Publication 164 - Q's & A's, Compensation, Relocation ...

1Publication 164, May 2001

Contents

Introduction 3

Change to Lower Level 3

Severance Pay and Discontinued Service Annuity 4

Health Insurance 10

Life Insurance 13

Leave 16

Thrift Savings Plan 17

Flexible Spending Account 22

Variable Pay Program (Nonbargaining Employees Only) 23

Relocation Benefits 24

Unemployment Compensation 27

Reinstatement 27

Rehire or Transfer 29

Note: This brochure is NOT an official U.S. Postal Service directive. It isintended only as an overview of compensation, relocation benefits, andreinstatement policies for career employees. It should not be used or citedas an official source document. Policies and regulations governing theseprograms are provided in various postal manuals and handbooks. Severalof these programs are governed by federal law and specific regulationsissued by the U.S. Office of Personnel Management. Finally, the scope andlevel of benefits provided by many of these programs are subject to thecollective bargaining process and are defined in the applicable collectivebargaining agreement.


IntroductionIn order to meet the demands of an ever-changing marketplace,corporations periodically make changes to their organizations.These organizational changes are part of the normal life cycle of abusiness. Organizational changes that eliminate work can result inthe need for fewer authorized positions, the elimination oforganizations, or the closing of facilities. When these kinds ofchanges occur, they may affect you and your family bothfinancially and personally.

The information contained in this brochure is intended to provideyou with an overview of the benefits you may be entitled towhether you stay with the Postal Service or are faced with aninvoluntary separation. The Postal Service recognizes thecontribution you have made to achieving Postal Service goals andis committed to making your transition as smooth as possible.

The questions and answers below provide an overview of thevarious compensation and benefit programs available to careerpostal employees. Additional information is always available fromyour personnel office.

Change to Lower Level

1 As a nonbargaining employee, what happens to mygrade and salary if I voluntarily elect to change to alower level position?

When the Postal Service activates its reduction in force(RIF) avoidance procedures, if you are voluntarily placedinto a lower grade position, your current grade will bereduced to the grade of the lower level positionimmediately. However, you will be eligible for 2 years ofprotected salary.

4 Publication 164, May 2001

2 What is protected salary for nonbargainingemployees?

Protected salary provides that if your current salary doesnot fall into the salary range of the lower level position, youare eligible to retain your current salary for a period not toexceed 2 years (104 weeks). During this 2-year period, youmay receive merit lump sum payments and variable payamounts based on your protected salary and the policiesapplicable to employees at or above the maximum salaryof their grade.

If at the end of the 2-year period your protected salary isstill above the maximum of the lower grade position, yoursalary will be reduced to the maximum salary for the lowergrade position.

Severance Pay and DiscontinuedService Annuity

3 Will I be entitled to severance pay or a discontinuedservice annuity?

General limitations. If you voluntarily resign from thePostal Service, you are not entitled to severance pay or adiscontinued service annuity, except as specified below.Further, an employee in no instance is entitled to bothseverance pay and a discontinued service annuity. If youare eligible for a discontinued service annuity, you areautomatically disqualified from receiving severance pay.

Nonbargaining Employees. If you are a nonbargainingemployee, you may be entitled to severance pay or adiscontinued service annuity if you receive an involuntaryseparation notice due to either of the following:

(1) Reduction in force (RIF).

(2) Your declination of a directed reassignment outsideyour commuting area.


Note: If you voluntarily resign prior to the effective date inthe involuntary separation notice, you retain eligibility forseverance pay or discontinued service retirement.

Bargaining Employees. If you are a bargaining employee,you may be entitled to severance pay or a discontinuedservice annuity, if you receive an involuntary reassignmentunder the terms of your collective bargaining agreement toa position outside your commuting area and you elect to doeither of the following:

(1) Voluntarily resign prior to the effective date of yourinvoluntary reassignment.

(2) Decline the involuntary assignment and you receive aninvoluntary separation notice from the Postal Service.

Additional eligibility requirements for severance pay and adiscontinued service annuity are provided below.

Severance Pay. If you have been employed continuouslyby the Postal Service and/or another federal agency as acivilian for at least 12 consecutive months immediatelybefore your separation, you are eligible for severance payunless one of the following applies:

a. You are immediately eligible for a retirement annuity(including a discontinued service annuity).

b. You are offered and decline a position with the PostalService or another federal agency of like seniority,tenure, and pay within your commuting area.

c. You are receiving compensation at the time ofseparation as a beneficiary of the Federal EmployeesCompensation Act (Injury Compensation), unless youare receiving this compensation concurrently withpostal pay. In such cases, severance pay is based onthe postal pay only.

d. You are separated because of your entry into themilitary service.

e. You are separated for cause on charges ofmisconduct, delinquency, or inefficiency.

If you are found eligible, a severance pay fund isestablished for you. The amount of the fund is based on


1 week of basic salary for each year of creditable serviceup to 10 years, plus 2 weeks of basic salary for each yearof creditable service in excess of 10 years. Each 3-monthperiod of service that exceeds 1 or more full years ofservice is computed as 25 percent of a full year. The basicseverance pay allowance is increased by 10 percent foreach year your age exceeds 40 years at the time ofseparation. In no instance, however, can your totalseverance pay fund exceed 52 weeks of your basic salary.

You receive severance pay on a pay period basis in theamount of 2 times your basic weekly salary, lesswithholdings, until the severance pay fund is exhausted oryou are reemployed by the Postal Service or anotherfederal agency.

Discontinued Service Annuity. If you meet all of thefollowing conditions, as required by the Office of PersonnelManagement, you may be eligible for an immediate,possibly reduced, discontinued service annuity:

a. Minimum Age and Service Requirements. You mustbe either at least age 50 with at least 20 years ofcreditable service or any age with at least 25 years ofcreditable service. Creditable service must include atleast 5 years of civilian service. Accrued and unusedannual leave or donated leave may be used to meetthe age and service requirements to qualify for adiscontinued service retirement. Employees remain onthe rolls beyond the effective date in the involuntaryseparation notice, using leave only to the extentneeded to satisfy the above age or service yearsrequirement. Any remaining leave balance will be paidin a terminal leave payment.

Note: Sick leave may not be used to meet therequirements mentioned above.

b. Separation From Covered Position. You must beseparated from a position that is covered by the CivilService Retirement System (CSRS), CSRS Offset, orthe Federal Employees Retirement System (FERS).

c. One Out of Two Requirement Under CSRS. If youare covered by CSRS or CSRS Offset, you must have


been subject to retirement contributions for at least1 year within the 2-year period immediately precedingthe separation upon which the annuity is based. The1 year of service does not have to be continuous. Thisrequirement does not apply if you are covered byFERS.

d. Reasonable Offer. If you refuse a reasonable offer ofanother position, you will not qualify for a discontinuedservice annuity. For discontinued service annuitypurposes, a job offer is considered a reasonable offerif these three requirements are met:(1) The offer is made in writing.

(2) You meet the qualifications for the position beingoffered.

(3) The position offered is:

� Within your local commuting area

� Of the same tenure group (e.g., career vs.noncareer).

� Within the same work schedule (e.g., full-timevs. part-time)

� Not more than the equivalent of two grade orpay levels below your current grade or paylevel.

e. Annuity Amount. If you are a CSRS or CSRS Offsetemployee, your annuity will be computed like avoluntary optional retirement using standard annuitycalculations based on total creditable years of service.Then, if you are under age 55, your annuity will bereduced at the rate of 2 percent a year, or by 1/6 of 1percent for each full month you are under age 55. Ifyou have a life-threatening affliction or other criticalmedical condition (as defined in Code of FederalRegulations, 5 CFR 831.2207), you may be eligible toelect the alternative form of annuity that provides forboth an annuity and a lump sum payment of yourretirement contributions.


If you are a FERS employee, there is no reduction in yourannuity if you retire under the age of 55. However, if aportion of your annuity is based on a benefit that youaccrued under CSRS, that portion of your annuity issubject to the reduction mentioned above for CSRS andCSRS Offset employees.

4 Is it better to apply for a voluntary optional retirementor a discontinued service annuity?

First, you must qualify for a voluntary optional retirement. Ifyou are a CSRS or CSRS Offset employee, you must meetone of the following age and service requirements: (a) beage 55 with at least 30 years of service, (b) be age 60 withat least 20 years of service, or (c) be age 62 with at least5 years of service. As a CSRS or CSRS Offset employee,you must also meet the one out of two requirementsexplained in question 3c under Discontinued ServiceAnnuity and have at least 5 years of civilian service.

If you are a FERS employee, you are eligible for animmediate unreduced annuity if you meet one of thefollowing service and age requirements:

a. Be minimum retirement age (MRA) with 30 years ofservice.

b. Be age 60 with at least 20 years of service.

c. Be age 62 with at least 5 years of service.If you do not qualify for an immediate unreduced annuity,you may be eligible for a regular voluntary retirement butwith a reduced annuity. To be eligible, you must havereached your MRA with a minimum of 10 years of service.Your MRA depends on your year of birth. The MRA underFERS ranges between age 55 and 57. For example, if youwere born before 1948, your MRA is age 55. To qualify foran annuity, you must have at least 5 years of civilianservice.

Your choice between a voluntary optional retirement and adiscontinued service annuity may depend on whether youare interested in being reemployed by the Postal Serviceor another federal agency. If you elect a discontinued


service annuity, upon reemployment to a position subjectto a federal retirement system your annuity will beterminated. If you are a CSRS or CSRS Offset annuitant,you will also be required to reestablish your entitlement toretirement benefits by meeting the age and servicerequirements and the one out of two requirement as statedin Question 3c under Discontinued Service Annuity. On theother hand, if you are receiving a voluntary optionalretirement and you are subsequently reemployed into acovered position, you are considered a reemployedannuitant and your salary will be offset by the amount ofyour annuity.

5 If I am not eligible for retirement, what other optionsdo I have?

If you do not meet the requirements for a discontinuedservice annuity or a voluntary optional retirement, you mayapply for a refund of your retirement contributions in a lumpsum payment or leave your retirement contributions in theretirement fund and apply for a deferred annuity at a laterdate. To be eligible for a deferred annuity, a CSRS orCSRS Offset employee must be at least age 62 and haveat least 5 years of creditable civilian service. If the currentperiod of career service does not meet the one out of twoyear rule, as explained in question 15c above underDiscontinued Service Annuity, the current period will not beincluded in creditable service for annuity purposes. AFERS employee with at least 5 years of creditable civilianservice is eligible to apply for a deferred annuity at the timethe age requirement is met to match the appropriate yearsof service or at the employee’s MRA with at least 10 yearsof creditable service. For example, if an employee hadacquired 20 years of service but was under age 60 at thetime of separation, a deferred retirement could begin atage 60 with no reduction.


Health Insurance

6 Can I continue my health insurance coverageinto retirement?

If you are eligible for an optional retirement, voluntary earlyoptional retirement, or a discontinued service retirement(see questions 3 and 4) and you have been enrolled orcovered as a family member in the Federal EmployeesHealth Benefits (FEHB) Program either (a) continuously forthe 5 years of service immediately preceding thecommencing date of your annuity or (b) for the fullperiod(s) of service since your first opportunity to enroll,you are eligible to continue your health insurance intoretirement.

For those retirements that are effective following aninvoluntary separation notice (i.e., RIF, decline of areassignment outside of commuting area, etc.), accruedand unused annual leave or donated leave may be used tomeet the 5-year requirement to continue health insurance.Employees remain on the rolls beyond the effective date ofthe involuntary separation, using leave only to the extentneeded to satisfy the 5-year requirement. Any remainingleave balance will be paid in a terminal leave payment.Sick leave may not be used to meet the requirementsmentioned above.

Enrollees who fail to satisfy the 5-year enrollmentrequirement due to exceptional circumstances may submita request for waiver including supporting evidence to theOffice of Personnel Management (OPM). Based on theevidence submitted, OPM will determine whether or not towaive the participation requirement and allow FEHBcoverage to be continued into retirement.

If you are eligible for a FERS annuity under the “minimumretirement age and 10 years of service” provision at thetime of separation (see question 4) but elect to postponeyour annuity in order to lessen the annuity reductions, youmay choose to resume your health insurance coverage onthe date your annuity begins provided you are otherwise


eligible for FEHB continuation of coverage. During thepostponed retirement period, you may convert to anongroup contract (individual policy) as described inquestion 9 below.

7 If I am not eligible for retirement benefits, will myhealth insurance coverage terminate upon separation?

If you are not eligible for a voluntary optional retirement ora discontinued service annuity, your health insurancecoverage will terminate following an automatic 31-daytemporary extension of coverage. Your health insuranceenrollment will terminate on the last day of the pay periodin which you are separated from the Postal Service, andthe 31-day temporary extension of coverage will begin theday after the regular coverage ends. However, if you areconfined in a hospital on the 31st day of the temporaryextension of coverage, benefits will continue duringconfinement up to a maximum of 60 more days. Thesetemporary extensions of coverage are without cost to youand also apply to all covered family members.

8 Do I have any other options to continue my healthinsurance coverage?

Yes, you will receive from the personnel office advising younotification that your group health insurance coverage willterminate and information concerning the two optionsavailable to you for continuing your health insurancecoverage beyond the 31-day temporary extension. Youhave these two options:

� Converting to a nongroup contract (individual policy)by the carrier of the plan you are enrolled in at the timeof your separation.

� Electing 18 months of coverage under the TemporaryContinuation of Coverage (TCC) provision of theFEHB Program.


9 How do I convert my health insurance coverage to anongroup contract?

You must send a written request to the plan carrier within91 days after your enrollment ends or 31 days after thedate the termination notice was signed by an official atyour personnel office, whichever is earlier. The plan carrierwill then send you an application form and cost informationabout the nongroup coverage. You will be responsible forpaying the total premium cost for this coverage.

10 How do I elect Temporary Continuation of Coverage?

You must complete and submit Standard Form 2809,Health Benefits Registration Form, to your personnel officewithin 60 days after (a) the date of separation or (b) thedate you received notification from your personnel officeadvising you of the options available for continuing yourhealth insurance coverage, whichever is later.

11 What plan choices do I have under TCC?

You may choose any FEHB plan, option, or type ofcoverage that you are eligible to select. A list ofparticipating plans and corresponding monthly premiumrates is provided in Booklet RI 70–5, FEHB Guide forIndividuals Eligible to Enroll for Temporary Continuation ofCoverage Under the Spouse Equity Law or SimilarStatutes, which is available from your personnel office. Ifyou elect TCC, you will be responsible for the full premiumcost plus a 2 percent administrative surcharge.


12 If I elect one of the two options available forcontinuing my health insurance coverage, when iscoverage effective?

The effective date of coverage under both options is theday after the expiration of the 31-day temporary extension.When TCC expires after 18 months, you will be entitled toa free 31-day temporary extension of coverage for thepurposes of converting to a nongroup contract (individualpolicy) with the plan.

Life Insurance

13 Can I continue my life insurance coverage intoretirement?

If you are eligible for a voluntary optional retirement or adiscontinued service annuity and you have been enrolledin the Federal Employees Group Life Insurance (FEGLI)Program for at least 5 years or since your first opportunityto elect it, you are eligible to continue your life insurancecoverage into retirement. The “5-year or first opportunity”requirement applies separately to Basic coverage and toeach individual option (i.e., Option A — Standard,Option B — Additional, and Option C — Family).

14 If I am not eligible for retirement benefits, will my lifeinsurance coverage terminate upon separation?

Your life insurance coverage will terminate following anautomatic 31-day temporary extension.


15 Do I have any other options to continue my lifeinsurance coverage?

Yes, following your separation, your personnel office issuesStandard Form 2819, Notice of Conversion Privilege.Personnel advises you that your group life insurancecoverage will terminate and provides informationconcerning your right to convert to an individual direct-paypolicy, provided you have not assigned your FEGLIcoverage to another party. If you have assigned your lifeinsurance coverage, only the assignees may convert theinsurance coverage.

16 How do I convert my life insurance to a nongroupcontract?

If eligible, you must complete the appropriate eligibilitystatement on the SF 2819 and mail it to the followingaddress:

OFFICE OF FEDERAL EMPLOYEESGROUP LIFE INSURANCE200 PARK AVENUENEW YORK NY 10166-0188

Your eligibility statement must be mailed within 31 daysafter (a) the date of separation or (b) the date you receivednotification from your personnel office advising you of yourconversion right, whichever is later. An individual policy willnot include disability or accidental death ordismemberment benefits.

17 How much will a nongroup life insurance contractcost?

The premiums for a nongroup life insurance contract willbe determined by the type and amount of the coverageand your age and class of risk on the day followingtermination of your group coverage. You will beresponsible for the total premium cost associated with thenongroup life insurance contract.


18 If I elect to convert to a nongroup life insurancecontract, when will coverage begin?

If you elect to convert to a nongroup life insurancecontract, coverage and premium payments will be effectiveretroactive to the day after the 31-day temporary extensionended. Any insurance policy purchased under theconversion privilege is a private business transactionbetween the individual and the insurance company.

19 If I made an election during the FEGLI 1999 openenrollment period (April 24 through July 30, 1999) and Iam subsequently separated from the Postal Service,will I be able to convert this new coverage or carry itwith me into retirement?

Coverage options elected during the FEGLI 1999 openenrollment period became effective on May 6, 2000, at theearliest, if you met the pay and duty status requirementsduring the pay period before May 6, 2000. If you have notmet the pay and duty status requirements, then theeffective date is delayed until you do. If you are a full-timeemployee, you must be in a pay and duty status for at least32 hours during this pay period. If you are a part-timeemployee with a regular tour of duty, you must be in a payand duty status for one-half of your regular tour of dutyduring this pay period. On the other hand, if you areemployed on an intermittent basis (e.g., you are a part-timeflexible employee), during this pay period you must be in apay and duty status for one-half the number of hours youcustomarily worked. If you make an open enrollmentelection but you separate or retire before May 6, 2000, orbefore you meet the pay and duty status requirements, thenewly elected coverage never becomes effective.

If your newly elected coverage becomes effective and isterminated upon separation from the Postal Service, youmay convert the life insurance to a nongroup contract asdescribed in questions 10 and 11. Or, in order to continuenewly elected coverage into retirement, you must meet the“five-year or first opportunity” requirement, as discussed in


question 8. For instance, if you elected Option B during theopen enrollment period, the coverage must be in effect for5 years before you retire in order to continue it. This isbecause the open enrollment period would not be your firstopportunity to elect Option B coverage. However, since2 to 5 multiples of Option C coverage were not availablebefore the 1999 open enrollment period, it was the firstopportunity you have had to elect this type of coverage. Ifyou retire any time after these additional multiples go intoeffect, you will be eligible to continue the increasedcoverage, provided you meet the continuation requirementbased on your previous “first-time” election of Option C.

Leave

20 If I separate from the Postal Service, what happens tomy earned and unused annual leave?

� If you are a bargaining employee and have completedyour 90-day probationary period, you may be eligiblefor a lump sum payment for the balance of yourearned and unused annual leave (including anyunused donated leave) up to your annual leavecarryover limit at the time of separation.

� If you are a nonbargaining employee, you may beeligible for a lump sum payment for your earned andunused annual leave up to your annual leavecarryover limit plus any annual leave earned andunused in the current year as well as any unuseddonated leave.

21 What happens to my accumulated sick leave balance?

No payments are made for accumulated sick leave.


22 Is my accumulated sick leave treated differently forretirement purposes?

If you retire on a voluntary optional retirement or adiscontinued service annuity under CSRS, you can receiveadditional service credit towards your retirement or survivorannuity. If you retire under FERS, your sick leave is notcredited toward additional service credit for annuitycomputation purposes unless you transferred to FERSfrom CSRS and your annuity has a CSRS component. Inthese situations, you can receive additional service creditbased on the sick leave balance you accrued at the timeyou transferred to FERS or your sick leave balance at thetime of your retirement, whichever is less.

23 What if I am indebted to the Postal Service forunearned annual or sick leave?

If you are indebted to the Postal Service for unearnedannual or sick leave, you must refund the amount paid forthe unearned leave. If you do not refund the amount of theindebtedness, deductions will be made from any funds thatyou are due upon your separation.

Thrift Savings Plan

24 May I continue to participate in the Thrift SavingsPlan?

Following your separation, you are not eligible to makeadditional contributions to or borrow money from your ThriftSavings Plan (TSP) account. However, you may continueto reallocate money in your TSP account among thevarious investment choices (Government SecuritiesInvestment (G) Fund, Common Stock Index Investment (C)Fund, and Fixed Income Index Investment (F) Fund) aswell as other funds scheduled to become available in thenear future.


25 Will I receive any information concerning my TSPwithdrawal options?

Yes, at the time of your separation, your local personneloffice will provide a TSP withdrawal package that includesthe booklet Withdrawing Your TSP Account, necessaryforms, and a notice on tax information.

26 As a FERS employee, am I vested in the AgencyAutomatic (1 percent) Contributions made by thePostal Service to my TSP account?

If you have at least 3 years of federal civilian serviceand/or military service covered by USERRA, you areconsidered vested in the Agency Automatic (1 percent)Contributions and the earnings on those contributions. Ifyou do not have the required 3 years of service to meet thevesting requirement, those contributions and the earningson them will be removed from your account and forfeited tothe TSP. You are always vested in your own contributions,Agency Matching Contributions, and the earnings on them.

27 I only have a small amount in my TSP account. Do Ihave any options concerning these monies?

If your account balance is $3,500 or less upon yourseparation, you are subject to the TSP automatic cashoutprocedures. TSP will automatically pay your vestedaccount balance directly to you unless you make anotherwithdrawal election or elect to leave your money in theTSP. If you want to receive an automatic payment, you donot need to submit any withdrawal forms to TSP. On theother hand, if you want to keep your money in the TSP orhave TSP transfer all or part of your payment to anIndividual Retirement Arrangement, (IRA) or anotherqualified plan, you must promptly return the appropriateforms included with your cashout notice received fromTSP. Of course, you also have the options of electinganother withdrawal option by submitting the Form TSP-70that is included in the withdrawal package provided to youby your local personnel office.


28 Who do I contact if I have l questions concerning myTSP account?

Following your separation, you must contact the TSPService Office for assistance with TSP questions. It isextremely important to advise the TSP Service Office ofany changes in your address. A change of address form isincluded in the withdrawal package sent to you by yourpersonnel office. The TSP Service Office can be contactedat the following address and telephone numbers:

THRIFT SAVINGS PLAN SERVICE OFFICENATIONAL FINANCE CENTERPO BOX 61500NEW ORLEANS LA 70161-1500

TELEPHONE: (504) 255-6000TDD: (504) 255-5113

29 May I withdraw funds from my TSP account?

Upon your separation, you are eligible to withdraw fundsfrom your TSP account. Funds may be withdrawnimmediately or left in TSP and withdrawn at a future date.

30 What TSP withdrawal options do I have available?

Withdrawal options include receiving a life annuity,receiving a single payment, receiving a series of equalmonthly payments, or transferring all or part of a singlepayment or certain types of monthly payments to an IRA orother qualified plan. An election of a withdrawal option maybe changed to a different option only before funds are paidout; with one exception — even after a series of monthlypayments has begun; it is possible to elect a single finalpayment.


31 How long will it take to withdraw funds from my TSPaccount?

Generally, the TSP Service Office advises individuals thatdisbursement of funds may take up to 2 months followingseparation and receipt of properly completed forms. Anemployee must be separated from employment for 31 ormore full calendar days before funds can be withdrawn. Inaddition, before a withdrawal can be processed, the TSPService Office must receive a code indicating separationstatus. This code is automatically generated by the PostalService and transmitted electronically to the TSP ServiceOffice.

The TSP Service Office makes withdrawal payments onceeach month, about mid-month. If a participant’s account isinvested only in the G Fund, then a withdrawal electionsimply needs to be received in time for it to be processedon the mid-month payment date. However, if an account isinvested in either the C or F Fund, then a withdrawalelection must be received sooner. It must be received intime to be processed on the next-to-last business day ofthe month in order for a withdrawal to be processed on thefollowing month’s mid-month payment cycle. Finally, if aparticipant has an outstanding loan, this will delaypayment. (Before a withdrawal can be processed, eitherthe loan must be repaid or the TSP Service Office mustdeclare a taxable distribution.)

32 What tax consequences should I consider whenwithdrawing from my TSP account?

All contributions to TSP and the earnings on thesecontributions are tax-deferred and, therefore, areconsidered as taxable income upon withdrawal. For thisreason, it is important that you understand the taxconsequences of each withdrawal option. You shouldcarefully review the tax information provided in thewithdrawal package.


33 Can I transfer my TSP funds directly to an IRA oranother qualified plan?

Yes. When TSP funds are transferred directly to an IRAor another qualified plan, the funds are not taxed upontransfer. The funds will be taxed upon withdrawal from theIRA or another qualifying plan.

34 Are there any unique taxes that I should be aware ofwhen I consider withdrawing my TSP funds?

If you are separated before the year in which you turn age55 and withdraw funds from your TSP account, you maybe subject to a 10 percent early withdrawal penalty tax onall amounts withdrawn before age 59Â. This penalty taxapplies if the withdrawal option selected is either a singlepayment or a series of monthly payments not based uponthe Internal Revenue Service (IRS) life expectancy table.The penalty tax does not apply if you transfer your TSPfunds directly to an IRA or other qualified plan, receive anannuity, or receive a series of monthly payments basedupon IRS life expectancy tables.

35 What can I do to alleviate the tax burden if I withdrawall my TSP funds during one tax year?

If you receive your entire TSP account balance in 1 taxyear, you may be able to use the 5-year or 10-year taxoption to reduce your tax liability. Review the TSP noticeon tax information provided to you upon separation.

36 Does my spouse have any rights concerning how Iwithdraw my TSP funds?

Your spouse does have certain rights when the value ofyour TSP account exceeds $3,500. If you are covered bythe FERS, your spouse has a right for the withdrawaloption to be a certain type of joint life annuity. Before theTSP Service Office will process any other withdrawaloption, your spouse must sign the waiver on the TSP


withdrawal form. If you are covered by the CSRS, yourspouse is entitled to be notified by the TSP Service Officeof the withdrawal option you elect. There are cases whenexceptions can be made, such as when the spouse’swhereabouts are unknown or when certain otherexceptional circumstances exist.

Flexible Spending Account

37 Can I continue to participate in the Flexible SpendingAccount Program?

You can continue to request reimbursement from yourflexible spending accounts (FSAs) only for the expenses ofeligible services received before the date of separation.You may receive reimbursement for up to the full annualamount for the health care FSA and up to the accountbalance for the dependent care FSA. Any servicesreceived on or after the date of separation are not eligiblefor reimbursement. However, the deadline for submitting awithdrawal request does not change. Claims will beprocessed provided they are received by the FSACustomer Service Center by June 30 of the year followingthe year of program participation.

You must pay contributions to your flexible spendingaccounts to equal the abbreviated coverage period. Forexample, if you elected to contribute $2,600 to the healthcare FSA (at $100 per pay period) and you separate after10 pay periods, you must pay for the 10 pay periods($1,000), not the full 26 pay periods.


Variable Pay Program(Nonbargaining Employees Only)

38 If I separate from the Postal Service, am I entitled toany distributions from the Variable Pay Program?

If you separate from the Postal Service for any reasonother than for misconduct and you have a reserve accountbalance under the Variable Pay Program, you are eligiblefor a distribution under the following conditions:

� If your separation is after the last day of the fiscal yearand before the variable pay payment date, yourreserve account will be credited under the VariablePay Program criteria applicable to the preceding fiscalyear (including positive or negative credits andexclusions). Following these adjustments, if any, youwill receive a distribution of your entire reserveaccount balance or, in the case of death, your estatewill receive the distribution on the payment dateapplicable to active employees.

� If your separation is before the end of the current fiscalyear, you (or, in the case of death, your estate) willreceive a distribution of your reserve account balanceat the time of your separation. No credit will be appliedfor the current fiscal year.


Relocation Benefits

39 As a nonbargaining employee, if I am reassigned toanother position or I am successful in obtaininganother position competitively, to what relocationbenefits am I entitled?

If your new position meets the 50 mile rule as defined byIRS regulations (see Exhibit 39B) you are entitled torelocation benefits applicable to nonbargaining employees.Please note that if the distance test result is less than100 miles, you are to move at least half the distance toqualify for relocation. See table on page 25 for an overviewof relocation benefits available.

39A If I obtain the position noncompetitively, to whatrelocation benefits am I entitled?

If the position is obtained noncompetitively, relocationbenefits are available only if management certifies that themove is primarily in the best interests of the Postal Serviceand not primarily for your convenience or benefit. The 50mile rule would have to be met and if the distance testresult is less than 100 miles, you are to move at least halfthe distance.

40 As a bargaining employee, if I am reassigned toanother position outside my commuting area underthe terms of my collective bargaining agreement, am Ientitled to relocation benefits?

Yes, if your reassignment is involuntary and falls under theprovisions of Article 12, and your new position meets the50 mile rule as defined by IRS regulations (seeExhibit 39B) you are entitled to relocation benefits inaccordance with Article 12 of the applicable collectivebargaining agreement. For an overview, see the table onpage 25 that shows relocation benefits available tobargaining employees.


Exhibit 39AOverview of Relocation Benefits for Bargaining and NonbargainingEmployees

Relocation BenefitBargainingEmployees

NonbargainingEmployees

� Advance house hunting

� Spouse on trip

� Dependent children on trip

1 trip

Yes

No

Up to 3 trips

Yes

Yes

� Return trips to old station No 1 trip

� Miscellaneous expense allowance $300 (if married);$150 (if single)

$2,500

� En route expenses Yes Yes

� Movement and storage ofhousehold goods through therelocation management firm

60 days 60 days

� Temporary quarters* 30 days 60 days

� Residence sell or buy transactions

� Relocation management firm(RMF) home purchase

Yes

No

Yes

Yes(nonbargaining-19and above)

� Reimbursable Loan OriginationFee

No Yes

� Equity loss consideration No Yes

� Grossing up No Yes

� Relocation leave 5 days 5 days

* Temporary quarters allowances are based on actual expenses with a cap limit. Forexample, for a 30-day period a bargaining employee with a spouse and one childmoving to a low-cost area can claim actual expenses not to exceed $2,085. For thatemployee moving to a high-cost area, the actual expense cannot exceed $2,692. Fora nonbargaining employee, a spouse, and one child for a 30-day period, the actualexpenses can not exceed $2,851 for a low-cost area and $4,730 for a high-cost area.


Exhibit 39BDistance — The “50-Mile Rule”

To qualify for relocation benefits, your new permanent duty stationmust be at least 50 miles farther from your former residence thanyour former permanent duty station was from your formerresidence. This is known as the ”50–mile rule.” See the illustrationand formula below to determine how the rule works.

3

Note: If the distance test result is less than 100 miles, you are tomove at least half the distance.

Exception to the Distance Requirement

If you are a newly appointed postmaster and the district manageror area vice president deem it necessary that you move to yournew community, you do not have to comply with the 50–mile ruleto qualify for relocation benefits. However, the approving officialmay reduce or disallow benefits for advance round trips andtemporary quarters.

Retirees do not need to comply with minimum miles, as they haveno new permanent duty station.


Unemployment Compensation

41 Can I apply for unemployment compensation?

Yes, any employee who is separated may apply forunemployment compensation. Your personnel office willprovide you with Standard Form 8, Notices to FederalEmployees About Unemployment Insurance. This formexplains the general eligibility requirements forunemployment compensation and the steps to file a claimfor benefits.

Reinstatement

42 Does it matter whether I am voluntarily or involuntarilyseparated from the Postal Service in being consideredfor reinstatement at a later date?

No, provided your separation was not a removal action forcause or that you resigned after being notified that chargesproposing removal would be, or had been, issued. Youmay be considered for reinstatement, provided you meetthe qualification standards, including any requiredexaminations, for the position for which you are requestingreinstatement. Depending on your status, you may also besubject to certain time limits that may restrict the periodyou are eligible for reinstatement.

43 What are the time limits for reinstatement to the PostalService?

If you are entitled to veterans’ preference or havecompleted the service requirements for career status (i.e.,3 years of substantially continuous creditable service), youmay be reinstated without any time limit. If you do not meeteither of these two conditions, you may be reinstated onlywithin 3 years following the date of your separation.


44 If I am a nonbargaining employee separated as a resultof a RIF, am I entitled to any priority consideration forreinstatement?

Yes, you can request that your name be entered on areinstatement list (RL) by completing and submittingForm 999, Application for Reinstatement List. If you arefound eligible to participate, you will be given priorityconsideration for reinstatement to the Postal Service forup to 2 years following the establishment of the RL.

45 How do I qualify for the reinstatement list?

You must submit your Form 999 (and pages 1 and 2 ofForm 991, Application for Reassignment or Promotion)within 30 days following your RIF effective date. Inaddition, you must be found minimally qualified for thepositions identified on your Form 999, your most currentmerit performance rating of record must be aboveUnacceptable, the positions must be authorized positions,and the position grade levels must be equal to or below thegrade of the position you held before your separation.

46 If my name is on the reinstatement list, will I beconsidered for positions nationwide?

No, you can only be considered for vacant positions withinyour reinstatement list area of consideration (RLAC). AnRLAC covers an area that is approximately a 50-mileradius of your competitive area.

47 Will my name remain on the reinstatement list for theentire 2-year period?

Yes, unless you are disqualified or placed. You can bedisqualified if you (a) request that your name be removedfrom the RL, (b) fail to respond to an employment inquiryfrom the Postal Service, (c) decline or fail to appear at aninterview for a postal position, (d) decline a careerappointment to a postal position, or (e) fail to update your


address or telephone number and this prevents reasonablecontact with you concerning employment opportunities withthe Postal Service. Your name will also be removed fromfurther RL consideration if you subsequently accept acareer appointment with the Postal Service or anotherfederal agency.

48 Once I qualify to participate on the reinstatement list,what priority consideration will I be given?

Before a career nonbargaining vacancy is advertised eitherinternally or externally within your RLAC, HumanResources will review the RL to determine whether or notany of the applicants on the list have been found minimallyqualified for the vacant position. If one or more applicantsare identified, the selecting official is required to reviewpages 1 and 2 of the applicant’s Form 991 and determinewhether or not to consider the applicant further. If adecision is made to consider an applicant further, he or shecan be considered on a competitive or noncompetitivebasis.

Rehire or Transfer

49 What happens to my benefits and leave if I amseparated and later rehired by the Postal Service or bya federal agency?

If you separate from the Postal Service as a careeremployee, have a break in service of 4 days or more, andare rehired as a career employee at the Postal Service or afederal agency, your benefits would be processed asfollows:

� Retirement. If you were covered by CSRS you wouldbe covered by CSRS when you were rehired, providedthat the break in service between the careerappointments was not more than 365 days.


a. If the break exceeded 365 days, you wouldbecome covered by CSRS Offset, withcontributions to both CSRS and Social Security.

b. If you were covered by FERS you would becovered by FERS when you were rehired.

c. If you were covered by CSRS Offset you would becovered by CSRS Offset when you were rehired.

d. If you were covered by either CSRS or CSRSOffset when you are rehired (since your break inservice between career appointments would havebeen more than 3 days), you would be offered anopportunity to voluntarily transfer to FERS.

� Health Benefits. Your FEHB coverage ended at theend of the pay period in which you separated (subjectto a temporary extension of coverage for 31 days).Upon being rehired, you would need to reenroll tohave health benefits coverage. This would not be anautomatic reenrollment. You would need to complete anew Standard Form 2809, Employee Health BenefitsElection Form, within 60 days of being rehired.

Note: If you are rehired as a federal employee in anotheragency and do not return to the Postal Service, you wouldpay the higher federal contribution rate for premiums.

� Life Insurance. For FEGLI, your coverage upon beingrehired would depend upon the length of the break inservice.a. If you had less than a 31-day break in service,

your life insurance coverage would remain thesame upon being rehired. You would not have anopportunity to make a new election. Any previousvalid designation of beneficiary would remainvalid.

b. If you had a break in service from 31 to 179 days,your life insurance coverage would automaticallyremain the same upon being rehired. However,any previous designation of beneficiary would becanceled (voided).


c. If you had a break in service of 180 days or more,only your Basic life insurance coverage wouldautomatically remain in force upon being rehired.For any optional insurance, you would have theopportunity either to reinstate what you had inyour prior Postal Service appointment, or to makea new election within 60 days of being rehired. Ifyou were to make a new election, you would needto complete a new Standard Form 2817, LifeInsurance Election Form. Any previousdesignation of beneficiary would be canceled(voided).

Note: If you are rehired as a federal employee in anotheragency and do not return to the Postal Service, you wouldhave to pay one-third of the premium cost for Basiccoverage, which was fully paid by the Postal Service. Theoptional insurance premium rates would be the same.

� Thrift Savings Plan. If you had a break in service of30 days or less and you were covered by FERS,CSRS, or CSRS Offset at the Postal Service andrehired to a position covered by FERS, CSRS, orCSRS Offset, your TSP participation would continue.This means that your TSP contributions (and AgencyAutomatic (1 percent) Contributions and AgencyMatching Contributions for FERS employees) wouldcontinue. If you had not yet become eligible toparticipate in TSP, the TSP waiting period wouldcontinue and you could not make a new TSP electionuntil TSP open season. Also, if you had a TSP loan,your loan repayment would be required to continue.

If you had a break in service of 31 days or more beforebeing rehired, then you would have a waiting periodbefore TSP participation could begin. If you had neverbeen eligible for TSP in a prior appointment, then youwould become eligible for TSP in the second TSPopen season election period. If you had been eligiblefor TSP in a prior appointment, then you wouldbecome eligible for TSP in the first TSP open seasonelection period.


� Flexible Spending Accounts. If you are rehired bythe Postal Service, you would be eligible for FSAparticipation only after completing 26 pay periods ofcareer service. If you are rehired by a federal agency,it is unlikely that the agency will have an FSA programavailable.

You would be required to pay contributions to yourFSA to equal your abbreviated coverage period.Unless you had insufficient pay, these contributionsalready would have been withheld from yourpaychecks. For example, if you elected to contribute$2,600 to the health care FSA (at $100 per pay period)and you separated after 10 pay periods, you wouldpay for the 10 pay periods ($1,000), not the full 26 payperiods.

Note: The amount you are required to contribute doesnot depend on what you claim; it depends on thecontributions scheduled for your period of participation.

� Annual Leave. If you received a lump-sum paymentfor annual leave upon separation (see question 20)and subsequently you are rehired or reinstated beforethe period covered by the payment expires, you mustrefund in full the payment for the overlapping period.You are then recredited with the annual leave.

� Sick Leave. If you are separated from the PostalService for a reason other than retirement andsubsequently you are rehired by the Postal Service,sick leave will be credited in accordance withregulations in effect at the time that you are rehired.Current policy is that Postal Service sick leave may berecredited upon rehire provided there is not a break inservice in excess of 3 years.

50 What happens to my benefits and leave if I transfer toa Federal agency?

If you transfer from a career position at the Postal Serviceto a career position at a federal agency, your benefits andleave would be processed as follows:


The term transfer applies if you separate from the PostalService and within 3 days you are placed on the rolls of afederal agency. When placement is effective within 3 days,you are considered to have no break in service.

Note: See question 49 for information about whathappens if you have a break in service of 4 days or moreand you are rehired as a career employee at the PostalService or a federal agency.

� Retirement. Your retirement plan coverage, whetherunder the CSRS, CSRS Offset, or FERS, wouldremain the same at the federal agency.

� Health Benefits. Your FEHB coverage would betransferred to the federal agency and you would nothave an opportunity to make a new election. Youwould pay the higher federal contribution rate forpremiums.

� Life Insurance. Your FEGLI coverage would betransferred to the federal agency. You would not havean opportunity to make a new election. Any properdesignation of beneficiary would remain valid. As afederal employee, you would pay one-third of thepremium cost for Basic coverage, which was fully paidby the Postal Service. The optional insurancepremiums would be the same.

� Thrift Savings Plan. Your TSP participation wouldcontinue without interruption. This means that yourTSP contributions (and Agency Automatic (1 percent)Contributions and Agency Matching Contributions forFERS employees) would continue. If you had not yetbecome eligible to participate in TSP, the TSP waitingperiod would continue. You could not make a new TSPelection until TSP open season. Also, if you had a TSPloan, your loan repayment would be required tocontinue.

� Flexible Spending Accounts. The FSA program isspecific to the Postal Service. You cannot continue it ata federal agency. It is unlikely that a federal agencywill have an FSA program available.


If you were a Flexible Spending Accounts (FSA) programparticipant when you separated, you could continue torequest reimbursement from your FSA only for theexpenses of eligible services received before your date ofseparation from Postal Service rolls. You could receivereimbursement for up to your full annual contributionamount for the health care FSA and up to your accountbalance for the dependent care FSA. Any services youreceived on or after your date of separation would not beeligible for reimbursement. However, the deadline forsubmitting a withdrawal request would not change. Yourclaims would be processed provided that the FSACustomer Service Center received them by June 30 of theyear following the year of program participation.

You would be required to pay contributions to your FSA toequal your abbreviated coverage period. Unless you hadinsufficient pay, these contributions already would havebeen withheld from your paychecks. For example, if youelected to contribute $2,600 to the health care FSA (at$100 per pay period) and you separated after 10 payperiods, you would pay for the 10 pay periods ($1,000), notthe full 26 pay periods.

Note: The amount you are required to contribute does notdepend on what you claim; it depends on the contributionsscheduled for your period of participation.

� Annual Leave. If you received a lump-sum paymentfor annual leave upon separation (see question 21)and you transfer to another federal agency before theperiod covered by the payment expires, you mustrefund in full the payment for the overlapping period upto the maximum carryover allowed by the federalagency to which you transfer. You are then recreditedwith the leave.

� Sick Leave. Postal sick leave policies may differ fromthose at other federal agencies. Consult with thefederal agency.

Publication 164 - Q's & A's, Compensation, Relocation ...

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