This section covers four types of employees; law enforcement officers, firefighters, air traffic controllers, and military reserve technicians.
Law Enforcement and Firefighting Personnel
CSRS
If you work in a position that your agency has determined to be a law enforcement or firefighting position, you are covered under special rules of the Civil Service Retirement System. You pay a higher retirement contribution rate (in 1997, 7.5% of pay) for more generous retirement benefits, and you have the ability to retire at age 50 after 20 years of law enforcement officer/firefighter covered service. The benefits you receive will be computed based on 2.5% of your high-3 average pay for each of the first 20 years of law enforcement/firefighter service, and 2% per year of service (covered or not) thereafter. Once you have 20 years of covered service, you are subject to mandatory retirement at age 55 if you are a firefighter and age 57 if you are a law enforcement officer. Other CSRS rules apply to you in the same manner as to any other employee.
FERS
Under FERS, there are also special benefits for law enforcement and firefighting personnel, but the rules are different. First, the FERS definition of a law enforcement or firefighting position includes a requirement that the positions be limited to "young and vigorous" personnel. Second, in order to qualify for the special benefits, you must have occupied a primary or first-line law enforcement or firefighting position for at least 3 years before moving to a secondary (that is an administrative or supervisory) position. Agency heads may determine that some supervisory positions are "primary" because they meet the "young and vigorous" requirement. The FERS definition and the 3-year requirement are generally more strict that the CSRS rules.
The contribution rate for FERS special law enforcement and firefighting benefits is a half percent more of pay than for regular benefits. FERS also has different rules for when you can retire: at age 50 with 20 years of covered service, like CSRS, or at any age with 25 years of covered service. Under FERS, the special benefits formula is 1.7% of your high-3 average pay for each of the first 20 covered years of FERS service, and 1% of pay per year of service thereafter. The FERS cost-of-living adjustments will begin at retirement instead of at age 62, the age when most FERS retirees begin to receive cost-of-living adjustments. In addition, law enforcement and firefighting retirees will receive the FERS Special Retirement Supplement until age 62. The earnings test does not apply to the Special Retirement Supplement until you reach the Minimum Retirement Age. NOTE: The following sentence is incomplete in the April 1998, printed copy of the FERS Transfer Handbook; the sentence should read as follows. Once you have 20 years of covered service, you are subject to mandatory retirement at age 55 if you are a firefighter and age 57 if you are a law enforcement officer. Other FERS provisions, including those for Social Security and the Thrift Savings Plan, are the same as for regular employees.
In general, the same transfer rules apply to CSRS law enforcement and firefighting personnel who elect FERS as they do to regular employees. That is, you take with you your credit for your CSRS service, including your 2.5% credits, and the full CSRS cost-of-living adjustments payable on those credits. (You must retire under the special provisions to get the 2.5% credits.)
However, there are two points that you should keep in mind:
Example: If you transfer to FERS after 13 years of CSRS law enforcement/firefighter service, you can still earn up to 20 years of additional service at the 1.7% rate under FERS. In effect, the period of time during which you can earn special benefits is extended by transferring to FERS. However, mandatory retirement age requirements are not affected by transferring.
Transfer Considerations for Law Enforcement and Firefighting Personnel
If you will perform, or have already completed 25 years of covered (law enforcement-firefighting) service before attaining age 50, the FERS provisions permitting retirement at any age after 25 years of service permit you to retire earlier under FERS than under CSRS.
If you are close to meeting the 20-year limitation for the special benefit formula under CSRS but contemplate working beyond 20 years, you may wish to consider FERS as a means of extending your eligibility for the special benefit formula. The FERS 1.7% rate, plus Social Security and the Thrift Savings Plan, generally provide more basic value than the regular 2% per year CSRS formula you earn after 20 years of covered service under CSRS.
Because the FERS definitions of law enforcement officer and firefighter differ from the CSRS definitions, you will not necessarily be covered by FERS special provisions if you transfer, even though your position now qualifies under CSRS provisions. Your agency head must determine which positions qualify. If there is any question as to whether your current position meets the FERS definition or whether you can meet the 3-year requirement for primary law enforcement/firefighting duties under FERS, you should consider staying with CSRS.
Of course, as has been stated throughout this handbook, if you plan to leave Federal service short of retirement, FERS is almost always the better choice. This is especially important for those who leave before becoming eligible to retire under the law enforcement/firefighters provisions. They will be treated the same as any other employee under CSRS or FERS.
The definition of an Air Traffic Controller, or Controller is the same under CSRS and FERS.
CSRS
Under CSRS you can retire at age 50 after 20 years of service as a controller, or at any age after 25 years as a controller. While there is no special benefit formula, there is a guaranteed benefit after at least 20 years of controller service. The guarantee is 50% of your high-3 average pay. If you retire after 25 years, it works out to earning 2% per year. If you retire after 27 years, the guarantee provides no more than the regular formula would have. Other than the guaranteed benefit and mandatory retirement, there are no special CSRS rules for controllers.
FERS
While FERS has the same rules as CSRS for when a controller can retire, FERS doesn't have a guaranteed benefit. Instead, FERS provides the same special benefits that are provided to law enforcement and firefighting personnel, discussed in the section above. FERS also requires controllers to pay .5% more for the special benefits, as must law enforcement and firefighting personnel.
There are no special rules for controllers who transfer to FERS.
Transfer Considerations for Controllers
When a controller transfers to FERS, the regular CSRS formula is used to calculate the CSRS credit that the controller will receive under FERS, and the guaranteed benefit is completely disregarded. In cases where a controller plans to retire before completing 27 years of service, this can have the effect of significantly reducing the value of the CSRS service performed before transferring.
Example: A controller who has between 20 and 25 years of controller service has earned the CSRS guaranteed benefit of 50% of average pay. When that service is transferred to FERS, its value will be computed using the regular CSRS formula: 36% for 20 years and 46% for 25 years. This results in a loss of 4% to 14% of average pay compared to the value of the service under CSRS. Unless the controller expects to perform many years of service, the special formula for controllers under FERS won't make up the difference.
Of course, the CSRS guaranteed benefit is only available to employees who retire under the system. FERS is almost always a better system for those who expect to leave Federal service short of retirement.
A military reserve technician, or National Guard technician is a civilian employee who is a member of the Army National Guard of the United States, the Army Reserve, the Naval Reserve, the Marine Corps Reserve, the Air Force Reserve, or the Coast Guard Reserve who is assigned to duties in one of these components and who is required to maintain a specific military grade in order to continue in his/her civilian employment.
CSRS
A technician is treated the same as any other employee under CSRS. A technician who is involuntarily separated (not for delinquency or misconduct) from his/her position can get a discontinued service annuity at any age with 25 years of service, or at age 50 with 20 years of service. The annuity is reduced at a rate of 2% for each year the employee is under 55 years of age.
A National Guard technician who is medically disqualified for military duty and who has 5 years of creditable civilian service may receive disability benefits without meeting the usual CSRS disability criteria. This special provision does not apply to military reserve technicians.
FERS
Under FERS, a technician who is separated from civilian service because he/she no longer qualifies as a member of a military reserve component may retire and receive an unreduced annuity at age 50 with 25 years of service. If military status is lost due to a disability, FERS disability benefits are payable after only 18 months of FERS service. Also, the Special Retirement Supplement is paid until age 62. It is not subject to the Social Security Earnings Test until the employee reaches the Minimum Retirement Age. However, technicians are not eligible for the 1.1% annuity formula under FERS, no matter how long they work or their age at retirement.
Thrift Savings Plan Considerations for Special Groups
If you retire under any of the special retirement provisions, you will be eligible to withdraw your Thrift Savings Plan account. You may receive your entire account as a single payment, receive your account in a series of monthly payments, or have the TSP purchase an annuity for you. If you elect a single payment or certain monthly payments, you may have TSP transfer all or any portion of the payment(s) to an Individual Retirement Arrangement (IRA) or other eligible retirement plan.
Thrift Savings Plan payments are taxable as ordinary income for Federal income tax purposes for the year in which they are disbursed. In addition, if you retire before the year in which you reach age 55 and receive a direct single payment or monthly payments determined by dollar amount or number of months before you reach age 59 , the payment(s) will be subject to the Internal Revenue Service 10% early withdrawal penalty tax. If you transfer all or any portion of the payment(s) to an IRA or other eligible retirement plan, the amount transferred is not taxable income when it is transferred (it becomes taxable income when it is disbursed from the plan to which it was transferred) and, consequently, is not subject to early withdrawal penalty tax. If you receive a TSP annuity, or monthly payments computed by your life expectancy, the payments are not subject to the early withdrawal penalty.
Updated 26 June 1998