Federal employees who are covered by the Federal Employees Retirement System (FERS) and who retire before age 62 under an immediate FERS retirement receive a FERS annuity and are also entitled to the FERS Retirement Annuity Supplement, also known as the Special Retirement Supplement (SRS) annuity.
This column discusses the earned income – salary/wages/net self-employment income – reporting requirements for SRS annuity recipients. There is a reporting deadline of June 30,2023 for FERS annuitants who received the SRS annuity during 2022 and who also had earned income during 2022. Among the items presented is the form SRS recipients must complete and submit each year to the Office of Personnel Management (OPM).
It is important to first review SRS annuity eligibility requirements, the SRS annuity calculation, and possible reductions due to “excess earnings”.
A FERS-covered employee is eligible for the SRS annuity if he or she retires before age 62 under the immediate FERS retirement rules. FERS-covered employees who leave federal service before they are eligible to retire under the immediate retirement rules and elect a deferred retirement are not eligible for the SRS annuity. FERS-covered employees who are eligible for the “MRA+10” or “MRA+20” retirement (immediate or postponed) are also not eligible for the SRS annuity.
A retiring FERS-covered employee must have at least one calendar year of FERS service and retire with entitlement to an immediate FERS annuity:
(1) At or after reaching minimum retirement age (MRA) (age 55 to 57, depending in which year an employee was born) with 30 or more years of creditable FERS service;
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(2) At age 60 with at least 20 years of creditable FERS service;
(3) Under one of the “Special Provisions” employee categories (law enforcement officer, firefighter or an air traffic controller);
(4) At or after reaching MRA under discontinued service; or
(5) At or after the MRA under early retirement provisions, such as a RIF, reorganization, or transfer of function.
Note the SRS annuity is payable in addition to the FERS annuity. The SRS annuity is payable through the earlier of the following dates:
(1) The last day of the month in which the FERS annuitant becomes age 62, or
(2) The last day of the month before the first month for which the FERS annuitant would, upon proper application, be entitled to a Social Security monthly retirement benefit.
OPM calculates the SRS annuity. The retiring employee can estimate his or her SRS annuity by performing the following steps:
Step 1. Obtain the retiring employee’s current Social Security monthly retirement benefit at age 62. The employee can obtain this figure by going to his or her Social Security account (www.ssa.gov/myaccount) and note the amount of his or her monthly retirement benefit at age 62.
Step 2. Determine the total years of FERS creditable service, including full and part time permanent service and temporary time for which a full deposit was made.
Step 3. Divide the number obtained in Step 3 by 40.
Step 4. Multiply the amount in Step 1 by the amount in Step 3.
Note that the purpose of this four-step procedure is to determine the amount of the FERS employee’s Social Security retirement benefit that was earned as a FERS employee. The following example illustrates:
Example 1. Frank retired from federal service on December 31,2022 at age 58 years with 32 years of federal service – 30 full-time years and two years of temporary service for which a full deposit was made. Frank’s estimates his SRS as follows:
Frank’s SRS annuity is $1,600 per month. Frank will receive the SRS annuity of $1,600 per month in addition to his FERS annuity. The SRS annuity will continue with no cost-of-living adjustment until the month Frank becomes age 62 at which time the SRS annuity ceases.
A FERS annuitant who is receiving a FERS annuity and the SRS annuity after retiring from federal and has earned income; that is, the FERS annuitant is employed (receiving a salary/wages) or self-employed (and has a net profit from self-employment) may lose some or all of the SRS annuity due to “excess earnings”. The “excess earnings” is the amount of salary/wages or net profit that exceeds the annual exempt amount of earned income. Note the following with respect to the possible reduction to the SRS annuity due to “excess earnings”:
• The reduction applies only to the SRS annuity and not to the FERS annuity.
• The reduction does not apply to Special Provision employees (law enforcement officers, firefighter, and air traffic controllers) until they reach their MRA, and
• The exempt amount is the same amount established by the Social Security Administration each year for Social Security recipients receiving benefits who are younger than their full retirement age (FRA) and who have earned income (salary/wages or net self-employment income).
During 2022, the exempt amount was $19,560. That means a FERS annuitant receiving the SRS annuity during 2022 and who also had earned income during 2022 could have earned as much as $19,560 without losing any portion of the SRS annuity. During 2023, the exempt amount increased to $21,240.
If a FERS annuitant’s earned income during a calendar year exceeds the exempt amount, then OPM will reduce the SRS annuity $1 for every $2 that is earned above the exempt amount. Note the following:
(1) Any reduction during year may not exceed the amount of the SRS annuity payable during that year; and
(2) For the year immediately following the first year during which a FERS annuitant becomes eligible to receive the SRS, the earnings reduction amount cannot exceed the total SRS to which the FERS annuitant was entitled during the first year. The following example illustrates.
Example 2. Laura retired from federal service on September 30, 2021 at the age of 60 with 25 years of FERS service. She is entitled to an SRS annuity of $1,000 a month with her first SRS monthly check paid on November 1,2021 and the second check paid on December 1, 2021. Total SRS annuity payments during 2021 were $2,000. Since Laura’s SRS annuity payments totaled $2,000, the reduction of her SRS annuity during 2022 for post-retirement (9/30/2021) “excess earnings” during 2021 cannot exceed $2,000, no matter the amount of Laura’s earned income between October 1,2021 and December 31, 2021.
A reduction to the SRS annuity in a given year is based on “excess earnings” in the previous year. The reduction is assessed beginning with the year immediately after the first year during which a FERS annuitant becomes entitled to the SRS annuity. If the FERS annuitant is a Special Provision employee receiving the SRS annuity, then the reduction is assessed starting with the year the Special Provisions annuitant his or her MRA.
The following two examples illustrate:
Example 3. Thomas retired in June 2022 at age 57 with 30 years of service. He was immediately eligible for the SRS annuity and received his first monthly SRS annuity check of $2,200 in September 2022. His salary post-retirement during 2022 is subject to the “earnings test”. His post-retirement (7/1/2022 – 12/31/2022) salary was $41,260, exceeding the 2022 exempt amount of $19,560 by $41,260 less $19,560, or $21,700. Thomas reports his 2022 salary to OPM using Form RI 92-22 in May 2023. Retroactive to Thomas’ January 1,2023 SRS annuity payment, OPM will reduce his total 2023 SRS annuity payments by $21,700/2 or $10,850. On a monthly basis, Thomas’ 2023 monthly SRS annuity payment will be reduced by $10,850/12 or $904. His net 2023 SRS monthly check is $2,200 less $904 or $1,296. Note that Thomas’ FERS annuity check is not adjusted because of Thomas’ “excess earnings”. l
Example 4. William retired in May 2019 at age 52 as a federal firefighter (Special Provisions employee). He started receiving his SRS annuity in June 2019. His SRS is not subject to the “earnings test” until he reaches his MRA of age 56 years and 6 months in November 2023.
Note that if no SRS annuity is payable in the year following a year in which the annuitant’s earnings exceeded the exempt amount and the SRS annuity was terminated during the previous year due to the FERS annuitant’s attainment of age 62 – there is no reduction for “excess earnings”. This is because the SRS annuity reduction can only be applied to the SRS annuity.
The following example illustrates:
Example 5. Joan retired from federal service on June 30,2018 at age 59 years and two months with 31 years of FERS service. Joan received her SRS annuity during the last six months of 2018, during 2019, 2020 and January – March 2021. Her SRS annuity stopped as of April 1,2021 because Joan became age 62 on April 17, 2021. During 2021, Joan earned $57,000 as a part-time employee. Although Joan earned well over the 2021 exempt amount of $18,960, her three SRS annuity payments she received during 2021 (in January, February and March) will not be reduced.
Each year OPM asks FERS annuitants who reached their MRA for a statement of earnings in order to re-establish eligibility to receive the full SRS annuity. Earnings must be reported by retirees using OPM Form RI 92-22 (Annual Annuity Earnings Report). Once completed, Form RI 92-22 should be mailed to:
U.S. Office of Personnel Management
Retirement Surveys and Students Branch
FERS Annuity Supplement Survey
1900 E Street NW, Room 2416
Washington, DC 20415-0001
The completed Form RI 92-22 can also be FAXED to (202) 606-0022.
FERS annuitants who are receiving the SRS annuity during 2023 need to report their 2022 earnings. Included among earnings are 2022 salary/wages (which annuitants can obtain from their employers’ 2022 W2 statements that they received in January 2023). Also included among earnings is net self-employment received during 2022. The amount of net self-employment received during 2022 can be obtained from the 2022 IRS Form 1040 Schedule SE.
Note the following:
(1) The due date for Form RI 92-22 is June 30, 2023, and
(2) 2022 SRS annuity recipients should have received from OPM (sometime in April or early May 2023) Form RI 92-22. If an SRS annuity recipient has not yet received Form RI 92-22, then he or she can download the form here . Unfortunately, as of June 2023 OPM has not updated on its Web site Form RI 92-22 for the year 2023.
