Monthly Archives

September 2018

health premiums

OPM Announces Lowest Federal Employee Health Care Premium Increase in Two Decades

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The Office of Personnel Management announced Wednesday that federal employees will see the cost of their health insurance increase by 1.5 percent in 2019, the smallest hike in more than 20 years.

Enrollees in the Federal Employees Health Benefits Program with coverage only for themselves will on average pay an additional $1.53 each bi-weekly pay period next year. Those on full family plans will pay $2.55 more per pay period, while people in self-plus-one coverage will pay an additional $3.06.

The average increase in the government’s contribution to FEHBP premiums in 2019 will be 1.2 percent. OPM contributes roughly 72 percent toward premiums, which is based on a weighted average of the plans that enrollees choose.

The overall increase in premiums, including both employee and government contributions, will be 1.3 percent next year. That marks the slowest growth in health care costs since 1996, and the smallest increase in enrollees’ share since 1995, said Alan Spielman, director of health care and insurance at OPM.

“We still encourage enrollees to shop around for coverage and evaluate alternatives,” Spielman said in a call with reporters. “Even if you are only seeing a modest increase [in your current plan premiums] or a decrease, you might be able to find better value if you evaluate your needs and the choices available.”

Spielman said there could be a number of factors driving down price increases, including a regulatory change that allows all insurers to provide up to three plans of any type.

“There are a number of dynamics at play here,” he said. “Certainly, OPM and all of the carriers have been focused on quality improvement and achieving more affordable programs here . . . and there are a number of trends along those lines. They also include things like renegotiating provider contracts, and introducing programs like pharmacy management and chronic care management.”

Spielman said that next year, there is a moratorium on the Affordable Care Act’s health insurer provider fees.

Exact changes to premiums will vary based on the plans enrollees choose, and some will even decrease. For instance, for the Blue Cross and Blue Shield Standard Option—the most popular plan—self-only enrollees will pay $0.93 less per pay period, enrollees in family coverage will pay $3.74 less per pay period, and self-plus-one enrollees will pay $1.27 less each pay period.

For the Federal Employees Dental and Vision Insurance Program, where there is no government contribution, dental plan premiums will increase 1.2 percent on average in 2019, while vision plans will drop in price by 2.8 percent. This marks the first year that uniformed service retirees and their families can enroll in FEDVIP dental plans—the equivalent TRICARE plan will stop at the end of 2018—and the first year that active duty service members’ families can enroll in vision plans.

Open season for selecting or changing plans in the Federal Employees Health Benefits Program will run from Nov. 12 until Dec. 10.

Get the Federal Retirement and Benefits Review today.  Request one here.

Best Dates To Retire in 2019

By | Benefits, Federal Pay, Retirement | 8 Comments

It’s time for our annual look ahead at the best dates to retire in the next year. As always, your retirement coverage under the Civil Service Retirement System (including CSRS Offset) or the Federal Employees Retirement System (including transfers to FERS) will be an important factor in choosing the best date.


Some of the best dates to retire for CSRS employees occur when the end of the month (or one of the first three days of the month) coincides with the end of a leave period. This allows a final leave accrual (remember, annual leave is paid in a lump sum after you separate) and also ensures that the day after your separation is the first day you begin accruing CSRS retirement benefits.

The best dates for CSRS in 2019 that will allow a retirement at the end of the month (or within the first three days of a month) and also at or near the end of a leave period will be Jan. 3, Feb. 1, March 1, March 30, Aug. 2, and Aug. 31. Jan. 3, 2020, would also work, because it’s within the 2019 leave year.

The following dates would also work for CSRS, but would not earn a final leave accrual since they are not at the end of a pay period: May 3, May 31, June 30, July 3, Sept. 3, Oct. 3, Oct. 31, Nov. 1, Nov. 30, and Dec. 3.


All immediate, optional FERS retirement benefits start the first day following the month of retirement. This means, for example, that regardless of whether you retire on Oct. 1, 2, 15, or 31, your first FERS retirement benefit will be paid on Dec. 1 for the month of November. Your salary will cease on the last day of your federal employment. If your goal is to have your retirement benefit begin in October, then Sept. 30 would be the best date for you. FERS employees should focus on choosing a date at the end of the month, even if it is a Saturday or a Sunday, since these days can be included in the computation of service credit.

Retiring at the end of a leave period can be good, even though your salary will stop on that date and your retirement won’t start until the first day of the following month. This is because you will be paid your salary for the days that you worked during that last month, which could be more valuable than the retirement benefit you would forfeit. Because the benefit is computed very differently under FERS than CSRS, be sure to consider the tradeoff of salary for retirement benefit when you are choosing an end-of-leave-period retirement date that isn’t near the end of the month.

Also, remember that your payroll office pays your salary two weeks behind and the Office of Personnel Management may take a few months to process your retirement application. So your first retirement payment may not arrive on the first day of the month. You may receive several interim retirement payments from OPM until your claim is finalized and monthly payments begin.

Leave Considerations

Is it important to you to receive a large lump sum payout of your annual leave? If the answer is yes, the end of the leave year is the time to plan your departure. FERS employees who have a substantial amount of creditable service would benefit from a Dec. 31, 2018 or Dec. 31, 2019 departure and CSRS employees might choose Jan. 3, 2019 or Jan. 3, 2020. Although this won’t be the end of the leave year, it will allow 25 leave accruals and receipt of your first retirement benefit for the month of January (payable on Feb. 1).

If maximizing your lump sum annual leave payout is not that important to you, then remember you will be paid for your accumulated and accrued annual leave regardless of the exact date you retire.

Are you ready to explore some specific dates in 2019? Request your Free Retirement Review Today and we will also e-mail you the Best Dates To Retire Calendar. 

Could Your “401k” Federal Savings Plan Portfolio Withstand a Bear Market

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According to J.P. Morgan Asset Management, Guide to the Markets and Since March of 2009, the S&P 500 has gained over 300%.  Unfortunately, when long-run bull markets end, the decline can be dramatic.  In fact, the average bear market return is -45%.  Are you one of those that are still in the Risky Funds within your “401k” Federal Savings Plan ? Can you afford for your $100,000 invested balance to become $55,000?  Better yet your $250,000 invested balance to become $137,500?

Plus, it can take a significant return to recover from the loss.  If today’s bull market turns bear, and you are nearing retirement, do you have time to make up for a large loss?

First, what is a bear market?  A bear market is defined as a 20% or more decline from the previous market high.  The bear return is the from the peak down to where it starts to return gains again.  You can lose thousands in just a short amount of time, but takes months or sometimes years to gain it back.

During your Federal Retirement Review with one of our Consultants, make sure you ask them how you can help Protect your “401k” Federal Savings Plan s, while still have a reasonable rate of return, and I’m sure you will be happy with what they tell you.

To Schedule your Personalized Federal Retirement Review – Contact us Today.



Hundreds of USDA Employees Face a Decision to Relocate or Take a Buyout

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The Agriculture Department has announced it will relocate two major components outside of the Washington, D.C., area, and bring one—the Economic Research Service—directly under the purview of Secretary Sonny Perdue’s office.

The changes will affect most of the 700 employees at the research service and the National Institute of Food and Agriculture. USDA vowed not to involuntarily separate any employee, though most of them will have to relocate to a yet-to-be-determined area. The department will provide relocation assistance and the same base pay to affected workers, though employees could receive a pay cut if the new locality rate is lower than what they currently receive.

Employees who choose not to relocate may receive some financial assistance: USDA is requesting authority from the Office of Personnel Management to offer early retirement or buyouts to those opting not to take a job in the new location.

The department is looking to make the shift relatively quickly, saying it will complete the moves by the end of 2019. It has already issued a “sources sought” solicitation, seeking outside consultants to help select sites. The appropriate vendor will have experience in choosing new locations and transferring “corporate operations to new sites,” the department said. It requested information on the expected timeline for such a relocation, vendors’ prior experiences with similar moves and the typical costs for the consulting services.

USDA cited recent “significant turnover” at the components as necessitating the relocations, as new recruits often come from land-grant universities.

“It has been difficult to recruit employees to the Washington, D.C., area, particularly given the high cost of living and long commutes,” the department said in a statement.

It added that most of USDA’s stakeholders live and work far from the nation’s capital, and the moves would enable employees to work closer to those the department serves. USDA also said the moves would save money, trimming spending on rent, employee compensation and recruiting efforts.

“In our administration, we have looked critically at the way we do business, with the ultimate goal of ensuring the best service possible for our customers, and for the taxpayers of the United States,” Perdue said. “In some cases, this has meant realigning some of our offices and functions, or even relocating them, in order to make more logical sense or provide more streamlined and efficient services.”

He added the moves were in no way a negative reflection on the components’ workforces.

“These changes are more steps down the path to better service to our customers, and will help us fulfill our informal motto to ‘Do right and feed everyone,’ ” the secretary said.

Questioning the Move

In addition to relocating, the Economic Research Service will move to the Office of the Chief Economist within the secretary’s office. The two separated in 1994 as part of USDA reorganization. The research service engages in more general analysis of trends and emerging issues, while the Office of the Chief Economist directly reports to the secretary to investigate the economic impacts of the department’s policies and programs.

The transition has raised eyebrows in the agriculture and statistics communities, with some experts questioning the Trump administration’s motives. The White House proposed slashing the Economic Research Service budget nearly in half in the president’s fiscal 2019 budget. It proposed cutting the National Institute of Food and Agriculture budget a comparatively modest 8 percent.

Forcing employees to choose to relocate or take a buyout could potentially shrink the agencies, and the ERS-OCE merger could also politicize a nonpartisan, statistical enterprise, some fear.

Ricardo Salvador, the director of the Food and Environment Program at the Union of Concerned Scientists, said ERS should not be brought under a political umbrella. The 1994 reorganization, he said, was designed specifically to use the USDA’s chief scientist as a “firewall” against political influence. Employees whose research demonstrates an argument an administration had been putting forward was incorrect, he explained, would be making a “bad career move” to show their findings to a political boss. He noted that political influence over ERS’ predecessor is what led Congress to create the separate agency in 1961.

Outside groups working on agriculture issues have come to rely on ERS employees as a “set of independent, objective analysts,” Salvador said. That status could be jeopardized under the new arrangement.

Steve Lenkart, executive director of the National Federation of Federal Employees, which represents workers in other parts of USDA, called the moved “suspicious.”

“Typically, when a research or scientific function is separated it’s so they can have autonomy in the research that they’re doing,” Lenkart said. USDA is “taking two scientific functions and moving them closer to a political function.” He added the changes amounted to a one-two punch, as moving the economists out of Washington would give them “less visibility.”

Joseph Glauber, however, who served as USDA’s chief economist from 2007 through 2014, said there is merit to bringing the Economic Research Service within the OCE purview.

“It is really important to maintain that independence,” he said, but, “I don’t think the independence is compromised by reporting to a chief economist.” He explained that any secretary he worked with would confirm his office, led by a career employee, provided “objective analysis” and the shift would make ERS employees more responsive to “day-to-day issues.” He cited examples of instances when he presented research to the secretary and the secretary confirmed the accuracy of the data but said he had other factors to consider. Glauber found that process to be executed exactly as it should be executed.

What did not hold up, he said, was the decision to move the department outside of Washington. He agreed the relocation could help long-term recruiting, but argued that it would first raise significant, immediate problems.

“My fear is it will just result in a big loss of personnel,” Glauber said. He added if he were still at USDA, he would “want my economists close by.” ERS employees would miss out on key meetings, he said, and it “just doesn’t make a lot of sense” for future chief economists to have to travel hundreds of miles to visit their new employees.

Salvador agreed, saying USDA was “disincentivizing employees from remaining in ERS.” Coming to Washington is a point of attraction for agriculture scientists and economists, he said, as it enables them access to decision makers. Other USDA offices, such as the Natural Resources Conservation Service and Agricultural Marketing Service, have legitimate reasons to be spread across the country in more rural areas. Economists, statisticians and NIFA employees deciding grant awards benefit from not maintaining “cozy relationship” with department stakeholders, Salvador said.

The announcement marked the second USDA reorganization in the Trump administration. Last year, Perdue announced he was creating a new undersecretary for trade and foreign agricultural affairs and another to focus on farm production and conservation. That shake-up also involved concentrating the secretary’s power, as it eliminated the department’s rural development agencies’ undersecretary and moved those agencies into Perdue’s office.

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When Is The Best Time Of The Year To Take RMD’s

By | Benefits, Federal Pay, Retirement, TSP | No Comments

One of the most common questions federal retirees over age 70.5 ask is: What is the best time of the year to take a required minimum distribution (RMD) from the “401k” Federal Savings Plan ( “401k” Federal Savings Plan ) and, if applicable, from a traditional IRA?

There is in reality no right or wrong answer to this question. The answer depends mainly on one’s financial and personal situation. This column presents some factors that traditional IRA owners and “401k” Federal Savings Plan participants over age 70 should consider when making the decision as to what time of the year to take their RMD.

Reason to take the RMD early in the year

RMDs must be taken by the end of the year for which they are being taken in order to be considered timely. For example, an 2018 RMD must be taken by Dec. 31, 2018 to be considered timely for the year 2018. The exception to this rule is for the first year an individual is required to take an RMD, the year in which the individual becomes age 70.5. In that case, the individual has until April 1  following the year the individual becomes age 70.5 to take his or her first RMD. For example, any individual born between July 1, 1947 and June 30, 1948 will become age 70.5 during calendar year 2018. That individual has until April 1, 2019 to take his or her first RMD for 2018. Another exception is for “401k” Federal Savings Plan participants who continue to work in federal service after they reach age 70. These “401k” Federal Savings Plan participants are not required to take their first “401k” Federal Savings Plan RMD until April 1 following the year  they retire from Federal service. But these “401k” Federal Savings Plan participants over age 70 are still required to take their traditional IRA RMDs and other qualified retirement plan (like 401(k) plans) they had previously participated in.

Although Dec. 31, 2018 is less than four months away, it is advisable for any individual having to take an RMD during calendar year 2018 to take the RMD now to avoid any potential error. It is not uncommon for people to hold off taking their traditional IRA RMD until later in the year, only to forget, become ill, or otherwise preoccupied, leading to a missed deadline. There are so many issues to worry about in retirement, but by taking the RMD early in the year, a 50 percent IRS penalty resulting from not taking the traditional IRA and qualified retirement plan RMD does not have to be one of them.

A retired “401k” Federal Savings Plan participant over age 70.5 need not worry about forgetting to take the “401k” Federal Savings Plan RMD by the end of the year. This is because the “401k” Federal Savings Plan Service Office will automatically send the “401k” Federal Savings Plan participant the “401k” Federal Savings Plan RMD in December if the “401k” Federal Savings Plan participant has not requested his or her “401k” Federal Savings Plan RMD by December.

Traditional IRA owners should not leave beneficiaries with a tight deadline

If a traditional IRA owner is subject to RMDs in 2018 and passes away before Dec. 31, 2018, then the individual’s beneficiaries are required to take the individual’s RMD before Dec. 31, 2018. In order to avoid a 50 percent IRS penalty, the beneficiaries must take the RMD before Dec. 31, 2018. The longer an individual waits to take his or her RMD and the later in the year the individual dies, the more difficult it becomes for the individual’s beneficiaries to take the RMD if the individual died before taking it.

After the RMD is taken, the remainder of the traditional IRA account can be converted or rolled over

RMDs are considered the first money to be distributed out of a traditional IRA owner’s account each year. Furthermore, a traditional IRA RMD is not eligible to be rolled over or converted to a Roth IRA . Putting those two rules together, before any rollover or Roth IRA conversion may be performed, an individual required to take a traditional IRA RMD must first take the RMD for the year. In other words, unless an individual over age 70.5 has already take his or her RMD for the year, the traditional IRA owner cannot make a Roth IRA conversion or complete a 60 day rollover.

Failure to take a traditional IRA RMD before completing a rollover or making a Roth IRA conversion often leads to serious tax issues. The RMD that was erroneously rolled over or converted is considered to be an “excess” contribution and subject to an IRS six percent excess contribution penalty each year until the rollover or conversion is corrected. By taking one’s RMD “sooner than later” before making a rollover or a Roth IRA conversion, one can eliminate this potential error and IRS penalty .

Reasons to wait until later in the year to take one’s RMD

When it comes to traditional IRAs and qualified retirement plans, tax deferral is one major benefit. The longer the money stays in a traditional IRA, the longer any earnings are shielded from taxes. That is why it is important to make contributions to a traditional IRA as early in the year as possible, and why it makes sense to delay taking RMDs until later in the year.

By waiting until the end of the year to take one’s RMD instead of early in the  year, one is earning additional tax deferral on earnings on the RMD. Any interest, dividends, capital gains, etc. that are earned on the RMD between now and the time the RMD is taken will occur inside the IRA. These earnings will not be subject to income tax unless distributed from the IRA in addition to the RMD. This may not seem very significant, but over time delaying one’s RMD until later in the year can have a beneficial impact on the size of one’s remaining traditional IRA and “401k” Federal Savings Plan retirement nest eggs.

A 2019 Pay Raise Appears Likely To Happen, But Not A Done Deal Yet

By | Benefits, Federal Pay, Retirement | No Comments

As congressional negotiators on Thursday discussed their progress in coming to an agreement on a $154.2 billion spending package, no lawmakers mentioned the dispute between the House and Senate over whether to give federal civilian employees a 1.9 percent pay raise next year.

But the prospects of a pay hike for federal workers are looking strong. After announcing a bipartisan deal to avert a government shutdown next month, congressional conferees suggested that most of the key outstanding issues in the appropriations “minibus” that would contain the pay raise involve so-called policy riders attached to the vehicle and not the raise itself.

The bill also includes appropriations for the Interior Department; the Environmental Protection Agency; financial services; the Agriculture, Transportation, and Housing and Urban Development departments; and other agencies.

Although the Senate included a 1.9 percent pay increase for federal employees in its version of the spending bill, the House included no language on federal compensation in its legislation, which effectively endorsed Trump’s pay freeze plan. Trump has recently both formalized his plan to freeze federal compensation, and suggested he may reverse course.

Last weekend, Rep. Barbara Comstock, R-Va., issued a statement saying that she secured support for the Senate pay raise proposal from the leadership of the House Appropriations Committee.

“I worked with [Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J.] and [Subcommittee Chairman Tom Graves, R-Ga.,] to make sure that our appropriations process this month will maintain the pay raise,” Comstock said. “I am pleased to report that they are supportive of maintaining the pay raise also.”

After the conference committee meeting Thursday, Frelinghuysen declined to say the House conference had assented to the pay raise, describing it as something that is “still under negotiations.” But he also seemed to confirm Comstock’s comments.

“That’s something that is still under negotiations,” Frelinghuysen said. “I certainly would be supportive of it.”

A Government Executive analysis of the conferees’ voting record and statements regarding a 2019 pay increase suggested that odds could favor feds hoping for a raise.

All Senate conferees voted for the minibus containing a 1.9 percent pay raise. In the House, all six Democrats are supportive of a pay raise, and Rep. Tom Cole, R-Okla., has thrown his support behind the measure as well. If Frelinghuysen ultimately supports a pay raise, that would amount to a majority of House conferees, enough to approve a compromise bill.

Conferees have indicated that they remain divided on a number of other provisions of the minibus, however, and that Congress likely would maintain funding for the agencies covered by the bill as part of a continuing resolution running through Dec. 7.

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Thrift Savings Plan

Catching Up With The “401k” Federal Savings Plan “401k” Federal Savings Plan

By | Benefits, Federal Pay, Retirement, TSP | One Comment

Are you part of the majority of federal civilian employees in the Federal Employee Retirement System? Or maybe you are a member of the uniformed services. If so, you probably have access to the “401k” Federal Savings Plan , one of the workplace benefits that people receive as United States government employees.

The “401k” Federal Savings Plan ( “401k” Federal Savings Plan ) is a 401(k) like plan for federal workers. It allows you to contribute to your retirement fund and receive a matching contribution from your federal agency.

According to recent statistics, over 5 million people participate in the “401k” Federal Savings Plan , which has more than $500 billion in assets under management.

One common issue for many federal employees is they don’t understand their “401k” Federal Savings Plan accounts and what it can offer them. If you find it hard to navigate, no sweat. Here’s a quick rundown of some must-know facts about your “401k” Federal Savings Plan account that can be of benefit.

“401k” Federal Savings Plan Basics

Just like with a 401(k), the “401k” Federal Savings Plan is a defined-contribution plan. In this sort of plan, employees contribute money to their accounts. Contributions are from earned income.

Federal employees have six different investment options within the “401k” Federal Savings Plan . In your “401k” Federal Savings Plan account, you choose how your money will be invested. Your retirement funds grow tax-deferred inside the account. And when you withdraw money, income tax will be due on the balance.

The future benefits of your “401k” Federal Savings Plan account will depend on how much money is put into it, how the money is invested, and how well it performs.

Traditional vs. Roth “401k” Federal Savings Plan Options

Like with many 401(k)s, you likely won’t be limited to just a traditional “401k” Federal Savings Plan account as your only retirement savings plan. In fact, your TSA likely offers both traditional and Roth options. You may even find some similarities between your options here and those of a traditional versus Roth IRA.

When you choose the traditional “401k” Federal Savings Plan , you contribute to your account with pre-tax dollars, paying tax on withdrawals in retirement. With the Roth option, the taxation is in reverse. You contribute post-tax income. In exchange, you won’t pay taxes on money you withdraw when you are retired.

Your annual contribution limit for 2018 is $18,500. Employees age 50 or older can make an additional $6,000 catch-up contribution annually.

FERS or CSRS: How Does It Affect the “401k” Federal Savings Plan ?

For federal civilian employees, there are two retirement systems. If you were hired by the federal government prior to January 1, 1984, you fall under the Civil Service Retirement System (CSRS).

The “401k” Federal Savings Plan doesn’t come ‘automatically’ as part of CSRS employee benefits, but it is an optional supplement. Your primary retirement benefit will be a pension annuity, to which you may contribute up to 8% of pay.

If you so choose, you may also contribute part of your pay toward the “401k” Federal Savings Plan as well. Your “401k” Federal Savings Plan account won’t come with an agency match. It will be established by your agency after you have made your contribution election.

If your hire date was January 1, 1984 or later, you fall under FERS. Those hired after July 31, 2010, are automatically enrolled in the “401k” Federal Savings Plan . Unless you modify or halt your contributions, 3% of your pay is deposited into your “401k” Federal Savings Plan .

If you are a FERS employee hired before August 1, 2010, your “401k” Federal Savings Plan account receives a 1% contribution from your agency. You may also contribute another 4% for up to a 5% match based on your pay.

It’s important to note that if you are covered by CSRS, or you are a member of the uniformed services, the “401k” Federal Savings Plan becomes a supplemental benefit to your CSRS annuity or military retired pay.

What about Those Who Leave for Private-Sector Jobs?

Certain conditions may apply if you were part of CSRS at one point, then took a job in the private sector, and later came back to work for the U.S. government. Depending on your situation, your federal rehire may qualify you for enrollment in FERS and, by extension, the “401k” Federal Savings Plan .

A federal employee benefits consultant can help you determine which system you belong to, if you are unsure based on your employment history.

What About Members of the Military?

Starting in 2018, the Blended Retirement System was implemented to offer more retirement benefit versatility. Beforehand, you had to remain in the military for at least 20 years to receive a pension. Now, you can choose a pension, a “401k” Federal Savings Plan account, or both if you want.

The best option for you will depend on your years of service. Consider consulting with a federal benefits-knowledgeable financial professional to explore your options. However, anyone entering the military now is automatically enrolled into the Blended Retirement System. That means their benefits will include a “401k” Federal Savings Plan and an annuity (if your period of service is 20 years or longer), albeit a reduced one.

As for the “401k” Federal Savings Plan , 1% of your base pay is automatically put toward your account. You may also put away another 4% for up to a 5% total match.

Distribution Options from the “401k” Federal Savings Plan

So, we have covered quite a bit of ground on contributions and savings options with the “401k” Federal Savings Plan . What about the backend, when you are retired? What sort of choices do you have with the “distribution” of your “401k” Federal Savings Plan assets?

Even if you are a long-time contributor, you may not realize you have choices on how your assets are invested and distributed. In retirement, the balance you have built up in your “401k” Federal Savings Plan will likely be some of your income.

Current Distribution Options Hold, But Changes Coming in 2019

But before you begin to withdraw money from your account, you need to know the “401k” Federal Savings Plan rules and regulations. Understanding them will help you avoid actions that can affect your options for accessing your money in the future.

Legislation passed back in November 2017 is slowly changing the flexibility of your distribution options for you and other federal employees. New rules will, among other things, permit more withdrawals in retirement by federal employees. However, these new rules of withdrawal won’t be fully effective until November 2019. In the meantime, current rules hold.

After you leave federal service, or after you turn 59.5 years old, your “401k” Federal Savings Plan gives you two withdrawal options for your money: a partial withdrawal or a full withdrawal. Not only that, two age milestones matter for how they apply in the “401k” Federal Savings Plan withdrawal rules: age 59.5 and age 70.5. Let’s go over your withdrawal options in more detail.

The Basics of Partial Withdrawals

The “401k” Federal Savings Plan permits only one partial withdrawal. Thereafter, you must leave your remaining money in your account for a later date. Reasons for taking a partial withdrawal may include high-cost “one-time” expenses: a roof replacement or a costly appliance purchase, for example.

You must meet these requirements to qualify for making a partial withdrawal:

  • A prior partial withdrawal can’t have been made. Nor can you have one pending.
  • You can’t have made an age-based, in-service withdrawal while in federal civilian or military employment.
  • Your request must be for a minimum of $1,000 or more.

In-service withdrawals are subject to several rules. Among married FERS employees and uniformed services members, a spouse must give their consent to the in-service withdrawal.

By contrast, married CSRS employees’ spouses need only to receive notice of the in-service withdrawal. Learn more about  “401k” Federal Savings Plan account in-service withdrawals and their particulars by visiting here.

The Basics of Full Withdrawals

When you have chosen to take all money from your account — a lump sum withdrawal — you have a number of income options or “government distribution options.” You can choose to:

  • take a full lump-sum
  • receive monthly payments over time
  • buy an annuity that will give you lifetime payments
  • combine any of these income options

Because the income tax implications can be substantial, it’s prudent to consider alternatives to cashing in your entire balance.

With a “systematic withdrawal,” you receive monthly payments over a period of time. You may receive a specific monthly amount. Or you can base the monthly amount on your life expectancy, which would be determined with actuarial tables from the IRS.

The “401k” Federal Savings Plan will adjust how much you receive monthly according to your life expectancy. Both options will begin drawing down your “401k” Federal Savings Plan account balance until depletion. Keep in mind that systematic withdrawals may offer only limited flexibility.

Basics of a Life Annuity, the Third Option

As a third option, you can take part or all of your “401k” Federal Savings Plan account balance as a life annuity, giving you monthly benefits for the rest of your life. You must purchase an annuity priced at a minimum of $3,500.

You get to choose your annuity amount over $3,500 because, as mentioned above, you have the freedom to combine income options. You may not want to put all your funds into the “401k” Federal Savings Plan life annuity, which your plan purchases from MetLife, the plan provider. Depending on the annuitization option you choose, the insurer may keep your balance once you pass away. But beware, this could cost your beneficiaries thousands if chosen incorrectly!!

This reinforces the importance of investigating and evaluating your options.

Consult a Federal-Benefits Consultant

Because the “401k” Federal Savings Plan is multi-faceted and offers you many options, you should reach out to one of our Chartered Federal Employee Benefits Consultants who are designated experts in federal employee retirement strategies. To request your free Consultations with one for a Chartered Federal Employee Benefits Consultants of your unique account, retirement goals, and ideal options to help you maximize the potential of your “401k” Federal Savings Plan account.

If you are looking for guidance,  request your free consultant with a financial professionals at My Federal Retirement Help today.  

Have You Had a Paycheck Checkup Lately?

By | Benefits, Federal Pay, Retirement | One Comment

The Internal Revenue Service (IRS) wants USPS and other employees to review their federal income tax withholding.

Several tax law changes took effect this year. By checking your withholding now, you can avoid an unexpected bill or penalty at tax time.

The IRS offers an online withholding calculator that can help you determine if you should submit a new Form W-4 to the Postal Service.

You should have your most recent pay stub and federal tax return on hand. The calculator’s results are only as accurate as the information you enter.

According to the IRS, it’s especially important to check your withholding if you:

  • Are a two-income family
  • Have two or more jobs at the same time
  • Work a seasonal job or only work part of the year
  • Claim credits like the child tax credit
  • Have dependents age 17 or older
  • Itemized your deductions on your 2017 return
  • Have high income or a complex tax return
  • Had a large tax refund or tax bill for 2017

You can use PostalEASE to make changes to your Form W-4.

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A Pay Freeze Is In Doubt and Back Pay for Fired VA Employees

By | Benefits, Federal Pay, Retirement | No Comments

As Congress last week prepared to negotiate whether to provide federal civilian employees with a 1.9 percent pay increase next year, President Trump introduced additional uncertainty to the conversation.

Just one day after following up on his fiscal 2019 budget plan with a formal proposal to freeze federal workers’ pay, the president suggested he would “study” the issue.

“I’m going to be studying, you know, the federal workers in Washington that you’ve been reading so much about,” Trump said at a ceremony marking the signing of an executive order on retirement savings. “People don’t want to give them any increase. They haven’t had one in a long time. I said, ‘I’m going to study that over the weekend.’ It’s a good time to study it—Labor Day. Let’s see how they do next week. But a lot of people were against it.”

The “lot of people” who have been against a pay raise are primarily employees of the White House and the Office of Management and Budget. And Trump last Saturday retweeted Corey Stewart, the conservative Republican running against Sen. Tim Kaine, D-Va., for a Senate seat, criticizing Trump’s pay freeze plan.

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Unions Speaking Out to Politicians: Lift The Pay Freeze

By | Benefits, Federal Pay | No Comments

A major federal employee union has renewed its demand that members and other feds get the pay raise they deserve.

The American Federation of Government Employees issued a press release Sept. 10 pressing lawmakers and the White House—which recently announced the cancellation of a modest pay raise—to get on with reversing course, and providing the boost.

“Federal employees have had their pay and benefits cut by over $200 billion since 2011, and they are earning nearly 5 percent less today than they did at the start of the decade,” the release notes. “Federal employees are encouraged that the administration’s proposed pay freeze was immediately met with opposition from many in Congress. Our calls and visits to explain the real situation across the country have paid off.”

Specifically, the document says, almost 200 members of Congress “have joined together to denounce President Trump’s decision to freeze pay for federal employees next year.” Letters and other missives sent to the White House or to leaders on Capitol Hill are pushing for at least the 1.9 percent rise that was promised and approved in a fiscal 2019 appropriations bill that the Senate passed.

“President Trump’s claim that the federal government cannot afford to provide the workforce with a modest pay adjustment next year after signing a $1.5 trillion tax cut for the wealthiest individuals and corporations is ridiculous on its face and insulting to every employee who has taken an oath to serve this country,” J. David Cox, the president of AFGE, said in the release.

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