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March 8, 2019
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Pension Annuities, Withdrawals and More Questions Answered

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

This week, we’re back with a few more questions and comments from readers, covering everything from Civil Service Retirement System and Federal Employees Retirement System coverage to “401k” Federal Savings Plan withdrawals.

I was CSRS back in 1977 thru 1982. I received a refund of the retirement funds. I went back into the service in 1983, did my remaining years and retired. In 2000, I returned to civil service and I am now FERS. I am paying back the five years for CSRS. How will they calculate the five years? 

First of all, if you had at least five years of prior CSRS coverage (whether or not you took a refund of retirement contributions), you should have been rehired under CSRS Offset retirement coverage and given a six-month opportunity to choose FERS coverage. If this is not what happened, you should contact your human resources office to find out if you were misclassified under FERS. If so, there’s a remedy under the Federal Erroneous Retirement Coverage Corrections Act, which allows you to go back to CSRS Offset coverage instead of FERS if you choose to.

If you remain under FERS and have more than five years of coverage under CSRS, then you will have a “CSRS component” to your retirement computation. That portion of your benefit will be computed under CSRS rules.

Keep in mind that since you received your refund of contributions prior to March 1, 1991, you can receive credit for this service without paying the redeposit. Your annuity will be subject to a permanent actuarial reduction based on the amount of the redeposit, interest due and your age at retirement. The actuarial reduction will not be applied to an annuity due your surviving spouse. You can avoid the reduction by repaying the refund.

I will have 24 years total at retirement at age 63. I have Federal Employees Group Life Insurance Coverage [at a level of] my salary times one. Lately, everyone is saying to keep it and eventually the government will pay for it. That’s a new one on me.

You can continue basic FEGLI into retirement as long as you were covered for the five years immediately preceding your retirement. The premium is $.325 per $1,000 of coverage per month until you’re 65 and retired. Then, if you elect the 75 percent reduction option at retirement, the premium ends and the coverage begins to reduce by 2 percent per month until you’re left with 25 percent of your original coverage at no further premium. You can also choose no reduction or a 50 percent reduction if you’re willing to pay an additional premium. And you can continue optional FEGLI into retirement if you have been covered for five years and retire on an immediate retirement.

Annuities begin on the first [of the month]. But if you retire on the fourth of any month, you will not start the annuity until the next month, and actually receive it the following month, so you will be out about seven weeks with no pay. 

The start date of your retirement is the first day of the month after your last day on the job. (You’re paid your salary through close of business of the date you indicate for your separation on your retirement application.) There’s an exception for employees who retire under CSRS or CSRS Offset that allows retirement to start on the day after the retirement date if the date of final separation is the first, second or third day of the month. Regardless of whether you are retiring under CSRS or FERS, if you select June 15 as your retirement date, for example, this is the day your salary will stop accruing. Your first retirement benefit will be for the month of July, payable on Aug. 1. So you’ll get no compensation for June 16-30. This is why most employees try to retire on the last day of the month—or the first three days of the month in some cases under CSRS or CSRS Offset.

On the “401k” Federal Savings Plan issue of required minimum distributions, folks should notify the “401k” Federal Savings Plan to send your RMD distribution in mid-December so you can maximize those funds. If your RMD is 4 percent, and those funds gained 4 percent during the year, your “401k” Federal Savings Plan would not run out, because it would replenish itself. The RMD is based on the balance of “401k” Federal Savings Plan on Dec. 31 of the prior year, so you get another year of earnings on that RMD.

Here is an example of one of the loyal readers of this column who consistently provide supplemental information and insight that’s very helpful. I’d add this note: According to the “401k” Federal Savings Plan , if you’re already receiving a series of monthly payments from your account when you turn 70½, your monthly payments will be used to satisfy the IRS minimum distributions requirement. If the total amount of your monthly payments does not satisfy the requirement, the “401k” Federal Savings Plan will issue a supplemental payment for the remaining amount in December. This is automatic if your monthly payments are not high enough to satisfy your annual RMD. Your monthly payments can be as low as $25.

I don’t understand why the federal government can’t come up with an annual statement, like the “401k” Federal Savings Plan gives you an estimate. Why can’t you just go to the Office of Personnel Management website and get the info? I would think that would keep your information up-to-date and it wouldn’t take so long to finally get your first retirement check.

The problem is that OPM doesn’t have access to your current information, since your personnel and payroll data is not transferred from your agency to OPM until you have separated for retirement. In many cases, agency payroll offices do provide an annual benefits statement so you can get a snapshot of your retirement and insurance benefits. For example, some USDA federal employees who have their payroll processed through the USDA National Finance Center will receive an annual benefits statement. It describes the estimated value of your retirement benefit, your “401k” Federal Savings Plan account value, and when you’ll be eligible for Social Security and Medicare benefits.

Now for others or anyone who wants to receive their annuity estimate in a free Federal Retirement Review and go over all of your benefits can request one from one of our Chartered Federal Employee Benefits Consultants. So Request and Schedule your review today!

December 21, 2018
1

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, “401k” Federal Savings Plan rollovers, Pension Maximization, talk FEHP vs Medicare.  Contact Us to request your Retirement Review and Assistance today. 

July 12, 2018
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Retirement Backlog Creeps Up More Last Month

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The number of pending federal employee retirement claims ticked up slightly last month, as the Office of Personnel Management increased its processing to meet the higher demand.

According to statistics released last week, the retirement backlog increased by less than 200 claims in June to 18,198, up from 18,024. But the number of new claims received jumped from 7,625 in May to 9,397 last month.

That total marks a significant increase over the same period in 2017, when OPM received only 6,141 new retirement requests. Last month, the agency processed 9,223 claims, up from 7,090 in May.

» Get your Free Federal Retirement Review Today. Sign up here.

Although OPM mostly kept pace with demand, the influx of new claims has increased the agency’s monthly average processing time from 58 days in May to 65 last month.

July 12, 2018
0

Retirement Backlog Creeps Up More Last Month

By | Benefits, Retirement | No Comments

The number of pending federal employee retirement claims ticked up slightly last month, as the Office of Personnel Management increased its processing to meet the higher demand.

According to statistics released last week, the retirement backlog increased by less than 200 claims in June to 18,198, up from 18,024. But the number of new claims received jumped from 7,625 in May to 9,397 last month.

That total marks a significant increase over the same period in 2017, when OPM received only 6,141 new retirement requests. Last month, the agency processed 9,223 claims, up from 7,090 in May.

» Get your free Federal Retirement Review here. Contact us Today

Although OPM mostly kept pace with demand, the influx of new claims has increased the agency’s monthly average processing time from 58 days in May to 65 last month.

January 17, 2018
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Early Retirement - VER Eligibility for postal service employees - what is vera

Voluntary Early Outs Offered to the United States Postal Service

By | Benefits, Retirement, TSP | One Comment

USPS Early Retirement – Are You Eligible for VER?

The Voluntary Early Retirement (VER) recently announced for eligible Clerk Craft employees by the Postal Service has generated many questions from the Federal Postal Employees.  The Postal Service published a list of 93 questions and answers shared with our members in an earlier Web article.

Many are asking, “Should I accept early-out retirement?” It is not our place to give advice on whether to retire or not. That is a personal or family decision.  However, it is decision with implications that the employees should know and consider and also know all the facts about this VERA.

What is a VERA

When a Federal Agency wants to reduce their staff, they can request for a VERA commonly known as Voluntary Early Retirement Authority from the Office of Personnel Management before they can restructure their workforce.  Instead of employee layoffs, the agency send out offers to certain eligible employees.  These employees are typically the ones that will generally be retiring in a few years anyway, but offers them to retire early without any penalties.

USPS management did not discuss the VER with the APWU in advance of the announcement. APWU national officers initiated a January 10 meeting with postal management to address issues and concerns about the VER including why the VER was not offered to all crafts, the need to halt all plans for excessing in light of the VER and the process in place for retirement counseling. Management has committed to respond to the APWU’s questions which we will share with the membership as received.  In this meeting, the union also pressed its views that:

  1. the Postal Service is not overstaffed, and service to the public is suffering due to understaffing; and,
  2. if the Postal Service moves forward with misguided plans to reduce the workforce, the Postal Service should offer a monetary incentive for those eligible for regular retirement as well employees eligible for an early-out.

Incentives have been offered numerous times in the past for both bargaining unit and supervisory employees.

If you are eligible for the VER, the USPS will be mailing you a packet on January 12th. The packet will have vital information about your opportunity for an early-out. The packet will include your annuity estimate (this is not a guarantee of what your annuity payments will be; OPM makes the final determination of your annuity, and it could be different than the estimated amount provided in your packet) and information about available benefits including eligibility, limits, and costs.  Anyone considering the early-out offer needs to study the packet very carefully and or Request a Federal Retirement Review with a Federal Retirement Consultant to learn more about all of the aspects of your USPS early retirement. Take advantage of every opportunity to learn the specifics about your retirement benefits.

Some points to consider when making your decision:

  • As of now there is no financial incentive to retire early, unlike the 2009 and 2012 VERAs, where incentives were negotiated with the APWU.
  • In its August 22, 2017 request to the Office of Personnel Management (OPM) for VERA approval, the Postal Service said that 10,522 APWU represented employees will shortly be “impacted” by “differing personnel actions” and “repositioning initiatives.”
  • The Postal Service estimates that only 1,712 of the 10,522 APWU represented employees will accept the VER.
  • Those who apply for the early-out will see financial/income impacts, including:
    • If you are an employee covered by CSRS, you will have your annuity reduced by 2% for each year you are under age 55.
    • If you are covered by FERS, you will only earn 1% of your salary as an annuity for each year worked (e.g. if you worked 20 years, your annuity will be 20% of your high-3 average salary).
    • If you are under the Minimum Retirement Age (MRA), you will not receive the Social Security Supplement until you reach the MRA. Find your MRA using this OPM Chart. FERS is a three-legged stool: a modest annuity, social security, and retirement savings in “401k” Federal Savings Plan .  If under normal conditions, you retire after reaching the MRA but are not yet eligible for Social Security, you receive an “annuity supplement” to provide that social security leg until you reach the age of sixty-two (62) An “early-out” is different; so, for example, if you are age 50 and your MRA is 57 you will not receive the supplement until you turn age 57.
    • You will not receive Cost of Living Allowances (COLAs) on your annuity until you reach MRA.
    • With a USPS early retirement you can’t make additional contributions to “401k” Federal Savings Plan or receive employer contributions as you would with continued employment.
    • “401k” Federal Savings Plan withdrawal restrictions are not eased for those accepting a VERA.
    • Your life insurance coverage (FEGLI) may change.  The amounts of coverage may decrease and the costs (if you continue coverage) will likely rise.
    • Your health insurance premiums will increase if you currently are covered by the Consumer Driven APWU health plan.

Make your decision on complete and accurate information about your retirement benefits.  Postal management has verbally committed to the union that they have no intention of capping the number of employees who can take this VER offer, so there should be no need to rush your decision.

Schedule your appointment early that way you can make the correct decision if it is to Retire or keep on working until you do retire.

October 13, 2017
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federal retirement planning - fers benefits -retirement support services - tsp payment schedule 2018

EPA To Offer Employees Buyouts Early Retirement This Year

By | Benefits, Retirement, TSP | No Comments

The Environmental Protection Agency will begin offering employees financial incentives to leave the agency this year, according to an internal memorandum obtained by Government Executive.

As part of its efforts to meet the requirements of recently issued guidance from the Office of Management and Budget calling on all agencies to restructure themselves and reduce their workforces, EPA will continue a freeze on external hiring and begin offering early retirement and buyouts. Details of the plans were not made clear in the memo, which was sent by acting Deputy Administrator Mike Flynn. He noted only that EPA’s goal was to complete the separation incentive program by Sept. 30, the end of fiscal 2017.

Agencies can offer up to $25,000 to employees who have worked in the federal government at least three years through a Voluntary Separation Incentive Payment and allow employees not otherwise eligible for retirement benefits to receive them through Voluntary Early Retirement Authority. The Office of Personnel Management must approve all early out and buyout programs.

In its guidance, OMB said OPM would “provide expedited reviews for most [VERA and VSIP] requests within 30 days.” While OMB said it would not prescribe any specific strategy or set reduction targets for individual agencies, President Trump’s fiscal 2018 budget called on the EPA to cut 25 percent of its workforce, amounting to 3,200 employees. The proposal suggested slashing 31 percent of the agency’s budget.

EPA has endured significant spending cuts in recent years, with its spending level already reduced more than 20 percent since 2010 and its workforce at its smallest total since 1989. EPA last offered separation incentives to its employees in 2014, targeting mostly regional offices.

A recently released inspector general report found EPA paid $11.3 million to get 456 employees to leave the agency that year. Generally, the IG found the incentives “aided workforce restructuring goals,” though it was unclear if EPA had successfully reached its other goals of obtaining staff with new skillsets and increasing the number of staffers per supervisor. When accounting for the additional annual leave payments, EPA doled out a total of $16.2 million in 2014 to separate the employees. The IG noted the agency could not control how many or which employees would voluntarily leave, but that the various EPA offices adequately analyzed their workforce data to determine which positions to target.

Under OMB’s guidance, all agencies must come up with both short and long-term plans to reduce their staffing levels, with preliminary plans due June 30. Flynn said EPA has recently formed a workgroup to develop its agency reform plan. EPA is at least the third agency to continue its hiring freeze despite Trump ending it last week. Flynn said the agency will approve “very limited exceptions” to the moratorium and allow certain internal reassignments.

“I appreciate your patience as we work through the details of the guidance and will work with you as we move forward,” Flynn said.

Liz Bowman, an EPA spokeswoman, said the approach mirrored the one taken by the Obama administration and would ensure “payroll expenses do not overtake funds used for vital programs to protect the environment.”

“Streamlining and reorganizing is good government and important to maximizing taxpayer dollars,” she said.

John O’Grady, president of the American Federation of Government Employees council that represents many EPA workers, said reaching the administration’s desired cuts through incentive payments would prove prohibitively expensive. EPA, he added, is already “underfunded and understaffed.”

“Any further cuts will absolutely cripple the agency,” O’Grady said

October 5, 2017
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federal early retirement - voluntary early retirement for federal employees

Senate Panel Approves 60% Increase in Buyout Payments for Feds

By | Benefits, Retirement, TSP | No Comments

The Senate Homeland Security and Governmental Affairs Committee passed a bill on Wednesday that would raise the maximum buyout payment for federal employees from $25,000 to $40,000.

The legislation comes as agencies look for ways to downsize their workforces in response to directives from the Trump administration. Congress set the original Voluntary Separation Incentive Payment at $25,000 in 1993, and it’s remained unchanged since.

The committee approved the legislation by voice vote on Wednesday. If passed by Congress, the bill would also tie payments to the Consumer Price Index, and adjust them annually for inflation.

The Defense Department piloted a similar one-year buyout increase for its civilian employees in fiscal 2017, but the new bill would extend the increase to civilian and military employees across government.

The $15,000 bump in VSIPs could make leaving government more appealing to employees as agencies look for ways to decrease the size of their workforces. Agencies were required to submit reorganization plans to the Office of Management and Budget by Sept. 30, and although leaders have said the plans would focus more on increasing efficiency than reducing the workforce, tight budgets may make some cuts inevitable.

The Environmental Protection Agency has already contacted 1,200 employees with early retirement and buyout offers. The Interior Department and other agencies have also indicated plans to move forward with similar measures.

The White House asked Congress for an identical $15,000 raise in agencies’ buyout limits earlier this year ahead of the National Defense Authorization Act. The proposal wasn’t included in either the Senate or the House version of the NDAA, but the new bill would provide the requested incentives for workforce reductions.

While he welcomes any opportunity for federal employees to retire “with a few extra dollars in their pockets,” Steve Lenkart, executive director of the National Federation of Federal Employees, said he worries that the legislation risks helping to create a vacuum in agency leadership as top employees leave their posts ahead of schedule.

“At a time when most agencies are trying to fill critical vacancies, the increase in buyout payments may exacerbate the worker deficit especially in the upper ranks, which can lead to brain drain and a loss of institutional knowledge,” Lenkart told Government Executive. “This is exactly what some in Congress are trying to do. A better way is to plan strategically and execute a plan over a period of time defined in years, not months. As we’ve seen time and time again, Congress is no expert on running government.”

August 2, 2017
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federal retirement planning - fers benefits -retirement support services - tsp payment schedule 2018

How Does a Court Order Affect “401k” Federal Savings Plan Accounts

By | Benefits, Retirement, TSP | No Comments

A court decree of divorce, annulment or legal separation can make an award from a “401k” Federal Savings Plan account to someone other than the participant, such as a spouse or a former spouse.
The “401k” Federal Savings Plan will honor such orders if they are issued in connection with such an action and they comply with the board’s regulations. It also will honor preliminary court orders for the purposes of freezing a participant’s account as well as amendatory court orders issued after such a decree.
When the “401k” Federal Savings Plan receives a court order, the account of the participant is frozen, meaning that the participant is not allowed to withdraw the account, except to meet certain IRS mandatory distributions, or receive a loan from the account. All other account activity is permitted, however. If the “401k” Federal Savings Plan determines that the court order is qualifying, it issues a statement regarding the effect that compliance will have on the account and a description of the method by which any entitlement was calculated, the results of the calculation and the circumstances under which payment will be made.
The “401k” Federal Savings Plan will make only one disbursement under a court order even if the order on its face requires a series of payments.
After a payment is made, the account will be unfrozen.
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July 30, 2017
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federal retirement planning - fers benefits -retirement support services - tsp payment schedule 2018

How Does a Court Order Affect “401k” Federal Savings Plan Accounts

By | Benefits, Retirement, TSP | No Comments

A court decree of divorce, annulment or legal separation can make an award from a “401k” Federal Savings Plan account to someone other than the participant, such as a spouse or a former spouse.
The “401k” Federal Savings Plan will honor such orders if they are issued in connection with such an action and they comply with the board’s regulations. It also will honor preliminary court orders for the purposes of freezing a participant’s account as well as amendatory court orders issued after such a decree.
When the “401k” Federal Savings Plan receives a court order, the account of the participant is frozen, meaning that the participant is not allowed to withdraw the account, except to meet certain IRS mandatory distributions, or receive a loan from the account. All other account activity is permitted, however. If the “401k” Federal Savings Plan determines that the court order is qualifying, it issues a statement regarding the effect that compliance will have on the account and a description of the method by which any entitlement was calculated, the results of the calculation and the circumstances under which payment will be made.
The “401k” Federal Savings Plan will make only one disbursement under a court order even if the order on its face requires a series of payments.
After a payment is made, the account will be unfrozen.
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