Benefit Breakdown | Working while on Federal Disability Retirement

Hey everyone! Welcome back to another Federal Disability Retirement Benefit Breakdown, this time on working in the private sector while on Federal Disability Retirement. This is a huge piece of the Federal Disability Retirement Benefit, and most federal employees have no idea it exists. But first, don't forget to like this video and subscribe to our channel so you don't miss any other helpful videos just like this one. Now, let's jump in. So one amazing benefit to receiving Federal Disability Retirement is the ability to work in the private sector while receiving your monthly annuity payments. So the requirement for Federal Disability Retirement is to just be occupationally disabled, not totally disabled. So we're proving that you just can't work your job, not any job. So this means that as long as you're staying within your medical restrictions, you can go on and find gainful employment in the private sector. And because you have the safety net of your Federal Disability Retirement annuity payments, you can find a job in something that you're really passionate about. So the one caveat to remain on the benefit is that you can only make up to 80% of your old position's current salary. But this still allows you to make more money than what you were making in your federal job. So how do they keep track of that? The OPM will perform annual income reviews to ensure that you're not exceeding the 80% income cap. If you are, that's called an administrative recovery. So this means that the OPM thinks you're now making enough money to supplement your income. If that happens, you're going to lose your annuity payments and all credible years of service that you gained while on the benefit. So we recently had a webinar that covered this exact topic and it brought up a lot of great questions. Let's look at a few. Question number one, how is 80% of your old income calculated and does it just include basic pay? When working in the private sector, you can only make up to 80% of your previous job's current salary. So this 80% is based off of what your last grade and step is currently making. So while the grade and step remain fixed, the amount goes up over time as that position receives increases. Question number two, what types of income can you make that do not count against Social Security Insurance or Federal Disability Retirement? So passive income does not count against Social Security Disability Insurance or Federal Disability Retirement. And this can include things like annuities, pensions, social security benefits, withdrawals from your 401k or TSP, unemployment compensation, insurance proceeds, any type of gambling winnings, or alimony and child support. So remember, only earned income is reported on the annual income review by the OPM. Question number three, what are the options if you cannot work in the private sector? So unfortunately, many of our clients are unable to go on to work in the private sector and are wondering what their options look like. In this case, you may be eligible for Social Security Disability Insurance. If you receive both of these benefits, they will offset, but you will be receiving additional income in the long run. So the first year that you're receiving both of these benefits, your Federal Disability Retirement annuity will be reduced by 100% of your SSDI benefit. Years two on, your Federal Disability Retirement will be reduced by 60% of your SSDI benefit. As you can see, working in the private sector can have a significant impact on your financial future. And knowing how it works can help you maximize your benefits and income in the long run. So make sure you check out the description below for links to more resources and benefit breakdowns just like this. Thanks for watching. We'll see you next time.