Defending Public Safety Employees’ Retirement Act Enacted
Defending Public Safety Employees’ Retirement Act
Certain former and current federal employees can now access their retirement benefits earlier than traditional retirement accounts allow for without fear of repercussions. The president signed and enacted the Defending Public Safety Employees’ Retirement Act on June 25. This bill allows current and former employees to access the federal employee retirement system to withdraw funds as early as the age of 50, without penalty. Typically, individuals can only access their retirement benefits at 59 1/2 without incurring an early distribution tax penalty.
The Defending Public Safety Employee’s Retirement Act
The Defending Public Safety Employee’s Retirement Act allows early retirement benefits to be distributed as early as age 50 to those who have worked as enforcement officers, firefights and air traffic controllers, according to a copy of the bill. The bill stipulates that those currently of formerly participating in these forms of federal employment be allowed early access for various reasons. Other individuals face a 10 percent penalty.
The bill also stipulates that the restriction on allocations from government retirement plans labeled as benefit plans are the only plans to qualify for early withdraw. As an added measure, the bill prohibits the Internal Revenue Service from treating the change to equal payments as a reason to increase the early-withdraw penalty. Qualified current and former federal employees can begin taking early distributions without penalty as of December 31, 2015. The bill does not extend the exemption past these specific organizations. All other individuals could face a tax and penalty fee on early withdraws as is typical for all retirement plans.
Federal Retirement and Withdrawal Rules
Current retirement withdrawal qualification is based on your minimum retirement age. Employees born between 1948 and 1952 can typically begin withdrawing pension benefits sometime during their 55th year, while individuals born after 1970 must wait until the age of 57 to qualify. Additionally, no matter which federal organization you work with, your FERS benefits will be reduced based on the number of years you served and your withdrawal age may increase. As a general rule, to qualify for early withdraw, with no fees, you must have worked for the federal government for at least 20 years.
The Public Safety Employees Retirement Act did not stipulate whether employees in the qualified positions were also exempt from the 20-year service qualification requirement. Federal Employees can use the retirement calculator to determine how much their benefits will be to be at the age of retirement. The Office of Project Management features several retirement calculators including: a General Schedule calculator, Federal Ballpark Estimate, Federal Withholding Calculator and Tax Free Annuity Calculator to help federal employees properly prepare for retirement.
Reductions and Early Withdrawal Fees
Employees that opt to take an early retirement may qualify for a reduced or waived early-withdraw fee. However, they also face a reduction of annuity payments totaling 5 percent per year for every month the employee is under the age of 62. To avoid the reduction, check out the Office of Personnel Management website or work with a qualified financial professional to determine your minimum retirement age and plan to receive benefits after that age.
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