What Happens To Your FERS Pension If You Leave Federal Service Early?
Working under federal service grants you plenty of amazing federal employee benefits towards the cushy retirement that you’ve worked so hard for. Hitting all of your important milestones as a federal employee is the best way to ensure maximum federal benefits, but things don’t always pan out how you expect. Life happens, and sometimes, you’re forced to throw in the towel early. Unfortunately, leaving federal service early means that your FERS pension might take a blow.
If you find yourself in this predicament, keep reading to understand your options and find the best way to secure your federal government retirement given the circumstances. Federal Educators St. Petersburg is here to help you plan out and maximize your federal retirement benefits with what you have.
Deferred Retirement vs Contribution Refund
Those who leave federal service early are often faced with two viable options in St. Petersburg. The first is to opt for deferred retirement. The second is to file for a refund of your FERS contributions. Considering that receiving pensions before your minimum retirement age (MRA) will hit you with costly penalties, these alternatives are worth looking into.
Deferred Retirement
Those who have worked in federal service for at least 5 years can opt for deferred retirement. This means having your retirement contributions locked away until you reach your MRA. That way, you won’t have to pay early withdrawal fees! Think of it as putting your federal retirement pay on hold until you’re ready.
Important Note: When you apply for deferred retirement in St. Petersburg, your annuity may decrease by 5% for each year you are under your MRA. If you can, postpone your deferment for as long as possible for minimal penalties.
Refund of Contributions
If you’re not eligible for deferred retirement in St. Petersburg, you can choose to get a refund of your FERS contributions instead. The only downside? You won’t be getting any of those long-term annuity benefits by pulling out those funds. The bright side? You can immediately put that money into another federal retirement program so you can continue to earn compounded savings over time.
Are Those My Only Two Options? See What Else You Can Do:
An easy way to manage your federal retirement annuity before you leave federal service early is by rolling over your FERS funds into another qualifying savings account. A couple of popular options in St. Petersburg are the Thrift Savings Plan (TSP) and either an IRA or Roth IRA rollover. Look into the Federal Educators Thrift Savings Plan overview for more information.
Already have a TSP account? Learn more on our FAQ page for the TSP early withdrawal process if you need to access your funds sooner.
Meet With Federal Educators St. Petersburg Before Leaving Federal Service. Know Your Options and Make the Right Choice!
Bottom line? To receive maximum federal government retirement benefits in any given situation, you just need to make smart choices at every stage. Meeting with a Federal Educators benefits advisor is a good start. And the sooner you meet with a qualified expert, the better.
Call Federal Educators St. Petersburg today at (813) 568-1212 to schedule a consultation for advice to guide you through a strategized retirement plan. Start by getting a free benefits analysis to see what you might qualify for! Use our contact form online for your convenience.