Retirement is an

option all federal employees have available. It is

a time consuming process and remember you

are certifying that you cannot perform your job

anymore due to health reasons. There are forms

that will need to be completed by your doctor,

your supervisor, and yourself.

There are two basic formulas that are followed

and one deals with the procedures for CSRS and

the other deals with FERS disability. The basic

2012 Postal Benefits Group Page

85

criterion that must be met for both is the

following:

Required Criteria:

OPM considers the documentary evidence

that you, your physician, and your agency

provide. Your claim can be allowed only if

the evidence established that you meet all of

following criteria:

1) A medical condition, which is defined as a

health impairment resulting from a disease

or injury, including a psychiatric disease.

2) Disability must last more than one year

3) Become disabled while serving under FERS

or CSRS

2012 Postal Benefits Group Page

86

4) A deficiency in service with respect to

performance, conduct or attendance, OR in

the absence of service deficiency, show that

your medical condition is incompatible with

either useful service or retention in the

position.

(Useful and efficient service means fully

successful performance of the critical or

essential elements of the positionor the

ability to perform at that leveland

satisfactory conduct and attendance.)

5) Your medical condition has caused a service

deficiency.

6) Your employer must certify it is unable to

reasonably accommodate your medical

condition in your present position and that

it has considered you for any vacant

position in the same agency, at the same

grade or pay level, and within the same

commuting area, for which you are qualified

for reassignment.

2012 Postal Benefits Group Page

87

7) You, or your guardian or other interested

person, must apply before your separation from

service or within one year of your separation.

The application must be received by OPM

within one year from the date of your

separation. This time limit can be waived only

in instances involving incompetency.

When should I apply for a disability

retirement?

You should consider applying for disability

retirement only after you have provided your

employing agency with complete

documentation of your medical condition and

your agency has exhausted all reasonable

attempts to retain you in a productive

capacity, through accommodation or

reassignment. Your supervisor will need to

provide a statement for OPM that is contained

in the packet.

2012 Postal Benefits Group Page

88

What forms do I fill out?

Complete SF 2801, Application for Immediate

Retirement, and SF 3112, Documentation in

Support of Disability Retirement.

What are the service requirements?

For CSRS employees you must have completed

at least five years of creditable Federal civilian

service and for FERS employees 18 months.

What documentation will I need to support

my application?

Your doctors will need to provide OPM with

statements stating that your condition will not

be improving (you have reached maximum

medical improvement) AND your condition(s)

keeps you from performing the essential

elements of your position.

The thing to remember when applying

for disability retirement is that you and your

2012 Postal Benefits Group Page

89

Physician need to show a correlation

between your illness or disease and the

expectations of your job with the agency.

How will my doctor know what the essential

elements of my job consist of?

In your medical retirement packet that you

receive from your agency, it will contain a copy

of your “Standard Position Description” but it

does not accurately detail what you do on a

daily basis for your job.

Include a detailed account of what you do in

your position with the “Standard Position

Description” and a cover letter for your

physician so he has a clear understanding of

what your job truly involves.

EXAMPLEThe

position of a Sales and Service Distribution

clerk assigned to the Anytown Post Office

2012 Postal Benefits Group Page

90

involves the following tasks. Use this as an

example, then analyze your position in the same

detail the next day you go to work. Document

every move and every detail.

In the morning, when breaking mail down to be

sorted, I will be moving carts and large hampers

from the dock area into the facility. This

requires me to push equipment that weighs

from 451200 pounds. Empty weight of a cage

(6’x 4’x 3’ with a metal shelf that weighs 25 lbs)

that is used to transport mail ~325 lbs and

when it is fully loaded with mail, it can weigh up

to ~1200lbs I will have to remove the mail from

the equipment and it will be in trays (815

pounds), flat tubs (550 pounds), and mail sacks

(variable weights up to 70 pounds)

I am required to stand for 23 Hours,

intermittently static, when I am sorting mail

to a letter case. These trays of mail weigh

approximately 15 lbs. when full. The case is

2012 Postal Benefits Group Page

91

approximately 30 inches off the ground and has

mail slots of 3” x 4” for mail to be placed in each

slot. The mail sorting case looks like a grid and

is a total of 56 slots for mail to place with a total

height of 6 feet. I will stand as I sort the mail

and be required to place mail in the case

reaching from below my waist to 18 inches

above my shoulder. This requires a repetitive

motion utilizing my upper arms and hands. I

will repeat this motion 200500 times in a 15

minute period.

I am required to stand for 23 hours,

intermittently static, when I am sorting mail

to a flat case. The flat tubs of mail (plastic

containers 1’x 1.5’x 1’that weigh up to 50lbs)

vary in weight from a few pounds to 50 pounds

when full. The case is approximately 30 inches

off the ground and has slots for flats that are 10”

x 4” for mail to be placed in each slot. The mail

sorting case looks like a grid and is a total of 40

slots for mail to placed I will stand as I sort the

2012 Postal Benefits Group Page

92

mail and be required to place mail in the case

reaching from below my waist to 1 foot above

my shoulder. I will repeat this motion 300500

times in a 15minute period. When I sort the

mail to the Post Office Boxes in the office the

task is similar to casing mail but the

dimensions’ include boxes located only 18

inches off the floor to a height of 65 inches.

The mail distribution portion of my position

requires prolonged standing, walking,

bending, lifting (up to 70 lbs), pulling,

pushing/pulling large metal containers (with

weights up to 1200 lbs), and reaching above

my shoulders and below my waist.

When assigned to the window section of the

office, my tasks include selling stamps,

accepting mail (letters and flats) and parcels (of

all shapes and sizes up to 70 pounds). My job

will involve fine manipulation using a computer

system. I will have to lift packages across the

2012 Postal Benefits Group Page

93

counter to place them on a scale to be weighted.

After the mail is accepted I will have to place the

package in a mail cart/hamper/metal container

for transport to the rear of the Post Office for

dispatch.

The window clerk portion of my position

requires prolonged standing, walking, bending,

lifting (up to 70 lbs), twisting turning,

pushing/pulling carts/hampers/large metal

containers (with weights up to 1200 lbs). I will

do this multiple times in an hour period

depending on how busy the windows are.

I am allowed 2 15 minute breaks and a  hour

lunch in an 8 hour window. (hour 2 break,

hour 4 lunch, hour 61/2 break)

ATTACH THIS TO THE FRONT OF THE JOB

DESCRIPTION YOU GIVE YOUR PHYSICIAN

2012 Postal Benefits Group Page

94

EXAMPLE LETTER TO DOCTOR

Dr. Anyone,

On August 6, 2012, I wrote to you informing you

that I had submitted my papers to the United

States Postal Service Office of Personnel

Management (OPM) requesting a Medical

Retirement. You stated to me during my last

scheduled appointment with you that you

thought that was the best route for me to take

other than just quitting. You stated that you

would assist me in any way that you could.

Enclosed is a Physician’s Statement, which is

required by the OPM, along with copies of my

bid job description (both personal and

professional). I have highlighted exactly what is

required from you (minus the copies of my

medical records, as I already have those). It is

2012 Postal Benefits Group Page

95

important for me to show the OPM that I can

no longer continue to do the work required

in my current position as a Sales and Service

Distribution Clerk (SSDA), as the repetitive

work and heavy lifting, pulling and pushing

is debilitating to my health and body. I must

show that I have complied with all the tests,

surgeries and therapies that you have

suggested and completed; but that

continued employment in this position is

regretfully not conducive to my continuing

issues with tendonitis and joint/arthritis

issues. They also need to know I have

reached “Maximum Medical Improvement”

with my condition.

I realize this is additional work for you and I

apologize for any inconvenience. This

information is time critical. I need to have it as

quickly as possible.

2012 Postal Benefits Group Page

96

Thank you

If I am seeing one doctor for my arthritis

issues, another doctor for my respiratory

condition and another doctor for back

issues, do I need each one to send in a

physician statement?

Yes, the employee’s total medical health is taken

into consideration. If your arthritis limits your

mobility and your back condition limits your

ability to lift weight, both conditions have an

overall effect on if you can perform the essential

requirements of your position.

2012 Postal Benefits Group Page

97

What will my annuity be if I am approved for

a medical retirement?

As a CSRS employee, you are guaranteed a

minimum of 40%. However, if you have more

than 21 years 11 months of service, your

disability will be computed using all your

creditable years of service. For example if you

had 30 years of service and were only 52 years

old, you would receive credit for all years of

service and would receive a disability of

.5625% of your high3.

That wouldn’t be a full annuity because you

are forced to leave due to a medical reason

three years earlier than a full retirement

(which could have added another 6% at full

retirement). You would receive this amount

plus any additional COLA’s every year that one

is granted.

If you are a FERS employee your computation

is a bit different. You will receive earned

2012 Postal Benefits Group Page

98

annuity based on actual service if you are age

62 or over, or you are eligible for a regular

Voluntary retirement with no age reduction.

If you are age 61 or less the FERS disability is

computed at 60% for the first 12 months

minus 100% of your Social Security

entitlement (if you receive one from Social

Security). This means you would receive an

amount of 60% of your high3 the first year.

After the first 12 months, you would receive

40% of your high 3 minus 60% of the social

security amount.

If you filed for disability from OPM, you are

required to also file for disability from Social

Security at the same time. This is required

because you have Social Security as a

component for your retirement and it also has

a disability payment for FERS members.

Once you have been approved for Social

Security disability, you must immediately

2012 Postal Benefits Group Page

99

notify OPM that it has been approved. If you

are approved for both, you must recognize that

you are not allowed to keep both of these

amounts in total. You would receive this

amount until age 62. At that time your

retirement would be recomputed and you

would receive a new annuity for all years of

service plus the years you were retired on

disability.

There is no underlying principle of the

computation, which allows for the offset. It is

federal law and if you are under FERS, then

you must follow the law. Do not think you can

keep the entire OPM amount and the Social

Security amount and it will not catch up to you.

Understand that the government will catch

up with you eventually. Sooner or later, you

will have to pay this money back.

2012 Postal Benefits Group Page

100

What if I want to work doing something

else?

If you are approved for disability retirement

from OPM, you can still work elsewhere and

earn as much as 80% of your base for the

grade and level of your last government

position. It should be something within your

restrictions. If you earn more than 80% while

on disability, your retirement could be

jeopardized.

2012 Postal Benefits Group Page

101

DO YOU NEED HELP

APPLYING FOR USPS

DISABILITY RETIREMENT?

Postal Benefits Group has secured

the services of the only Disability

Retirement expert in the country.

This individual has had 100% of the

cases she has submitted approved by

OPM!

If you elect to retain her services she

will work with you every step of the

way to get your disability retirement

approved. This person is a retired

postal employee and knows

everything there is to know about

disability retirements.

If you are interested in getting help

from our disability expert please email

us at

[email protected]

Instructions on the next steps will be

included in our email to you.

2012 Postal Benefits Group Page

102

2012 Postal Benefits Group Page

103

Chapter Six: Thrifts Savings Plan

The Thrift Savings Plan (TSP) is the

government’s version of the 401k. Employees

can set aside pretaxed money and defer

payment of taxes until retirement (see the

Thrift Savings Plan form in Appendix D).

CSRS employees receive no match from the

government. FERS employees receive matching

on their contributions based on the following

formula:

1%: free from the government

First 3%: Dollar for dollar match

Next 2%: 50 cents on the dollar match

2012 Postal Benefits Group Page

104

There are six funds the employee can choose

from within the TSP. All funds have different

levels of risk and have their investment

performance tied to different securities and

indexes.

G Fund

This fund is invested in Government Bonds.

This is the safe place within the TSP. The down

side, however, is the performance. The G fund

had a return of 2.45% for the year ending 2011.

Gas prices alone have gone up 30% in the last

year. What’s unfortunate about the G fund is it

is losing for most Postal employees every year.

You might say, “I’m not losing, it’s guaranteed.”

Well just because you don’t see a negative on

your statement doesn’t mean you didn’t lose

money. If the cost of goods are going up higher

than the rate you are earning you are in a losing

2012 Postal Benefits Group Page

105

situation. This problem becomes huge over

longer periods of time.

F Fund

The F Fund is slightly better than the G Fund.

This fund is invested in highgrade bonds that

are not government bonds. They are still safe,

but with better returns than the G Fund. For the

year 2011 the F fund was the place to be

earning 7.89% with almost no risk. As a

company we are big proponents of the F Fund.

C Fund

The C Fund is the common stock fund and is

invested in the S&P 500. This is the fund that

lost 40% in 2008 when a lot of employees lost a

lot of money. For the year ending in 2011 the C

fund ended up making a whopping 2.11%. I

think the chart I have below will show that it

2012 Postal Benefits Group Page

106

wasn’t an easy ride for those in the “C “ Fund in

2011.

As you can see there were significant dips in the

market. What if these years were the years you

were planning on retiring? In almost every case

significant loses close to or soon after you retire

can devastate your retirement plans. Since none

of us know when these crashes are going to

happen we suggest moving your money to the G

or F as you get within 5 years of retirement.

After you retire, we suggest you only invest

2012 Postal Benefits Group Page

107

your money in products that guarantee and

protect you from losses.

S Fund

The S Fund is invested in small cap stocks that

are not in the S&P 500. The S Fund did not do

well in 2011 and showed a loss of 3.38%.

I Fund

The I Fund is invested in international stocks.

It’s no secret that the international markets are

anything but stable right now. For the year

ending 2011 the I Fund lost 11.81%.

I’ll give you a fund fact about the I Fund that I

bet you didn’t know. Everyone knows the best

countries to be in are Japan, China and India.

2012 Postal Benefits Group Page

108

None of these countries are included in the I

Fund through the TSP. Makes no sense to me.

Lifecycle (L Funds)

The government recently reviewed how

employees were utilizing the TSP and saw that

too many of them had all their money in the G

Fund. Knowing that the average federal

employee is not an investment manager and

does not know how to invest money, the

government then created the Lifecycle Funds.

These funds are named with the employee’s

closest planned retirement year in mind. Today

employees have a choice of the following L

Funds:

Table 4: Types of L Funds

L2010............G Fund 43%..........C Fund

27%...........30% other

2012 Postal Benefits Group Page

109

L2020............G Fund 27%..........C Fund

34%...........39% other

L2030............G Fund 16%..........C Fund

38%...........46% other

L2040............G Fund 5%............C Fund

42%...........53% other

We list what the G and C allocations are, so you

can see the purpose of the L Funds. The longer

the employee has until retirement, the more

money they have invested in the C and other

risky funds. The L2010 is almost half in the G

Fund and is very conservative.

The government went to the big banks on Wall

Street and got their advice on how employees

should invest their money based on their

options within the TSP and how long they had

to work. Now employees can pick the fund

closest to their retirement date and have their

2012 Postal Benefits Group Page

110

TSP allocated across all the funds, as if a Wall

Street bank was managing it for them.

One nice feature of the L Fund is that they reallocate

every quarter. Because every quarter

the employee is closer to retirement, the

investment gets a little safer each quarter. The

best benefit of this feature for employees is it

acts as an “auto pilot.” With the L Fund, the

employee can turn it on and forget about it. The

allocation automatically adjusts every quarter.

If an employee had their money in the L2010

account in 2008, they would have only lost

3.03%. If they were in the 2020, they would’ve

only lost 9.22% versus the 19.89% they

would’ve lost if they were in the C Fund last

year. These numbers are validation the L Funds

work.

2012 Postal Benefits Group Page

111

As a company, we suggest employees use the L

funds if they have no strategy of their own. You

can learn more about the TSP by visiting

www.tsp.gov.

Accessing Funds in the TSP

Because the TSP is pretax, the government puts

limitations on how you can access that money

with or without paying taxes. It’s important to

understand these options in the event you need

these funds.

Cashing Out

An employee can withdraw cash from their TSP

only with an acceptable hardship:

2012 Postal Benefits Group Page

112

1. Documented Negative CashFlow: The

employee has to fill out a worksheet to

document their cashflow to qualify

2. Medical Expenses

3. Legal Costs due to Divorce or

Separation

4. Personal Property Loss: Home repairs

that are necessary

Special Note about Taxes: All funds the employee

receives are after taxes have been taken out. If

the employee was under 59.5years of age, they

will also pay a 10% penalty for early withdrawal.

After Retirement

The TSP gives you a few options to access your

funds should you decide to leave your money in

2012 Postal Benefits Group Page

113

the TSP. They are very strict and very inflexible

compared to what most people can get in the

private sector.

Monthly Payments:

This option allows you to tell the TSP what you

want each month for the upcoming year. You

have the option to change this amount on an

annual basis. The downside to this option is it is

permanent. You elect your monthly payments in

December and you CANNOT change them until

the next December. A lot of things can happen

in a year and in our opinion these rules are

extremely strict compared to options you have

in the private sector.

Lump Sum Withdrawal:

Let’s say you don’t want payments but would

prefer to just take the money out as you need it

2012 Postal Benefits Group Page

114

in chunks as you need them. Sounds pretty easy

until you review the TSP rules. Once you retire

you have a ONETIME option to make a partial

withdrawal of your TSP. That’s it ONE TIME.

Your only other choices on getting money is a

monthly payment (that we’ve already covered)

or rolling it over into a private IRA. Again, this is

very strict and in our opinion makes the TSP

obsolete to use in retirement.

THE TSP IS THE ONLY RETIREMENT

ACCOUNT IN THE COUNTRY THAT HAS

THESE LIMITATIONS. BECAUSE OF THESE

LIMITATIONS POSTAL EMPLOYEES SHOULD

ROLL THEIR TSP INTO A PRIVATE IRA WITH

MORE FLEXIBILITY AND ACCESS TO YOUR

FUNDS.

2012 Postal Benefits Group Page

115

Should You Annuitize Your Tsp And Convert It

To Monthly Payments?

This is a choice that a lot of Postal employees

exercise because they aren’t aware of their

options and because it is the only option people

in Shared Services are allowed to “support”

during your preretirement counseling sessions.

The choice to annuitize your TSP has one

benefit and several consequences. The only

benefit to this option is you can have the

assurance of a check each month in retirement

and never worry about it changing or outliving

your money. While these are strong benefits,

they should be weighed against the

consequences.

1. Your money no longer grows: Once you

annuitize the TSP funds, the government

applies an interest rate to calculate your

payments. If you run an annuitization

2012 Postal Benefits Group Page

116

quote today, the rate of interest they use

in calculating your monthly payments is

2.25%. There are rates much higher in the

private sector that are just as safe.

2. You no longer have access to the cash:

When you annuitize, you are handing

over your pile of cash in exchange for the

monthly payments. If later down the road

you need a lump sum of cash, you will not

have that option.

3. Your heirs are disinherited: When you

annuitize your TSP you can elect a

survivor benefit for your spouse in the

event of your death. Once the spouse

passes away, your children or other

family members will receive nothing. This

consequence is huge in situations where

there is a large TSP balance and the

2012 Postal Benefits Group Page

117

premature deaths of the employee and

spouse.

Again, the TSP is very rigid and has very

little flexibility to accommodate most Postal

employees. In almost every scenario it is

better to rollover your TSP to a Private IRA

to allow more access to your funds and

better options for investing.

When can I rollover my TSP?

Very few Postal employees understand their

options when it comes to the TSP. Hopefully

after reading the previous sections you now

understand that the TSP doesn’t really measure

up for your retirement needs.

2012 Postal Benefits Group Page

118

You have two opportunities to rollover your

TSP:

After Retirement: Once you have been “retired”

for 30 days you are eligible to rollover your TSP.

The form you would use is a TSP70. This form

can be used to transfer your funds to any

private IRA you wish.

While Working: This option is one of the best

options you have as a Postal employees. The

government realizes that the TSP isn’t the best

option out there. The day you turn 59.5 you can

rollover your TSP to a private IRA with no

penalties or taxes. If you are a FERS employee

you can still contribute to the TSP until you

retire and still receiving matching. If you

rollover your TSP while you are working and

are still contributing to the TSP when you retire

you will have another sum accumulated.

2012 Postal Benefits Group Page

119

After you retire you could use the TSP70 to

rollover your reaccumulated balance into your

existing IRA you’ve already set up.

2012 Postal Benefits Group Page

120

Understand Your TSP Options

There are many advantages to rolling over

your TSP with Postal Benefits Group:

• Your funds are guaranteed you can’t lose

money.

• Your interest is based on what the S&P 500

does (better upside potential)

• You can name as many beneficiaries as you want

• Your children are protected

• You have better access to your funds than the

TSP.

• In the event of your death the funds are

transferred to your heirs in half the time the

TSP normally takes.

If you would like to discuss your options with your

TSP and do what’s best for you and your family

please email or call our office. We will arrange for

someone to meet with you.

8882113779 MonFri 95pm CST

Or email us at [email protected]

There is no cost for the meeting.

2012 Postal Benefits Group Page

121

Chapter Seven: Military Time and the

Postal Employee

There are thousands of Postal employees who

had prior military time. One of the reasons for

this is the preferential treatment of veterans on

the entrance exam. While the Post Office gives

veterans a preference upon entrance, they are

hurting them by not fully explaining their

options on buying military time as soon as they

are hired by the Post Office.

CSRS

CSRS employees who had prior military time

that was post 1956 can buy their time by paying

7% of what they made the 1st year in the

military and for each additional year in the

2012 Postal Benefits Group Page

122

military. An example will make the math easier

to understand:

Example 10: Buying Military Time

Military Service 1962.......Pay: $10,000........ Buy back: $700

Military Service 1963.......Pay: $11,000........ Buy back: $770

This math continues for each year the employee

chooses to pay. There is an additional factor of

interest that has to be included. The

government charges different amounts of

interest for each year of buy back because they

lost the opportunity to invest your

contributions during those years.

A great resource for calculating and estimating

what your buy back would be can be found at

www.fedcalc.com. You can input your earnings

and years of service and come up with an

estimate of deposit.

2012 Postal Benefits Group Page

123

Should You Buy the Time?

The question of whether to buy back or not

really comes down to looking at the cost and the

benefit of the purchase. An example of a real

employee we spoke with this year will help you

understand the choices.

Example 11: The Choice to Buy Military Time

The employee had four years of military

service and the buy back amount he had

to pay was about $7,000. He wasn’t sure if

it would be worth it to buy the time. For a

CSRS employee, each year they buy is

worth 2% more on their pension. In this

employee’s situation, he would receive

another $4,000 a year in pension by

paying the one time fee of $7,000. In just

two years of retirement, he would recover

2012 Postal Benefits Group Page

124

his investment and then some. We

advised him to buy the time immediately.

FERS and Military Time

FERS employees have a pretty easy decision

when buying their military time. THEY SHOULD

ALWAYS BUY IT, AND BUY IT AS QUICKLY AS

POSSIBLE. The government only charges a FERS

employee 3% of pay in the military to buy their

time. That’s only $300 for every $10,000 earned

in the military. As long as the employee did not

fully retire from the military, it is in their best

interest to buy whatever years they have and

have that time added to their creditable service.

2012 Postal Benefits Group Page

125

When to Buy the Time

This is the area where we get a bit frustrated. A

FERS employee should buy their military time

as early as possible. In an ideal situation, the

employee should buy their time in the first two

years of working for the Postal Service. If they

buy the time in the first two years, they will be

exempt from any interest.

The difference in buying the time in the first

two years and waiting to do this before

retirement is thousands of dollars. The

frustrating aspect of this is the Postal Service

knows if the employee had prior military

service because they are giving the preference

on the entrance exam. How hard would it be for

them to add one document addressing the

2012 Postal Benefits Group Page

126

choices veterans have regarding buying their

military time?

To sum it up, veterans should buy their time as

early as possible. This not only limits applicable

interest, but also gives the employee a longer

time to pay for the time, which will allow for

lower payments coming out of their checks.

See chapter 7 for instructions on how to buy

your military time.

2012 Postal Benefits Group Page

127

Chapter Eight: Procedures for Making

Military Deposits Post56 Military

Service

The time to consider your deposit option is

now—the earlier in your civilian career is

better.

Military service is generally creditable as

federal service, provided it was active duty and

the employee received an honorable discharge.

If your military service was performed prior to

1957, it is included in your Service Computation

Date and in the computation of your annuity.

Beginning January 1, 1957, military service

became subject to Social Security. A 1982

change in the law states that CSRS employees

2012 Postal Benefits Group Page

128

hired after September 30, 1982 will receive

Post56 Military Service credit only if they make

a deposit covering the service. CSRS employees

hired before October 1, 1982 can receive credit

for Post56 Military Service without making a

deposit, but will be subject to the elimination of

this service if they become eligible for Social

Security benefits at age 62. At this time, their

annuity will be recomputed without the Post56

Military Service.

Example 12: Post56 Military Service

Sam had four years of military service

covered by CSRS when he began his

Department of Education career on May

1974. When he retired (with 34years of

civilian service, plus his military service),

he did not meet eligibility requirements

for Social Security since he only had 20

quarters of coverage. He elected not to

2012 Postal Benefits Group Page

129

make a Post56 Military deposit, believing

he would not work after retirement. At

age 62 when Social Security reviewed his

records, he had worked and was now

eligible for Social Security. Since he had

not made a deposit prior to retirement,

his Department of Education annuity will

be recalculated with only the 34years of

civilian service.

Under CSRS rules, Post56 Military Service

deposits will be 7% of the basic military pay

earned during the period covered by the

deposit, plus interest, which is figured at a

variable interest rate.

Employees may have more than one period of

military service covered by this rule and elect to

pay a deposit for all, some, or none of the

periods.

2012 Postal Benefits Group Page

130

FERS

Military service that would be creditable under

CSRS is also creditable under FERS, except all

Post56 Military Service must be covered under

a deposit to receive credit under FERS for any

purpose. Under FERS rules, Post56 Military

deposits will be 3% of the basic military pay

earned during the period covered, plus interest,

which is figured at a variable interest rate.

If you transferred into FERS retirement system

from CSRS, determination of whether military

service is creditable under FERS rules or CSRS

rules will depend on how many years of

creditable CSRS service you had prior to

transferring. If you had less than five years of

CSRS service, all service is treated under FERS

rules. If you had five years or more of CSRS

2012 Postal Benefits Group Page

131

service, this service plus your military service is

treated under CSRS rules.

Required Actions

Employees must send a written request (Form

RI 2097) to the appropriate DFAS Center for

their branch of service. You must use a separate

request for each branch of service with a copy

of the appropriate DD214(s) attached to each

request. Form RI 2097 may be requested at the

following website:

www.opm.gov/forms/pdf.fill/RI20.97.pdf.

Addresses for the appropriate DFAS office may

be obtained at the following website:

www.dfas.mil.retiredpay/estimatedearning.htm

l.

2012 Postal Benefits Group Page

132

After completion of the employee portion of the

RI 2097, it should be mailed or faxed to the

appropriate address/fax number.

DFAS will return the RI 2097 to the employee,

who then in turn should submit it to their HR

Office for the computation of the required

deposit.

Once the deposit computation is complete, you

will be given the options available for payment.

Keep in mind, the interest will continue to

accrue while payments are being made.

Deposits must be paid in full prior to

retirement.

2012 Postal Benefits Group Page

133

2012 Postal Benefits Group Page

134

Appendix A: FEGLI Election (Change)

form

Special note: if you need your own copies of the

forms referenced here, you can find them all at

www.Opm.Gov by searching for the form number

as it appears on the forms enclosed.

2012 Postal Benefits Group Page

135

2012 Postal Benefits Group Page

136

Appendix B: FEGLI Designation of

Beneficiary

2012 Postal Benefits Group Page

137

2012 Postal Benefits Group Page

138

Appendix C: Unpaid Compensation

Designation of Beneficiary

Note: This form is used if an employee dies between pay

periods. There will be compensation the employee is owed

but did not receive due to his/her death. This form

designates who gets these funds.

2012 Postal Benefits Group Page

139

2012 Postal Benefits Group Page

140

Appendix D: TSP Designation of

Beneficiary

2012 Postal Benefits Group Page

141

2012 Postal Benefits Group Page

142

2012 Postal Benefits Group Page

143

2012 Postal Benefits Group Page

144

Appendix E: FERS Pension Designation

of Beneficiary

2012 Postal Benefits Group Page

145

2012 Postal Benefits Group Page

146

Appendix F: CSRS Pension Designation

of Beneficiary

2012 Postal Benefits Group Page

147