Leaving and Rejoining Federal Service by Jay Hunt
Leaving and Rejoining Federal Service: Benefits Retained and Benefits Lost
by Jay Hunt
Jay Hunt of Stratico Retirement and Insurance Solutions is in the business of helping people, and here he discusses how benefits may be affected upon taking leave from the Federal Service.
Recently, we received an excellent question regarding what happens to all benefits when rejoining federal service. Primarily, they wanted to know what would happen if they ever returned and we realized this is something that needed to be covered, so that is what we plan to do today!
Over the years, thousands of federal service workers have gone back after leaving so this is not uncommon. In fact, it is relatively common for all of us in the world to go back to at least one job in our career. Whether we thought the move away would be good for our career or just our bank balance, it is easy enough to return when you realize the truth.
In answering the question, you will have the option to enroll into most of the federal benefits or continue from where you left off, and this includes federal health insurance (FEHB), federal employee life insurance (FEGLI), and likely more. With FEHB, it will be classified as ‘continuous’ for the five-year requirement before then carrying it over towards your future retirement.
FEGLI for Federal Employees Returning to Service
With FEGLI, you will not have an opportunity to change coverage if you rejoin federal service within 180 days of leaving; you will just go straight back onto the same coverage you had before you left. If you left over 180 days ago, you have the option of rejoining the same coverage, or you can start from fresh with a brand new policy.
Furthermore, your annual leave will be calculated using your overall length of service (regardless of breaks) and any sick days taken previously will also carry over. If you withdrew from your TSP before resigning, this cannot be replaced although you will be able to carry on with the same plan and contribute in the coming months and years. If you managed to roll the TSP into a different account, there would also be options to roll this account into the TSP; this includes any qualified gains.
Returning to Federal Service and Retirement Coverage
When it comes to retirement coverage, this will ultimately depend on the time you spent away from federal service and what system you were on before your resignation. For example, you can return to FERS if this was your plan beforehand. If at resignation, you had fewer than five years of creditable civilian service, 4.4% of your salary will go towards the FERS system (this is not affected by whatever you were paying before leaving). As a side note, the percentage payable can increase by 0.5 points if your new position is covered by the law enforcement or firefighter special provisions. If you managed to obtain creditable civilian service time of over five years, your rate of contribution to FERS would remain the same.
With CSRS, you will find the rules to be different because most people are eligible to retire with CSRS; however, there are a few who are not yet eligible due to age. If you were not eligible to retire when you resigned, the following would be true;
- You would be covered by Social Security if your break was larger than one whole year. Unfortunately, your opportunity for the standard CSRS has now gone, but you can choose between FERS and CSRS Offset.
- If your break was less one year, you could choose FERS coverage when you return to your role.
- At the time of leaving, you could have also been CSRS Offset, and you will be offered FERS on your return. However, all of your CSRS Offset years will be counted as FERS service for your retirement.
No matter what retirement system you follow or followed before your resignation, you will not have a problem depositing any money you withdrew before leaving. If you need any other advice, be sure to talk to a finance professional or someone who can help in federal service. If you want to retire with confidence, these decisions could be important so take your time!
Contact Jay Hunt
Stratico Retirement & Insurance Solutions
(816) 260-6737
Other Jay Hunt Articles:
Article:FAQ Regarding New TSP Investment Options by Jay Hunt
Article: Let the Thrift Savings Plan (TSP) Help You Retire Well
