Monthly Archives

January 2020

Pay Raise for 2021

Lawmakers Introduce Bill to Grant Civilian Feds a 3.5% Pay Raise in 2021

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Democrats in both chambers of Congress on Tuesday reintroduced a bill that would provide federal civilian employees with a 3.5% across-the-board pay increase next year.

The Federal Adjustment of Income Rates Act (H.R. 5690) was introduced by Rep. Gerry Connolly, D-Va., in the House and Sen. Brian Schatz, D-Hawaii, in the Senate. The bill mirrors similar legislation the lawmakers introduced last year that would have provided federal workers with a 3.6% raise in 2020.

Congress did not act on either version of last year’s bill. But lawmakers and President Trump ultimately agreed to provide an average 3.1% raise—including a 2.6% basic pay increase to all federal workers, and an average 0.5% increase to locality pay—as part of the bipartisan spending deal for fiscal 2020 reached last month.

“We fought hard for several consequential victories last year, but our work on behalf of our dedicated federal workers is never finished,” Connolly said in a statement. “After years of pay freezes, furloughs and Trump shutdowns, federal employees understand better than most that we simply cannot let our guard down while this president is in the White House. The FAIR Act is much-needed and well-deserved recognition of our government’s greatest asset—its public servants.”

If approved, the raise called for in the bill would mark a nearly 1-percentage point increase over the raise enacted for this year. Lawmakers still would have to negotiate how much to increase locality pay.

In a statement Tuesday, National Treasury Employees Union National President Tony Reardon endorsed the bill.

“Sen. Schatz and Rep. Connolly have been advocates, year in and year out, of helping our nation’s civil servants be able to pay their bills, invest in their children’s education, and save for retirement,” he said. “Our members will be fully engaged in the effort to pass this bill into law and give federal employees the ability to keep doing what they love: serving the public.”

Meanwhile, at the monthly meeting of the board that administers the federal government’s 401(k)-style retirement savings program, officials with the “401k” Federal Savings Plan highlighted recent successes.

According to Tee Ramos, the “401k” Federal Savings Plan ’s director of participant services, the agency completed more than 3,100 roll-in transactions last month, which capped off a 2019 in which the “401k” Federal Savings Plan saw 35,000 totaling $1.34 billion.

“I think it’s a cumulative effect,” he said. “We didn’t have any special education campaigns, but our crew has just been constantly extolling the virtues [of the “401k” Federal Savings Plan ] and the fact that we have the best plan in America. That message is getting out there and resonating with people.”

Additionally, Ramos said early numbers suggest that the recent change making two-factor authentication a requirement for participants to access their account online was implemented smoothly.

“Authenticated logins have climbed from 350,000 in early October to 1.8 million about a week ago,” Ramos said. “That represents around 550,000 unique participants.”

So far, Ramos said there have been around 7,000 instances where people failed to log in at least twice after activating two-factor authentication, and officials are helping people learn the new system when needed, and exploring ways to make logging in easier.

“We’re extending the time we allow people to use the unique code they receive, and to save the log-in in their browser,” he said. “We’re also exploring things like allowing participants to use the unique code to authenticate their login through the call center, which is not only safer but more expedient for our participants.”

A Paycheck Mistake, and Changes to “401k” Federal Savings Plan Catch-Up Contributions

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The agency responsible for processing payroll for around 650,000 federal workers last week announced that it had issued incorrect paychecks for some employees across the federal government earlier this month.

The problem stemmed from the final paycheck of the 2019 calendar, which ended Jan. 4 and was issued Jan. 10. A number of federal workers reported receiving both smaller and larger amounts than they were owed.

The National Finance Center, which is a subcomponent of the Agriculture Department but provides payroll services for a variety of federal agencies, first acknowledged the discrepancies on Jan. 10, and said the problem likely resulted from federal payroll tax withholding.

By Jan. 14, the National Finance Center announced that it had identified the root cause: employees who had not submitted a new W-4 form or were not exempt defaulted to a new, often incorrect number of exemptions. Single federal workers had taxes withheld as single, with two exemptions, while married feds had taxes withheld as married, with three exemptions.

NFC said it implemented changes to fix the problem “prior to the second pass” on the relevant pay period’s payroll processing. Although the agency said it expected to have compiled a list of all employees who received the wrong amount in their pay check by the end of last week, it did not announce a timeframe for when employees who are owed money would be made whole, or when employees who were overpaid will see a lighter paycheck.

“Updates will be forthcoming as additional information becomes available and the corrective action is finalized,” NFC wrote.

Meanwhile, the federal agency responsible for administering the federal government’s 401(k)-style retirement savings program proposed new regulations this week to make it easier for older federal employees to make catch-up contributions to their “401k” Federal Savings Plan accounts.

Currently, “401k” Federal Savings Plan participants age 50 and older may exceed the normal 401(k) annual contribution limits in order to make up for time spent in the private sector or when they were otherwise unable to invest in the “401k” Federal Savings Plan . But in order to do so, those federal workers must submit a form authorizing catch-up contributions, in addition to the standard contribution election form that all participants provide to their agency.

In draft regulations set for publication to the Federal Register Thursday, the Federal Retirement Thrift Investment Board, which governs the “401k” Federal Savings Plan , proposed that beginning Jan. 1, 2021, federal workers will no longer be required to submit that second form to enroll in catch-up contributions.

“Instead, the “401k” Federal Savings Plan will simply continue to accept contributions based on the participant’s contribution election that is already on file, until his/her contributions reach the combined limits on catch-up contributions and other types of contributions,” the agency said.

“401k” Federal Savings Plan officials first announced that this change would be coming last year. It is part of an effort to make the process simpler and easier for federal workers to participate, as well as to streamline the process for both the “401k” Federal Savings Plan and federal agencies.

According to the proposed regulations, beginning next year, when federal workers hit the standard annual contribution limit, the “401k” Federal Savings Plan will automatically cross reference their ages to see if they are eligible to make catch-up contributions. If the employees are at least 50 years old, they will be able to continue to make contributions up to the higher catch-up contributions limit.

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