Second Career & the Earnings Test
What a second paycheck does to your SRS, and what it doesn't touch
Earnings Test Calculator
Your FERS pension is yours no matter what you earn. A second-career paycheck, though, can reduce your Special Retirement Supplement (SRS) once you reach your Minimum Retirement Age (MRA) of 57.
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Enter your second-career income and estimated SRS to see the earnings-test impact.
Annual Income Breakdown
The earnings test reduces only your SRS, never your FERS pension. If the reduction exceeds your SRS, the supplement stops; you never owe money back. OPM applies any reduction the year after you earn the money: you report earnings on OPM's annual survey, and the next year's supplement payments are cut.
Estimate only. The SRS earnings test follows the SSA annual exempt amount and the $1-for-$2 reduction; it applies only once you reach your MRA. Your official SRS and any reduction are determined by OPM from your reported earnings.
How the SRS Earnings Test Works
The SRS works like an early Social Security payment, so it carries the same earnings test Social Security applies to benefits claimed before full retirement age.
The $1-for-$2 reduction
If your annual earnings from wages or self-employment exceed the exempt amount, your SRS is reduced by $1 for every $2 earned over the limit.
2026 exempt amount: $24,480, adjusted annually by the Social Security Administration.
The ATC head start: no test before MRA
As a special-category retiree, the test does not apply until the year you reach your MRA of 57. Separate in your early-to-mid 50s and second-career income is unlimited until then.
What counts as earnings
Counted
- Wages from an employer (W-2 income)
- Net self-employment income
- Bonuses, commissions, and consulting fees
NOT counted
- FERS pension annuity
- TSP withdrawals
- Investment income (dividends, capital gains, interest)
- Rental income
- Social Security benefits
Worked examples
For a retiree who has reached MRA (so the test applies), assuming an annual SRS of $15,000 ($1,250/mo) and the 2026 exempt amount of $24,480:
| Second Career Income | Over the Limit | SRS Reduction ($1 per $2) | Remaining SRS |
|---|---|---|---|
| $30,000 | $5,520 | $2,760 | $12,240/yr |
| $50,000 | $25,520 | $12,760 | $2,240/yr |
| $80,000 | $55,520 | $27,760 | $0 (fully eliminated) |
At $80,000 the reduction ($27,760) exceeds the $15,000 SRS, so the supplement simply stops at $0. For how the SRS is calculated, paid, and ends at 62, see the Special Retirement Supplement page.
Penalty-Free TSP Access
Most Americans pay a 10% penalty on retirement-account withdrawals before age 59½. ATCs usually don't: under the Public Safety Employee (PSE) exemption, if you separate from federal service in or after the year you turn 50 (or after 25 years of service, if that comes first), withdrawals taken directly from TSP carry no penalty, at any age. Ordinary income tax still applies to Traditional withdrawals; the exemption waives the penalty, not the tax.
The IRA rollover trap
Roll your funds into a traditional IRA and the exemption is gone: IRA withdrawals before age 59½ face the standard 10% penalty (plus income taxes). Keep funds in TSP if you plan to access them before 59½.
Left too early for the exemption? 72(t) is the fallback
Resign before the year you turn 50, with under 25 years of service, and the PSE exemption never attaches, no matter what age you reach later. The remaining penalty-free path before 59½ is a 72(t) series of substantially equal periodic payments (SEPP): withdrawals computed from your life expectancy under IRS-prescribed methods, taken every year for the longer of 5 years or until you reach 59½. Break the schedule early and the 10% penalty applies retroactively to every payment in the series, plus interest, so it's a commitment, not a dial. TSP's life-expectancy installment payments can qualify. (IRC § 72(t)(2)(A)(iv); IRS Notice 2022-6.)
Taxes on a Second Paycheck
How each retirement income stream is taxed, and where your rate lands, is covered on the Taxes page, estimator included. Adding a paycheck changes four things:
- FICA is back. Pension, SRS, and TSP withdrawals pay no payroll tax; wages do. That's 7.65% off the top before income tax even starts.
- It stacks on top. Wages land on top of your pension and SRS, so every dollar is taxed from your highest bracket up, not from zero.
- It can shrink the Roth window. Cheap early-retirement conversions depend on the low brackets sitting empty; second-career wages fill them. Size what's left of your conversion room →
- Your Social Security keeps building. Covered wages keep growing your record, raising your actual benefit at 62 (your SRS is unaffected).
Common Post-ATC Career Paths
With a pension, SRS, and TSP as the foundation, many retired controllers pursue work that interests them, for income, purpose, or both.
Working traffic at federal contract towers and contract military facilities; the federal age-56 separation doesn't apply. Contract towers →
Teaching the next generation at the FAA Academy in Oklahoma City.
Consulting for airlines, airports, or aviation technology companies.
Dispatch, operations, or management roles that use your airspace knowledge.
UAS operations, drone-traffic (UTM) companies, and airspace-integration consulting. Your airspace knowledge is the product.
Real estate, small business, education, trades, or pursuing entirely new interests.
With the pension, SRS, and TSP doing their jobs, many controllers never work another day. The plan is built for exactly that.
Going back to a federal job?
Different rules apply. As a reemployed annuitant, your new federal salary is generally reduced by the amount of your annuity unless the agency gets a waiver, and your earnings still count toward the SRS test after MRA. Civil-service controller positions, including DoD's, also carry the same age-56 rule as the FAA. Many Academy and DoD positions are contractor roles that avoid all of this; confirm which you're taking before you sign.