Email: Info@MyFederalRetirementHelp.com | Call: 254-870-5959 Ext. 700
Text: 254-301-6571
July 2, 2021
0

Leaving Government Now and Retiring Later

By | Benefits, Retirement | No Comments

The ins and outs of deferred or postponed retirement.

In her swearing-in ceremony, newly confirmed OPM Director Kiran Ahuja, had this to say about the major issues federal employees are facing: “From shaping how and where we work in the future to ensuring everyone is safe while working during this pandemic, and discussions regarding how we rebuild our federal workforce, there’s no shortage of conversations to be had and issues to tackle.”

Based on the increased number of emails I’ve been receiving requesting information about deferred or postponed retirement benefits, it appears that some employees may not be returning to their offices to help with this reshaping. Some are contemplating early retirement or transitioning outside of federal service to finish their careers.

Here’s one typical scenario:

I would like to get some information concerning deferred retirement. I have 20 years of federal service under FERS but I am only 49 years old. I am thinking of retiring now and defer my retirement pay until 57. Will there be a reduction in pay because I am retiring at 49 instead of waiting until 57? What forms do I need to complete to retire now?

Here’s another:

I’m writing because I am starting to talk with private sector employers and there’s a good chance I may pursue early retirement when I reach my minimum retirement age (56 years and 2 months). I currently have around 25 years of federal service. I would pursue the deferred/postponed retirement benefit and reinstate health insurance when I apply at age 60. I plan to use the insurance from whatever firm I join until 60 years old. My question is what do I want to do to make sure this happens before I leave the federal government, including what forms do I want to make sure I get copies of and retain? 

If you are under the Federal Employees Retirement System and considering a move outside of federal service before being eligible to retire with immediate retirement benefits or postponing your retirement, here are some things to know:

  • In order to qualify for a deferred retirement, you will need to complete a minimum of five years of creditable civilian service. Your benefit will begin the first day of the month after you reach age 62.
  • If you complete at least 10 years of creditable service, including five years of civilian service, then you are eligible for a deferred annuity beginning the first day of the month after you reach your minimum retirement age.
  • Your deferred annuity is based on the length of service and high-three average salary in effect when you separate from federal service. You will be entitled to a benefit computed at 1% of your high-three average salary for each year of service.
  • You will begin to receive cost of living adjustments on your deferred retirement benefits once you are over 62.
  • Former employees who receive a deferred or postponed annuity are not eligible for a retiree annuity supplement.
  • If you have already reached your MRA and you have at least 10 years of service, you can separate but postpone receiving your retirement benefit to avoid an age reduction.
  • Most of your insurance benefits such as health, dental and vision, and life insurance will end when you separate without applying for immediate retirement benefits.

There will be no forms to file until you are ready to apply for your deferred annuity. Your separation will be treated as a resignation, but form SF 50, Notification of Personnel Action, will note that you are entitled to a deferred or postponed retirement in the remarks section of the form.

Form RI 92-19 is used to apply for a deferred or postponed FERS retirement benefit. There are instructions for this form available in companion pamphlet RI 92-19a. You should file the application directly with the Office of Personnel Management 60 days before you want your monthly annuity benefit to begin.

It’s a good idea to request a retirement estimate for a deferred or postponed retirement from your agency’s human resources office before leaving federal service. This will give you an idea of the value of this benefit at the time you are entitled to receive it.

If you are married when your annuity begins, it will be computed with a reduction to provide a maximum survivor annuity (50 percent of your unreduced annuity) for your spouse upon your death. You can choose to provide a partial survivor annuity (25 percent of your unreduced annuity) or no survivor annuity; however, you must get your spouse’s consent.

If you separate from federal service, but die before receiving your deferred or postponed retirement, there would be a survivor annuity payable to your spouse if they were married to you at the time of your separation and you had 10 or more years of creditable service (and did not apply for a refund of your retirement contributions). Your surviving spouse may elect to receive a lump-sum payment of your retirement contributions in lieu of a survivor annuity.

You should keep personal copies of certain documents filed in your electronic Official Personnel Folder, because you will lose immediate access to this folder after your separation. These include:

  • FERS Designation of Beneficiary Form (SF 3102)
  • SF-50 forms showing appointments into federal service, prior separations from federal service, changes in your work schedule, changes in your retirement coverage, and pay changes over the last (or highest) three years of service, because they will be used to compute your high-three average salary for your future retirement benefit.
  • FEGLI forms if you are retiring with an immediate retirement, including SF 2817 (Life Insurance Election) and SF 2823 (Designation of Beneficiary).
  • SF 2809 FEHBP election forms.

If you are considering employment related to your government work or possibly returning to federal service later on, you may want to maintain information regarding training, duty stations, security clearances, pay, and positions that were held during your career.

The pandemic has upended our lives and made us think about our priorities. There is a big difference between retiring with an immediate, unreduced, retirement based on a full career of federal service versus a reduced or postponed deferred retirement. So be sure to think it through before you make the leap out of government.

We can also run a free benefits analysis for you as well, just visit out simple contact us page to request yours today.

June 10, 2021
0

FERS Retiree Annuity Supplement

By | Benefits, Federal Pay, Retirement | No Comments

If you are a FERS employee and you retire on an immediate, unreduced annuity before reaching age 62, you will not only receive your basic annuity but an additional payment that represents the amount of Social Security benefit you earned while a FERS employee. It’s called the special retirement supplement (SRS).

An immediate, unreduced annuity is payable to any FERS employee who retires:
• at age 60 with 20 years of service,
• at his minimum retirement age (MRA—currently 56) with 30 years of service,
• at his MRA, if involuntarily retiring, for example during a RIF, or
• at his MRA, if retiring under the Voluntary Early Retirement Authority (VERA)

Note: Employees who retire under the MRA+10 provision aren’t eligible for the SRS. Nor are deferred retirees or disability retirees.

The amount of the SRS is determined using a complicated formula that relies on data that isn’t available to you. A ballpark formula: multiply your Social Security benefit by your total years of FERS service then divide by 40.

There are three key things you need to know about the SRS: 1) It’s a fixed amount that’s established on the day you retire; 2) it isn’t increased by any cost-of-living adjustments (COLAs); and, 3) it ends when you reach age 62 and become eligible for a Social Security benefit.

The money used to pay the SRS doesn’t come from the Social Security Administration. Instead it comes from the Civil Service Retirement and Disability Fund. That’s why it’s based solely on your actual FERS service. However, like a Social Security benefit, the SRS is subject to an annual earnings limit, above which the benefit is reduced.

There is an exception to that earnings limit rule: If you were employed under the special provision for law enforcement officers, firefighters and air traffic controllers and you retired before your minimum retirement age, you can earn as much as you want without your SRS being reduced. However, once you reach your MRA, you’ll be subject to the earnings limit just like any other FERS retiree.

The SRS is subject to the annual earnings limit, just like your Social Security benefit. If you have earnings from wages or self employment that exceed the limit, your SRS will be reduced by $1 for every $2 that exceed that limit.  In 2020 that limit is $18,240.

March 23, 2021
0
Social Security Early Retirement -

What is Full Retirement Age for Social Security Benefits

By | Retirement | No Comments

Full retirement age—also called normal retirement age—is the age when Americans receive full Social Security benefits. Your full retirement age varies depending on the year you were born. Contrast this with the so-called early retirement age of 62, when people may start receiving partial Social Security benefits.

Social Security Full Retirement Age

The Social Security Administration sets a full retirement age to standardize benefit calculations and ensure fairness. Originally, Social Security’s full retirement age was set at 65 for all beneficiaries, but the Social Security Amendment of 1983 gradually raised the full retirement age to 67.

Increasing the full retirement age preserved revenue in the system and addressed a looming shortfall” as American life spans lengthened and more people were claiming Social Security benefits for longer.

Today, your Social Security full retirement age depends on what year you were born. For everyone born in 1960 or later, it will be standardized at age 67:

 

Year You Were Born Full Retirement Age
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67

Full Retirement Age vs Early Retirement Age

While understanding your full retirement age is a key part of the puzzle, it’s different from when you may start claiming Social Security benefits. That’s your early retirement age, which is 62 regardless of what year you were born. And while all Americans may start receiving benefits when they turn 62, doing so will decrease the amount of each monthly payment.

Here’s a bit of the Social Security Administration’s official jargon, which is essential for getting a complete picture of your benefits. Full retirement age is how old you must be to receive your full primary insurance amount (PIA), or the base-rate Social Security benefit you’re eligible for given your lifetime earnings history.

How Full Retirement Age Impacts Your Social Security Benefits

When you claim Social Security benefits early—before your full retirement age—your total monthly benefit is decreased by a small percentage of your PIA for each month until your full retirement age. Conversely when you delay claiming benefits until after your full retirement age, it boosts your monthly benefit payment by a small percentage of your PIA—up to the year you turn 70.

Your Social Security benefit is reduced by around half a percent for each month between the date when you claim benefits early and your full retirement age. At the very most, you could see a reduction of up to 30% of your PIA by claiming benefits before reaching full retirement age. A PIA of $2,000, for example, could be cut to $1,400 if you take your benefit as soon as you are eligible, rather than waiting for full retirement age.

On the other hand, delaying Social Security benefits until after your full retirement age could garner you a larger monthly benefit.

“For every month after full retirement age, you add two-thirds of 1% per month up until you attain age 70,” says Carroll. This means an increase of up to 8% per year that you delay taking benefits between full retirement age and age 70. For a beneficiary with a full retirement age of 66 and 6 months, a PIA of $2,000 could be increased to $2,600 by waiting to take benefits until age 70.

Just keep in mind that other types of Social Security retirement benefits, like survivor and disability benefits, have different cutoff ages. Social Security survivor benefits, which provide a monthly payment to the surviving spouse based on their deceased partner’s work history, can start at 60, or 50 if the survivor themselves is disabled.

Social Security’s full retirement age also matters in these cases, because if you live to claim Social Security, any benefit reductions or gains you lock in will impact the amount survivors receive on your passing.

Social Security disability benefits do not have any specific retirement age, since disability can strike at any age.

Should You Take Social Security at Full Retirement Age?

There are tons of factors to consider in deciding when to start your Social Security benefits.

For people with serious health problems, it might make sense to start benefits early. Someone who was disabled before full retirement age and can no longer work might consider forgoing a higher monthly benefit to start collecting monthly Social Security benefits immediately. Meanwhile, maximizing Social Security benefits is a strategy that’s most relevant for people who expect to live longer than average.

Consider a hypothetical beneficiary who lives to 79, which is the average American life expectancy:

  • If they started collecting Social Security at age 62, with a $1,400 monthly payment, they would receive a lifetime total of $285,600 in benefits.
  • If they waited until their full retirement age, they’d receive a $2,000 monthly benefit, for a lifetime total of $300,000.
  • If they waited as long as possible to claim benefits—to age 70—they would get a monthly benefit of $2,600, or a lifetime total of $280,000.

For this hypothetical American, no matter when they choose to start receiving Social Security benefits, the differences in lifetime total benefits isn’t very large. Deciding when to start Social Security isn’t always as simple as aiming to maximize your monthly payment.

To help you figure out the right solution for your personal financial and health situation, consider meeting with a financial advisor to run the numbers and determine if starting Social Security benefits at full retirement age is right for you. And remember to factor in your loved ones in this decision as your choice may ultimately affect them.

If your spouse is the lower earner and will eventually receive your Social Security benefit [as a survivor benefit], keep in mind that your filing decision (early vs. later) will impact the amount of monthly benefits they will receive after you are gone.

February 1, 2021
3

Most “401k” Federal Savings Plan Funds Stumble to Start 2021

By | Benefits, Federal Pay, TSP | No Comments

All but two of the portfolios in the federal government’s 401(k)-style retirement savings program lost ground for January.

The federal government’s 401(k)-style retirement savings program got off to a rocky start in 2021, as most of its portfolios ended January slightly in the red.

The small- and mid-size businesses of the “401k” Federal Savings Plan ’s S Fund were the top performers, gaining 2.85% last month. The G Fund, made up of government securities, also increased 0.07%.

But the common stocks of the C Fund fell 1.01% in January, while the international (I) fund lost 1.09%. The fixed income (F) fund fell 0.71%.

All of the “401k” Federal Savings Plan ’s lifecycle (L) funds, which shift to more stable investments as participants get closer to retirement, also lost ground last month. The L Income Fund, for people who already have begun making withdrawals, fell 0.10%; L 2025, 0.24%; L 2030, 0.32%; L 2035, 0.35%; L 2040, 0.37%; L 2045, 0.39%; L 2050, 0.41%; L 2055, 0.44%; L 2060, 0.44%; and L 2065, 0.44%.

 

January 28, 2021
0

Billions Flow Out of “401k” Federal Savings Plan Due to COVID and More

By | Benefits, Retirement, TSP | No Comments

Officials at the federal government’s 401(k)-style retirement savings program said this week that nearly $3 billion exited the “401k” Federal Savings Plan this year as a result of the COVID-19 pandemic.

The CARES Act authorized “401k” Federal Savings Plan participants to take loans from their accounts of up to double the normal amount, and it waived requirements that participants be 59 1/2 years old, cite a specific financial hardship or take a 10% tax penalty.

At the January meeting of the Federal Retirement Thrift Investment Board, which administers the “401k” Federal Savings Plan , Participant Services Director Tee Ramos outlined how federal employees and retirees made use of these flexibilities.

Over the course of the programs, which both expired last year, “401k” Federal Savings Plan participants took out 3,043 CARES Act loans over the normal $50,000 cap, for a total of $229 million. And 119,720 participants withdrew money using the CARES Act flexibilities, totaling $2.9 billion. Despite these figures, assets in the “401k” Federal Savings Plan grew in 2021.

“Plan assets were up to $710 billion in December, and the total number of participants reached 6.2 million,” Ramos said. “Hardship withdrawals and loan volumes were 18% lower than the prior year, likely driven by the availability of CARES Act withdrawals and loans.”

In other retirement news, a bipartisan group of lawmakers last week reintroduced legislation that would eliminate two provisions of the Social Security program reviled by many federal retirees. The Social Security Fairness Act (H.R. 82), introduced by Reps. Rodney Davis, R-Ill., and Abigail Spanberger, D-Va., would eliminate the windfall elimination provision and the government pension offset from the Social Security Act.

The windfall elimination provision reduces the Social Security benefits of retired federal, state and local government employees who worked in private sector jobs in addition to a government job where Social Security is not intended as an element of their retirement income, like employees in the Civil Service Retirement System. And the government pension offset prevents government retirees from collecting both their own pension like the CSRS annuity and Social Security benefits derived from their spouse’s work in the private sector.

“Virginians shouldn’t be penalized for careers in public service—and that’s why eliminating the government pension offset and windfall elimination provision is so important,” Spanberger said in a statement. “Many central Virginians—including teachers, first responders and public employees—are negatively impacted by these outdated provisions that unfairly reduce the Social Security benefits they’ve earned.”

In a statement, National Active and Retired Federal Employees Association National President Ken Thomas endorsed the legislation.

“For decades, NARFE has supported full repeal of the windfall elimination provision and the government pension offset, and applauds introduction of a bill . . . to do just that,” Thomas said. “These policies have unfairly punished retired public servants through reduced Social Security benefits for far too long. This bill would provide much-needed relief for the millions of retirees and survivors currently affected by this inequitable practice and will improve fairness for future retirees.”

 

 

January 27, 2021
4

2021 Changes for Retirement Savings Plans

By | Retirement | No Comments

As we start the new year, My Federal Retirement Help wants to make sure consumers are updated about how 2021’s changes will affect their planning or retirement years. In 2020, COVID-19 relief through the Coronavirus Aid, Relief and Economic Security Act (CARES Act) assisted many retirees (and retirement planners).

The CARES Act in 2020 eliminated annual required minimum distributions (RMD) for retirees for last year, and also allowed people younger than 59½ to withdraw up to $100,000 from retirement accounts without the usual 10% penalty. If the withdrawals were COVID-19 related, the person making the withdrawal also could spread the retirement plan’s taxes over three years (instead of one) and he/she also had the ability to replace that money taken from the account.

Concerning both of these exceptions created by the CARES Act in 2020, RMDs will restart in 2021 as owners of certain retirement accounts will have to make those withdrawals and pay income tax on the amount withdrawn from the specific retirement account. The early withdrawal penalty is back in 2021, and income on withdrawals will count as income for the 2021 tax year.

For 2021, the amount you contribute to an IRA stays at $6,000 per year for age 50 and under with consumers aged 50+ able to add another $1,000 to their annual contribution ($7,000). If a person chooses to invest money into a 401(k) plan, 403(b) plan, or other employer retirement accounts, he/she can invest $19,500 in 2021 and consumers aged 50 and older can add up to $6,500 to these accounts.

More employers also are opening up to adding annuity into their retirement plan options. An annuity has multiple options with a minimum required amount and maximum contribution amount based on the selected carrier and annuity product. Based on the carrier, a person can take out monthly payments or lump sums depending on how they want to set up the annuity for their retirement strategy. Money also placed into an annuity is tax-free until a withdrawal is made from the account.

If you would like to discuss your annuity options, My Federal Retirement Help to discuss these different products. If you have any questions regarding taxes, please consult with your tax advisor.

If you plan on retiring in the next few months or next few years, you should get a Free retirement review from our team as well.  Please visit our Contact Us page to get your review schedule today.

January 21, 2021
3

New Bill Would Standardize Federal Retiree Annual Increases and More

By | Benefits, Federal Pay, Retirement | No Comments

A Washington, D.C., area lawmaker last week filed legislation that would standardize the annual increase in annuity payments that retired federal employees receive across retirement systems.

The Equal COLA Act (H.R. 304), introduced by Rep. Gerry Connolly, D-Va., would ensure that federal retirees in the Federal Employee Retirement System and the Civil Service Retirement System both receive the same annual percentage cost of living increase each year.

Under the current rules, which date back to 1986, the CSRS methodology for calculating cost of living adjustments is tied to the annual change in the third quarter consumer price index for workers. But FERS COLAs are based on an extrapolation from the CSRS adjustment: if the CSRS sees an increase of under 2%, FERS retirees will receive the full COLA. If the adjustment is between 2% and 3%, FERS enrollees would only receive a 2% increase. And if the CSRS COLA is 3% or more, FERS retirees would receive that adjustment, minus 1 percentage point.

Connolly’s bill, which he last introduced in 2018, would tie both systems’ annual increase directly to the CPI-W. The prospects for success seem brighter in this session of Congress, with Democrats controlling both chambers. President-elect Biden also vowed to the National Active and Retired Federal Employees Association last year that he would push for retiree cost of living adjustments to be based on the more generous consumer price index for the elderly.

Elsewhere on Capitol Hill, a bipartisan pair of House lawmakers have introduced a bill that would double the cash bonus available to federal employees who identify wasteful spending at their agencies.

The Bonuses for Cost-Cutters Act of 2021 (H.R. 103), introduced by Reps. Chuck Fleischmann, R-Tenn., and Jim Cooper, D-Tenn., would increase the maximum reward for feds who successfully identify wasteful spending to 1% of the amount saved, up to $20,000.

Under the bill, agency heads would be able to grant the cash bonus to federal workers if the agency chief financial officer or other designated official determines the spending is unnecessary. Employees of offices of the inspector general and Senate-confirmed political appointees are ineligible for the benefit.

“In the private sector, employees work hard to identify ways to save their organization money and they are often rewarded for their diligence,” Fleischmann said in a statement. “It doesn’t make sense that federal agencies are encouraged to spend, spend, spend instead of being rewarded for working to save taxpayer dollars and reduce our national debt.”

If you or any coworker has any questions about his or her retirement and would like to have a Free Retirement review, please Contact Us today to schedule your personalized one on one call to get the information you are looking for.

December 15, 2020
5

OPM retirement claims backlog reaches over 20k

By | Benefits, Federal Pay, Retirement | No Comments

By the end of November, the Office of Personnel Management’s backlog of retirement claims in need of processing was more than 20,000 after taking a slight dip over the last seven months of the COVIC-19 pandemic, according to the agency’s latest numbers.

The claims inventory stood at 20,022 last month, up from 19,605 in October and having remained between 17,000 and 19,000 between the months of April and September.

OPM received 5,876 applications for retirement last month, compared to 8,323 in October and having received an average of 6,000 claims per month from March through September.

It processed 5,459 claims in November, which is down from 6,992 the month prior and significantly less than the 8,931 claims it processed in March at the start of the COVID-19 pandemic.

The agency took an average of 76 days to process claims last month, which is comparable to the number of days it took to process a claim throughout the pandemic, but more than the average of 59 days in February, before the pandemic.

The figures come from OPM’s monthly claims processing progress report available on the OPM website.

Want to add your name to this list of applicants?  We can help you get into retirement.  Schedule your free consultation today.

November 16, 2020
1

Which Should You Choose, Original Medicare or Medicare Advantage?

By | Retirement | No Comments

If you are turning 65 this year, chances are you are researching Medicare. Did you know you could choose between Original Medicare and Medicare Advantage? This article will explain both types of Medicare and the differences between them so that you can choose the plan that suits your budget, your health, and where you want to receive care.

What is Medicare?

Medicare is the name of the federal health insurance program for people who are 65 or older. Others can join Medicare as well:

  • Some younger people who have a disability;
  • People with End-Stage Renal Disease, which is also called ESRD and is permanent kidney failure requiring dialysis or a transplant;
  • Those with Amyotrophic Lateral Sclerosis (ALS), also called Lou Gehrig’s Disease.

There are currently four parts to Medicare:

  • Part A provides inpatient/hospital coverage.
  • Part B provides outpatient/medical coverage.
  • Part C offers an alternative to Original Medicare (Parts A and B) called the Medicare Advantage Plan, or the Medicare private health plan.
  • Part D provides prescription drug coverage.

What are the Features of Original Medicare?

If you require medical attention, you go to your primary care doctor or hospital. No prior authorization is required. Most doctors and hospitals accept Medicare.

You will pay a monthly premium for Part B, and some people also pay a premium for Part A. Typically, you will pay a copay for the medical care you receive. Medicare places limits on the amounts that doctors and hospitals can charge for your medical care.

Original Medicare does not cover prescription drugs. You must purchase Part D or choose and purchase a private drug plan (PDP). Original Medicare does not cover dental care or vision.

What are the Features of Medicare Advantage?

Each Medicare Advantage Plan is a private plan that is required to provide all Part A and Part B services covered by Original Medicare. The primary difference is that Medicare Advantage plans have different rules, costs, and restrictions that can affect how, when, and where you receive medical care.

Like Original Medicare, you will usually pay copays for medical services if you have Medicare Advantage. Unlike Original Medicare, you are restricted to health care providers who are in your network and within your geographical service area, and many medical services require preauthorization. Some Medical Advantage plans provide benefits that Original Medicare does not, such as dental care, vision, hearing, and membership in fitness programs or clubs.

Medicare Advantage plans generally have an annual maximum out-of-pocket spending limit. If you reach this limit, your plan pays your medical expenses for the rest of the year.

The Most Important Differences Between Original Medicare and Medicare Advantage

You may save money on premiums and expand coverage to other services like dental care or vision if you don”t mind getting preauthorization for medical care and only visiting providers in your network. If this is you, look into private insurance under Medicare Advantage.

If you prefer to visit your own doctors and to seek medical attention when you want, Original Medicare may suit you, although you will have to purchase additional prescription drug coverage and coverage for other medical care like dental and vision, if needed.

Both forms of Medicare require that you pay the Medicare Part B premium. The standard Part B premium amount in 2020 is $144.60, which most people pay. In 2020, the Part B deductible is $198. After you meet your deductible for the year, you typically have a 20% copay for most doctor services, outpatient therapy, and durable medical equipment (DME).

Can I Change My Medicare to a Different Plan or Add or Drop Coverage?

Yes. If you sign up for one form of Medicare and decide later to switch to another form, or if you want to purchase additional coverage or drop any coverage, there are certain times of the year that you are able to do that.

The Fall Open Enrollment Period, also known as the Annual Coordinated Election Period or ACEP), occurs annually from October 15 through December 7. Any new coverage selected takes effect the following January 1.

During the Fall open enrollment period, you can change your choice of healthcare coverage no matter what you previously chose, and you can add, drop, or change Medicare prescription drug coverage.

The Medicare Advantage Open Enrollment Period, or MA OEP, occurs each year from January 1 through March 31. During this period, you can switch from your Medicare Advantage Plan to another Medicare Advantage Plan or to Original Medicare with or without a stand-alone prescription drug plan (Part D or a private prescription plan). Any changes you make take effect on the first of the month following the month you make the changes. People who have Original Medicare coverage may not make any changes during the MA OEP but must wait until the Fall Enrollment Period.

If Medicare Advantage appeals to you, research the plans offering coverage in your area. You may find a plan that suits you and your medical needs and preferences better than Original Medicare, or, you may not. Do your homework before enrolling in any form of Medicare.  Better yet, reach out to your Federal Retirement Consultant and ask us to compare all plans for you.

About the Author

Veronica Baxter is a legal assistant and blogger living and working in the great city of Philadelphia. She frequently works with David Offen, Esq., a busy Philadelphia bankruptcy lawyer.

August 31, 2020
6

“401k” Federal Savings Plan Participants Move Out of Stock Funds Right Before Record Highs

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

The participation rate in the “401k” Federal Savings Plan ( “401k” Federal Savings Plan ) for federal employees has leveled off in the last several months. That is a normal change for this time of year.

The “401k” Federal Savings Plan notes that participation in the “401k” Federal Savings Plan for federal employees under the Federal Employees Retirement System (FERS) is still up two percentage points above last year.

Implementing the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed on March 27, 2020. The Federal Retirement Thrift Investment Board (FRTIB) created the CARES Act project to implement key provisions of the law. The project included four key provisions to enable “401k” Federal Savings Plan participants and beneficiaries to respond to their financial management needs during the COVID-19 pandemic.

These four provisions were:

  • Changes in 2020 Required Minimum Distributions
  • Loan Payment Suspensions
  • An increase in the maximum loan amount to $100,000
  • CARES Act withdrawal provisions.

CARES Act Loans, Suspensions and Withdrawals

CARES Loans

Date Count Amount
June, 2020 2,462 $61,429,570.22
July, 2020 4,990 $115,588,460.67
MTD – Aug 12, 2020 1,704 $37,803,631.74

CARES Loans Over $50,000

Count Amount
499 $37,018,575.68
825 $61,766,534.20
267 $19,935,382.67

CARES Loan Suspensions

Date Count Amount
June, 2020 245 $ 12,514,932.41
July, 2020 354 $ 16,419,035.09
MTD – Aug 12, 2020 41 $ 1,958,857.50

CARES Withdrawals

Date Count Amount
July, 2020 21,296 $ 554,831,990.61
MTD – Aug 12, 2020 11,621 $ 277,567,169.17

“401k” Federal Savings Plan Participants Move into Bonds

In July, many “401k” Federal Savings Plan participants decided to transfer money from stock funds and into the “401k” Federal Savings Plan ’s G and F Funds.

The G Fund took in more than $1.1 billion dollars in transfers in July and the F Fund took in more than $1.6 billion. The Lifecycle Funds received more than $933 million in transfers in July.

Also during July, more than $2 billion was transferred out of the C Fund and almost $1.7 billion from the S Fund.

After the transfers into the G and F Funds, the asset allocation in funds for “401k” Federal Savings Plan participants breaks out in this way:

Fund Allocation Percentage
G Fund 33.3%
F Fund 4.6%
C Fund 28.5%
S Fund 9.3%
I Fund 3.5%
L Funds 20.9%

The latest month shows a change in direction for “401k” Federal Savings Plan investors. As of December 30, 2019, 30.7% of asset allocation was in the G Fund, 29.7% was in the C Fund, 3.8% was in the F Fund and 21.6% was in the L Funds. In effect, participants are moving away from stocks and putting more of their assets into the bond funds.

If you would like some help navigating your “401k” Federal Savings Plan , or some safe options with your “401k” Federal Savings Plan , you can use our Contact Us form and someone will be in touch with you.