Some of the most expensive work mistakes come from rules with fixed numbers in them: a 1.1% multiplier that starts at 62, a 52-week severance cap, an 11-hour driving limit, a $3,000 nanny tax threshold. This guide works four situations from the federal rule text, with the arithmetic shown.
A FERS employee with 30 years of service and a high-3 average salary of $100,000 can retire immediately at 60 because she has at least 20 years. Under OPM’s computation rules the basic annuity is 1% of the high-3 for each year of service, rising to 1.1% if she is 62 or older at separation with at least 20 years.
Waiting two years raises the annuity by $3,000 a year but gives up about $92,400 (two years of the age-60 annuity plus 24 months of supplement), which takes roughly 31 years of the higher annuity to recover, before COLAs and before counting two more years of salary, which this simple comparison leaves out. That is why many people who can leave at 60 with 30 years do. Two more points from OPM: regular FERS retirees get no cost-of-living adjustment until 62, and a full survivor annuity cuts the annuity by 10% (5% for a partial one). Run your own figures in the FERS retirement calculator, which also handles the MRA+10 reduction of 5% a year under 62. The high-3 comes from your General Schedule salary, which the GS pay calculator looks up by grade, step and locality from OPM’s 2026 tables. The annuity is only one part of FERS: the TSP calculator projects the Thrift Savings Plan side, with the agency’s automatic 1% and matching contributions.
OPM’s severance pay fact sheet works this example: weekly pay of $1,500, 20 years and 4 months of creditable service, age 45 years and 8 months at separation.
Under 5 CFR 550 subpart G, lifetime severance is capped at 52 weeks of pay, and someone eligible for an immediate annuity cannot get severance at all. That interacts with Situation 1: a 57-year-old with 30 years may already have an immediate annuity, so check retirement eligibility first. The federal severance pay calculator reproduces OPM’s example and applies the cap for severance already received.
A property-carrying driver comes on duty at 6:00 after 10 consecutive hours off. Under 49 CFR 395.3 (current as of October 1, 2026, last amended in 2020):
The weekly limit then decides the rest of the week. If her carrier runs every day, she is held to 70 hours on duty in 8 days. Five 13-hour days use 65, leaving 5 hours for day six unless she takes 34 consecutive hours off to restart the count. Bus and motorcoach drivers follow 395.5 instead: 10 hours of driving after 8 off, and no driving after 15 hours on duty.
| Rule | Property-carrying (49 CFR 395.3) | Passenger-carrying (49 CFR 395.5) |
|---|---|---|
| Off duty before driving | 10 consecutive hours | 8 consecutive hours |
| Driving limit | 11 hours | 10 hours |
| On-duty window | No driving after the 14th hour after coming on duty | No driving after 15 hours on duty |
| Break | 30 consecutive minutes after 8 hours of driving | No 30-minute break rule in 395.5 |
| Weekly limit | 60 hours in 7 days or 70 hours in 8 days | 60 hours in 7 days or 70 hours in 8 days |
| Restart | 34 or more consecutive hours off duty | No restart provision in 395.5 |
Drivers within a 150 air-mile radius who return and are released within 14 hours can use the short-haul exception in 395.1(e)(1), which drops the logbook and the 30-minute break but not the driving limits. Plan a day in the hours of service calculator.
A family pays a nanny $700 a week for 52 weeks in 2026: $36,400 in cash wages. That is over Publication 926’s $3,000 threshold for 2026, so Social Security and Medicare apply to every dollar:
The same family also pays an adult weekend sitter $60 a week for 50 weeks: exactly $3,000. The threshold is “$3,000 or more,” so this sitter is covered too. Her pay averages $750 a quarter, but the $1,000 FUTA test counts total wages to all household employees, and the nanny already crosses it, so the sitter’s first $7,000 is also FUTA wages. A sitter under 18 would be exempt from Social Security and Medicare unless babysitting is her principal occupation.
| 2026 rule (Pub 926) | Threshold | Tax |
|---|---|---|
| Social Security and Medicare | $3,000 or more in cash wages to one employee in 2026 | 15.3% of cash wages: 7.65% employee share, 7.65% yours; Social Security wages capped at $184,500 |
| Federal unemployment (FUTA) | $1,000 or more in cash wages to all household employees in any calendar quarter of 2025 or 2026 | 6.0% of the first $7,000 per employee; up to 5.4% credit for state contributions paid on time, so 0.6% net |
| Federal income tax | None required | Withhold only if the employee asks and you agree |
| Not counted | Wages to your spouse, your child under 21, your parent (with an exception), or an employee under 18 (unless household work is their principal occupation) |
The nanny tax calculator splits the employer and employee shares for any wage.
The FERS multipliers, the severance formula and the hours-of-service limits are written into statute or regulation without annual indexing, so they carry into 2027 unless amended. The household employer threshold and the Social Security wage base are indexed: the $3,000 figure and the $184,500 wage base are 2026 numbers. The IRS publishes the 2027 figures in the 2027 edition of Publication 926, which was not out as of October 22, 2026, so use the 2026 numbers only for 2026 wages. For 2027 the Social Security wage base rises to $192,300 (Social Security Administration, announced October 14, 2026).
Special retirement rules for law enforcement officers, firefighters and air traffic controllers; CSRS and CSRS Offset; deferred and disability retirement; state wage and hour laws for drivers and household workers; ELD technical rules; and state unemployment tax rates. Each calculator page lists what it leaves out.
U.S. Office of Personnel Management, “Computation” and “Eligibility” retirement pages and Severance Pay fact sheet; CSRS/FERS Handbook, chapter 51 (March 2022); 5 CFR part 550 subpart G; 49 CFR 395.1, 395.3 and 395.5 (eCFR, current as of October 1, 2026); IRS Publication 926 (2026), Household Employer’s Tax Guide. All accessed October 22, 2026.
With 30 years and a $100,000 high-3, retiring at 60 pays $30,000 a year plus a supplement until 62; waiting pays $33,000 a year, and recovering the two years given up takes roughly 30 years before COLAs.
One week of basic pay per year for the first 10 years and two weeks for each later year, plus 2.5% for each full quarter over age 40, capped at 52 weeks of pay over a lifetime.
No. Under 5 CFR 550 subpart G, an employee eligible for an immediate annuity is not entitled to severance pay.
A property-carrying driver may drive 11 hours after 10 consecutive hours off, and not after the 14th hour after coming on duty, with a 30-minute break after 8 hours of driving.
A driver whose carrier runs every day may not drive after 70 hours on duty in 8 consecutive days; 34 consecutive hours off duty restarts the count.
Social Security and Medicare apply once you pay one household employee $3,000 or more in cash wages in 2026; FUTA applies once total household wages reach $1,000 in a quarter.
No. Federal income tax withholding is required only if the employee asks and you agree, according to IRS Publication 926 (2026).