Under the Federal Employee Retirement System (FERS), there is an option where federal employees can retire at their minimum retirement age (MRA) with as little as 10 years of service. This option is commonly referred to as MRA+10, but the Office of Personnel Management (OPM) has another name which is equally descriptive – reduced. An employee who elects to retire under the MRA+10 criteria will be subject to a 5% reduction for each full year they are under the age of 62 (5/12 of 1% for each full month).
So what is your Minimum Retirement Age? MRA is a concept that was introduced with the advent of the FERS system and does not apply to CSRS employees. Your MRA is based on the year in which you were born. A FERS retiree who was born before 1948 would have a MRA of 55. However, if they were born in 1970 or later, their MRA would be 57. A chart listing MRAs appears below.
|Year of Birth||MRA|
|1948||55 and 2 months|
|1949||55 and 4|
|1950||55 and 6|
|1951||55 and 8|
|1952||55 and 10|
|1953 – 1964||56|
|1965||56 and 2|
|1966||56 and 4|
|1967||56 and 6|
|1968||56 and 8|
|1969||56 and 10|
|1970 and later||57|
In addition to having one’s retirement reduced, an individual who retires under the MRA+10 criteria will not be eligible for the supplement. Refer to earlier article on supplement here.
There is often confusion among FERS employees about the 5% per year reduction. Many individuals who are covered by FERS believe that if they retire under the age of 62 they will be hit by the penalty. Nothing could be further from the truth – the 5% penalty only applies to FERS retirees who leave under the MRA+10 provision. FERS employees who are under age 62 and retire under other provisions face no reduction at all. Examples of the other provisions being:
- MRA plus 30 years of service
- Age 60 plus 20 years of service
- Special category retirement (e.g., law enforcement, firefighter, etc.)
- Disability retirement
- Certain deferred retirements
The first three bullets above are sometimes referred to as “voluntary retirement”.
There is a method that an individual leaving under the MRA+10 provision can use to avoid the penalty. This method, however, is not for everybody, as it requires that you postpone the receipt of your annuity and give up some other retiree perks for a period of time. Here’s how it would work.
Let’s say you are age 60, neither disabled nor a special category employee, and have 15 years of service, but you really want to leave government service. As you need a full 20 years of service to qualify for voluntary retirement, 15 years won’t get you out the door so you apply for MRA+10 retirement. When your MRA+10 retirement is approved, you tell the Office of Personnel Management (OPM) that you wish to postpone receiving your annuity. Upon reaching age 62, you contact OPM again and ask them to start your annuity. Because you are age 62 when the annuity begins, there will be no reduction in your annuity amount.
But wait, there’s more! Well, actually, there’s really less. Here are some reasons that applying for and then suspending a MRA+10 retirement is not more popular than it is (other than the fact you’ll not be receiving an annuity during the period of suspension).
- The high-three salary used to compute your annuity remains what it was when you left – it is not adjusted for inflation.
- You will be ineligible for health insurance through FEHB during the time your annuity is postponed. It will be reinstated when you begin collecting your annuity.
CSRS employees do not have anything like MRA+10 available. If the person in the example used above were a CSRS employee, they would have to wait until age 62 to be eligible for retirement.