FERS Options for Deferred or Postponed Retirement

While “deferred” and “postponed” are often used interchangeably to mean delaying an action, they have distinct meanings in FERS retirement. Understanding these differences is crucial for federal employees planning their retirement.

Deferred Retirement is for FERS employees who leave service before reaching their Minimum Retirement Age (MRA). It requires at least 5 years of creditable civilian service.

Postponed Retirement is for FERS employees who have reached their MRA and have 10-30 years of service. It requires at least 10 years of creditable service (including 5 years civilian).

Key Differences in Benefits

Insurance Benefits

• Postponed Retirement: Allows for reinstatement of health (FEHB), life (FEGLI), and supplementary dental and vision coverage upon receiving an annuity. Eligibility requires enrollment for at least five years prior to separation.
• Deferred Retirement: Does not offer continuation or reinstatement of these benefits after leaving federal service.

Survivor Benefits

• Postponed Retirement: May offer survivor benefits even if the retiree dies before receiving their annuity.
• Deferred Retirement: Does not provide survivor benefits if the retiree passes away before the annuity begins.

Thrift Savings Plan (TSP) – Both options allow access to TSP funds, but:

• Deferred Retirees: Face an early withdrawal penalty if taken before age 59½.
• Postponed Retirees: Avoid this penalty due to reaching their MRA.

Cost-of-Living Adjustments (COLAs)

• Deferred Retirement: No COLAs until the retiree turns 62.
• Postponed Retirement: COLAs begin as soon as annuity payments start, regardless of age.

Critical Timing Considerations

Timing is crucial in both types of retirement, particularly for postponed retirement:

• Application window: No earlier than one year before the intended start date, and not too late (especially not past age 62).
• Annuity start date: Must be at least 31 days after OPM receives the application but no later than the last day of the month before you turn 62.
• Federal health insurance retention: Annuity must start before age 62.
• Unused sick leave credit: May be lost if retirement is processed as deferred instead of postponed.

Common Mistakes and How to Avoid Them

• Misunderstanding the importance of the annuity start date.
• Believing you need to be 62 to start the annuity without reduction.
• Choosing a start date after turning 62, resulting in loss of benefits.

To protect yourself:

• Seek professional advice or clarification from OPM before submitting your application.
• Don’t rely solely on form instructions; conduct additional research.

Navigating Form RI 92-19

Pay special attention to these sections:

• Section F – Annuity Election (Page 1-2): Choose survivor benefit options.
• Schedule A – Spouse’s Consent to Survivor Election: Required if not electing full survivor annuity for spouse.
• Schedule B (if reached MRA when leaving) or C (if left before MRA).
• Part 2 – Commencing Date on Schedule B or C: Crucial for determining benefit start date.
• Parts 3-5 on Schedule B: Deal with reinstatement of health benefits, life insurance, and dental/vision coverage reinstatement.

Comparison Table

Aspect	Deferred Retirement	Postponed Retirement
Eligibility Age	Left federal service before Minimum Retirement Age (MRA)	Left at or after MRA
Service Requirement	At least 5 years of creditable civilian service	At least 10 years of creditable service (including 5 years civilian)
Annuity Start Date	Age 62 with 5 years of service, or MRA with 10 years of service	Any time after reaching MRA
Form to Use	RI 92-19	RI 92-19
Schedule to Complete	Schedule C	Schedule B
Age Reduction	Applies if started before age 62 (5% per year)	Applies if started before age 62 (5% per year)
Health Benefits	Not eligible to reinstate	Can reinstate if covered for 5 years before leaving (or from first opportunity)
Life Insurance	Not eligible to reinstate	Can reinstate if covered for 5 years before leaving (or from first opportunity)
Sick Leave	Not creditable	Creditable
FERS Supplement	Not eligible	Eligible, begins when annuity starts (if qualified)
Survivor Benefits	Available	Available
Thrift Savings Plan	Can leave funds in TSP, take withdrawals, or transfer	Can leave funds in TSP, take withdrawals, or transfer

Remember that this is a complex topic with significant long-term consequences. Careful consideration and informed decision-making are essential when planning your federal retirement.