2021 Changes for Retirement Savings Plans

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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in 2021 as owners of certain retirement accounts will have to make those withdrawals and pay income tax on the amount withdrawn from the specific retirement account.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.

New Bill Would Standardize Federal Retiree Annual Increases and More

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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.

OPM retirement claims backlog reaches over 20k

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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.

Which Should You Choose, Original Medicare or Medicare Advantage?

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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.

TSP Participants Move Out of Stock Funds Right Before Record Highs

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

The TSP notes that participation in the TSP 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 TSP 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


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

TSP Participants Move into Bonds

In July, many TSP participants decided to transfer money from stock funds and into the TSP’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 TSP 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 TSP 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 TSP, or some safe options with your TSP, you can use our Contact Us form and someone will be in touch with you.

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USPS Restructured and VERA

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In an effort to operate in a more efficient and effective manner and better serve customers, Postmaster General Louis DeJoy today announced a modified organizational structure for the U.S. Postal Service.

The new organizational structure is focused on three operating units and their core missions:

• Retail and Delivery Operations — Accept and deliver mail and packages efficiently with a high level of customer satisfaction. This organization will be led by Kristin Seaver.
• Logistics and Processing Operations — Process and move mail and packages efficiently to the delivery units, meeting determined standards. This organization will be led by David Williams.
• Commerce and Business Solutions — Leverage infrastructure to enable growth. This organization will be led by Jakki Krage Strako.

“This organizational change will capture operating efficiencies by providing clarity and economies of scale that will allow us to reduce our cost base and capture new revenue,” said DeJoy. “It is crucial that we do what is within our control to help us successfully complete our mission to serve the American people and, through the universal service obligation, bind our nation together by maintaining and operating our unique, vital and resilient infrastructure.”

As part of the modified structure, logistics and mail processing operations will report into the new Logistics and Processing Operations organization separate from existing area and district reporting structures. This includes all mail processing facilities and local transportation networks offices. Splitting operations into the two organizations of Retail and Delivery Operations, and Logistics and Processing Operations, is designed to allow for improved focus and clear communication channels. The transition to this new organizational structure will take place over the next several weeks. Transition coordinators have been identified to assist in the process.

These organizational changes do not initiate a reduction in force, and there are no immediate impacts to USPS employees. However, to prepare for future changes, the Postal Service has implemented a management hiring freeze and will be requesting future Voluntary Early Retirement Authority from the Office of Personnel Management for non-bargaining employees.

We want to hear your feedback of these new changes, or if you need help deciding if this VERA is right for you, Contact us to schedule your retirement review.

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USDA IT Shop Freezes Hiring and Offers Early Retirement

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The CIO Office at the Department of Agriculture has instituted a hiring freeze and plans to offer early retirement options to IT workers in an effort to optimize the agency’s tech investments and update the skillset of its workforce, according to a report on Federal News Network.

Voluntary Early Retirement Authority options will be offered to eligible IT specialists – excluding cybersecurity professionals — with 20 years of service at age 50, or those with 25 years of service at any age. Those staffers may voluntarily retire and earn an immediate annuity. Eligible employees can apply for VERA through mid-August, the department said.

USDA said it plans to accept as many VERA requests as it can, but early retirement offers will be extended on a first-come, first-serve basis, and those who have been accepted are expected to retire by Sept. 30.

The hiring freeze was instituted June 30 and will extend through fiscal 2021. It only applies to IT professionals who “report directly or indirectly to the mission area chief information officers or program executives,” the USDA spokesperson told Federal News Network.

If anyone is needing assistance or has any questions, please feel free to contact us at (877) 733-3877 x 1 or on our Contact Form.

COVID-19, TSP, And Your Retirement

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Planning for, investing in, and safeguarding your retirement nest egg during normal conditions can be a challenging task.

Add a global health crisis with COVID-19, economic recession, and record unemployment to the mix – thinking about your financial future can be downright scary.

Not to worry. There’s good news to ease your fears when it comes to your TSP and retirement savings strategy.

If you have a TSP, you may have noticed that several temporary changes started under the CARES Act at the end of March. These changes give you options to reduce possible financial loss and risk during these difficult times.

Required minimum distributions (RMD) and COVID-19

The negative impact of COVID-19 on both the economy and individual finances led Congress to pass a benefit in the CARES Act.

The change doesn’t require you to take the previously mandated RMD withdrawal in the 2020 calendar year. Plus, automatic RMD payments have been suspended for 2020. You’re eligible for this benefit regardless of your age or employment status.

There are specific rules about stopping the life-expectancy RMD installment payments and rolling 2020 disbursements back into any eligible retirement plan. Plus, there are also particular rules about repayment terms for non-RMD withdrawals and loans.

How federal employees can qualify for COVID-19 relief

To qualify for a loan and withdrawal program, you must meet these eligibility requirements:

  1. You, your spouse, or dependent have been diagnosed with COVID-19 by a CDC-approved test.
  2. You, your spouse, or a member of your household are experiencing adverse financial consequences from COVID-19 as a result of:
    • Being quarantined
    • Having work hours reduced
    • Being furloughed or laid off
    • Experiencing a reduction in pay
    • Being unable to work due to lack of childcare availability
    • Having a job offer rescinded or a delayed job start date

TSP loans and withdrawals in the CARES Act

Federal employees signed up for a TSP and qualified for COVID-19 relief can take advantage of temporary loan and withdrawal programs offering tax deferment and repayment options.

Suspension of notarized documents

If you decide to take advantage of a COVID-19 loan or withdrawal program, you don’t have to get any forms notarized until further notice.

Keep in mind…

This info can change as new info and guidelines become available. It can also change as new and revised options are included in the HEROES Act which is planned to be enacted in August.

Your retirement options

Not sure how COVID-19 may impact your retirement? Or, not sure which option may be best for you and your retirement goals? Send us an email at info@MyFederalRetirementHelp.com , give us a call at 877-733-3877 x 1 or Contact Us

Should I Have a Traditional or Roth Thrift Savings Plan?

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Should I Have a Traditional or Roth Thrift Savings Plan?

If you are a federal employee and planning for retirement, you must carefully consider whether to contribute to a Thrift Savings Plan (TSP) and what type of TSP you should get. This article will set forth the pros and cons and explain how an effective TSP strategy can best supplement your other retirement income sources.

What is a Thrift Savings Plan?

A Thrift Savings Plan (TSP) is a retirement and savings plan available to both civilian federal employees and members of the military. It is similar to the 401(k) plans offered by employers in the private sector.

Federal Agency Contributions

One aspect of TSPs that cannot be overlooked is that a federal employee may be eligible for matching contributions from their agency. If you are a federal employee you must look into whether matching contributions are available and whether there is a limit.

Once you have that information, plan on contributing at least the amount that will be matched. If you don’t, you are leaving free money on the table.

For many federal employees, their agency will contribute 1% of income to a TSP even if the employee contributes nothing. If the employee contributes 5% of income, the agency will contribute another 4%.

Traditional TSP

In a traditional TSP, your contribution is deducted from your pre-tax wages, and taxes are deferred until you make withdrawals. This reduces your present taxable income, and your contributions are taxed at the rate that applies to your income in retirement, which should be lower.

Roth TSP

You make contributions to a Roth TSP with after-tax income. While this does not reduce your present taxable income, it does render your withdrawals in retirement tax-free.

What if I Worked in the Private Sector and have a 401(k) or Roth IRA?

You can roll an IRA from a private employer into your federal TSP. However, reach out to a Federal Retirement Consultant to ask about some other ways to manage these as well.  Keep in mind also that if you are 50 or older you can make additional catch-up contributions, however, they will not be eligible for matching contributions from your agency.

Can I Convert a Roth TSP to a Traditional TSP?

No, and you can’t convert a Traditional TSP to a Roth or vice versa.

Which Type of TSP Should I Get?

Consider having one of each and varying the contributions according to how much money you are making. This allows you to strategically allocate retirement savings throughout your career to save the most in income tax.

For example, if you are just starting your career, you might open both a Roth TSP and a Traditional TSP, and contribute most to the Roth and just a bit to the Traditional. As the years pass and you presumably make more money, you can gradually increase contributions to the Traditional and decrease contributions to the Roth.

This way you are taking advantage of both the tax-free withdrawals of a Roth TSP, and the tax-deferred withdrawals of a Traditional TSP, and reducing your taxable income when you are making more, later in your career. Don’t forget to always contribute at least the amount that your agency will match.

What About Other Retirement Income?

You will have Social Security benefits when eligible, and if you are a civilian federal employee you will have an annuity from the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). If you are a member of the uniformed services, you will have Social Security benefits and your military retired pay.

The amount of income you have in retirement will vary according to the amount you contribute to your TSP, the amount that is taxable to you in retirement, and how you allocate your TSP contributions to the various funds and the return that your choices get. Even considering market variables, strategically contributing to your TSP is sure to maximize your income in retirement. 

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.

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Three Great Reasons to Take Social Security Benefits at 62

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There’s no such things as the perfect age to sign up for Social Security. You get an eight-year window to claim benefits that begins at 62 and ends at 70, financially speaking, and each age within that window has its pros and cons.

Now it just so happens that 62 is the most popular age to sign up for Social Security, but it also comes with consequences. You’re entitled to your full monthly benefit based on your wage history once you reach full retirement age, or FRA. That age is either 66, 67, or somewhere in between those two ages, depending on your year of birth.

If you claim Social Security at 62 with an FRA of 66, you’ll shrink your monthly benefit by 25%. And with an FRA of 67, you’re looking at a 30% reduction by filing at 62. But despite that tremendous hit to your retirement income, here’s why it could pay to land on 62 as your Social Security filing age.

1. You’ll get to retire sooner

Many people dream of early retirement. If you’ve spent the bulk of your career at a grueling job, you may want nothing more than to leave the workforce on the early side. And while you’ll generally need a healthy level of retirement savings to make that possible, claiming Social Security could provide the financial push you need to feel comfortable ending your career a bit sooner than most.

2. You have to retire sooner

An estimated 48% of workers are forced to retire earlier than planned, according to the Employee Benefit Research Institute, and the COVID-19 outbreak — and unemployment crisis it’s produced — could drive that percentage up even higher. These days, a lot of older Americans are out of work, and those struggling to return to a job may have no choice but to retire ahead of schedule instead. Furthermore, some older workers may be voluntarily leaving their jobs due to health concerns, and it’s these same people who are apt to need an income source like Social Security once their paychecks go away.

But even outside of the pandemic, it’s clear that early retirement often isn’t a choice, but rather, a side effect of unwanted circumstances. Older workers get pushed out of jobs all the time to make room for younger, less expensive employees, and health issues can make continuing to work impossible. If that’s the scenario you’re in, whether it’s related to COVID-19 or not, you may have to claim Social Security at 62 so you can pay your bills. And to be clear, that’s a much better option than racking up debt just to exist.

3. You’re not willing to take chances

Technically, Social Security is designed to pay you the same total lifetime benefit regardless of when you file. The logic is that while filing early lowers your monthly benefit, you collect benefits for a greater number of months. When you file on time or even after FRA, you grow your benefit, but collect fewer individual monthly payments. You should therefore, in theory, break even if you live an average lifespan.

But what if you don’t? Even if your health is great at age 62, you never know when a medical issue might pop up out of nowhere that suddenly shortens your lifespan. And if you’re unlikely to live an average life expectancy, you’re better off claiming Social Security early, as that will result in a greater amount of money in your lifetime.

Though claiming Social Security at 62 isn’t the right choice for everyone, it may be the best bet for you. Weigh the pros and cons, and with any luck, you’ll land on a solid choice.

The $16,728 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

We also conduct Free Federal Retirement and Benefits review, if you would like to take advantage of one via phone call, please reach out and call (877) 733-3877 x 1 or on our Contact Us Page fill out the simple form.