Your first retirement check should arrive on or about the first of the month
following your separation. For example, if you retire by no later than the 3rd
of January your first check should arrive on or about the first of February. You
will receive approximately 70 to 80% of what your actual monthly annuity will be
for several months until OPM verifies your retirement calculations. Typically,
the leave that you sell back will be paid within 6 to 8 weeks in a separate
check. When you start receiving your regular retirement check OPM will send you
a highly informative pamphlet that outlines your personal retirement plan
including benefit elections, general guidance, contact information, your
personal "CSA" or "CSF" retirement account number, and survivors information.
OPM sends out updates to this pamphlet as changes occur. Keep this booklet with
your estate plan and make sure it is easily accessible for your spouse and/or
loved ones. Your retirement number is very important. You MUST use your
retirement number for all correspondence with OPM.
Direct Deposit of your annuity check
I often get questions about Direct Deposit. If your employer sends your
retirement records to OPM by magnetic tape, your account information for direct
deposit will be sent to them automatically. In this case you would not need to
do anything. Otherwise, you should include your request to receive your payments
by direct deposit with your retirement package. You can do this by submitting a
letter or a Standard Form (SF) 1199A with your application. You must get the SF
1199A, Direct Deposit Sign-Up Form, from your financial institution.
Direct deposit is available to retirees residing in Canada but, generally, it
is not available to those whose permanent address for receiving payments is
outside the United States. However, retirees living outside the U.S. can arrange
to have their payments electronically deposited in a U.S. bank.
On-Line retiree services
You can access the following list of services through
OPM on-line if you receive benefits under the Civil Service Retirement
System (CSRS), Federal Employees Retirement System (FERS) or FERS Special, or
the Organization Retirement and Disability System (ORDS). To use it, you need
your "CSA" or "CSF" claim number and your Personal Identification Number (PIN).
Your PIN is the random number issued to you by the Office of Personnel
Management (OPM). It is the same number you use for their automated self-service
telephone system. If you do not have a PIN, call OPM at 1 (888) 767-6738
- Start, change, or stop federal and state income tax withholdings;
- Buy, change, or stop savings bonds;
- Request a duplicate tax-filing statement (1099R);
- Change your Personal Identification Number (PIN) for accessing our
- Establish, change, or stop an allotment to an organization; Change your
- Start direct deposit of your payment or change the account or financial
institution to which your payment is sent; and,
- Establish, change, or stop a checking or savings allotment. View a
statement describing your annuity payment.
Taxable portion of your annuity
IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits,
walks you through the process. You will receive a tax-free recovery of your
contributions to both CSRS and FERS. If your annuity started after November 18,
1996, you must use the Simplified Method to figure the taxable and tax-free
parts of your annuity. Use the convenient Tax Calculator listed below to
determine how much federal tax you will pay each month.
Federal Tax Calculator -
IRS Publication 721 -
Taxes can be significant in retirement. Calculate what your federal tax burden will be
before you leave by using OPM's
tax calculator. It is important to keep your
tax returns organized and in a safe
location for future reference. Use our
Cost Analysis Spread Sheet to help you determine all of your expenses
including taxes that you will owe in retirement. Ten states exempt annuities
from tax and nine states don't have income taxes and they are listed below. You
may wish to relocate to a state that offers retirees a better break, however you
have to check on what other taxes are assessed in those states to make a truly
informed decision. I retired in Pennsylvania and pay no state or local income
tax on my annuity. That is a savings of over 4% a year.
States that Exempt Tax on Annuities
Ten States exempt your entire annuity including Alabama, Kansas, Hawaii,
Illinois, Louisiana, Massachusetts, Michigan, Mississippi, New York, and
Pennsylvania. Four other States may exempt parts of your annuity. For example,
North Carolina started exempting federal annuitants in 1998 as long as they had
a total of five years creditable service as of August 12, 1989. Kentucky only
exempts pre 1998 retiree’s annuities. Oregon taxes apply only on the portion of
annuity contribution earned after October 1, 1991, and Wisconsin exempts
annuities established prior to 1964.
States that Don't Have Income Taxes
Nine States don’t have personal income taxes including Alaska, Florida,
Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
For decades, individuals employed in certain non-foreign areas outside of the
contiguous 48 states (Alaska, Hawaii, Puerto Rico, and other U.S. territories or
possessions) have been eligible for a non-foreign Cost of Living Allowance
(COLA). While such non-foreign COLA payments are not subject to income
tax, they are also not basic pay for retirement purposes. Individuals
receiving non-foreign COLA payments have not been eligible for locality pay,
with the result that their basic pay has fallen further behind the rest-of-US
(RUS) locality pay each year.
These provisions permit a phased conversion from non-foreign COLA to locality
pay over a three year period beginning in 2010. Individuals who
separate from service from 2010 through 2012 will have the right to elect to
have the non-foreign COLA allowances received during that period count towards
retirement credit, to the extent that the non-foreign COLA allowances plus any
locality pay received do not equal more than the RUS locality pay.
Such election must be filed not later than December 31, 2012. The statute
makes provisions for agency and employee payments based upon those elections,
which must be made to OPM. OPM will issue regulations to carry out the
election and payment process.
The annuity continues until either the surviving spouse dies or the
spouse remarries before age 55. Exception: if the widow or widower
remarries before age 55, and was married at least 30 years to the original
annuitant the survivor annuity will not be terminated.
FedRetireSoftware.com to estimate your
annuity and benefits. FedRetireSoftware has a comprehensive set of FREE tools
for estimating and analyzing federal
employees annuities, benefits, Thrift Savings
Plan, social security, FERS & CSRS sick leave conversion, military credits
and more. The free software is very helpful and easy to use. You will be able to
generate numerous reports to help you make informed decisions about your unique
These calculators will get you in the
ballpark. To determine your actual annuity payout contact your Human Resource
Department and request several estimates for dates that you find attractive. Most
ask for an estimate for the end of the year, December 31 for FERS or January 3rd
for CSRS employees,
because you are able to sell back your accumulated annual leave when you
retire. You can carry over 240 hours of leave each year and your final year
can add another 208 hours if you are in he highest annual leave category
earning 8 hours a pay. This way you would leave with 448 hours to sell back
to Uncle Sam, a nice payout.
You can also download this Retirement Calculator EXCEL spreadsheet to determine your approximate
annuity for CSRS. FERS, LAW and MIXED retirements. This spreadsheet is from
http://Firstgov.gov and made available here
for your convenience.
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