FERS Disability Retirement 80% Earnings Limit in 2026: When Can OPM Stop Your Annuity?

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If you retired on FERS disability and are under age 60 on December 31 of a calendar year, OPM can stop your annuity for that year if your income from wages and self-employment reaches at least 80% of the current pay for the position you held when you retired. Your earnings must stay below that 80% line. Reaching or exceeding it triggers "restoration to earning capacity" and ends the annuity.
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When that happens, the statutory termination date is June 30 following the end of that calendar year, not the date during the year when your earnings first reach the threshold. This rule, called the FERS disability retirement earnings limit, comes directly from federal regulation. Understanding exactly how it works is the difference between safely supplementing your income and accidentally ending your benefit.

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FERS is the Federal Employees Retirement System, the retirement plan covering most federal workers hired after 1983. OPM is the U.S. Office of Personnel Management, the agency that administers these annuities.

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At Federal Employee Advisor Network, a retirement planning firm specializing in federal employee benefits, this is one of the most common sources of confusion we see among disability annuitants who want to return to work. This guide walks through the exact threshold, what counts as income, the timing of termination, and how to protect your benefit.

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What Is the FERS Disability Retirement Earnings Limit?

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The FERS disability retirement earnings limit is a federal rule that caps how much a disability annuitant under age 60 can earn from work before OPM considers them "restored to earning capacity" and ends their annuity. According to 5 CFR 844.402, if a disability annuitant is under age 60 on December 31 of any calendar year and earns at least 80% of the current rate of basic pay for the position they occupied immediately before retirement, their earning capacity is considered restored.

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The threshold is based on wages and self-employment income only, and it resets each calendar year. Once you turn 60, the 80% earnings limit no longer restricts your earnings.

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The critical detail is the phrase "at least." Your earnings don't need to exceed 80% to end your benefit. Reaching exactly 80% is enough. To stay safe, your annual wages and self-employment income must remain below 80% of the applicable current basic-pay rate.

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How the 80% Threshold Is Calculated

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The 80% figure is not tied to your old salary at the time you left. It's tied to what your former position pays now. According to 5 CFR 844.402, your calendar-year income is compared to the gross annual rate of basic pay in effect on December 31 of that year for the position you occupied immediately before retirement. That figure can include additional basic pay, subject to certain premium-pay restrictions in the statute.

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That distinction matters because federal pay generally rises over time. As the editorial team at FedTools explains, if your old GS-12 position now pays $85,000, your earnings limit for that year is $68,000, which is 80% of the current figure. When the applicable pay rate for your former position increases, your 80% earnings threshold generally increases with it.

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To find your own number, use the current gross annual basic-pay rate for the position from which you retired, then multiply by 0.80. For a General Schedule (GS) position, confirm the correct grade, step, and locality or special-rate treatment.

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Other pay systems require different handling. According to 5 CFR 844.402, the Senior Executive Service, special-rate positions, retained-rate situations, and the U.S. Postal Service each have their own rules for establishing the comparison figure. OPM publishes updated pay tables on OPM.gov each year, but if your former position doesn't map cleanly to a simple grade and step, confirm the correct calculation before relying on it.
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What Counts as "Earned Income" and What Doesn't

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Not all money you receive counts toward the 80% limit. The rule applies only to earned income, meaning wages from employment and net income from self-employment. According to 5 CFR 844.402, earning capacity is demonstrated by the ability to earn income in exchange for personal services or a work product, or as profit from a business the annuitant owns and actively helps manage. Income you earned during the year counts even if you receive it in a later year.

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A large category of income does not count. According to OPM guidance published on FedWeek, the following are generally excluded from the earnings calculation:

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• Gifts, inheritances, and prizes or awards
• Pensions and annuities, including your FERS annuity itself
• Social Security benefits
• Workers' compensation and unemployment compensation
• Insurance proceeds
• Rents and royalties not resulting from personal services or a trade or business
• Interest and dividends not from your own trade or business
• Capital gains
• Money you earned before you retired
• Net business losses

Two nuances matter here. Most investment income and passive rents or royalties don't count, but business-related income can count, depending on how actively the annuitant is involved. Rents or royalties received in the course of a trade or business, and profits from a business you help manage, are treated as earned income.

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Second, according to 5 CFR 844.402, a loss from one activity cannot offset income from another. A net loss from one self-employment endeavor is treated as zero rather than subtracted from your wages or from another business's profit. You can't use a side-business loss to shrink your reported earnings below the limit.
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Comparison: Under Age 60 vs. Age 60 and Older

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The earnings rules change sharply once a FERS disability annuitant reaches age 60. The table below summarizes the key differences.

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According to OPM's official retirement guidance, after age 60 there is no limit on your earnings, and OPM can find you recovered only if you request that finding. This is why some disability annuitants deliberately keep earnings below the threshold until they reach 60, then work without this 80% earnings cap. Anyone also receiving SSDI may still be subject to Social Security's separate work rules.

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When Does OPM Actually Stop Your Annuity?

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Exceeding the 80% limit doesn't end your annuity on the spot. The timing is set by regulation and gives annuitants a predictable window. According to 5 CFR 844.402, if your earning capacity is restored in a given calendar year, your disability annuity terminates on June 30 after the end of that calendar year.

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In practice, that means if you're still under age 60 on December 31, 2026 and your 2026 earnings reach the threshold, your annuity would not stop until June 30, 2027. OPM identifies who has exceeded the limit through an annual earnings report. According to OPM's Retirement Services division, OPM's 2025 Disability Earnings Report opened in Services Online in February 2026 and covered 43,392 disability annuitants under age 60.

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Responding to that report is mandatory. According to 5 CFR 844.402, every disability annuitant under age 60 on December 31 must report their wage and self-employment income for that year. If an annuitant fails to submit the report, OPM may stop annuity payments until it receives one. That suspension is separate from the earnings limit itself. It can happen even to someone who earned well under 80%, simply for not filing.

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Can Your Annuity Be Restored After It Stops?
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Yes, and the path back depends on why the annuity stopped. According to 5 CFR 844.404, if your annuity ended solely because your earning capacity was restored, it can generally be reinstated effective January 1 following a calendar year in which your earnings fall below 80%. That reinstatement applies only if you are not reemployed in a FERS-covered position, have not recovered from the disability for which you retired, and are not already receiving a non-disability FERS annuity that prevents reinstatement. Staying below the threshold for a full calendar year can restore eligibility, but only if those conditions also hold.

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The rule is stricter if you were found recovered, either medically recovered or "administratively recovered" through reemployment. According to OPM, if your benefit stopped because you were found recovered, it can resume only if the disabling condition recurs and your income does not exceed the 80% limit.

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And according to OPM, if you return to a federal position at a higher salary or grade than the one you retired from, you'll be found administratively recovered, your benefit will stop, and you can't return to disability retirement without filing a new application with current medical documentation.

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A Real Planning Scenario

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Consider a former GS-13 employee who retired on FERS disability at age 54 due to a chronic condition, whose old position now pays $110,000. Her 2026 earnings ceiling is anything below $88,000. She takes a private-sector consulting role and, midway through the year, realizes a large project would push her past $88,000.
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Working with a planner, she structures the engagement so her wages land at roughly $82,000 for the calendar year, keeping her safely under the limit and preserving her annuity. Had she reached $88,000, her annuity would have terminated the following June 30, and she would have needed a full calendar year back under the threshold before it could resume. This is the kind of modeling Federal Employee Advisor Network, a retirement planning firm specializing in federal employee benefits, does routinely for disability annuitants weighing a return to work.

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How the Earnings Limit Interacts With Other Benefits

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Three coordination points cause frequent confusion.

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The OPM 80% earnings test and Social Security's SSDI work rules are separate tests, so an annuitant receiving both must satisfy each independently and report income to both OPM and the Social Security Administration, the federal agency that administers Social Security benefits. But the benefits themselves are financially coordinated.
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According to OPM's disability benefits guidance, for the first 12 months the FERS disability benefit is generally 60% of your high-3 average salary minus 100% of any Social Security disability benefit for months of concurrent entitlement. After the first 12 months, it is generally 40% of your high-3 minus 60% of the Social Security disability benefit. In either period, if your earned FERS annuity is higher than the disability-formula amount, OPM pays the earned annuity instead. So SSDI does not affect the earnings limit, but it can substantially reduce the FERS annuity amount.
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Disability retirees don't receive the FERS annuity supplement. According to OPM's official types-of-retirement guidance, the FERS annuity supplement is not payable to individuals who retire under disability provisions, a different rule set from the 80% earnings limit, though the two are often conflated.
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The age-62 recomputation is often misunderstood. According to OPM's disability benefits guidance, at age 62 a disability benefit is recalculated as though the employee had continued working until age 62, and the average salary is increased by all FERS cost-of-living adjustments (COLAs) paid during the disability period. The disability-retirement years are included in the service used for that recomputation. But that is a specific recomputation rule, not a guarantee that the disability period counts as ordinary active federal service for every benefit purpose. Annuitants already eligible for an immediate retirement when they applied are calculated at their earned rate, with no age-62 recomputation.

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How to Stay Under the Limit and Protect Your Annuity

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If you plan to work while receiving a FERS disability annuity before age 60, a few practices reduce your risk:
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1. Recalculate your ceiling every year. Use the current applicable basic-pay rate for your former position when planning, but remember OPM's final 80% test uses the rate in effect on December 31 of that calendar year. Multiply that applicable rate by 0.80 and keep your earnings below the result.
   
   
2. Track only earned income, but count active business income. Wages and self-employment profit count. Most passive investment income does not. Business income where you play an active role does count.
   
   
3. Do not rely on losses to reduce earnings. A loss from one activity is treated as zero and cannot offset wages or another business's profit.
   
   
4. Watch deferred income. Income you earned but received in a later year counts in the year it was earned, so map your work carefully near the threshold.
   
   
5. File the Disability Earnings Report on time. Missing OPM's annual report can suspend your annuity independently of the earnings limit.
   
   
6. Model large or lumpy income before you commit. Bonuses, project fees, and self-employment spikes can cause an unexpected overage.

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The Bottom Line

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The FERS disability retirement earnings limit is manageable once you know the moving parts. It applies only under age 60, your wages and active work income must stay below 80% of your former position's current pay, and termination lands on June 30 following the year you reach the limit. Most passive investment income is safe, business losses can't offset earnings, the threshold can change as the applicable pay rate for your former position changes, and staying below the limit for a full calendar year can restore a terminated annuity.
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Because these figures change annually and the calculation depends on your specific grade, step, locality, and pay system, and because SSDI coordination and the age-62 recomputation add real complexity, it is worth confirming your numbers before making a work decision. Federal Employee Advisor Network, a retirement planning firm specializing in federal employee benefits, can model your exact earnings ceiling alongside your full retirement picture so you can return to work with confidence rather than guesswork.
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Frequently Asked Questions

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1. How much can I earn on FERS disability retirement? 

Your wages and self-employment income must stay below 80% of the current salary for the position you held before retiring, and only while you are under age 60. According to 5 CFR 844.402, reaching at least 80% in any calendar year restores your earning capacity and ends your annuity. After age 60, no earnings limit applies.
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2. What happens if I exceed the 80% earnings limit on FERS disability?

If your income reaches 80% or more of your former position's current pay in a calendar year, OPM considers your earning capacity restored. According to 5 CFR 844.402, your disability annuity then terminates on June 30 of the following year. Depending on your age and service, you may then have rights to a non-disability FERS annuity.

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3. When does the FERS disability earnings limit stop applying?

The earnings limit stops when you turn 60. According to OPM's official guidance, the 80% earnings cap no longer applies after age 60, and OPM can find you recovered only if you request it. The annual earnings report requirement also ends. If you also receive SSDI, Social Security's separate work rules can still apply.

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4. Can my FERS disability annuity be restored after it stops?

Yes. According to 5 CFR 844.404, if your annuity stopped solely because your earning capacity was restored, it can resume effective January 1 after a year in which your earnings fall below 80%. That reinstatement applies only if you are not reemployed in a FERS-covered position, have not recovered from your disability, and are not already receiving a non-disability FERS annuity. If you were found recovered, restoration requires the disability to recur.

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5. How does OPM know how much I earned?

OPM sends an annual Disability Earnings Report through Services Online. According to OPM's Retirement Services division, its 2025 report covered 43,392 disability annuitants under age 60. Under 5 CFR 844.402, filing is mandatory, and failing to respond can suspend your annuity until you submit the report.

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Disclaimer

This article is for informational and educational purposes only and does not constitute individualized financial, legal, tax, medical, or federal retirement advice. FERS disability retirement rules, OPM procedures, earnings thresholds, SSDI coordination, and benefit calculations can vary based on individual circumstances and may change over time. Verify current requirements with OPM.gov and SSA.gov, and consult an appropriate qualified professional before making employment or retirement decisions.