Can I Receive My FERS Pension as A Lump Sum?
Are you planning to leave a federal position before retirement eligibility is available? Perhaps one of the most important decisions to consider is whether to take a lump sum of your accumulated retirement contributions, or not. Federal Educators share a few factors to weigh before you decide.
A certain percentage of every paycheck you received as a FERS employee was deposited into the FERS retirement system. This system is what funds FERS pensions in retirement. Traditionally, pension eligibility is available for the following: reaching age 62 with at least 5 years of service or age 60 with at least 20 years of service or MRA (minimum retirement age) with at least 30 years of service or MRA with at least 10 years of service for a reduced pension. If you choose to leave your federal service before reaching any of the above, there are two options available. You can ask for a lump-sum payment or leave your payments in the system and wait for deferred retirement. You must have at least 5 years of service for the latter.
Waiting for a deferred retirement may seem like the best option but for others, a lump sum is more advantageous. One of the first things to understand is how much you are paying into the system as an employee. Those hired before 2013 contribute 0.8% of their salary, those hired in 2013 contribute 3.1%, and those employees hired after 2013 contribute 4.4% of their salary. There is a significant difference in the contribution amount between new and senior employees!
Another notion to consider is how long you must wait if you choose to defer. Leaving your payments in the system might seem clear if your retirement age is quickly approaching. But, if you must wait decades before it’s accessible, it may be a better option to invest a lump sum on your own.
If you decide to take a lump sum, you must complete an application from your personnel office and return it to them. If you have already separated, you can access an application on the Office of Personnel Management’s website here.
Feeling overwhelmed? Federal Educators can help you prepare for retirement with the perfect combination of educational resources and a knowledgeable team. Call our Tampa office at (813) 755-7037 or request a complimentary benefit analysis today.
