FERS Supplement Earnings Limit 2026: Rules for Working in Retirement

Many federal employees plan to work after retiring early. Whether it's part-time consulting, a second career, or helping with the family business, earning income in retirement is common.

But if you're receiving the FERS Supplement, that income could cost you. Earn too much and your supplement gets reduced, sometimes to zero.

Here's what you need to know about the 2026 earnings limit and how to protect your benefit.

Key Takeaways

• The 2026 FERS Supplement earnings limit is $24,480 (up from $23,400 in 2025)
• For every $2 you earn over the limit, your supplement is reduced by $1
• Only wages and self-employment income count, not TSP withdrawals, investments, or rental income
• LEO, firefighter, and ATC retirees are exempt from the earnings test until they reach their MRA
• The supplement ends automatically at age 62, regardless of your earnings

What Is the FERS Supplement?

The FERS Supplement is a temporary benefit that bridges the gap between your retirement date and age 62. It approximates what your Social Security benefit would be based on your FERS-covered service.

Not everyone gets it. You qualify for the FERS Supplement if you:

• Retire at MRA with 30 years of service
• Retire under VERA (Voluntary Early Retirement Authority)
• Retire under special provisions (LEO, firefighter, air traffic controller)

You do not qualify if you:

• Retire at age 60 with 20 years (no supplement)
• Retire at MRA+10 with a reduced pension (no supplement)
• Take deferred or postponed retirement (no supplement)

The 2026 Earnings Limit Explained

The 2026 earnings limit is $24,480. This is the same threshold used for Social Security's retirement earnings test.

If your earned income exceeds this amount, OPM reduces your FERS Supplement using this formula:

Your Earnings	Excess Over Limit	Annual Reduction	Monthly Impact
$24,480 or less	$0	$0	Full supplement
$30,000	$5,520	$2,760	-$230/month
$40,000	$15,520	$7,760	-$647/month
$50,000	$25,520	$12,760	-$1,063/month

The formula: For every $2 you earn over $24,480, your supplement is reduced by $1.

Example Calculation

Maria retires at 57 with a $950/month FERS Supplement. She takes a part-time consulting job earning $34,480 in 2026.

1. Excess earnings: $34,480 - $24,480 = $10,000
2. Annual reduction: $10,000 ÷ 2 = $5,000
3. Monthly reduction: $5,000 ÷ 12 = $417

Result: Maria's supplement drops from $950 to $533 per month.

What Income Counts Toward the Limit

Not all income triggers the earnings test. Only earned income counts.

Income That Counts (Reduces Your Supplement)

Income Type	Notes
W-2 wages	All salary, overtime, bonuses
Self-employment	Net earnings after expenses
Consulting fees	Even occasional work counts
Severance pay	If paid after retirement
Deferred compensation	When earned, not when received

Quick test: If FICA or self-employment tax applies, it probably counts.

Income That Does NOT Count

Income Type	Why It's Exempt
FERS annuity	Retirement income
TSP withdrawals	Investment income
Social Security	Retirement income
Dividends and interest	Passive income
Capital gains	Investment income
Rental income	Passive (unless active business)
IRA distributions	Retirement income
Lump-sum leave payout	One-time retirement payment

This is good news. You can withdraw from TSP, collect dividends, and earn rental income without any impact on your supplement.

Special Category Employees: The Exception

If you're a law enforcement officer, firefighter, air traffic controller, or other special provision employee, you get a major advantage.

You're exempt from the earnings test until you reach your Minimum Retirement Age (MRA).

Birth Year	MRA
1966	57
1967	57
1968	57
1969	57
1970+	57

Example

Kent, a federal firefighter, retires at age 51 with 22 years of service. His MRA is 57.

• Ages 51 to 57: No earnings test. Kent can earn $100,000+ with zero reduction to his supplement.
• Age 57+: Normal earnings test applies. If Kent exceeds $24,480, his supplement is reduced.

This exemption can be worth tens of thousands of dollars for special provision employees who want to work after retiring in their 50s.

How OPM Tracks Your Earnings

OPM doesn't automatically know your income. You have to report it.

The Annual Survey Process

1. April/May each year: OPM mails Form RI 92-22 (Annuity Supplement Earnings Report)
2. You report: Earned income from the previous calendar year
3. Deadline: Typically mid-May to late June
4. If you exceed the limit: Reductions begin the following July

Do You Need to Respond?

Situation	Action
Earned income under $24,480 (no prior reduction)	No response required
Earned income over $24,480	Must return form
Prior year had a reduction	Must return form
No earned income	No response required

Don't ignore the survey. Failure to respond can result in suspension of your supplement or recovery of overpayments.

When Reductions Take Effect

There's a delay between earning over the limit and seeing your supplement reduced.

• 2026 earnings are reported in spring 2027
• Reductions begin in July 2027
• Reductions continue through June 2028

This lag gives you time to adjust your income strategy if needed.

5 Strategies to Protect Your Supplement

Strategy 1: Stay Just Under the Limit

If you want to work part-time, consider limiting earned income to $24,000 or less. You get significant income without triggering any reduction.

Strategy 2: Shift to Non-Countable Income

Focus on income that doesn't trigger the test:

• TSP withdrawals
• Dividend-paying investments
• Rental properties (passive)
• Capital gains from selling investments

Strategy 3: Calculate Your Break-Even Point

Sometimes earning more is still worth it, even with the reduction.

Example: Your supplement is $800/month ($9,600/year). If you earn $44,480 (that's $20,000 over the limit), your supplement is reduced by $10,000.

Net result: You keep $20,000 in earnings minus $10,000 in lost supplement = $10,000 net gain.

Working may still make sense. Just know the true cost.

Strategy 4: Use the Monthly Test in Your First Year

In the calendar year you retire, you may be able to use a monthly earnings test instead of annual. If you retire mid-year with high earnings from your federal job, you may still qualify for full supplement in months where you earned under $2,040.

Strategy 5: Time Income Strategically

• Defer bonuses to years when you'll be 62+ (no supplement to lose)
• Accelerate income into years you're already over the limit
• If you're going to lose the supplement anyway, maximize earnings

What Happens at Age 62

Your FERS Supplement ends automatically when you turn 62. No action required on your part.

At that point:

• Social Security becomes available (though you can delay until 67 or 70 for higher benefits)
• No more OPM earnings test for the supplement
• Your FERS annuity continues unchanged

The supplement was designed to bridge you to Social Security. Once you're 62, that bridge is no longer needed.

Common Mistakes to Avoid

Mistake 1: Assuming All Income Counts

Many retirees avoid TSP withdrawals, thinking they'll lose their supplement. Not true. Only earned income counts.

Mistake 2: Forgetting About Self-Employment

Net self-employment income counts. If you do consulting, freelance work, or run a small business, that income is subject to the test.

Mistake 3: Not Tracking Income Throughout the Year

By December, it's too late to adjust. Track your earnings quarterly so you can make informed decisions.

Mistake 4: Ignoring the OPM Survey

Failure to respond can result in suspension of your supplement or recovery of overpayments.

Mistake 5: Thinking the Reduction Is Permanent

If your earnings drop below the limit in future years, your full supplement can be reinstated. Submit proof to OPM.

Mistake 6: Special Provision Employees Assuming Permanent Exemption

The exemption only lasts until you reach your MRA. After that, the normal earnings test applies.

Calculate Your FERS Retirement Income

The FERS Supplement is just one piece of your retirement puzzle. Use our free FERS Retirement Calculator to see how your pension, supplement, and other income sources fit together.

Estimate Your FERS Pension →

Frequently Asked Questions

What is the FERS Supplement earnings limit for 2026?

The 2026 earnings limit is $24,480. This is the same limit used for Social Security's retirement earnings test. If you earn more than this amount in wages or self-employment income, your FERS Supplement will be reduced by $1 for every $2 you exceed the limit.

Does TSP income count toward the FERS Supplement earnings limit?

No. TSP withdrawals, whether from traditional or Roth accounts, do not count as earned income and will not reduce your FERS Supplement. The earnings test only applies to wages from employment and net self-employment income.

Are law enforcement officers exempt from the FERS Supplement earnings test?

Yes, but only until they reach their Minimum Retirement Age (MRA). LEOs, firefighters, air traffic controllers, and other special provision employees who retire before their MRA can earn unlimited income without any reduction to their supplement. Once they reach MRA (typically age 57), the normal earnings test applies.

How do I report my earnings to OPM for the FERS Supplement?

OPM sends Form RI 92-22 (Annuity Supplement Earnings Report) in April or May each year. You report your earned income from the previous calendar year and return the form by the deadline (typically mid-May to late June). If you earned less than the exempt amount and had no prior reduction, you don't need to respond.

When does the FERS Supplement reduction take effect?

Reductions don't take effect immediately. If you exceed the earnings limit in 2026, your supplement won't be reduced until July 2027. The reduction then continues from July through June of the following year.

Can I get my FERS Supplement restored if my earnings drop?

Yes. If your supplement was reduced due to excess earnings but your income drops below the limit in subsequent years, you can request reinstatement. Submit proof of lower earnings (tax returns, W-2s) to OPM.

Is the FERS Supplement taxable?

Yes, 100% of your FERS Supplement is subject to federal income tax. This differs from Social Security benefits, where only up to 85% may be taxable depending on your total income.

Related Resources

• FERS Retirement Calculator: Estimate your complete retirement income
• Complete FERS Retirement Guide: Everything about FERS eligibility, formulas, and benefits
• Best Dates to Retire 2026: Optimize your retirement date for maximum benefits
• VERA/VSIP Guide 2026: Early retirement options and eligibility

Sources

• SSA 2026 COLA Fact Sheet
• OPM FERS Annuity Supplement Survey FAQ
• OPM Retirement Eligibility Surveys
• FedWeek: Earnings Limits for FERS Supplement