Information for FERS Annuitants

Taxes and Other Deductions From Your Annuity

Income Tax

Federal Income Tax
Your annuity payments are subject to Federal income tax under rules set forth and administered by the Internal Revenue Service (IRS). If you have questions about the taxability of your annuity, you should contact your local IRS office. We do not provide tax advice and do not supply IRS publications. For a detailed explanation about Federal tax and your annuity, request Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits, from the IRS.

We are withholding Federal income tax from your annuity at the rate which you specified on your application for retirement. No federal income tax is being withheld if you elected that option when you applied for retirement. If you did not make an election regarding Federal tax withholding, we withheld federal tax from your annuity at the rate for a married person with 3 exemptions.

Changing the Amount of or Stopping your Federal Income Tax Withholding
To change the amount of Federal income tax withheld each month or to stop the Federal income tax withholding from your annuity, you can call the Office of Personnel Management (OPM) at 1-888-767-6738 (customers within local calling distance to Washington, DC must use 202-606-0500), and use our automated telephone service. When you use this system, you will need your claim number (CSA number) and the Personal Identification Number (PIN) that OPM assigned to you.

If you prefer, you can write to:

U.S. Office of Personnel Management
Retirement Operations Center
ATTN: Tax
P.O. Box 45
Boyers, PA 16017-0045

Please note that you may be penalized by the Internal Revenue Service (IRS) if you do not have at least 90% of your yearly tax liability either withheld from your salary or annuity or made via quarterly payments to the IRS. You should monitor your tax withholding status each year to make sure you comply with this rule.

State Income Tax
If you want state income tax withheld from your monthly annuity, you should contact OPM, using the same procedures outlined in the previous section on Changing the Amount of or Stopping your Federal Income Tax Withholding.

Other Deductions From Annuity

Health Benefit/Life Insurance Premiums
If you are eligible to continue your health benefits and/or life insurance coverage into retirement, the premiums for these are withheld from your monthly benefit. If your monthly retirement payment doesn't cover the cost of the premiums, you can arrange to make direct payment to the Office of Personnel Management (OPM) for the premiums.

Medicare Premiums
If you are not receiving social security benefits, you can have your Medicare premiums withheld from your annuity. We must receive a request from the Health Care Financing Administration to withhold Medicare premiums from annuity payments. We cannot act on a request from a retiree or the Social Security Administration to withhold Medicare premiums from annuity payments. Your social security district office can give you additional information about this.

Union Dues
Some union dues can be withheld from annuity payments. Contact your union for information.

Debts Owed the Federal Government
If you owe a debt to the U.S. Government, we can take money from your annuity to settle that debt. If you owe the debt to the Federal Employees' Retirement System (FERS) due to an overpayment of benefits, we'll send you an explanation of the amount of the debt, the reason for it, and how much we'll withhold from your monthly annuity payments until the debt is paid. We'll also give you specific information about your rights in connection with the collection of the debt. If you owe a debt to another Federal agency, that agency will give you an explanation of the debt and any rights available to you before asking us to withhold the debt from your annuity payments.

If you owe a debt to another Federal agency, you may be subject to a government-wide program administered by the Department of Treasury, called the Treasury Offset Program (TOP). Under this program, your annuity payments will be offset to collect the debt. If a debt is being collected under the Treasury Offset Program (TOP), you will be notified by Treasury before the offset will begin. The Office of Personnel Management (OPM) will not have any information about the debt. If you have any questions about the debt and the collection, you should contact the creditor agency shown on Treasury's notice to you, or Treasury's Administrative Offset Toll Free Number at 1-800-304-3107.

Other Withholds
Your annuity may be subject to legal process to enforce any obligation you may have to pay alimony, child support, or separate maintenance. Also, your annuity may be reduced to comply, in certain circumstances, with a state court order, decree, or community property settlement dealing with apportionment of retirement benefits in connection with a divorce, annulment, or legal separation. We'll also honor an attachment of your annuity by a trustee in bankruptcy. Except in these circumstances, the annuity is not subject to execution, attachment, garnishment, or other legal process.

Waiving Benefits

Waiver of Annuity
You can waive all or part of your benefit by writing to OPM. No special form is necessary. You merely state in a dollar amount the portion of your monthly annuity that you want to waive and the effective date, which cannot be earlier than the first of the month following the month in which we receive your letter. If you have already cashed your annuity check, you cannot return any part of it for waiver purposes. You may cancel your waiver at any time by requesting this in writing, but only for payments that are due after we receive your written request to cancel the waiver. No retroactive payment of annuity can be made covering the period during which your waiver was in effect.

If you waive part of your annuity, you will not receive a cost-of-living allowance. However, if you cancel your waiver, your new monthly annuity rate will be adjusted to reflect all cost-of-living adjustments (COLA) as though no waiver had been made.

You cannot waive part of your annuity if a court has ordered part of your benefit to be paid to a former or separated spouse unless the waiver was received by the Office of Personnel Management (OPM) before we received the court order. If a waiver is already in effect when a court order is received, the court order will apply only to the unwaived portion of your benefits.

Effect of Waiver of Annuity on Survivor Benefits
If you waive all or a part of your annuity benefit, your spouse's benefit will be paid as if no waiver had been in effect at the time of your death.

Employment After Retirement

Employment in the Private Sector

• Effect on Your Basic Annuity Your employment outside the Federal service will not affect your basic Federal Employees Retirement System (FERS) annuity payments unless you're receiving a disability annuity and are under age 60. If you're a disability retiree under age 60, you will be subject to the 80% earnings limit. You reach the 80% earnings limit if, in any calendar year, your income from wages and self-employment is at least 80 percent of the current rate of basic pay for the position from which you retired. (See pamphlet RI 98-2, Information for Federal Employees Retirement System [FERS] Disability Annuitants, for more detailed information.
  
  
• Effect on Your Annuity Supplement If you are receiving an annuity supplement, it will be reduced based on how much you earn over the annual earnings limit, as explained in the section Changes in the Amount of the Supplement.

• Effect on Your Basic Annuity
  
  
  • Non-Disability Retirees
    If you are a non-disability retiree and return to work for the Federal Government, you will continue to receive your annuity. Your salary will be reduced by the amount of your annuity for the period of reemployment.
    
    
  • Disability Retirees Under Age 60
    If you are a disability retiree under age 60 and return to work for the Federal Government in a position equivalent to the position you held at retirement, the Office of Personnel Management (OPM) will find you recovered from your disability and will stop your annuity payments. If you are reemployed in a position that is not equivalent to the one you held at retirement, your annuity will continue and your salary will be offset by the amount of your annuity for the period of reemployment. You will be subject to the 80% earnings limit. You reach the 80% earnings limit if, in any calendar year, your income from wages and self-employment is at least 80 percent of the current rate of basic pay for the position from which you retired. (See pamphlet RI 98-2, Information for FERS Disability Annuitants, for more detailed information).
    
    
  • Disability Retirees Age 60 or Older
    If you are a disability retiree age 60 or older at the time of reemployment, your annuity payments will continue and your salary will be reduced by the amount of your annuity. There is no limit on the amount of earnings you may receive. You will not be found recovered on the basis of your employment unless you specifically request to be found recovered.
    
    
  • Retirement Deductions Federal Employees' Retirement System (FERS) retirement deductions will be withheld from your pay while you are reemployed, even if you're still receiving annuity benefits, unless your new appointment is intermittent, as a justice or judge, or as an employee subject to another retirement system for Government employees. Those retirement deductions will be refunded to you if you are reemployed for less than 1 year.

When Federal Reemployment Ends
If you work full-time for at least 1 year (or the equivalent of 1 year on a part-time basis), you may be eligible for a supplemental annuity after you leave the job. If you complete at least 5 years of service (or part-time service which is equivalent to 5 years of full-time service), you may have your entire annuity recomputed. To get either benefit, you need to file a new retirement application with the Office of Personnel Management (OPM). You can get an application from your reemploying agency. You should contact OPM to be sure we are aware you are no longer working.

Employment with a Private Sector Company that Contracts with or Receives Grants from the Federal Government
You should direct any questions concerning your employment with a private sector company that contracts with or receives grants from the Federal Government to the Ethics Office of your former agency, or write to:

Office of Government Ethics
Suite 500
1201 New York Avenue, NW
Washington, DC 20005-3917

RI 90-8
Revised January 2000
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