Eligibility for Retirement and the Effect of Leaving Your Job
The effect of leaving your government job without being eligible for prompt annuity payout will leave you with two choices: leaving the contributions you put in savings, your take the refund when you go.
If you want to leave your contributions in your already-established retirement fund, you must first find out if a deferred annuity is something you are eligible for. After leaving your job, you must be at least age 62 and have five years of government service. Any less than that, and it’s not really enough money to leave in, and would probably be the smart move to take it out.
This could always be paid, if you desired, should you return to government work in the future, but there will be a required interest added to the amount if you’re looking to make up the funds to match the time you missed.
That is why, regardless of the size of the annuity, it might be the smart move to leave the funds alone if you qualify for retirement deferment. The money is this fund will continue to pay out for the rest of your life, back by a governmental credit line. That is a smart investment when you look at it that way.
But perhaps, upon leaving your job, you need money immediately, and taking the refund is the way you want to go. There are many complicated steps you’ll have to take to secure it. First, you need to fill out the paperwork. Then you’ll have to send it to OPM. The OPM then will have to notify your current or former spouse and inform them that you are requesting your refund. That is because you would not be allowed to receive those funds should the money end any right that person has to your future benefits.
The interest rate on paying those funds back is 3 percent, which is annually compounded from your last date of employment. This is only for parting employees who had put in less than five years time. More than five years, and you are not required to pay those rates.
Adversely, interest would be paid on contributions to FERS, based on the market rate for all service of over a year. The month before OPM pays out to you, that amount too is annually compounded.
If you’re enrolled in the FEHB or FEGLI programs, you have only thirty-one days before your coverage ends. This coverage can be put towards another insurance policy. Persons using FEHB can also get their coverage extended with the Temporary Continuation provision, giving yourself extra time to find a new policy. The downside being that the government will not be matching premiums, which will have to be paid by you in full. FLTCIP insurance is the same, with premiums your responsibility.
