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Labor Dept. Denies Request That Excepted Feds Be Eligible for Unemployment

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Labor Secretary Alex Acosta has rejected an effort by District of Columbia Mayor Muriel Bowser to allow federal employees working without pay during the partial government shutdown to be eligible for unemployment benefits while agencies remain shuttered.

On Monday, Bowser sent a letter to Acosta requesting the change in policy. Currently, furloughed federal workers and idle contractors in a number of states can apply for unemployment, although they are expected to return the money when they return to work and Congress has approved back pay. But excepted employees, whose pay is guaranteed once the government reopens, cannot apply for unemployment.

In the letter, Bowser said it is unfair that employees working without pay are effectively in worse financial straits despite arguably sacrificing more during a shutdown.

“These federal workers are providing the nation and our region with vital services such as public safety,” she wrote. “Without a steady paycheck or unemployment benefits, hardworking federal workers and their families are forced to make difficult decisions: pay the mortgage or buy groceries; pay for a doctor’s appointment or pay to keep the lights on. These are decisions no one should have to make.”

But on Thursday, Bowser reported that her request was denied and decried the decision. She noted that in Washington, D.C., alone, more than 7,500 furloughed federal workers and contractors had already filed for unemployment. That number increases to roughly 9,000 federal workers, not including contractors, in the D.C. metro area.

“Federal workers and their families continue to pay the highest price for this unnecessary and unprecedented shutdown,” Bowser said in a statement. “It is unconscionable for the Trump administration to acknowledge that these individuals are working without pay and with no end in sight, but will not make the smallest effort to help them by allowing states to offer unemployment insurance benefits.”

The line between federal workers who are furloughed and excepted is shifting, as agencies like the IRS recall significant numbers of workers to restore services despite the lapse in appropriations. Observers have been vocal in questioning the legality of such decisions, and the constantly loosening interpretation of what constitutes the protection of life and property is the subject of a lawsuit by the National Treasury Employees Union.

Friday marked the end of the second full pay period of the shutdown, which is in its 28th day. Agencies will be required to send out new furlough notices next week, as the shutdown passes the 30-day mark. If a deal to reopen the government is not reached by Tuesday, employees of unfunded agencies likely will miss their second straight paycheck.

Best Dates To Retire in 2019

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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.

CSRS

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.

FERS

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? Follow the link Below to Request your Free Federal Retirement Review and we will also send you the

Second Furlough Notice and Another Missed Paycheck Appear Likely for Shutdown Feds

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Early next week will mark a new set of key deadlines in the partial government shutdown, with significant implications for the more than 800,000 affected federal employees.

By Monday, the shutdown will have dragged past the 30-day marker. That means the furlough notices most federal workers currently sent home without pay received on Dec. 21 will expire. Due to a quirk in federal statute, furlough notices can only last for a month. Most of the 300,000 employees still furloughed received a message at the start of the shutdown that read: “This furlough is not expected to exceed 30 days. Therefore, it expires on Jan. 21.”

According to guidance from the Office of Personnel Management, agencies should treat a shutdown passing the 30-day mark as resetting the clock.

“When the shutdown furlough goes beyond 30 days, agencies should treat it as a second shutdown furlough and issue another adverse action or furlough notice,” OPM said, which also clarified that reductions in force would not take place as part of any shutdown.

OPM did not respond to requests to confirm whether the second round of furlough notices would go out, whether it was coordinating those efforts with federal agencies or how the notices would be communicated to employees, instead referring questions to the Office of Management and Budget. OMB also declined to answer any questions, referring questions back to OPM.

Tuesday will bring another key day for federal employees, as multiple White House officials have said it is the deadline by which the government must be reopened to prevent feds from missing a second paycheck. In criticizing House Speaker Nancy Pelosi’s, D-Calif., planned trip overseas to war zones—which has since been canceled after President Trump revoked the military aircraft Pelosi and the congressional delegation planned to use—White House Press Secretary Sarah Sanders noted that Pelosi was not scheduled to return until Tuesday.

“We want to keep her in Washington,” Sanders told reporters on Thursday. “If she leaves, she guarantees that the second round of paychecks to workers won’t go out.”

Most of the more than 800,000 federal employees affected by the ongoing shutdown are not scheduled to receive their next paycheck until Friday, Jan. 25, but federal agencies need a few days to certify time and attendance sheets and recall workers who process them. All employees, both those furloughed and those working due to exceptions and exemptions, are guaranteed back pay. Congress has also instructed agencies to make employees whole “at the earliest date possible after the lapse in appropriations ends,” regardless of the timing of the next pay period or when the next round of paychecks is scheduled to go out.

Federal employees first missed their paychecks on Jan. 11, a date many lawmakers in both parties initially saw as a key date and potential turning point. As it turns out, it yielded no developments.

The second round of furlough notices, and missed paychecks, is all but assured. Both chambers of Congress have canceled scheduled recesses for next week, but members of the Senate have largely left Washington, D.C., and no votes are scheduled. They have been put on notice, however, to stay available for a quick return if a deal to reopen government is reached. The House on Friday adjourned until Tuesday.

If you need to know some details on how you may get some penalty free loans to help offset until this gets put into the past, please reach out to us.

It’s Official: Furloughed Feds Will Receive Back Pay Once the Shutdown Ends

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Why Retirement Processing Takes So Long

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

The busiest time of the year for retirement claims processing at the Office of Personnel Management is fast approaching. At the end of November, OPM had an inventory of 19,162 unprocessed retirement applications. This will most likely significantly increase over the next few months, because many federal employees plan their retirements at the end of the year in order to maximize their lump sum payout of unused annual leave.

The spike in end-of-leave-year retirements presents a number of challenges for retirement processing. According to a recent OPM inspector general report, the timely processing of initial retirement payments remains a challenge for the agency. OPM’s 2018-2022 strategic plan sets a target of achieving an average case processing time of 60 days or less. The agency’s Retirement Services unit appears to have met that goal in fiscal 2018, with an average of 59 days. But its claims backlog as of September was 17,628, more than 4.5 percent higher than at the same time a year ago.

According to the IG report, the steps Retirement Services is taking to address delays in processing include:

  • Continue to integrate improvements for correspondence and claims processing.
  • Enhance reporting tools to monitor and address Retirement Services workloads.
  • Use overtime to assist with timely processing.
  • Work with the agency’s chief information officer to explore new uses of technology to help improve processing and reduce wait times.
  • Provide monthly feedback to agencies and payroll offices and alert them of trends and improvement opportunities.
  • Identify training needs for agencies and conduct workshops on the retirement application process.

Once your retirement application is in the hands of OPM, there’s not much you can do but wait. But there are steps you can take beforehand to help ensure the process runs as smoothly as possible:

  • Double-check your application to make sure you’ve answered all of the questions on it. Complete your application electronically, if possible. OPM will not accept corrections in certain sections of the application form.  We will assist or completely fill this paperwork out and mail or email it to you.
  • Keep a copy of your completed application.
  • Be sure to complete the Marital Information and Annuity Election sections of the application. That applies whether you’re married, single, widowed or divorced. If you’re married, be sure to include a copy of your marriage certificate with your  application. If you’re divorced, you only need to include a copy of your court order or divorce decree if there was a portion of your retirement or survivor annuity awarded to your former spouse.
  • If you’re married and your spouse is waiving their right to the maximum spousal survivor annuity, be sure to have their signature notarized on the Spouse’s Consent to Survivor Election portion of the application.
  • If you’ve performed active duty military service, be sure you’ve included the documentation of your service and information related to military retired pay in Schedules A and B of the application.
  • Be sure to document that you’ve had five years of coverage under Federal Employees Health Benefits Program, especially if you were covered under your spouse’s FEHBP plan or you’re using coverage under TRICARE within five years of your retirement. According to an OPM training video, 20 percent of all retirement errors involve not documenting five years of FEHBP coverage.

For those of you who will be retiring from federal service in the next few weeks, let us be among the first to congratulate you and wish you a wonderful and rewarding life after government.

If you need any assistance on reviewing prior to separating, we do complete Federal Retirement Reviews, all the way from planning and preparing for your retirement, filling out retirement form packages, TSP rollovers, Pension Maximization, talk FEHP vs Medicare.  Contact Us to request your Retirement Review and Assistance today. 

How To Deal With Market Volatility with TSP When Close to Retirement

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This season’s market volatility can give any investor vertigo. But for those looking to retire in the next three to five years, the fluctuations are even more unsettling. CPA, author and retirement expert Ed Slott has some advice about what investors should be doing to protect themselves in these tumultuous times.

“As you get closer to retirement, income is more important than savings because savings — especially if they’re in the market — are not guaranteed, and savings can run out,” Slott tells Yahoo Finance.

“Short-term money has to be more secure. If you need the money on Thursday, you shouldn’t be in the market,” he says. “But if you need it in five or 10 years, then you can ride out a market correction like this.”

For investors close to retirement who do have money in the market, Slott urges caution. Overreacting to a declining market can put investors into situation known as a sequence-of-returns risk.

“If you’re pulling out money while the market is declining, you need to make a lot more money just to get back to even at double the rate and double the risk,” he says. “You can’t have dramatic reactions to something. It’s too much of a shock to the system,” Slott adds.

The best way for soon-to-be retirees to approach market volatility is with older conventional wisdom and walk away as soon as things have bounced back — even if it feels wrong to do so.

“When the market comes back, nobody wants to pull money out because it’s riding high,” Slott says. “That’s the time you might want to lock in some of those gains and pull it off the table and put it into a guaranteed income source,” such as annuities.

Last-minute retirement tips for the rest of 2018

With the year quickly winding down, there are still a few moves you can make to maximize your savings. Chief among them, according to Slott, is a Roth conversion, the process of moving money out of a conventional IRA into a Roth IRA and paying taxes now on the amount you convert.

“The last thing you want to think about is a tax maneuver while the market is declining, but there are three things happening now that make Roth conversions at year-end very favorable,” Slott says. “Number one, the market is declining so the values are lower. Tax rates are lower after the new tax law — they’re lower for most people — and you’re at the end of the year,” so you have a clear picture of your income and tax bracket.

“The benefit of paying tax now is that once it’s in a Roth IRA, it’s tax-free forever,” he says. You pay tax on today’s value, but if values are down, now is the time to strike. It’s like buying the taxes on sale.”

One key to keep in mind is that Roth conversions are not the same as IRA contributions — and they each have their own deadlines. While you have until April to make 2018 contributions to an IRA, Roth conversions for 2018 have to be completed in 2018 — meaning by Dec. 31.

Additionally, recent changes to the law have made Roth conversions permanent, so you have to be sure you want to move the money over since there are no do-overs.

To learn more on ways to safeguard your TSP account and for your free Fedeal Retirement Review to help you maximize all of your benefits, please contact us today. 

See Who Would Get Furloughed in a End of the Year Shutdown

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The federal government is about a week away from shutting down, though only about 41 percent of civilians report to agencies at risk of having their doors shuttered.

Congress has already allocated a majority of full-year spending, with President Trump signing legislation that accounts for 75 percent of annual discretionary appropriations. Those bills set line-by-line spending for the departments of Defense, Labor, Health and Human Services, Education, Energy and Veterans Affairs, among other agencies.

The departments of Transportation, Housing and Urban Development, State, Interior, Agriculture, Treasury, Commerce, Homeland Security and Justice, as well as other independent agencies, are currently operating under a continuing resolution set to expire Dec. 21. Those agencies will be forced to shut down after that date if Congress fails to act.

About 850,000 employees work at those agencies, and about 345,000, or 41 percent, of them would be subject to furloughs under a partial shutdown, according to the most recent data federal agencies have made available on their contingency planning. An update to Office of Management and Budget guidance during the Obama administration required agencies to refresh their shutdown plans at least every two years starting in 2015.

The plans vary significantly from agency to agency, with some enabling nearly their entire workforces to continue working because of the funding stream that pays their salaries or because their jobs are necessary to protect life and property. Other agencies, such as NASA or the Housing and Urban Development Department, would send home about 95 percent of their employees. Those working during a shutdown must go without pay until the government reopens, while furloughed workers are not guaranteed back pay at all. Historically, Congress has always taken action to provide those lost wages.

Some agencies have changed their plans drastically, following 2017 guidance from OMB Director Mick Mulvaney that instructed them to use “carry-forward funding” and “transfer authority” as much as possible to mitigate the impact of an appropriations lapse. Last year, for example, the Environmental Protection Agency planned to furlough 95 percent of its employees during a shutdown. This year, it will use unexpired multi-year and no-year funding to keep nearly its entire workforce on the job, sending home only a portion of the inspector general’s office.

Some agencies, such as the State Department, have updated their plans but have not spelled out exactly who would be furloughed. During the 16-day shutdown in 2013, State sent home just a few hundred of its 70,000 employees, but warned it would have had to add thousands to that list if the government had remained closed much longer.

Below is a chart detailing the furlough rates of every agency with more than 1,000 employees that would be subject to a shutdown come Dec. 21:

Federal Employees Continue to Retire in Greater Numbers Than in Previous Years

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Federal employees continue to file for retirement at an increased pace compared with recent years, continuing a trend that began more than a year ago.

According to statistics from the Office of Personnel Management, 7,510 federal workers filed for retirement in November. That figure is a 34 percent increase over the same month in 2017, when 5,572 employees retired.

In October, the number of retirement requests increased as well, although only slightly. That month, 9,012 federal employees filed for retirement, compared with 8,850 for the same period last year.

Statistics for the last two months suggest a continuation of the trend where increasing numbers of workers are leaving the civil service. Over the course of fiscal 2018, which ended on Sept. 30, retirements were up 24 percent from the previous year.

Federal workforce observers have long predicted a retirement wave. Currently, 14 percent of federal workers are eligible to retire, according to a July report, and that number is expected to increase to 30 percent within five years.

Despite the rising retirement numbers, OPM has for the most part kept the backlog of pending claims in check. Last month, the agency processed far more claims (8,077) than it did the previous November (5,138) or the previous month (6,911).

The existing backlog at the end of November was 19,162, a decrease from 19,729 in October. That is also below the total of 19,294 a year ago.

Now, the agency will prepare for the annual spike of retirements that occurs in January. At the beginning of 2018, OPM received 14,590 new claims, and the backlog peaked at 24,225 pending claims the following month.

If you are in need of assistance, let us help you prepare your retirement package for you after a complete Federal Retirement Review.  Contact Us Today.

Expanding Veterans Preference

On the policy front, OPM on Thursday published a rule in the Federal Register that expands who is eligible to be hired by the federal government under veterans’ preference standards.

The rule implements a provision of the 2015 Gold Star Fathers Act, which allows parents of a veteran who died overseas or is permanently disabled to be eligible for veterans’ preference hiring standards at federal agencies, provided the parent is unmarried, separated from their spouse, or if their spouse is also permanently disabled.

This measure permanently implements an interim rule issued by OPM in December 2016, although the language of that rule was partially altered to refer to parents, rather than “mothers.”

Some Secrets To A Financially Secure Retirement

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

What is the best way to ensure a comfortable and enjoyable retirement? This week, I thought I’d share some observations I’ve made over the years about employees who end up with the same (and sometimes even greater) income during their retirement years than while they were employed.

These folks have been planning for retirement throughout the beginning, middle and pre-retirement stages of the federal careers. I sometimes meet employees who tell me they remember me from a retirement planning class they attended 20 years ago.

For those covered under the Federal Employees Retirement System, the Thrift Savings Plan has played an important role. These people have learned how to invest for the long term and what it means to diversify their investments among the G, C, F, S, and I Funds—or used the L Funds to automatically shift their investments as their careers progress. They have learned to tolerate a certain level of risk in order to obtain maximum results by not reacting emotionally to swings in market conditions.

FERS employees who have successfully leveraged their TSP accounts tend to have several things in common:

  • Those in higher income brackets are saving the maximum in their TSP accounts. The maximum employee contribution for 2019 is $19,000 plus an additional $6,000 in catch-up contributions if you’re turning 50 or are already older than 50.
  • Those in lower income brackets are living with little or no consumer debt and have saved a minimum of 5 percent of their salary in the TSP.
  • In general, they haven’t borrowed from their TSP account—or if they have, they didn’t stop contributing while repaying their loan balance.

The TSP was designed to be an integral part of FERS, but many employees under the Civil Service Retirement System also have taken advantage of participating in the plan and putting away savings on a pre-tax basis. They now have a significant nest egg for retirement.

Successful planners who are married have considered the “what-if” situations about the future. For example:

  • They weigh the value and cost of the spousal survivor benefit election. This causes a reduction in your CSRS or FERS retirement of about 10 percent, but it can mean the difference between financial security and uncertainty for a surviving spouse.
  • They consider that a delay in claiming Social Security may be more important to a future surviving spouse than to a couple’s short-term need for income. You may have other options than taking Social Security as soon as you can: delaying retirement, taking larger TSP distributions while waiting to claim Social Security, or embarking on a second career for a few years after your retirement from government. The difference between claiming at age 62 and waiting until age 70 is a benefit that is about 75 percent larger for the rest of your life and possibly later to the life of your surviving spouse.
  • They’re wary of using life insurance as a substitute for a survivor benefit. Life insurance is very expensive to continue as a substitute for a survivor’s annuity. Life insurance also doesn’t carry a cost of living adjustment or a guaranteed lifetime payment stream. And life insurance is not protected under the spouse equity provisions of the law, so it can be canceled without spousal consent.

Single people who have successfully planned for retirement have considered the amount of income they will need for a retirement that could potentially last longer than their career. This means both adequate retirement savings and thinking about such considerations as the potential need for long-term care.

If you’re a single woman, you may have a longer life expectancy than your male counterparts, and you also may have had lower lifetime earnings. This could translate into a need to save diligently for retirement and become a savvy investor. You need to put yourself first to ensure your financial independence before helping others.

Those who have successfully managed the retirement preparation process have another thing in common: They’re realistic. They, may, for example, limit the financial assistance they provide to their children in retirement to protect their savings. And some of them find that working a little longer than they anticipated eases the future financial strain. Sometimes following the path to a comfortable retirement involves some hard choices.

Which ever category you may fall in, its always best to ask a Federal Benefits Consultant how you are doing and let us help guide you to make sure you are maximizing all of your resources properly. Request your Free Consultation today. 

TSP Finally Unveils Plans for Expanding TSP Withdrawal Options

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

The Thrift Savings Plan has until November to implement the 2017 TSP Modernization Act. That law will allow federal employees and retirees to make multiple age-based withdrawals from their TSP accounts and remain eligible for partial withdrawals after they leave government. Additionally, those who have left government would be able to make multiple partial post-separation withdrawals, and retirees will be able to change the amount and frequency of their annuity at any time, instead of only once per year.

Tanner Nohe, a project manager for the TSP, said the agency plans to have the law fully implemented by mid-September 2019. The project has caused officials to go beyond simply adding the functionality needed to implement the new law and instead “make some fundamental changes” to how withdrawals work, he said.

Under the new system, participants will no longer be forced to make a full withdrawal election—a choice between setting up annuity payments, taking a partial lump sum withdrawal, or a full lump sum payment—when they reach 70 and a half years old. That change will be retroactive, officials said.

“People on installment payments now, and [next year] they can come back and say, ‘I want to stop taking installments for a while,’” said Tee Ramos, director of participant services.

Nohe said his team is coming up with three new forms to help participants make use of the new flexibilities, including one that allows participants to change the amount and frequency of their annuity payments at any time. The agency is also doing away with a policy that suspends a participants’ contributions to their TSP accounts for six months if they take a hardship withdrawal.

“You can change your monthly installment payments currently only during [a fall open season period],” Nohe said. “But in the future, you can choose between monthly, quarterly and annual installment payments, and changes can be made to that at any time during the year.”

TSP officials said they plan not only to provide new flexibilities to participants, but make it easier to make use of those flexibilities. Nohe touted the fact that there will be four new “wizards” on the TSP website to help federal employees and retirees go through the various new processes.

“Right now, our wizards are just form fillers, but [next year], they will be more dynamic,” he said. “It can tell what’s in your account, and ask if you want to take [withdrawals] out of your Roth distribution or your traditional account. It’ll understand what you have so it can suggest what distribution you can take . . . It will take you from start to finish in your withdrawal.”

The first phase of implementation, focused on installment payment maintenance and removal of the withdrawal selection deadline, is slated to go into testing within the next two weeks, Nohe said. The public rollout of the new features is slated to occur on Sept. 15, although TSP officials will begin communicating with participants about the coming changes next February.

»To get the best federal retirement assistance and ideas about your benefits, request your free Federal Retirement Review.