What Happens to Your FERS Annuity If You Return to Federal Service in 2026?

A reemployed annuitant is a federal retiree who draws a Federal Employees Retirement System (FERS) pension and, at the same time, earns a paycheck as a rehired federal employee. If you return to federal service in 2026, your FERS annuity almost always continues in full. But your new salary is reduced by the amount of that annuity for the period you work.
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This guide explains what happens to your pension, your pay, your Special Retirement Supplement, and your Thrift Savings Plan (TSP) when you go back. It also covers the two ways your reemployment can eventually increase your lifetime benefit.
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FERS generally covers federal civilian employees first hired after December 31, 1983. This article was written by Federal Employee Advisor Network, a retirement planning firm specializing in federal employee benefits, and updated August 2026. We verified every current-year figure below against official guidance available as of August 2026, including OPM, the IRS, and other primary sources.

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The Short Answer: Your Annuity Continues, Your Salary Is Offset
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When a reemployed annuitant returns to work, the FERS annuity continues in full. What changes is the paycheck.
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Under the standard rule, your salary is reduced, or "offset," by the amount of the annuity you receive during the period of reemployment. According to U.S. Customs and Border Protection reemployed annuitant guidance, your annuity keeps arriving from OPM on its normal schedule. Meanwhile, your employing agency reduces your salary by the allocable annuity amount and remits the offset amount to OPM for credit to the Civil Service Retirement and Disability Fund.
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Here is what that looks like in practice. Say your reemployment position pays $80,000 a year and your FERS annuity is $30,000 a year. Your agency pays you the $80,000 salary reduced by the $30,000 annuity, roughly $50,000 in salary, and you separately keep the full $30,000 annuity from OPM.

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Your total gross income is still about $80,000. The offset simply prevents you from being paid twice for the same period.

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For most regular FERS retirees, the annuity continues. Certain disability-annuitant situations can cause it to stop. According to OPM, these include a disability annuitant whom OPM finds has recovered or been restored to full earning capacity, along with specified cases involving an annuitant who is medically disqualified for continued National Guard membership. For ordinary, non-disability FERS retirees returning to work, the annuity does not stop.

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Salary Offset: How the Reduction Actually Works

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The salary offset is the single most important concept for any reemployed annuitant to understand, so it deserves a clear, standalone explanation.

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When you're rehired, your agency calculates the annuity amount allocable to each pay period and subtracts it from your basic pay before issuing your paycheck. According to the USDA National Finance Center's payroll guidance, the agency pays the reduced salary to you and remits the offset amount to OPM for credit to the retirement fund. IRS guidance describes the employing agency as generally paying, as taxable wages, the difference between the salary and the annuity for the reemployment period.
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Social Security (FICA) and Medicare payroll taxes are withheld on the salary amount that remains after the annuity reduction.
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For most FERS reemployed annuitants whose annuity continues, retirement deductions are mandatory, subject to statutory exceptions. According to FEDweek, FERS reemployed annuitants generally have retirement deductions withheld from pay automatically. Unlike CSRS retirees, they have no option to decline them.
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Under 5 U.S.C. 8468 and OPM's 2026 reemployment decision tables in BAL 26-104, exceptions exist. Examples include intermittent reemployment, coverage under another federal retirement system, service as President, and reemployment under a dual compensation waiver. CSRS is the older plan that covers employees hired before 1984, and CSRS reemployed annuitants may generally choose whether to have deductions withheld.

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The Dual Compensation Waiver: The Main Exception
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Some reemployed annuitants keep both their full salary and their full annuity with no offset at all. Under the standard FERS reemployment rules, this generally requires an approved dual compensation waiver (DCW) or another applicable statutory authority.
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A dual compensation waiver is a special authorization that removes the salary offset, so the agency pays the entire salary and you keep the entire annuity.
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According to the Federal Law Enforcement Training Centers (FLETC), the salary offset requirement applies to reemployed annuitants unless OPM approves a waiver. Agencies request these waivers to fill positions where they need candidates with specific critical skills or extensive experience that is hard to replace. Waivers are the exception, not the rule, and they are tied to particular agency needs rather than granted on request.
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The rules here changed recently. According to a Government Accountability Office (GAO) report, an earlier National Defense Authorization Act (NDAA) authority let certain agency heads grant their own dual compensation waivers. The caps were no more than 520 hours in the first six months, 1,040 hours in any 12-month period, and 3,120 hours total.
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That statutory authority expired on December 31, 2024, and Congress did not extend it, a result consistent with the current text of 5 U.S.C. 8468. As of 2026, the broad agency-head waiver authority under that expired temporary provision is no longer available. OPM may still approve waivers under its permanent authority (5 CFR Part 553), and certain agencies may have separate statutory reemployment authorities. For example, OPM's current guidance describes a specific Department of Defense dual compensation provision.

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Your Special Retirement Supplement May Shrink or Disappear
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If you retired before age 62 and receive the FERS Special Retirement Supplement (SRS), returning to work can reduce or eliminate it for most retirees. The SRS, also called the FERS Annuity Supplement, is a monthly payment that bridges the gap until Social Security eligibility. Special-category retirees are treated differently, explained below.

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The supplement is subject to an annual earnings test that works much like Social Security's. The reduction is more aggressive than most retirees expect.

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According to the Social Security Administration, the 2026 lower annual earnings-test amount is $24,480. For every $2 you earn above that threshold, the supplement is reduced by $1. Critically, according to OPM, the earnings figure used for federal reemployment is your gross salary before the annuity salary offset is applied, not the reduced amount you actually take home.

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So a reemployed annuitant in a position paying $80,000 has the full $80,000 counted toward the earnings test, even though the offset means the agency only pays about $50,000. At a substantial full-time salary, the earnings test may sharply reduce the supplement. It can reduce it to zero for the year, depending on your individual supplement amount and earnings.
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There's an important exception for special-category retirees. According to OPM's Benefits Administration Letter 25-103, the earnings-test reduction does not apply before the Minimum Retirement Age (MRA) to certain special retirees. These include qualifying law enforcement officers, firefighters, air traffic controllers, and military reserve technicians. For those retirees, the earnings test begins only once they reach their MRA.

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Note the reverse point about dual compensation waivers: a waiver does not exempt you from the supplement earnings test. According to OPM, a dual compensation waiver removes the salary offset and retirement-deduction requirements, but the FERS Annuity Supplement earnings limit still applies. A high reemployment salary can still reduce or eliminate your supplement.
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The Upside: Supplemental and Redetermined Annuities
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Returning to federal service is not only about offsets and reductions. If you work long enough, your reemployment can permanently increase your pension through one of two paths, with one important exception.
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Service performed under a dual compensation waiver does not qualify for a supplemental or redetermined annuity. According to OPM's BAL 25-103, annuitants serving under a dual compensation waiver are not eligible for additional annuity benefits based on that reemployment, even though they receive full salary plus full annuity while working. The two paths below apply to reemployment where the annuity is offset in the standard way.

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A supplemental annuity is a small additional FERS annuity that is added on top of your existing pension. According to FEDweek, a reemployed annuitant who works full-time on a continuous basis for at least one year may be entitled to a supplemental annuity. Part-time work requires a proportionately longer period to qualify. The supplement reflects the extra service you performed during reemployment.

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A redetermined annuity is a complete recalculation that replaces your existing pension entirely. According to FEDweek and OPM guidance, if your reemployment continues for at least five years of full-time service (or the part-time equivalent) and you qualify for a retirement when you separate from the reemployment service, you may elect a redetermined annuity. It recomputes your entire pension using your combined years of service and your updated High-3 average salary.

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Under 5 U.S.C. 8468 and OPM's reemployed-annuitant guidance, the redetermined annuity replaces the supplemental annuity. You elect one or the other, not both, and to qualify you must have the required retirement deductions accounted for.

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For a retiree whose reemployment salary is significantly higher than their pre-retirement pay, the redetermined annuity can produce a substantially larger lifetime benefit. Note that intermittent service cannot be counted toward eligibility for either the supplemental or redetermined annuity.
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Comparison Table: Supplemental vs. Redetermined Annuity

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The High-3 is the highest average basic pay you earned during any three consecutive years of creditable service. Source: OPM and FEDweek reemployed-annuitant guidance.

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What Happens to Your TSP When You Return

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Your Thrift Savings Plan is treated separately from your annuity. When you return to a position covered by FERS or CSRS, you become eligible to contribute to the TSP again from your reemployment salary. FERS employees who contribute at least 5% of basic pay receive the full agency contribution: a 1% automatic contribution plus up to a 4% match.
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According to OPM's 2026 reemployed-annuitant decision tables, there is an important exception. Annuitants reemployed on an intermittent appointment or under a dual compensation waiver are not eligible to participate in the TSP during that reemployment.

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According to the IRS, the 2026 TSP elective deferral limit is $24,500. Participants age 50 and older can add $8,000 in catch-up contributions, and those turning ages 60 to 63 during 2026 can add $11,250 under the SECURE 2.0 Act.

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One 2026 change to note: according to the IRS, catch-up contributions must generally be made as Roth for participants whose prior-year wages from their employing agency exceeded $150,000. If you had begun withdrawals from your TSP after your original retirement, returning to service and resuming contributions has implications for those withdrawals. Confirm your specific situation with the TSP before you re-enroll.

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Your FEHB and FEGLI Coverage in Reemployment

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If you carried Federal Employees Health Benefits (FEHB) into retirement, your enrollment generally transfers from OPM back to your employing agency when you return to work. According to OPM's 2026 reemployed-annuitant decision tables, this generally happens when the reemployment position provides FEHB coverage and you participate in premium conversion. If the position is not FEHB-eligible or you waive premium conversion, your enrollment and premium withholding can remain with your annuity at OPM.

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Federal Employees Group Life Insurance (FEGLI) treatment depends on whether the reemployment position provides FEGLI coverage, not simply on the appointment label. According to OPM's 2026 decision tables, Basic, Option A, and Option C coverage carried as an annuitant are generally suspended or transferred to the employing agency when the new position is FEGLI-eligible, while Option B has separate election rules. Confirm how your specific coverage is handled with your employing agency's benefits office.

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The Bottom Line

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For most FERS reemployed annuitants, returning to federal service allows the annuity to continue while the new federal salary is subject to an annuity offset. You gain a paycheck without losing your pension.
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The trade-offs to plan around include the salary offset, a possible reduction or loss of the FERS Special Retirement Supplement when the earnings test applies, and retirement deductions that generally apply unless an exception covers your appointment. The long-term reward is the chance to earn a supplemental or redetermined annuity, when the reemployment service qualifies, that can meaningfully raise your lifetime benefit.
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Because these rules interact with your age, your years of service, and whether a dual compensation waiver applies, the right move depends on your specific numbers.
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Federal Employee Advisor Network, a retirement planning firm specializing in federal employee benefits, helps federal retirees model the offset, the supplement earnings test, and the supplemental-versus-redetermined decision before they accept a reemployment offer. If you are weighing a return to federal service, review your figures against your OPM annuity statement and current-year OPM and TSP guidance before you sign.

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Frequently Asked Questions

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1. What happens to my FERS annuity if I return to federal service?

Your FERS annuity continues in full when you return to federal service. Your new salary is reduced by the annuity amount for the period you work, unless a dual compensation waiver or another applicable statutory authority removes the offset. For most retirees the annuity keeps arriving. Certain disability-annuitant situations, such as recovery or restoration to earning capacity, can cause it to stop.
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2. Can I collect my FERS pension and a federal salary at the same time?

Yes, but in most cases your salary is offset by your annuity amount, so you are not paid twice for the same period. You keep the full annuity from OPM while your agency reduces your paycheck. Keeping both your full salary and full annuity generally requires an approved dual compensation waiver or another applicable statutory authority.
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3. How does the salary offset for a reemployed annuitant work in 2026?

Your employing agency calculates the annuity amount allocable to each pay period and subtracts it from your basic pay. According to the USDA National Finance Center, the agency pays you the reduced salary and remits the offset amount to OPM for the retirement fund. For most FERS reemployed annuitants, retirement deductions are withheld automatically, subject to statutory exceptions.

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4. Will returning to work affect my FERS Special Retirement Supplement?

Yes. If you receive the FERS Special Retirement Supplement, the 2026 earnings limit is $24,480, and it drops $1 for every $2 earned above it, based on gross salary before the offset. A substantial salary can reduce it to zero. Special retirees like law enforcement officers and firefighters are exempt until their MRA.
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5. How long must I work as a reemployed annuitant to increase my pension?

Working full-time continuously for at least one year can qualify you for a supplemental annuity added to your existing pension. Working at least five years, if you also qualify for retirement when you separate, lets you elect a redetermined annuity that recalculates your entire pension using combined service and your updated High-3. Intermittent service does not count.
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6. Do I still contribute to the TSP as a reemployed annuitant?

Generally yes, if your reemployment position is covered by FERS or CSRS. However, OPM says annuitants serving on intermittent appointments or under a dual compensation waiver are not eligible to participate in the TSP during that reemployment. The 2026 elective deferral limit is $24,500 according to the IRS. Contributing at least 5% of basic pay generally lets an eligible FERS participant receive the full agency contribution: the 1% automatic contribution plus up to 4% in matching contributions.

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Disclaimer

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This article is for informational and educational purposes only and does not constitute financial, legal, tax, or federal retirement advice. FERS reemployment rules, benefit limits, agency procedures, and TSP requirements may change. Always verify current information with official sources such as OPM.gov, TSP.gov, SSA.gov, and IRS.gov, and consult a qualified federal retirement or financial professional for guidance based on your individual situation.