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.

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 at age 60 with 20 years of service
• Retire under VERA (Voluntary Early Retirement Authority), with the supplement starting when you reach your MRA rather than at separation (5 CFR 842.503(b))
• Retire under special provisions (LEO, firefighter, air traffic controller)

You do not qualify if you:

• 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.

The formula: For every $2 you earn over $24,480, your supplement is reduced by $1. The table shows the uncapped formula amounts; the actual reduction cannot exceed your supplement (5 CFR 842.505(b)), so a $12,760 formula result against a $9,600 supplement takes $9,600 and no more.

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 (in the calendar year the supplement ends, the divisor is the number of months it was payable that year, not 12: 5 CFR 842.505(a)(2))

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.

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

This is good news. You can withdraw from TSP, collect dividends, and collect ordinary rental income without any impact on your supplement; rents earned through a trade or business are the exception.

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.

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. (A different rule covers retired air traffic controllers under 5 U.S.C. 8412(e): the earnings test is suspended while they work as an FAA contract air traffic control instructor or instructor supervisor, or as a contract controller under 49 U.S.C. 47124, per 5 U.S.C. 8421a(c).)

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: June 30 (OPM's retirement-surveys page)
4. If you exceed the limit: Reductions begin the following July

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), the formula produces a $10,000 reduction, but the reduction cannot exceed the supplement itself (5 CFR 842.505(b)), so you lose the whole $9,600 and no more.

Net result: You keep $20,000 in earnings minus $9,600 in lost supplement = $10,400 net gain before taxes.

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

Strategy 4: Know How Your First Year Is Counted

The supplement has no monthly test. In the calendar year you retire, only earnings after your annuity starts count toward the limit, so your final federal paychecks do not reduce it (OPM CSRS/FERS Handbook, Chapter 51). The reduction for a year's excess earnings is applied starting the following July, after OPM's annual survey.

Strategy 5: Time Income Strategically

• Deferring a bonus does not help by itself: like Social Security, OPM counts wages in the year they are earned, not the year they are paid
• Consider concentrating income only in a year where the supplement is already fully eliminated (being merely over the limit still costs $1 per $2 until it is gone), and weigh the tax and following-year effects
• If you're going to lose the supplement anyway, maximize earnings

What Happens at Age 62

Your FERS Supplement ends automatically at the earlier of the end of the month you turn 62 or the end of the month before you could first be entitled to Social Security (5 CFR 842.503(c)). 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

Once the calendar year ends, that year's earnings are fixed. 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, except for retired air traffic controllers in qualifying FAA contract instructor or controller work (5 U.S.C. 8421a(c)).

Calculate Your FERS Retirement Income

The FERS Supplement is just one piece of your retirement puzzle. Use our free FERS Retirement Calculator to estimate your FERS annuity and supplement.

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, with one statutory exception: a retired air traffic controller working in qualifying FAA contract instructor, instructor-supervisor or contract-controller employment is not subject to the test during that work (5 U.S.C. 8421a(c)).

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 June 30 (OPM's stated deadline for all survey forms). 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.

Does self-employment income count toward the FERS Supplement earnings limit?

Yes. OPM applies the Social Security earnings test, so net earnings from self-employment count alongside wages toward the $24,480 limit for 2026. Net means after business expenses; gross receipts are not the measure. TSP withdrawals, pensions, investment income, and rents or royalties still do not count, unless the rents or royalties come through a trade or business you run.

Does VA disability compensation count toward the FERS Supplement earnings limit?

No. The supplement's earnings test uses the Social Security definition of earnings. 5 U.S.C. 8421a(b)(4)(A) ties it to section 203 of the Social Security Act, which counts only "wages for services rendered" plus "net earnings from self-employment." VA disability compensation is neither. OPM's own annuity supplement survey instructions list "Veteran's benefits and military retired pay" among the income types you should not report. A 100% VA rating and a full FERS Supplement can be drawn together with no reduction. Only what you earn from working counts.

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 FERS annuity and supplement
• FERS SRS Calculator: Calculate your supplement amount to see exactly how much the earnings test can reduce
• 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