Why Special Retirement Rules for FAA and LEOs Aren’t as Straightforward as You Think

Brandon Kimmel
May 19, 2025

Key Takeaways

Although FAA employees and LEOs benefit from accelerated retirement rules in 2025, eligibility requirements, pension calculations, and post-retirement expectations remain complex.
Early planning and professional advice are essential to fully understand the financial trade-offs and unique benefits tied to these special retirement provisions.

Understanding Special Retirement Categories

Certain public sector employees, like Federal Aviation Administration (FAA) workers and Law Enforcement Officers (LEOs), fall under special retirement provisions within the Federal Employees Retirement System (FERS). In 2025, these special rules continue to promise earlier retirement eligibility and enhanced annuity

calculations. However, they come with strict eligibility criteria and hidden complexities that many overlook.

Early Retirement Eligibility Isn’t Automatic

While traditional FERS employees often qualify for immediate retirement at the Minimum Retirement Age (MRA) with 30 years of service, special category employees have a different path. In 2025, the rules specify:

LEOs and FAA air traffic controllers can retire at age 50 with 20 years of qualifying service.
Alternatively, they can retire at any age with 25 years of special category service.

However, only “good time” counts toward these years — meaning time spent in a qualifying position. Not all federal service counts, and breaks in service or reassignment to non-special duties can jeopardize eligibility.

Mandatory Retirement Deadlines

Mandatory retirement rules also apply:

LEOs must retire at age 57.
FAA air traffic controllers must retire by age 56.

Employees are expected to separate at the end of the month in which they reach the mandatory age, unless exceptions are granted for limited extensions. Missing this timeline without sufficient service credits could mean forfeiting enhanced retirement benefits.

Higher Annuity Formula — But with a Catch

FERS offers special category employees a more generous annuity calculation compared to regular employees. The formula for 2025 is:

1.7% of the “high-3” average salary for the first 20 years of special service.
1% of the “high-3” average for all years of service beyond 20.

This can significantly boost retirement income. But the “high-3” average is based strictly on base pay, excluding overtime and premium pay unless specifically included by regulation. Misunderstandings about what counts toward the “high-3” can lead to lower than expected pensions.

Special Retirement Supplement Considerations

In 2025, qualifying FAA employees and LEOs who retire before age 62 are eligible for the FERS Special Retirement Supplement. This supplement approximates the Social Security benefit earned from federal service and is paid until reaching age 62.

However, the supplement is subject to an earnings test. In 2025, if post-retirement earnings exceed $23,480, the supplement will be reduced. This can catch retirees off guard, especially those planning second careers.

Health Benefits Remain a Critical Factor

Maintaining Federal Employees Health Benefits (FEHB) coverage into retirement is crucial for many FAA employees and LEOs. In 2025, the continuation requirements include:

Being enrolled in FEHB for the five years immediately before retirement.
Retiring with immediate annuity eligibility.

Failing to meet these criteria could result in the permanent loss of FEHB coverage — a serious financial and healthcare risk.

Disability Retirement Rules Differ

Special category employees who become disabled may be eligible for disability retirement under FERS. However, in 2025, disability standards for FAA employees and LEOs remain stringent:

The disability must prevent performance in the specific special position.
Unlike regular FERS disability retirement, transitioning into a lower-demand government position often isn’t an option.

Understanding these nuances is vital for anyone who faces unexpected health challenges.

Creditable Service Requirements

In 2025, creditable service includes:

Active duty military service that has been “bought back” via a military service credit deposit.
Prior federal service covered by FERS.
Time spent in a special category position.

Importantly, not all prior government service automatically counts. Failure to complete service deposit payments or misunderstanding service types can lead to unpleasant surprises at retirement.

Impacts of Transfers Between Agencies

Transferring between special category positions (e.g., from one law enforcement agency to another) generally preserves enhanced retirement eligibility, but only if transfers are seamless and roles meet special criteria.

In contrast, transferring into a non-special category position restarts the retirement clock. In 2025, these transitions remain a major area where employees inadvertently lose special category status.

Thrift Savings Plan (TSP) Considerations

FAA employees and LEOs should actively manage their TSP accounts in preparation for retirement. In 2025:

Special category retirees can access TSP funds penalty-free after retiring at or after age 50.
Regular FERS employees must usually wait until age 59½ unless they separate in the year they turn 55.

Understanding these access rules can be essential for managing cash flow needs during early retirement years.

The Role of Overtime and Premium Pay

Many FAA employees and LEOs earn significant overtime or premium pay during their careers. However, for retirement purposes in 2025:

Most forms of premium pay do not count toward the “high-3” average.
Retirement annuities are calculated solely on eligible basic pay.

Failing to account for this distinction can lead to lower-than-anticipated retirement incomes.

Survivor Benefits Decisions

Choosing survivor benefits is a crucial step. In 2025, retirees must decide at retirement whether to provide a survivor annuity for spouses or children. If selected:

Annuity reductions apply to fund survivor benefits.
The survivor receives a portion of the annuity upon the retiree’s death.

Failing to plan for survivor needs could leave family members financially vulnerable.

Early Withdrawals and Tax Penalties

Despite early retirement eligibility, tax penalties on early withdrawals from non-TSP retirement accounts can still apply before age 59½ in 2025. Special exceptions exist, but they require careful planning to avoid unexpected costs.

Consulting a licensed professional is advisable before making withdrawals.

Life Expectancy and Financial Planning

Retiring early means potentially longer periods in retirement. In 2025:

Average life expectancy for federal retirees remains around 83-85 years.
Early retirees must ensure their financial assets last 30 years or longer.

Relying solely on the federal annuity and Social Security may not be enough. Diversified financial planning is essential.

Why Professional Guidance Is Critical

Given the intricacies surrounding early retirement, pension calculations, TSP management, healthcare coverage, and survivor benefits, consulting a licensed professional listed on this website can help you:

Maximize your retirement income.
Avoid costly mistakes.
Ensure long-term financial security.

Retiring Under Special Provisions Requires Careful Preparation

Special retirement rules for FAA employees and LEOs offer valuable benefits, but they demand a full understanding of eligibility, benefit calculations, timelines, and financial planning strategies. In 2025, ignoring these complexities can lead to serious financial and healthcare consequences. Connect with a licensed professional listed on this website today to evaluate your options and prepare confidently for retirement.

Brandon Kimmel

Brandon Kimmel is a seasoned financial professional dedicated to helping individuals and families achieve their long-term financial goals. With a career spanning over two decades, Brandon has cultivated extensive expertise in a wide range of financial disciplines. He is passionate about providing personalized guidance and developing tailored strategies to address each client's unique needs and circumstances. His commitment to client success is the driving force behind his dedication to continuous learning and staying abreast of the latest industry developments.

Licensed since 2002, Brandon possesses a deep understanding of the intricacies of financial planning. His areas of focus include retirement planning, asset protection and preservation, 401k and IRA rollovers, income planning, life insurance, and estate planning fundamentals. This comprehensive knowledge allows him to offer holistic advice, considering all aspects of a client's financial picture to create a robust and sustainable plan for the future. He believes in empowering his clients with the knowledge and resources they need to make informed decisions and confidently navigate their financial journey.

A resident of Lancaster, California for the past 25 years, Brandon is deeply rooted in his community. He is happily married and a proud father of two children, ages 16 and 18. When he's not working, Brandon enjoys spending time with his family and actively participating in local community events. His commitment to his family and community reflects his dedication to building strong relationships and fostering a sense of trust and collaboration in all his endeavors.