Navigating the Challenges of Re-employed Annuitants

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Val Majewski:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski with American Benefits Exchange. And as we typically do, today's topic came as a result of a question that I got from a recent retiree from the federal government, and they were asking about getting rehired as a retiree. It's called a reemployed. Annuitant can you go back to work for the federal government once you're retired from the federal government? So great question. It was awesome to dive into that with my client and talk to them about the opportunity that may come down the pike of what would happen, what would be the results of that, what would be affected, what wouldn't be affected, and really get into their situation and see if they could actually be re-employed once they're retired from the federal government. So let's dive into today's content and talk about what it means to be a reemployed Annuitant so re-employed. Annuitant right? There was questions that got answered or asked when we talked about this. Number one, are you able to be rehired now? This is in any sense and traditionally federal employees are saying yes, I mean, I can go back to work in retirement, I can get a job outside, I can work part time, I can do what it is I want once retired from the federal government. But can you get re-employed by the federal government once you're retired from the federal government? And we'll answer that here in just a second.

Val Majewski:
Question number two is how am I reemployment be treated? So how will you as a reemployed annuitant, if that's what you end up doing, how will it be treated? What will be affected? So these were the questions again that I got asked by one of my clients, one of my federal employee recent retirees. And when we dived in or dove in to their situation and looked at what could potentially change or would be affected, you know, it's great to see their reaction and see if it was worth them going back and getting rehired. So first of all, can you go back to work? Simple answer is yes. You have the ability to return to work either as a private sector employee, which we already discussed, or as a reemployed annuitant, meaning you're retired from the federal government and you got back in, you got rehired. Now, if you returned to work in the private sector, your annuity, your pension will not be affected. So the pension that you get as a retired CSRS or Fers employee will not be affected by your employment outside the federal government. In the private sector, you get a part time job, full time job, that full pension is still coming to you and nothing else is really affected. However, if you return to work as a federal employee, right, a Reemployed annuitant your new total base pay, base pay plus locality, your total salary will be reduced.

Val Majewski:
This is very important here. Uh, consideration will be reduced by the amount of your annuity. I'll say that again. If you were employed as a reemployed annuitant back into the federal government, you're already collecting a pension. Your new salary, total base pay, base pay plus locality will be reduced by the amount of the pension that you're currently receiving. So just understand that it's not a double dipping effect. Retiring and then going back to work as a reemployed annuitant. Number two, what will be affected by what will be affected when you go back as a re-employed annuitant? So as a private sector, nothing's really going to matter. Nothing's going to be affected. I mean, I shouldn't say matter, but nothing's going to be affected. When you get employed by a private sector company, you're still going to get your full pension. That's pretty simple. Okay. Pretty easy. It's you're going to get a pension and you can get a new salary. But if you're a re-employed annuitant, there's a couple of things that'll be affected typically. And I put the typically in there because there's a couple one offs, a couple special cases we'll talk about on the next slide that could pertain to your situation. Things will be a little different for you, but this is typically how it works.

Val Majewski:
So typically your salary adjustment right. Your new salary as I just mentioned on the previous slide, will be reduced by the amount of your retirement annuity. So understand you're going to make the same whatever your salary is. Now your annuity is going to basically offset that and your salary is going to be reduced. So you'll make your total salary. But it's not the salary plus the pension annuity plus the Fers or CSRS annuity social security. Now Social Security if you started taking that into retirement. So let's say you retired and you decided you were going to take Social Security as part of your retirement income, and now you went back to work. And this doesn't matter where you work, but your Social Security will be subject to the income reduction test. Income reduction test. That means you're allowed to make up to a certain amount of money prior to you turning your full Social Security retirement age. Now, this varies by year. So depending on when you're watching this, uh, episode, I would recommend you reach out to us. We can give you the exact amounts the the threshold, the earnings limit before you see a reduction in your Social Security benefit. But this usually will increase every year. So going into now or in 2024, the amount that you can earn up to is a little over $22,000 a year before seeing a reduction in your Social Security benefits.

Val Majewski:
So same thing here. Your earnings, meaning your W-2 wages or business income is what counts towards this earnings test. Your pension and TSP income does not count towards the earnings test, but now your new income as a reemployed annuitant would count towards the earnings test. If you're already taking Social Security and you have not yet hit your full Social Security retirement age, so just take that into consideration too. You may see a reduction of your Social Security benefits once you hit your full Social Security retirement age, which is anywhere between age 65 and 67, depending upon your birth year, you will no longer see any reduction in your benefits from Social Security. So important. That's a consideration to take into if you go back to work as a re-employed annuitant. Now the last thing. Thumbs up, right? It could be a potential increase in your retirement benefits. Now, what does that mean? Well, if you go back to work for the federal government and you're paying into the retirement system, you're accruing more time when it comes to retirement pension. And depending upon how long that you work for the government, whether it's part time or full time as a re-employed annuitant, you can get an increase ultimately when you leave that post or leave that position, or leave this new re-employment.

Val Majewski:
When it comes to your pension, you can see an increase in those benefits. There's two different types of increases. One is called a supplemental annuity, but the other one's called a redetermined annuity. Now what's a supplemental. Well if you've worked less than five years upon re-employment so you get re-employed. You have less than five years of service. You're just going to get a supplemental annuity. Just a it's a separate paycheck, pretty much. Right. It's a supplemental. You're going to get your regular pension back. We'll continue to get your regular pension and then get your supplemental annuity. If you work more than five years your annuity your pension would be redetermined, meaning they're just going to recalculate it with that extra service time that you've got. And now it's going to come in one payment. Right. A redetermined annuity based upon the new employment years that you had, the new payments you made into the retirement system. Now important to note also, if you end up for some reason you're not paying into the pension system, then you're not going to be accruing new time. So this new position will most likely, if you're re-employed, be paying into the retirement system so you can accrue more time. Now all of this is a typical example, right? So if you get hired or rehired as a retiree so you're re-employed.

Val Majewski:
Annuitant this is a typical scenario. Well what things would affect a non typical rehire. And if you're in any of these situations I'm not going to go into them in incredible detail. But if you are in any of these situations, if you're contemplating getting re-employed, if you're contemplating going back to work for the government once retired and you fall into some of these situations, please reach out to us. Go to our website dot Federal Retirement Show.com fill out that form. We want to talk to you about this because there's other considerations, maybe positive or negative, that you should take into consideration before committing to going back to work for the government. Not to say you shouldn't work at all, but when going back to work for the government, first of all, where are you originally? Uh, what is not typical? Sorry, I'm just going through this. What if you were originally a disability? Annuitant. So if you go back to work, obviously you're no longer disabled. That disability is no longer continuing. So you're not going to continue to get your disability retirement. Uh, those things are going to affect, you know, the, the, the retirement pension that you were getting, uh, no longer getting Social Security disability, no longer getting disability retirement. You retired involuntarily. Right. So this could be a non-typical case if you got forced out due to a reduction in force or a major reorganization if you retired involuntarily.

Val Majewski:
That's not considered typical. And there may be some other considerations, other things to review before going back to work. Did you receive a buyout? Now there are voluntary early retirement options or buyout opportunities, depending upon the agency. Depending upon the situation that you may have taken advantage of. I will tell you that if you took a buyout and retired voluntarily early or, you know, took the money, took the buyout and retired and you go back to work, you are going to have to pay that back. So important consideration there. If you took a buyout now retired, contemplating getting rehired or re-employed by the government, you are going to owe that buyout money back. So that is not a typical scenario, something you should consider. Talk to us, see if it's the best move for you. Did you receive a presidential appointment? Now, I know this is going to be a rare case, but say you're retired and you got, um, appointed by president. You had a presidential appointment that brought you back to work, re-employed by the government. There's different considerations there, how your pension and other things could be affected. So if you're in that situation, let us know. We can help. Are you an exception to the dual appointment employment rule? Okay. So what do I mean by that? Well, there are some exceptions that will allow you to have dual employment, meaning you can be collecting your full pension and your full salary.

Val Majewski:
So I said typically the typical thing is that you're going to have uh, your salary offset by your pension amount. But. But if you're an exception to the dual employment rule, you might be able to get both your full pension and your full salary. So if you're in a not typical scenario or if your situation is even different than this, there's a couple other circumstances that may apply to you. Reach out to us. If you're considering getting re-employed by the government, and let us walk through your situation and see if it's the best thing for you, your family, your retirement. Well, as I said, these episodes are coming in by suggestion or by questions that we're getting from our clients. If you have a question, if you have a suggestion, if there's information that you want to see on the podcast, on the radio show, reach out to us again, go to our website, Federal Retirement Show.com. We are happy to answer you, point you in the right direction. Maybe you can create a new episode based on the question that you're asking. I appreciate you taking the time out of your busy schedule to view today's episode, and look forward to seeing you on a future session.

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