I am aware that after I put in ten years’ federal civilian creditable service and then retire, my FERS annuity will be reduced monthly by 10% for the surviving spouse 50% annuity and that FEHB premiums will be deducted as well. My questions: Are the FEHB premiums in retirement deductible? Is the 10% deduction taxable? What is the monthly amount I should use as the gross received, prior to Simplified Method Deduction? Is it the total annuity? The annuity minus FEHB AND the 10% deduction? etc. Thanks.
Charles asks us four questions but each is so good that we need to unpack them a little so that we do not miss one single, important question. When are you eligible to retire from Federal Services? As a federal employee under the Federal Employee Retirement System (FERS) you are eligible to retire with an immediate, unreduced benefit when you achieve on of the following milestones: You can retire under FERS when you are:- Age 62 with 5 years of creditable service,
- Age 60 with 20 years of creditable service,
- Minimum Retirement Age (MRA) with 30 years of creditable service.
If Charles is, in this example, age 57 and wants to retire under the MRA + 10 years of creditable service rule the penalties would be,
Age | Penalty |
57 | 5% |
58 | 5% |
59 | 5% |
60 | 5% |
61 | 5% |
Charle’s Pension is Reduced by |
25% Total |
- Federal Employee Health Insurance Benefits (FEHB)
- Federal Employee Group Life Insurance (FEGLI)
- Federal Income Taxes Withheld