What Happens to My Benefits If I Leave Federal Service and Then Return in the Future?

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By on April 29, 2017 in Pay & Benefits, Q&A with 0 Comments

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Q: I’m considering leaving federal service and I’ve read your informative article on what happens to my benefits when I leave federal service before retiring. What would happen to them if I ended up coming back to federal service?

A: Returning to federal service after a break in service isn’t as unusual as one might think. We might think the grass is greener on the other side of the fence and find out we were mistaken. The answers I give below assume that you are returning to a permanent position, not to a temporary one.

When you return to federal service, you will be able to continue in or enroll in all of the benefits for which you are eligible (e.g., health insurance, life insurance, etc.). If you had FEHB up until you left, and picked it up immediately upon your return, your coverage would be considered “continuous” for the purpose of meeting the five-year requirement for carrying your FEHB into your future retirement.

If you had FEGLI and your break in service was less than 180 days, you will be enrolled in the FEGLI coverage you had at the time of your separation and would not have an opportunity to elect any other coverage. On the other hand, if your break in service was 180 days or more you will be enrolled in the FEGLI coverage you had at the time of your separation and would also have an opportunity to elect other coverage.

Any sick leave that you had at the time of your resignation would be re-credited. You would begin earning annual leave based on your length of service, including the service that took place before your resignation.

You will be able to resume contributing to the Thrift Savings Plan, though you will not be able to re-contribute any TSP funds that you withdrew after your resignation. However, if you rolled money from the TSP into another qualified plan or account, you would be able to roll that account (including any qualified gains) into the Thrift Savings Plan.

Your retirement coverage would depend on how long you were away from federal service and what your retirement system was when you resigned.

If you were FERS at the time of your resignation, you would return to the FERS retirement system. If you had less than five years of creditable civilian service at the time of your resignation, you would contribute 4.4% (4.9% if you returned to a position covered by the special provisions for law enforcement officers, firefighters, etc.) of your salary to the FERS system, regardless of how much you were contributing at the time you left. If you had five or more years of creditable civilian service at the time of your resignation, you would contribute to FERS at the same rate you did before you left.

If you were CSRS when you resigned, the rules are somewhat different. The odds are that if you are CSRS, you’re already eligible to retire, though some CSRS employees have not yet reached the age of eligibility. What follows here is for those CSRS employees who were not yet eligible to retire when they chose to resign.

  • If your break in service was for more than 365 days, you will be required to be covered by Social Security upon your return. You will not be able to remain in “plain old CSRS”; rather you will have to choose between CSRS Offset and FERS.
  • If your break in service was more than 3, but less than 365 days, you will have the option to elect FERS coverage upon your return.
  • If you were CSRS Offset when you left and chose to elect FERS upon your return, all of your previous CSRS Offset time will be treated as FERS service for retirement purposes. You don’t want that!

Regardless of your retirement system, you will have the opportunity to re-deposit any CSRS or FERS retirement contributions that you withdrew when you resigned.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2019 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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