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View Full Version : Best path to go? (Military and FERS)



EricDeLee
09-26-2013, 12:56 PM
Just looking at some future options that I have and looking to help educate others while learning the ropes a bit myself.

Currently:
17+ years total service
it equates to 12+ years of Active Duty Service.

I have roughly 8 years left (or a bit less) to retire from Active Duty on the AGR side of the house.
At that point I earn a military pension (1/2 of Base Pay).

If I can grab a job at the VA, I'd be able to work under the FERS system. One of the BIGGEST draws is that I can still contribute fully to my TSP, while getting matched as well Separeate question below regarding that)

Upon retiring from the military and starting a new career with the VA, I understand there is something where you can retire after 10 years of time there if you reach the minimum retirement age. The timing is nearly perfect for me, I can do 10 years with the VA, and I'll be 54-55 (so I may need to do a few extra years). So esentially I can retire and earn both pensions at that point... correct or incorrect?

I also read there was something about I can use my service years TOWARDS a retirement with the VA as well. Can I still use my service years if I am drawing an AD pension from the military or will it mess with my retirement pay from the military?

My Goal is this:
retire and start recieving the military pension right away at 44 or so.
Keep contributing to my TSP and maxing the contribution for an additional 10 years or so after initial military retirement with a VA job

Extra Bonus:
Earn the second retirement with the VA.

So... have any of you followed a gameplan like this? Can you give me some information regarding this?



bonus question regarding TSP:

If the agency does 5% matching, will that 5% matching count towards your maximum contribution amount? (Or can you still contribute $17500, and still get the 5% added to it without a penalty).

Chulke
09-26-2013, 01:17 PM
Hi Eric,

Here is what I know to be true...

I am in the military as well (due to retire in about 22 months) for 9.5 years I worked with civilians and ART's and this is what I saw and learned from that whole situation:

You can retire from active duty and become a civil service employee, you can BUY your active time back into the civil service but it does not count towards retired civil service pay it only counts towards seniority(because you are already getting a federal pension)

In other words, if you and another guy are hired at the same time and YOU buy back in your active duty time and he doesn't...say after 2 years when it comes time for layoff or furloughs or whatever it's like you've been there for 22 years while he has only been there 2, hence he'll get layed off before you will.

As far as a second retirement from the VA goes...I know you can get one but, I'm not sure of the rules.


Good Luck!

EricDeLee
09-26-2013, 02:50 PM
Chulke...
That helps a lot. So with that understanding, I would still draw my regular pension from AD military retirement, while working as a VA employee (Civil service). Even after selling the time back... just to gain seniority. Still sounds like a plan to me.

Now I need to figure out the retirement portion.
If I am reading it right, I can gain a retirement by serving 10 years on the civil service side. And simply hitting that Minimum retirement age (that would be 57 for me). So generally speaking I can earn a retirement with them as well... after serving those ten years (For me I'd need to work about 14 years with them because of the minimum retirement age).

What's the retirement pension like for a Civil Service in that situation?

Chulke
09-26-2013, 04:08 PM
My understanding of the retirement for a civil service person is that TSP is their retirement. So, it behooves them to contribute, especially since they're being matched.

I know the ART's (actually all the civil service) I worked with at my previous duty station all tried to max out their contributions, because they got matched dollar for dollar up to the first 5% and then .50 cents on the dollar for everything over and up to the contribution limit. At least that was what I was told by some of my closest friends that worked in that system...now they might have fallen under the old CSRS system and not the FERs system you'd be under.


Either way it's not a bad deal...I advise all my troops who are thinking of getting out to go into the ART or ANG program. It has 2 benefits: 1: You serve like active duty in most cases and you get a paycheck based on the WG/WS/GS pay scale and then you also get to contribute to TSP and get matched...

Here's a little story for ya:

A buddy and I started our TSP's at the same time...Me on the active duty side and him on the ART side...we were both putting in the same dollar amount roughly and investing in the same funds most of the time...after 2 years...my account balance was right around $2K and his was sitting around $20K...I was so mad! And if at that point I wasn't well over the hump (10 years of service)...I would have been looking to get into an ART position right then and there! It's absolutely a win-win deal. Because when you retire you will get a reserve pension based on your rank, total number of points and all that jazz, collectable at age 62 and1/2 or whatever..A reserve TSP pension if you were able to put enough in, and a ART TSP pension! Pretty nice huh?

Well as a straight civil service it's pretty nice too! But, I'd be interested to hear what you find out on the VA pension after 10 years of service...I'm willing to bet you'd be better off serving till age 65 with the VA...meaning you'd get even more out of your pension.


Good Luck, and keep me posted!

EricDeLee
09-26-2013, 07:12 PM
I did see this, but will need to research more.
Retirement pay by the numbers (http://blogs.federaltimes.com/federal-retirement/2013/02/05/retirement-pay-by-the-numbers/)

I suppose if I do what I'm planning, I'll be under that MRA+10 option.
Not sure what the heck that will equate to, but I think its about $1k a month. As well as the military pension. I think retiring at 20 with the military and getting that pension from age 45-58 on top of civil service pay will be best.

EricDeLee
09-26-2013, 07:25 PM
Better description for my situation
FERS Early Retirement - Rules for MRA+10 FERS Retirement (http://www.plan-your-federal-retirement.com/fers-early-retirement.html)

Not too much to gain (except contributing to TSP). Only something like $350 a month if you are a GS 7 or something like that.

Birchtree
09-27-2013, 10:47 AM
It's nice to have the security of a pension, annuities, social security, etc - but you must remember that this is money you don't control and will leave you paying taxes that can be raised at anytime - look at the ObamaCare 3.8% tax for example. Think in terms of legal tax avoidance for a better retirement - keep what is yours.

Kaufmanrider
09-27-2013, 11:50 AM
Better description for my situation
FERS Early Retirement - Rules for MRA+10 FERS Retirement (http://www.plan-your-federal-retirement.com/fers-early-retirement.html)

Not too much to gain (except contributing to TSP). Only something like $350 a month if you are a GS 7 or something like that.

Only $350 a month? Look at it this way, if you decide to retire at MRA+10 you get a gift of $350 a month. How many private sector jobs will give you $350 (or anything) after only 10+ years?
That would be $350 more then you have added to your military retirement benefits. Then you can look forward to adding
your Soc. Sec Benefits a few years later. Every little bit counts and adds another layer of protection for you and your family. In addition, you'd have 10+ years of adding to you TSP with a free government match of 5% which you don't have now. With a military pension you should easily be able to max out you annual TSP, or come close. That means a bigger account balance with more income from it. And what's to say you like your
job and opt to work to full retirement? Each year you work past your MRA+10 your retirement check goes up. I'd do it if I had the opportunity.

Birchtree
09-27-2013, 12:10 PM
When my daughter finished her military responsibility she took a private sector job that offered a Roth 401K - her retirement will likely be tax free. She builds gains from her contributions, employer contributions and market growth. Don't give your years away to the IRS - do what you can to keep them away from your doorstep.