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There are specific rules and regulations on returning to work for Uncle Sam after you retire. This article will not attempt to answer the question as to why someone would want to return to working for the federal government after retiring. It will simply address the how.
Basically, there are three ways to return to a federal position.
There is a legal prohibition against receiving “dual compensation” from the federal government (e.g., receiving both your pension and a full salary from a government job. This prohibition can be waived in certain situations, and has been repealed for certain approved part-time work (effective in late 2009).
If you are returning to a “non-waivered” position (i.e., a position that has not received a waiver of the prohibition on dual compensation, or is not approved part-time work), you cannot receive both your pension and the full salary for the job. You will receive your pension, but the salary of the job to which you return will be reduced dollar for dollar by the amount of your pension. If you make retirement contributions during this period of re-employment, you can become entitled to additional annuity payments.
If you remain in the new position as a re-employed annuitant for more than one year, but less than five years, you will, upon your “re-retirement”, become entitled to a supplemental annuity based on that period of re-employment
If you remain in the new position for more than five years, your entire annuity will be recomputed when you re-retire.
If you are returning to a “waivered” position (i.e., a position that has received a waiver from the prohibition on dual compensation), you will receive the full salary for the job and your full annuity. Your re-employment will be limited to two years, and you will not earn any additional retirement credit for this period of re-employment.
The prohibition against dual compensation is generally waived only for special purposes. Currently you may find waivered positions in agencies that deal with national security and counter-terrorism. Earlier, you found many waivers being granted for Y2K issues.
These rules do not apply to someone who retired under discontinued service retirement (not a common occurrence). They have special rules; when they return to federal employment, their annuity ends.
In late 2009 civil service legislation was passed that allowed federal retirees to return to work part-time for a limited period without losing any of their annuity. OPM recently announced implementing regulations.
The outlines of the legislation provide that agencies cannot allow more than 2.5% of their positions to be covered by the rules and that people who return to work under the new provisions:
Cannot work more than 1040 hours per year and not more than 520 hours in six months
Cannot work more than a grand total of 3,120 hours
John Grobe is a retired federal employee with over 25 years of experience in federal human resources and President of Federal Career Experts, a training and consulting firm that specializes in federal employee retirement and career transition issues.