retiring from military to federal job

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curmudgeon
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retiring from military to federal job

Post by curmudgeon » Mon Jul 30, 2018 9:30 pm

I'm curious about the implications in retiring from the military (normal retirement after 20 years service) and then taking a federal civil service job. Are there specific issues or decisions in the process? Any "gotchas" that would apply working a federal job vs defense contractor vs more typical civilian job? I seem to remember that there are ways to "buy-up" military service time to count towards federal years worked, but I'm not sure if that makes sense for someone who has completed 20 years.

The context is that my daughter will be coming up on 20 years in the Air Force (about 4 years). She's in a fairly narrow technical field (enlisted) from which quite a few people retire and take related AF civilian jobs after somewhere between 20-30 years of service. A related defense contractor would also be a possibility. More typical corporate jobs would be more of a stretch, though certainly possible. At this point, under the old military retirement system, doing the 20 years is a no-brainer (she's unmarried, and locked into a job/location she likes for at least 4 years). Obviously she'll make up her own mind when the time comes, but I'm curious if there are below-the-surface factors that she should keep in mind as time passes.

jminv
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Re: retiring from military to federal job

Post by jminv » Tue Jul 31, 2018 1:34 am

It’s possible to retire from the military, collect a pension, work for the federal government, and then at some point before retiring pay the post-56 military deposit. Or not retire from the military but apply the military years to the fed gov job with a military deposit. After a grace period there is interest charged on the deposit but it’s not high. The deposit can also be surprisingly small. It could be more attractive to invest the deposit and pay at end of service, before separation, depending on risk tolerance and how long to retirement. You can work out how much the deposit would be by requesting estimated earnings from the dod (there’s a form for this) and then using the estimator tool they have. For FERS it’s 3% of basic pay plus the interest component.

Generally, if you retire from the military a post-56 deposit will be useful if you are making more as a civilian than you were in the military, which could frequently be the case. This could be thought of as a way to, in effect, boost the military portion of your retirement by retroactively applying your higher civilian salary to it.There’s a misperception that it’s not a good deal if you’re collecting a military retirement but that’s not necessarily true. You have to do the math. If you leave the military before retiring then it would be a good idea in basically all cases to do the post-56 deposit.

navyitaly
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Re: retiring from military to federal job

Post by navyitaly » Tue Jul 31, 2018 8:01 am

In most cases she has to wait 180 days to get hired as a government civilian.

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friar1610
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Re: retiring from military to federal job

Post by friar1610 » Tue Jul 31, 2018 9:18 am

My experience is dated...

In my last active duty Navy assignment I had several civilian employees working for me at a DoD agency who were retired military E-9s. As I recall, they had to put in a minimum of 10 years and reach age 55 before they could retire as civs. But when they did, it was entirely separate - they kept the military retirement and had a separate retirement as civs. When they started as civs they were new hires as far as things like annual leave were concerned. I believe they were hired as GS-12s and all were eventually promoted, a couple to 14 but most to 13. They seemed to me to have the best of both worlds. I think the trade off between a gummint job or a contractor job in that situation is probably much the same as the trade off for non-military retired: potentially more salary vs greater security/more generous retirement benefits.

Caveat: my memory on some of these details may be clouded.
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curmudgeon
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Re: retiring from military to federal job

Post by curmudgeon » Tue Jul 31, 2018 5:31 pm

Some useful points here. I hadn't heard about the 6 month waiting period before being able to be hired as a DOD civilian. Sort of an odd rule, though I understand the issue they are trying to address. It would definitely make transition planning a challenge if you are targeting a specific area; can't wait for the job to open before putting in your retirement papers.

Buying your military years into the federal system seems like an open question, as jminv mentions. I guess it depends on relative pay scale of service retirement vs civilian side. I knew you could buy in credit for military years, but I hadn't realized that you could collect the military pension and then when retiring from the civilian job choose to stop the military pension and have the years transitioned to count for federal years. Given that the military pension is only against base pay (not housing and other allowances), I can see how it might make sense. It would be interesting to run some calculations for likely scenarios.

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dm200
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Re: retiring from military to federal job

Post by dm200 » Tue Jul 31, 2018 5:40 pm

No first hand experience - but in this area - this is very, very common.

There are several benefits of doing so. I believe that the military time somehow "counts" as federal service for federal retirement.

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dm200
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Re: retiring from military to federal job

Post by dm200 » Tue Jul 31, 2018 6:01 pm

Back many years ago, when I was an enlisted man in the Navy (in this area), I saw a number of Navy enlisted retirees - "arrange" to be hired in similar positions as federal employees.

Samferb81
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Re: retiring from military to federal job

Post by Samferb81 » Tue Jul 31, 2018 9:01 pm

I'm retired from the military (20 yrs) and work for the Dept. of Veterans Affairs (over 15 yrs). I would stay away from government contract jobs because they tend to be erratic, work one day laid of the next due to contract issues. I'm not sure about waiting before you can apply for a federal job because VA has a program hiring/training Veterans before they actually get out of service. Maybe there are restrictions for other agencies.

mxs
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Re: retiring from military to federal job

Post by mxs » Tue Jul 31, 2018 10:08 pm

You have to buyback military time for credit towards pension. Your military time does affect your SCD? Service Computation Date? Which is what your vacation time is based on. Not 100% on that, but I believe it is accurate. 4 hours a pay period your first two years, then 6 hours for 13 years, then 8 hours thereafter.

Long story short, it is a great deal money wise in her situation. Staying in the military for 30 years and completely retiring, or going to federal service then is a good deal as well. It depends on her specific situation. If I did my life over again I would probably join military at 17, put in 20 or 30 years, then go federal civ after 20 years military or consider full retirement after 30 years of military.

The above is for WG/WL/WS or GS positions. Other positions may be different. Regarding buyback and pension, she needs to know what her required time in service, age, and implications on buyback money should she not meet those ( and 401k/TSP matching money as well).

Good luck to her and thank you to her for her service.

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Nords
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Re: retiring from military to federal job

Post by Nords » Sat Aug 04, 2018 3:07 pm

curmudgeon wrote:
Mon Jul 30, 2018 9:30 pm
I'm curious about the implications in retiring from the military (normal retirement after 20 years service) and then taking a federal civil service job. Are there specific issues or decisions in the process?
Hi, Curmudgeon, I get these questions a lot.

Federal law requires that military retirees wait 180 days before taking a civil-service job with DoD, but they might not have any restrictions for civil-service jobs in other parts of the federal government (or in state civil-service jobs).
https://www.law.cornell.edu/uscode/text/5/3326

In mid-September 2001 (right after the 9/11 attacks) DoD and Congress gave a blanket waiver on the 180-day waiting period. That blanket waiver was revoked in late 2016. Retirees and DoD can still request an individual waiver on the 180 days, but approval seems to take about six months...
https://www.cpms.osd.mil/content/documents/RepealNationalEmergencyException_Sec1111.pdf

There may be additional ethics guidelines, but each military specialty is usually very familiar with those issues for their fields:
https://www.military.com/military-transition/employment-and-career-planning/employment-restrictions.html

Some defense contractors have their own restrictions based on their interpretations of DoD’s federal laws or their contract competition policies. For example quite a few corporations are reluctant to hire any military servicemember while they’re still on terminal leave, even though it may be permissible with their military command. Of course this makes servicemembers nervous when they’re seeking a bridge career and nobody seems interested in hiring them until after they’re discharged.
curmudgeon wrote:
Mon Jul 30, 2018 9:30 pm
Any "gotchas" that would apply working a federal job vs defense contractor vs more typical civilian job?
The context is that my daughter will be coming up on 20 years in the Air Force (about 4 years). She's in a fairly narrow technical field (enlisted) from which quite a few people retire and take related AF civilian jobs after somewhere between 20-30 years of service. A related defense contractor would also be a possibility.
If she has a security clearance then she should do everything she can on active duty to make sure the investigation is recent, in her records, and current. Again in some military specialties she might be able to transfer in status, but she’ll learn about that from her command’s security officer. The point is to have the clearance ready to be reinstated when she’s in a civil-service or civilian job which requires it, because it costs the government (or the corporation) more money to get it ready on their own.
curmudgeon wrote:
Mon Jul 30, 2018 9:30 pm
I seem to remember that there are ways to "buy-up" military service time to count towards federal years worked, but I'm not sure if that makes sense for someone who has completed 20 years.
You’re thinking of the military service credit deposit. Here are two excellent posts by a submarine vet with specific guidelines. One is for the usual deposit “bought” by veterans, while the second post looks at the issue for active-duty retirees.
http://gubmints.com/2013/03/26/gubmints-comprehensive-military-service-credit-deposit-guide/

http://gubmints.com/2013/04/15/military-service-credit-deposit-retired-from-active-duty/

Most active-duty military retirees elect to keep their military pension without using the military service credit deposit. Depending on the military retiree’s rank and the salary level of the civil-service job, it might make sense to waive the active-duty pension when it’s time to draw the civil-service pension, but it’s a highly individual decision based on promotions in both careers. They’ll have to do the math described in those posts.

Military retirees from the Reserves and National Guard have a federal waiver to both buy their military service credit deposit (with a higher civil-service pension) and still keep their Reserve/Guard pensions.
http://the-military-guide.com/earning-military-pension-civil-service-pension/

There are also additional waivers for disabled military retirees (a disability pension, or possibly a severe VA disability rating).
curmudgeon wrote:
Mon Jul 30, 2018 9:30 pm
At this point, under the old military retirement system, doing the 20 years is a no-brainer (she's unmarried, and locked into a job/location she likes for at least 4 years). Obviously she'll make up her own mind when the time comes, but I'm curious if there are below-the-surface factors that she should keep in mind as time passes.
I agree with you that she’ll likely stick around for 20. If she’s no longer feeling challenged & fulfilled, however, or if there’s an unacceptable demand from her assignment officer, then she might have more flexibility than she appreciates. If the fun stops then she could take a good hard look at leaving active duty for the Reserves or Guard.

She’d have more of the parts of the military which are enjoyable without so much of the sucky parts. She’d be able to continue her military skills (“a weekend a month, two weeks a year”) while working for a civil-service or civilian corporation. She’d still have access to inexpensive health insurance, and she’d still have an inflation-fighting pension at age 60.
http://the-military-guide.com/dont-gut-20-leave-active-duty-reserves-national-guard/

But with the information you have, I agree that she seems likely to stay on active duty for (at least) 20.
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dm200
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Re: retiring from military to federal job

Post by dm200 » Sat Aug 04, 2018 3:13 pm

My memory is vague - but are there any differences in the rules for "Reserve Officers"?

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Nords
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Re: retiring from military to federal job

Post by Nords » Sat Aug 04, 2018 3:16 pm

dm200 wrote:
Sat Aug 04, 2018 3:13 pm
My memory is vague - but are there any differences in the rules for "Reserve Officers"?
Military retirees from the Reserves and National Guard have a federal waiver to both buy their military service credit deposit (with a higher civil-service pension) and still keep their Reserve/Guard pensions.
http://the-military-guide.com/earning-m ... e-pension/
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Isabelle77
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Re: retiring from military to federal job

Post by Isabelle77 » Sat Aug 04, 2018 4:12 pm

My brother did this. He retired from the Air Force about 4yrs ago after 20yrs, now he works at a different base doing the exact same job but now as a federal employee. I think he took 2 weeks off between positions, so no wait time. There were a few things he had to decide if I remember correctly, whether to keep Tricare was one of them (he did). He will keep his military pension and not do the Service Credit because he's 47 and plans on retiring at 55 and the math works out better that way.

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SeeMoe
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Re: retiring from military to federal job

Post by SeeMoe » Sat Aug 04, 2018 5:53 pm

Retire from the military with a pension and annual COLA’s with benefits, then apply for a state or local government job with pension and benefits as well. That way there’s no conflict between pensions say employees I worked with who did just that.

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Katietsu
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Re: retiring from military to federal job

Post by Katietsu » Sat Aug 04, 2018 6:10 pm

A minor consideration is that converting the military pension to a federal pension may result in a loss of certain breaks given for military retirement. The one that comes to mind is state income tax. Of the state’s with income tax, over 80% do not tax either any or part of the military retirement income. Some of these states will still give you a break on civilian federal retirement but some will not.

curmudgeon
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Re: retiring from military to federal job

Post by curmudgeon » Sat Aug 04, 2018 6:48 pm

Isabelle77 wrote:
Sat Aug 04, 2018 4:12 pm
My brother did this. He retired from the Air Force about 4yrs ago after 20yrs, now he works at a different base doing the exact same job but now as a federal employee. I think he took 2 weeks off between positions, so no wait time. There were a few things he had to decide if I remember correctly, whether to keep Tricare was one of them (he did). He will keep his military pension and not do the Service Credit because he's 47 and plans on retiring at 55 and the math works out better that way.
As I look closer at the numbers, I can see that if you've done the 20 years of active duty, there are very few scenarios where it would make sense to convert those years to civil service credit (though with less than 20 years it makes tons of sense). It boils down the the military years earning pension at 2.5% (of military pay) per year, while using them for civil service they would only count at 1 or 1.1% multiplier (on civil service pay). Even though the military is only multiplied by base pay, while the federal includes location allowance in the pay multiplier, you'd have to have a pretty odd combination of very low military rank and high civilian job to make converting worthwhile.

It's also an interesting question of whether to stay longer than 20 years. I suspect financially it is a wash at best, and the choice to carry on longer would be more related to the job assignments and personal preference.

Thanks to all for the good feedback.

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