Question about benefits when you leave FERS to go active?

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journeyman
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Question about benefits when you leave FERS to go active?

Post by journeyman »

I'm in my early 30s. Might resign from federal service (FERS plan) and go full active duty as an officer. I will create a separate post mentioning some possible career paths or billets, and ask for your feedback (here: viewtopic.php?f=20&t=13322)!

My wife is a full-time student at a very prominent (and most expensive graduate program) at a university in California. I'm east coast, she's west coast. We're a long-distance couple. I have some touch choices ahead to make as we deal with her student debt.

Anyway this topic pertains to Federal benefits. OPM says if I quit federal service, all my annual leave, credit hours, and such will be lump summed (and of course taxed) in a final paycheck. However, it seems my sick hours will remain with the govt. They won't pay my sick hours (~400 hours!). The only silver lining here is, I can reclaim my sick hours if I ever rejoin federal service in the future.
1. Does anyone here know if it possible to get lump summed for sick leave upon separation from federal service?
2. Is it possible to transfer or credit my sick leave into the uniformed services when I join?
3. Or will I be starting from zero?

I believe that I have the option of going on Leave Without Pay (LWOP) and saving my job while I go on active duty so that I don't really have to quit federal service. Or maybe that only applies for employees who get called up to active duty but will be back in a shorter time frame than 4 years. I don't know.

Medical:
My wife and I will get 31 days of extended health insurance coverage after I resign. Then we can apply for up to 18-months of TCC insurance coverage but of course there is a cost attached. It seems I would continue paying my existing biweekly premium ($121.91) for High-deductible health insurance via GEHA but will have the added burden of covering the government's portion of the premium ($365.74) + 2% admin fee of some sort. That is really going to hurt!
1. Can anyone recommend a more cost-effective solution for health insurance rather than spending thru the nose to keep coverage up? [/list]
2. Should I look into the Affordable Healthcare plans or is all that going to change under the new presidential administration?
3. Is it true that all my FEGLI premiums will be lost once I resign, or will that be paid back?

TSP:
I know that I can keep my retirement savings in the TSP until retirement age. I won't be able to contribute unless I re-enter federal service. If and when I go active duty I will have to contribute into a new TSP under the Uniformed Services. So it will be a separate balance, which sucks. I could also transfer the funds to another retirement account, since I'm not anywhere close to retirement eligibility. Am I correct in these assumptions?

FERS pension:
Is it true that current FERS retirees get an average monthly annuity of $720? Does that sound about right? I'm guessing that's with at least 20 years federal service. I've only done over 6 years to accumulate just under $5K in FERS contributions. Instead of cashing the $5K and paying income tax, would a better option be to keep both TSP and FERS balance intact until retirement age, while accruing active duty time, rejoining federal service later (8 to 15 years from now) and then claiming credit for those years? Because I have at least 5 years of federal service, I will be eligible to receive FERS pension at retirement age. Thoughts?

I am curious if any of you can share your life experiences with govt and military, or provide insight into my questions. Thanks for reading.

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rcozby
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Re: Question about benefits when you leave FERS to go active

Post by rcozby »

I retire on FERS next Tuesday after 33+ years federal service, the first five being active duty + one year on recall after 9/11. Some quick thoughts:
- There's no cash-out for sick leave. It'll stay on the books for you in case you return to civil service.
- Tri-Care prime is as good or better than FEHB. Drop FEHB when you go active.
- Join the reserves! That way you can get the best of both worlds; you get military leave from your civilian job, you get both a uniformed and civilian TSP account and you can get two retirement checks if you do your time in both.
- It's easy to combine your uniform and civilian TSP accounts once you separate from one and/or the other.
- Cashing out your FERS annuity contributions is a gamble if you think you may come back to civil service. You can buy that time back, but you'll pay interest on it. Perhaps you can make more than the interest if you invest it, but there's no guarantee.

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evilanne
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Re: Question about benefits when you leave FERS to go active

Post by evilanne »

Many questions, but why would you resign and have any lapse between working and joining the military? You get medical through the military so you and your family would be covered. Your agency might allow you to do the leave without pay for a short period (maybe longer depending on how long the hiring freeze is in effect) but not if it prevents them hiring a replacement for your position. Have you considered the reserves?

You can answer most of the question you ask by looking at OPM's FERS guide https://www.opm.gov/retirement-services ... ri90-1.pdf

FEGLI is term insurance and only is in effect when you pay your premium...there is no cash value to it. If you are young & healthy, you can probably get better coverage on the outside.
If you don't retire from the Military and you get another federal job after the military, you can buy back the military time for FERS. Leave your TSP, FERS and Leave where they are. Annual leave counts for time when it comes to FERS retirement. You don't have enough in TSP to roll it over any place better IMO but make sure you invest it wisely, which you can still do. At five years you are vested, I don't know if you return to federal service if you would be put into one of the newer RAE or FRAE system that requires you to pay a higher percentage for your retirement pension under FERS or if they would allow you back in to the original FERS.

GetOut
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Re: Question about benefits when you leave FERS to go active

Post by GetOut »

Journeyman,

I started my federal service as an enlisted Marine back in 2000. I come from an extremely long line of military folk, and it was the best possible way to pay for college. I did my time, loved every single second of it, but I am crazy like that, and I was young and single. At 30, going in the Marines enlisted, you would be the Old Man, you would need to ask yourself, are you physically capable of going toe-to-toe with 18 year old football players, track stars, and wrestlers in every aspect of physical activity? Have you ever thrown on a 70lb pack and gone for a 20+ mile hike?. I am 35 now and would absolutely hate to have to do basic training again, even though I am in good shape, I am 35, not 18 or 19, and trust me it makes a difference. For me, I left after my first enlistment, went to college, then to grad school, now I am pulling a very comfortable salary with the feds raising a family with no concern for year long deployments, missing birthdays, first words, first steps, etc. If you enlist can you live off of $2k a month? An O1 is only about $3k a month, can this sustain your lifestyle? Honestly if I were in your shoes, and I was dead set on military service, then I would seriously, seriously consider the reserve components. In my opinion, this is by far the best option for somebody already in the system. You don't want to give up what you already earned.

journeyman
Posts: 26
Joined: Fri Jul 20, 2012 11:41 am

Re: Question about benefits when you leave FERS to go active

Post by journeyman »

GetOut wrote:Journeyman,

I started my federal service as an enlisted Marine back in 2000. I come from an extremely long line of military folk, and it was the best possible way to pay for college. I did my time, loved every single second of it, but I am crazy like that, and I was young and single. At 30, going in the Marines enlisted, you would be the Old Man, you would need to ask yourself, are you physically capable of going toe-to-toe with 18 year old football players, track stars, and wrestlers in every aspect of physical activity? Have you ever thrown on a 70lb pack and gone for a 20+ mile hike?. I am 35 now and would absolutely hate to have to do basic training again, even though I am in good shape, I am 35, not 18 or 19, and trust me it makes a difference. For me, I left after my first enlistment, went to college, then to grad school, now I am pulling a very comfortable salary with the feds raising a family with no concern for year long deployments, missing birthdays, first words, first steps, etc. If you enlist can you live off of $2k a month? An O1 is only about $3k a month, can this sustain your lifestyle? Honestly if I were in your shoes, and I was dead set on military service, then I would seriously, seriously consider the reserve components. In my opinion, this is by far the best option for somebody already in the system. You don't want to give up what you already earned.


I understand where you're coming from. That physical regimen seems pretty tough. I don't think I am cut out for marine infantry, if that is what you are describing. But as far as the salary cut and lifestyle, I'm not sure. Really tough choice.

If I stay in the feds and work reserves on the weekends, etc. that means that my reserve duty time will not count towards early retirement from the federal civil service, correct? If I'm wrong, please let me know.

What are the pros and cons of being a reservist and civilian employee, besides salary difference, and being closer to your family?

journeyman
Posts: 26
Joined: Fri Jul 20, 2012 11:41 am

Re: Question about benefits when you leave FERS to go active

Post by journeyman »

evilanne wrote:Many questions, but why would you resign and have any lapse between working and joining the military? You get medical through the military so you and your family would be covered. Your agency might allow you to do the leave without pay for a short period (maybe longer depending on how long the hiring freeze is in effect) but not if it prevents them hiring a replacement for your position. Have you considered the reserves?

You can answer most of the question you ask by looking at OPM's FERS guide https://www.opm.gov/retirement-services ... ri90-1.pdf

FEGLI is term insurance and only is in effect when you pay your premium...there is no cash value to it. If you are young & healthy, you can probably get better coverage on the outside.
If you don't retire from the Military and you get another federal job after the military, you can buy back the military time for FERS. Leave your TSP, FERS and Leave where they are. Annual leave counts for time when it comes to FERS retirement. You don't have enough in TSP to roll it over any place better IMO but make sure you invest it wisely, which you can still do. At five years you are vested, I don't know if you return to federal service if you would be put into one of the newer RAE or FRAE system that requires you to pay a higher percentage for your retirement pension under FERS or if they would allow you back in to the original FERS.

Great point! it makes little sense to take a lump sum payment for my leave which is a few thousand dollars, some of which gets eaten by tax. It would be better save it for later use for retirement purposes or have that free time available if I come back.

Never heard of FRAE or RAE until now. Why do they keep changing the system? To squeeze more out of service members and pay to congress members? Last I heard there is no TSP matching for the troops. Just the civilians.

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Aitrus
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Re: Question about benefits when you leave FERS to go active

Post by Aitrus »

journeyman wrote:
I understand where you're coming from. That physical regimen seems pretty tough. I don't think I am cut out for marine infantry, if that is what you are describing. But as far as the salary cut and lifestyle, I'm not sure. Really tough choice.

If I stay in the feds and work reserves on the weekends, etc. that means that my reserve duty time will not count towards early retirement from the federal civil service, correct? If I'm wrong, please let me know.

What are the pros and cons of being a reservist and civilian employee, besides salary difference, and being closer to your family?


I'm in this exact position - Civil Service during the month, Air Guard on the weekends. I did 10 years of active duty service before going Guard, so I bought back all my time for my CS retirement.

Correct, your weekend time doesn't count towards early retirement. However, you do get 120 hours per FY to use specifically for military duties. For three weeks a year you'll be double-dipping, and you're also allowed to use regular leave as well.

If you decide to do an active tour, or go to a long training course, etc, you have re-hire rights to your CS position for 4 years (I think it's 4, I might be wrong) as long as you're vested.

Physical requirements depend on which service you belong to. AF is understandably easier, but then we're not meant to hold the front line. If a regular AF member is shooting back, then things have really gone sideways somewhere.

Pros to being CS and Guard:
- Extra paycheck every month. Not much, but still...
- You get an extra pension check that kicks in at age 60 (unless you get it earlier in certain circumstances).
- You can train in something else other than your normal job, it gives you a breath of fresh air to do something else.
- If you do your Guard job that's the same as your CS job, you get extra training and continuing education opportunities that make you better / more competitive at your CS job.
- The Guard makes a good back-up to a regular job because you can "Guard Bum" if you get laid off, lose work, etc. Guard Bumming is basically going on orders for X months / years to help out an Active Duty unit stateside that is having a manning shortage.
- There's opportunities to be a Guard Technician (Civil Service at the Guard unit), or AGR (Guard member put on orders and "deployed" to their home unit for a X year contract). Technicians are under FERS just like you are now. AGRs are considered the same as Active Duty members, except they don't get ordered to move across the country at a whim.
- 9/11 GI Bill is transferrable to spouse or kids in certain circumstances
- The Air Force COOL program pays for civilian certifications up to $4,500.
- Free CLEP / DANTES testing for those that need it.
- Access to Base Exchange (kind of like a Target) and Commissary (food store), all of it tax free. (some prices are better than off base, some aren't)
- Lots of travel if you want it, or no travel if you don't want it. A fellow Guardsman went to Antarctica for 6 months to hand out mail (not his regular job, but he got approved anyway). 80% of my unit went to Australia for 30 days a few years ago to participate in an exercise.

Cons
- You are in the military, and thus subject to all that entails - rules, requirements, etc.
- Sometimes you don't get a choice - if the annual "2 weeks a year" is smack dab in your family's planned trip to Disney World, you have to get the Commander to approve you not showing for that time period.
- You have to suffer the occasional "WTF?" stupidity of the military sometimes.
- If you have any rank above E-4 or O-1, you will supervise somebody. Some people just aren't cut out for supervision, but the military doesn't care about that.
- You give up 25% of your weekends, plus up to 15 days a year for annual training events. That's 25% of your sunrise-to-sunset free time days with your family.
- You get little respect from the Active Duty force. The Guard has a reputation as lacking in skills, out of shape, and generally lazy.
- Your Civil Service boss might give you a hard time about being gone so much. You'll have to train somebody to take care of your core responsibilities when you're gone. This might mean that leadership's impression of you is less than it should be, and that can affect awards, decorations, bonuses, etc.

Let me know if you have any other questions.
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rcozby
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Re: Question about benefits when you leave FERS to go active

Post by rcozby »

And (in keeping with the topic of this website) - you can contribute to TSP in both jobs.

mindofmush
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Re: Question about benefits when you leave FERS to go active

Post by mindofmush »

One small correction about application of leave toward retirement:

Accumulated Sick Leave (in units of months) can be applied to Time of Service for calculating federal pension annuity.

Accumulated Annual leave is paid out upon separation at the hourly rate in which it was earned.
mo meng, mo ching (which loosely means: no money, no life)

GetOut
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Re: Question about benefits when you leave FERS to go active

Post by GetOut »

journeyman wrote:I understand where you're coming from. That physical regimen seems pretty tough. I don't think I am cut out for marine infantry, if that is what you are describing. But as far as the salary cut and lifestyle, I'm not sure. Really tough choice.

If I stay in the feds and work reserves on the weekends, etc. that means that my reserve duty time will not count towards early retirement from the federal civil service, correct? If I'm wrong, please let me know.

What are the pros and cons of being a reservist and civilian employee, besides salary difference, and being closer to your family?


Active duty military time does not help you retire early, it gives you more years on your pension percentage. What I mean is this, I did 5 years active duty, as a Fed LEO, I have to retire at 57. I started in the Feds at 28. Since I bought back my military time, when I retire, should I wait until I am forced out, I will have a 34 year pension, instead of a 29 year pension.

If you are really on the fence about things, try out a reserve component first, you will sacrifice a couple years of weekends, but if you figure out it is not for you then at least you are not 100% in for the next 4-6 years, even longer if you figure in your IRR commitment.

Active duty is a huge commitment, when you are 18/19 and don't have much going it is easy to adapt, and drastically change every aspect of your life at the drop of a hat.

At 30 years old, having a career and being married, you would be in for a heck of a culture shock if going the enlisted route. I cannot speak for those on the officer side of the house. Is your wife completely committed to this endeavor? Does she understand that the second you sign the contract she is no longer first in your life? Is she ok with the fact that birthdays, anniversaries, holidays, etc. come second and sometimes third in the priority list? Is she ok being told where she will live? Is she ok potentially living in another country where her employment opportunities could be limited to a store clerk at the base exchange?

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evilanne
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Re: Question about benefits when you leave FERS to go active

Post by evilanne »

journeyman wrote:Never heard of FRAE or RAE until now. Why do they keep changing the system? To squeeze more out of service members and pay to congress members? Last I heard there is no TSP matching for the troops. Just the civilians.

FRAE & RAE are FERS applicable to civil service employees hired in or after 2013. With 5 years of "creditable service" under FERS you should be OK and able to return under regular FERS. IMPORTANT: you better verify that you actually have that before making a decision(any special or temporary time may not count) because the FERS-FRAE (4.4%) requires new hires to pay 3.2% more than traditional FERS (.8%) and it could be higher if they make any more changes under Trump. see http://www.fedsmith.com/2014/04/07/fers ... this-mean/ & https://www.opm.gov/retirement-services ... e-service/

No matter what path you take, you need to be consistently be contributing 5-10% of your salary to your TSP. With $5K after 5+ years you probably haven't been getting all the available matching or not investing in stock which you should be at your age.

There is another thread that address changes to military that you should read, addressing matching/reduced retirement benefits that you should read--change is coming in 2018 see viewtopic.php?f=14&t=13290&hilit=military+retirement+system

journeyman
Posts: 26
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Re: Question about benefits when you leave FERS to go active

Post by journeyman »

evilanne wrote:FRAE & RAE are FERS applicable to civil service employees hired in or after 2013. With 5 years of "creditable service" under FERS you should be OK and able to return under regular FERS. IMPORTANT: you better verify that you actually have that before making a decision(any special or temporary time may not count) because the FERS-FRAE (4.4%) requires new hires to pay 3.2% more than traditional FERS (.8%) and it could be higher if they make any more changes under Trump. see http://www.fedsmith.com/2014/04/07/fers ... this-mean/ & https://www.opm.gov/retirement-services ... e-service/

No matter what path you take, you need to be consistently be contributing 5-10% of your salary to your TSP. With $5K after 5+ years you probably haven't been getting all the available matching or not investing in stock which you should be at your age.

There is another thread that address changes to military that you should read, addressing matching/reduced retirement benefits that you should read--change is coming in 2018 see viewtopic.php?f=14&t=13290&hilit=military+retirement+system


I have put nearly the max allowable for TSP the last few years. I'm guestimating I've contributed $75-80K+ to TSP over 6 years. The $5K balance is not TSP; that's my cumulative FERS contribution over the same time period.

Thank you for the link. Looking at it now

sunny
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Re: Question about benefits when you leave FERS to go active

Post by sunny »

You can keep your money in TSP for eight years and make transfers, just cannot contribute to it.

Pinay76
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Re: Question about benefits when you leave FERS to go active

Post by Pinay76 »

In reference to annual leave, I don't think you can save it towards retirement. But your sick leave does. As far as going back to Feds after military, if the break in service is 8 years, you start from zero, i mean you lose your grade/step. Your TSP can be rolled over into an IRA or keep it in TSP. But should something happen to you, your beneficiaries will only get the amount you contributed, not the matching portion. If you roll over to an IRA, you get everything.

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evilanne
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Re: Question about benefits when you leave FERS to go active

Post by evilanne »

Journeyman,
My apologies...never thought of transferring the amount deducted for retirement although it is possible (see https://www.opm.gov/retirement-services ... employees/) If there is a chance you would go back to the federal government, it still would make sense to just leave it. If you never return, you would have a small benefit in the form of a deferred retirement once you reach retirement age.

Since you are vested after 3 years for TSP, if something happened to you, your beneficiaries should get your entire TSP including the matching. Pinay76's point may apply to the FERS Retirement payments which you could roll into an IRA--you would need to clarify that with someone in human resources. Typically, you have term life insurance to make sure your family is taken care of properly in the event of your death in addition to what is available to your dependents through Social Security.

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