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How to Calculate IRS Retirement Plans

By Business & Finance Last updated Wednesday, May/22/2024

1). Calculate your "high-three" average by taking the three highest consecutive salaries you earned and finding their average by adding them together and dividing the total by 3.
2). Multiply the amount of years you worked by 1.1 if you are over age 62 and worked for the IRS for more than 20 years.
3). Multiply the number of years you worked by 1 if you are under 62 and/or worked less than 20 years.
4). Take the figure from Step 2 or 3 (whichever applies to you), turn it into a decimal. If you worked for 10 years and retired at 65, your decimal is 0.10 (1 x 10 / 100). If you worked for 20 years and retired at 65, your decimal is 0.22 (1.1 x 20 / 100).
5). Multiply your decimal by your high-three average. So if both the employees above had high-three averages of $100,000, then the first one's pension will be $10,000 a year ($100,000 x 0.1) and the second one's pension will be $22,000 a year ($100,000 x 0.22).

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