Not affiliated with The United States Office of Personnel Management or any government agency

April 2, 2020

Federal Employee Retirement and Benefits News

Category: Articles


All the latest articles covering the information that you will be craving to devour will be available via this category. From getting to know how indebted our company is to reading about the presidential elections; from knowing about new retirement plans to finding out how security breaches can affect your life; you can browse it all!

For more articles, visit our articles’ section.

Public Sector Retirement, LLC (‘PSR,’ ‘’ or the ‘Site’) is a news channel focusing on federal and postal retirement information.  Although PSR publishes information believed to be accurate and from authors that have proclaimed themselves as experts in their given field of endeavor but PSR cannot guarantee the accuracy of any such information not can PSR independently verify such professional claims for accuracy.  Expressly, PSR disclaims any liability for any inaccuracies written by authors on the Site, makes no claims to the validity of such information.  By reading any information provided by June Kirby or other Authors you acknowledge that you have read and agree to be bound by the Terms of Use

Will Coronavirus Impact Retirement Savings? Things to do With Your Investments by Ray Yon

Will Coronavirus Impact Retirement Savings? Things to do With Your Investments by Ray Yon


Experts cautiously warn everyone and suggest not allowing this temporary situation to impact your long-term financial security. 


The entire US market has seen a slowdown in the hours of the coronavirus outbreak and left many investors worrying about their retirement accounts.


According to statistics, The Dow Jones Industrial Average has dropped nearly 30 % during the past month, and the S&P 500 has dropped more than 25 % over the same month-affecting the longest-running bull market.


As per Fidelity, the overall number of 401(k) and IRA millionaires set a record of 441,000 as of February; it has declined throughout the past weeks.


Now concerned investors are worried about their retirement accounts. What should they do or not do? 


Greg McBride, the chief financial analyst at, suggested to the media that people should forget about their 401(k) right now. They will get their quarterly statement in April, and he added that “it won’t be fun and will generate opportunities to rebalance your portfolio.”


McBride added that most people believe that rebalancing means selling some part of the investment that has done well and buying some that have failed to do well. This is a well-implemented strategy of buying low and selling high.


Jobless claims surge in the United States as the coronavirus impacts the economy. 


Americans who are older and closer to their retirement might find this situation somewhat different than others. The stock market has highlighted points and focused on pointers mentioning why these Americans should have a diversified portfolio.


McBride stated that initially, the withdrawals were listed separately in cash, and conservative bonds allowed people to drive the market.  


Earlier media had reported that it is mandatory for all Americans of all ages to have a financial plan, which should include readily available cash in case of any emergencies. Not only this, but it should also “safe money” on which concerned investors may take less, or no, risk and which can be used on planned expenses. The money invested in the stock market should stay there for the long run. 


By diversified portfolio, we mean that investors would consider downturns and losses and not make any adjustments or worry about the investments. 


Greg Hammer, CEO and president of Hammer Financial Group, reported to the media that planning investments would make things easier and make your results predictable. This is why you should invest some time and sit with an expert to actively plan for these events, depending on the needs and circumstances of every individual. 


Overall speaking, workers need to interpret that, though the stock market is extremely volatile for now, it will eventually boom and come back to normal. 


McBride added that investors need to think from a long-term perspective. It’s extremely draining, but this situation is temporary. Experts cautiously warn everyone and suggest not allowing this temporary situation to impact your long-term financial security. 


Good news for workers who have a 401(k) account is that they can automatically invest every pay period and get better prices. 

Tough Times for the Stock Market and TSP during COVID-19 sponsored by Aaron Steele

Tough Times for the Stock Market and TSP during COVID-19 sponsored by Aaron Steele


Global markets have been facing tremendous losses in the last three weeks, with market volatility reaching levels that have never been seen before since the financial crises of 1929, 1987, and 2008. We have done some research and come up with the facts and figures of the stock market and TSP during this financial crisis due to the coronavirus outbreak.

The Dow and S&P 500 are reputed markets that dropped into bear market territory that means the economy faced a downturn of nearly 20% or more from all-time highs in over a century of recorded data. Treasury bonds recorded low yields and then reached an adequate level furiously. So many corporate junk bond and investment-grade bonds were sold off as investors took more risk to their interest rate yields. On Thursday, the U.S. was hit hard and reported its biggest-ever single-day market drops in history with a nearly 10% downturn, and Europe recorded something similar to the U.S. with its biggest one-day market drop at more than an 11% downturn.

The C Fund tracked the S&P 500 and found that their market has dealt with a few strong bounces, but it remains to fight.

Smaller companies tracked by the S Fund were dropped by over 30% before they bounced back on Friday, and they are still dropping quicker than the C Fund in terms of percentage.

Companies tracked by the I Fund have encountered the fewest bounces so far, and that market reported the weakest relative strength index as compared to its counterparts (which, on the contrary, signals investors to buy more often).


Let’s see what the Federal Reserve says.

 During this time of stock market volatility, the foundation of the entire nation and the whole financial system has been shaken and tested at every level. Interbank lending spreads are reporting major liquidity problems not seen since 2008. The reason for this is that many corporations like Boeing and Hyatt are opting out of their revolving credit facilities to balance cash.

The Treasury market is basically the most liquid market in the world, but, unfortunately, this market stopped working last week and was declared volatile and illiquid.

Many funds received margin calls that led to immediate selling off of Paper (futures) prices of precious metals. So many physical bullion dealers across the country confirmed physical buying. Surprisingly, the U.S. Mint went out of stock of silver eagles as they received bulk orders.

A lot of stock market investors will wait for the response from the Federal Reserve next week that is expected to come during the scheduled FOMC meeting as a last hope for the liquidity provider. On Sunday, a rate cut to zero was announced, realizing that markets were initially dealing with another sell-off.

During this vast sell-off, the Federal Reserve imposed an emergency interest rate cut of 0.50% and gave access to its largest-ever collateral lending facility to provide liquidity, if needed. The Federal Reserve responded to the low liquidity of the Treasury market by expanding its monetary base and buying Treasuries across this duration. They may take advantage of this situation and pull out other tools like commercial paper operations. More information on this subject matter will be available next week.

According to reports from the White House officials, the officers worked with Congress to generate a fiscal response. Though the coronavirus is manageable, the economy of the states has two key delicate aspects to consider.

One key delicacy is that the bottom 50% or so of the consumer income spectrum has little or no savings. As restaurants, public events, and other businesses temporarily shut down operations around the country, the entire virus scare has become a personal financial crisis for many workers living their life on a lower income.

The other key delicacy is that the United States is dealing with this issue with a total debt to GDP of 350%, and we must say that this has already been recorded as an all-time high.

Compared to the year 2007, the U.S. economy has a higher government-debt rate, corporate-debt rate, and consumer-credit rate as a percentage of GDP and a lower mortgage-debt rate.

Historical data suggests that most investors can protect themselves from this financial crisis by rebalancing their portfolio and remaining diversified in terms of financial assets when the scores go out of target range (or wait for the Lifecycle funds to do some good for them), and make sure they are financially strong enough to get through these tough times of financial hardship.

Fortunately enough, some are federal employees who get more stable income streams than workers in sectors that will have to face a harder time from this coronavirus crisis and the corresponding government response to shut down many offices and events.


SSA Looks To Increase Continuing Disability Reviews To Save Money, But At What Cost? sponsored by Todd Carmack

SSA Looks To Increase Continuing Disability Reviews To Save Money, But At What Cost? sponsored by Todd Carmack 


In the fall of last year, the Social Security Administration (SSA) publicly made propositions on making some changes to the Supplemental Security Income (SSI) and Social Security Disability Insurance programs.

Both of these social programs are based on the idea that citizens that are not able to have a job because of a disability, injury, or illness have the right to live their lives, which they need money to do for basic living such as food and shelter.

One change that has been suggested by the SSA is that some people participating in SSI and SSDI would have to go through a periodic evaluation to show that their situation has not improved. Others will also need to partake in a continuing disability review for those that have been diagnosed as medically disabled.

The forum for public feedback and comment was closed on the 31st of this past January. This may signify that these new changes may be found in the federal register this year.

The SSA states that they would like to ensure that the program stops the distribution of these benefits when the participants show improvement in their condition.

They believe that increasing the amount of continuing disability reviews (CDRs) to 18% will save $2.6 billion from 2020 to 2029.

However, those that know the processes of these continuing disability reviews counter that increasing these reviews will push more people with disabilities out of the program due to a lack of aid in the process rather than discovering many that have improved in health. They also state that more frequent reviews will be an unneeded hassle for the disabled as CDRs are already done with opinions based on medical evidence.

At this moment, according to the SSA, $1 towards continuing disability reviews saves $19.90 for the program. However, the SSA states that in the estimation, these increases in reviews would only save $1.40 for each $1 expended. This means that efficiency would be decreased.

Because most of the disabled have to go through CDRs without any legal assistance, some end up losing their benefits to the burdensome process. When legal aid is provided, it can take anywhere from 20 to 80 hours of assistance.

The commencing paperwork that is necessary to be filled out in a review can be up to 15 questions and must be sent back via the postal service within a set timeframe.

This deadline to complete and send out in the mail can often be a difficulty for those participants that have a disability, which involves issues with cognition, memory, and other limitations with behavior.

There are also situations where participants are in the hospital and being treated for severe health conditions that prevent them from answering the CDR in time. Also, there are times where the recipient does not even receive the CDR paperwork even though they have not changed their address.

In the scenario where the SSA cannot come to an answer due to not enough proof, the participant being reviewed must ask that their benefits be maintained within ten days as the CDR goes into further investigation.

A CDR has the participant provide new medical information that shows that their health condition has improved, gotten worse, or has not changed. If the participant’s doctor or doctors do not send their medical records in time, the patient’s benefits can be canceled. They can also lose their benefits even if the doctor does not provide enough information.

Another way the benefits can be canceled is due to little flubs. The SSA can also request for the participant’s medical history at their request, and if they send the request to the doctor’s personal address rather than where they work, the paperwork may not be handled. This can lead up to the termination of these benefits if the second request isn’t answered.

For many, this may be their only income stream, which can lead to unfortunate financial circumstances for them.

So how does it affect you if you’re healthy without any debilitating issues?

Though there are citizens that have had their disabilities pretty much their entire lives, a good number of people end up with disabilities in their 50s and 60s due to many years worked or to a specific incident that happened in the workplace.

Over one out of four workers that are considered young will be eligible for SSDI before they are of the minimum retirement age. Individuals that are age 30 to 34 and 60 to 66 are more likely to be recipients of disability benefits 14 folds than the average American.

Being qualified for Social Security Disability Insurance is limited according to the statistics: 77% of applicants will be denied, and 12% of that group will be accepted to be recipients due to an appeal or a rereview.

Aside from monetary benefits, another reason it is critical for many of the older generations to be able to qualify and keep their SSDI is because they are also able to receive Medicare, no matter their age, after two years of receiving their disability benefits. Not having Medicare can be dire for those that are too ill to work and do not have a workplace medical plan as the medical expenses may be unaffordable.

If CDRs increase, which will also increase the number of disabled individuals being pushed off their benefits, they will also lose their Medicare plan as the eligibility for this program is linked with SSDI. This can be a life or death situation for some.

Under their new proposals, the SSA also intends to focus on increasing CDRs for the elderly that have a “step five” disability. A judge can decide a step five disability once they have looked over the individual’s work history and their physical restrictions. They will determine them as step five if they believe the individual is not able to be employed.

A step five will generally be aged between 50 and 70 and will have worked manual labor in fields such as construction or mechanics. They are no longer able to work in this line of work due to a medical condition. They may be able to work an office job, but due to their inexperience at a desk job along with their age, the judge can decide if the person would not be someone that employers would find hirable.

Judges can only make this determination based on the individual’s age and how much education they achieved academically. Age can be a significant factor as age discrimination is quite an issue for the older generations.

According to an attorney at Prairie State Legal Services, Linda Rothnagel, she believes this specific focus on step five participants is of concern and that it may be discrimination due to age being a factor to being eligible for the step five determination. And usually, with old age, medical conditions tend to decline even more so.

It seems that if these new rules do go through, there will be some disabled Americans that will suffer from this change.


Would You Want To Retire Under MRA+10? by Joe Carreno

Would You Want To Retire Under MRA+10? by Joe Carreno 


For federal workers under the Federal Employees’ Retirement System (FERS) that wish to go into retirement but are not able to receive an immediate annuity that is not reduced may have another way with the MRA+10 provision.

FERS workers that are at least the minimum retirement age (MRA) can hang up their hats if they have a minimum of 10 years worked, but less than 30 under the MRA+10.

Those that have a birth year before 1948 will have a minimum retirement age of 55. Each year from 1948 will have two months added for each year until 1952. Individuals born from 1953 to 1964 will have an MRA of 56. Anyone with the birth year of 1965 or later will see an increase of 2 months for each additional year until the minimum reaches 57 for people born in 1970 and on.

In regard to the ten years of work, this can be a mix of any creditable service as long a deposit was put into such as FERS or CSRS (Civil Service Retirement System), active duty military service, and more.

Though it may be good news to hear that you can retire with less than 30 years of creditable service, there is a snag. Those that retire under the MRA+10 will have their annuity payments lessened by 5% for each year that you are under 62 years of age.

This reduction can be lessened or avoided by delaying receiving your annuity until much later. For individuals that have a minimum of 20 years worked will be able to receive their annuity payments at 60 without the penalty.

So how is the annuity for someone under the MRA+10 provision calculated? By using the following calculation:

.01 x your high-3 x years and full months of creditable service. But remember that you will be facing a reduction based on when you start receiving your annuity payments.

If you retire under MRA+10, you will not be qualified to receive a special retirement supplement. Also, you will not receive a COLA (cost-of-living adjustment) until the age of 62.

For workers that have had FEGLI (Federal Employees’ Group Life Insurance) and/or FEHB (Federal Employees’ Health Benefits) for at least five years straight when you claim retirement, you will be able to carry those benefits over into retirement without a gap in your coverage if you start receiving your annuity as soon as possible.

If you do not start your annuity immediately, the benefits will stop after 31 days of coverage that is premium-free. Once you start getting your annuity payments, you will be eligible to enroll once again into these benefit programs.

The Government Efficiency, Accountability And Reform Task Force Proposes How The Federal Government Can Be Better sponsored by Aaron Steele

The Government Efficiency, Accountability And Reform Task Force Proposes How The Federal Government Can Be Better sponsored by Aaron Steele


The Government Efficiency, Accountability, and Reform Task Force has published a report on what the government can do to be more efficient. Whether Congress will make these changes is another story.

We will be going over some of the proposals that would affect federal workers if they were to become a reality.

One of the proposals is to make changes to personnel policies. The report states that it wishes to make changes to ensure that federal government workers are all dedicated and strong performers. The report also states that the hiring process of new federal workers can be greatly improved as it takes federal organizations three times longer than private-sector groups to complete a hire. In 2017, the average timeframe to finish a hire was 106 days for federal agencies.

The task force mentions a pilot program that placed subject matter experts and hiring managers at the head of the process for hiring employees. This pilot was implemented within the Department of Health and Human Services and the Department of Interior. They appointed eight subject matter experts in the process of hiring for every two HR employees. It took an average of 37 days to select a new hire. In the pilot testing, the process took 16 and 11 days for the two departments.

The authors of the report advise that agencies should keep a continuous line of workers to fill their needs instead of just looking to fill a position when it becomes vacant. They state that agencies should constantly be looking through federal workers to fill positions throughout the government.

Another part of the report cites the Merit Act, which has been introduced but has not passed the Senate, as being a part of the process to remove underperforming workers. The report states that the Act would make the process of letting go of these types of workers more efficient and quicker. The Merit Act would also allow agencies to dismiss a senior executive for not meeting their duties as required instead of just receiving a demotion. The Merit Act would also restrict benefits for the retirement of workers that are dismissed from their duties because of a felony that is related to their job-related role. The Act would also enable agencies to recover bonuses and rescind awards when performance or conduct problems arise.

There is also a suggestion to extend the length of time for probation for competitive positions to two years instead of the current one-year probationary period. This is so that there is a significant amount of time to assess the new worker. They would also like to limit the capability for intermediates to intervene and countermand the Merit Systems Protection Board (MSPB)’s decisions or rulings.

Another thing the authors would like to do is to sustain protections for whistleblowers. The Merit Act would also cut the time to remove an employee that is underperforming or due to behaviors that go against policy. At this time, to remove a federal worker that is needed to be dismissed takes more than 300 days on average.

The report also mentions that under current legislation, federal agencies can suspend a federal worker that has broken the law for an unspecified period of time as the process to remove the individual is being worked. Some agencies state that they have to maintain the employees that are caught committing serious crimes on their roster as dismissing then would be “wrongful termination.”

The task force wants to change the policy from needing to provide a preponderance of evidence to providing substantial evidence to remove a federal employee from their post. They believe that the current system is not providing the best merit on behalf of the American people, but for federal workers to be less liable to consequences for inappropriate actions.

It seems that the authors of the report would like to change the current evidentiary system as the ongoing process drags things along, where the new standard would put the firing process more like a private business, quick and to the point.

The report also states that union representatives should have more limitations on how they can use their official time. They believe that it is unfair to the American people that political or union activity be used on official time and should be prohibited. If done, it should be an action that leads to being dismissed.

The report states that current federal workers receive raises for essentially working just enough not to be fired. On top of that, federal workers receive a yearly pay raise almost every year.  They believe that the employees have a very minimal reason to work much more productively and efficiently that would be in the interest of the American people.

The taskforce also mentions data that the Congressional Budget Office revealed, which was that federal workers that graduated from high school or those that had less education had a salary that was 34 percent more than civilians with the same education level. On the other end of the spectrum, federal workers with higher education were getting paid 24 percent less than their private-sector counterparts.

They concluded that this is causing highly qualified and higher performing workers to leave the federal labor force due to low pay, while under-qualified and underperforming workers stayed due to their higher pay.

The task force report would like for the government to even out this imbalance and would like for them to utilize Special Rates more so than they are now. The report also would like a reform on the federal pension system as they state that the benefits for retired federal workers is the highest cost for the federal government when it comes to benefit-related expenses. It indicates that federal workers are currently receiving benefits that are about the value of 14 percent of their pay when their private sector counterparts receive three percent of their salaries in retirement benefits.

The authors have advised that eliminating the Federal Employees’ Retirement System and offering only an improved and better-incentive Thrift Savings Plan (TSP) for federal employee newcomers in the future. They believe that this would save the American people money and give a better surety to future participants.

The task force report also suggests restructuring the Federal Employee Health Benefits (FEHB) program. With the current system in place, the federal government covers around 70 percent of the health plan premiums for their workers. The percentage does not change even if an employee selects a higher-priced plan or a lower-priced plan.

The authors advise that the system be changed so that the government would only cover contribution amounts that are the same across all the plans, and that the rest of the cost would be up to the federal worker to take care of. The motive for this change would be to steer workers to buy health plans that they only need so that it would save taxpayers a significant amount of money.

The proposals that the Government Efficiency, Accountability, and Reform Task Force have made would need to be put through by Congress if we were to see any of these changes. However, with one political party in charge of the Senate and the other in charge of the House, it isn’t likely that we will see any action happening with these suggestions. Political differences between the two political parties have resulted in little change in the system of federal civil service.

How To Save $1 Million For Your Retirement Fund by Bill Hoff

How To Save $1 Million For Your Retirement Fund by Bill Hoff


What is that magic number that you believe is enough to retire? For many, according to last year’s TD Ameritrade’s Retirement Pulse Survey, that magic number is $1,000,000. In the survey, participants were at least 23 and older, with a minimum of $10,000 to invest.

The survey touched on if they were open to slash spending to put away more money along with asking if $1,000,000 would be enough to have a financially stress-free retirement. Almost 90 percent of the participants state that they would lessen their expenses now to be able to save more for their retirement years. Some ways of saving more money were to brew coffee at the house, make home lunches rather than eating out, and downgrading or lessening costs on housing.

When it comes to the question of whether $1,000,000 would be enough? 6 out of 10 of the adults in different age ranges answer positively that $1,000,000 would be enough.

If these participants made the changes to lessen their spending and saved more, would they be able to reach that million after some time?

To get that answer, it depends on how much time you have left until you retire and how much money you have in your savings right now.

According to Fidelity, the average IRA balance is $107,100, and the average 401(k) is $103,700.

To go over some hypothetical situations on if it is possible to reach $1,000,000, we will use $100,000 as the amount that has been saved up so far and that each scenario has a seven percent return on your investments.

Situation #1: You want to retire in a decade, but before now, you didn’t really have a priority on saving a lot for retirement. So, you have $100,000 and want to know if you can grow it to $1,000,000 in 10 years.

The reality? Not a reachable goal unless you win the lottery or come across a windfall of sorts. The IRS has restrictions on the amounts you can annually put into your IRA and 401(k), so you would not be able to reach the magic retirement number on just putting money into retirement accounts.

If you started contributing the max limits in your IRA and 401(k) last year in 2019, the limits would have been $25,000. If you are over 50, that limit would have been $32,000.

Say that you are under the age of 50 and you decided to put in the max contribution limit which equals out to $2,083 each month for ten years, your savings would only increase to just less than $564,000.

The maximum contribution limits generally increase every year, so these estimations will be on the reserved side. But even then, to reach the magic seven figures, you would need to put additional savings into a taxable brokerage account, which has any growth liable to taxes. When you also add taxes to the calculations of saving into a taxable account, you would need to put away $2,718 if your local, state, and federal taxes add up to 25 percent. This $2,718 would be an addition to the $2,083 you are contributing to your IRA or 401(k) to reach $1,000,000 in a decade.

Situation #2: You have 20 years until retirement and want to have a savings of $1,000,000. This can be done with just a 401(k) or IRA contribution of $ 1,238 every month. You only need to contribute $120 over $373,000, and the rest would be from returns on investments.

Situation #3: You have 30 years to save up $1,000,000. You can do this by contributing $154 every month for three decades. This can definitely be done if you lessen your expenses by switching for making home-packed lunches and home-brewed coffee rather than eating out or heading to that coffee shop at the corner by your office every morning. Also, because the monthly contribution amount is within the allowed contributions limit, the funds will be able to grow tax-free throughout the period you are saving for.

For those of you that do not have a lot of years left until retirement or don’t have a $100K saved may feel like this $1,000,000 goal is unrealistic for them. However, what we have covered in the article should at least encourage you to start saving immediately. The more time you have for your money to grow in investments, the more cash you will have at the end of it. And for those that don’t have a lot of money to contribute to your retirement savings, save what you can now and slowly increase it as you go.

With the money that is in your retirement savings account, be sure that the funds are put into investments of your choosing. If you do not choose your investments, the money will generally be automatically invested in money market funds, which earn you about two percent. That would not allow you to get to the $1,000,000 goal.

Just like the situations given above, you will want to average a minimum of seven percent in growth. Many expert investors believe that seven percent is a realistic amount that considers inflation and bad return years. For instance, if your investments grow 15% percent one year, and another year you have no growth, you still have an average of a little over seven percent for those two years

When it comes to contributions to a workplace retirement plan, if employer matching is offered, be sure to at least put in the max amount for the match as that is free money. Also, if you don’t plan to stay at that job for decades, at least stay until you are fully vested.

Why a Will Is Necessary in Your Planning – By Joe Carreno


Why a Will Is Necessary in Your Planning by Joe Carreno


If you are planning for retirement, you should also be planning the affairs of your estate, and a very important thing you should take care of is having a will.

If you do not have a will and end up passing, your estate will be allocated according to your state’s law.

If you do not have a will set, there may be some unfavorable consequences that may happen.

For instance, if you and your partner unexpectedly die while your children are still underage, you will not have a choice in who the guardians of your children will be if you do not have it in a will. Generally, the court will make the decision as to who will take care of your children and the assets they will receive from your deaths.

If you do not have a will that lays out your wishes on how your assets will be distributed, the state that you live in will likely have all or a majority of your wealth go to your spouse. This can still happen even if you are separated or in the process of divorce. If you want some of your assets to go to specific people, you will need it planned out in a will. If not, the person or people you want the least to have your assets may end up getting your wealth.

This is also the same case for charitable causes. If you wish to donate some of your wealth to a cause you believe in when you die, you will need it stated in a will.

Another thing a will can do is help reduce any estate taxes if planned.

It is in your best interest, as well as your family’s, to get things planned out and written into a will. That way, you will be at peace knowing that your children will be taken care of and assets will go where you want them to.

What Are The Deferred and Postponed Annuity Options? Sponsored by Todd Carmack

What Are The Deferred and Postponed Annuity Options? Sponsored by Todd Carmack

We will be going over deferred and postponed annuities for those federal employees that are looking to retire soon.

When it comes to deferred annuities, this option is often the best if you are leaving your federal post before you have reached the age and time of service necessary to retire with an immediate annuity. However, a minimum of 5 years of creditable service must be under your belt, and you cannot receive a refund of the retirement contributions when you retire.

For employees under the Civil Service Retirement System (CSRS), you can apply for a deferred annuity at 62 years of age.

Those under the Federal Employees’ Retirement System have a few more options as to when they can retire. They can be eligible for a deferred annuity at 62 with five years of creditable service or at age 60 with a minimum of 20 years of service or at your minimum retirement age with a minimum of 30 years of service. Your minimum retirement age depends on the year you were, and it can be from 55 to 57 years of age.

Under FERS, there is also the option to be eligible for a deferred annuity if you retire at your minimum retirement age with at least ten years of creditable service. This is called the MRA+10. But your annuity payments will be deducted five percent for each year you are under 62. However, if you have a minimum of 20 years worked and your annuity starts at 60 or later, you can avoid the penalty.

Deferred annuities are determined by utilizing the CSRS and FERS calculations. This is: your high-3 and how many years and full months of creditable service worked.

Under the MRA+10, both CSRS and FERS participants will be able to start receiving the cost of a living increase when they reach the age of 62.

Those under FERS that defer their annuity Will not be able to get a special retirement supplement. This supplement approximates the SS benefit that is accumulated while under FERS.

If you become a deferred annuity retiree, whether under CSRS or FERS, you will never be able to reapply for FEHB (Federal Employees Health Benefit) or FEGLI (Federal Employees’ Group Life Insurance) benefits.

Another option is postponing your annuity, but this can only be done by workers under FERS.

Those that use the MRA+10 option to retire, you can delay when you begin receiving your annuity to a future date, which can reduce or prevent you from getting a five percent reduction for each year under 62.

As mentioned above, the formula used to calculate this type of annuity will be the standard FERS calculation, which is based on your high-3 and years of creditable service the day you are officially retired. That amount will be what you get when you begin your annuity, but remember, there may be reductions if you are liable for the five percent penalty due to your age.

Under this option as well, if you were covered by FEHB and/or FEGLI for at least five years when you retire, you are able to reapply for these programs when your annuity starts

What You Can Do About Taxes on Social Security Benefits sponsored by Todd Carmack

What You Can Do About Taxes on Social Security Benefits sponsored by Todd Carmack 

Once you are the legal age to pay income taxes, this will continue until the day you pass. There is no avoiding it. You will have to pay taxes on withdrawals from any tax-deferred retirement savings plans. You may also be liable for taxes on your Social Security payments.

According to a survey done by American Advisors Group, about 50 percent of baby boomers expect their Social Security benefits to be their primary or only source of income. This is why taxes could be detrimental to retirees.

Well, the good news is that you may be able to lessen or even avoid the impact of these taxes on your Social Security benefits.

The first way to do this is by having your annual retirement income fall under federal income limitations. You SS payments can be liable for taxes at the state and federal level. What you pay at the federal level, if you must pay taxes, depends on how much income you have coming in.

How much you need to pay in taxes is based on your combined income, which is half of your yearly SS benefit, nontaxable interest, and gross income. For instance, if you are getting $18,500 from Social Security and have withdrawn $25,000 from your IRA, you would combine $9,250 plus the $25,000, which adds up to $34,250 as your total combined income.

To start, the maximum portion of your benefits that the IRS can tax is 85 percent if you earn more than their limit.

Single filers do not have to pay any taxes if they have a combined income of less than $25,000 a year. Those that are married and filing jointly do not have to pay taxes if they have a combined income of less than $32,000 a year.

Single filers that have a combined income of $25,000 to $34,000 may have up to 50 percent of their Social Security benefits taxed. Those that are married and filing jointly will be liable for up to 50 percent of their benefits if they have a combined income of $32,000 to $44,000 a year.

Single filers that have a combined income of over $34,000 will face up to 85 percent of their benefits being taxed. Those that are married and filing jointly will have up to 85 percent of their benefits taxed if they have over $44,000 in combined annual income.

You may have noticed that to pay zero dollars on taxes for your Social Security payments, you must have a combined income of less than $25,000 if you are a single filer and $32,000 if you are married and filing together. For many, it is not worth having an intentionally low income to skip paying taxes on your Social Security benefits.

But if you have your savings in a Roth IRA, the withdrawals you make in retirement will not be considered in your combined income calculations as you have already paid taxes on the money you put into the Roth account. So, if you do it right, you can have a retirement income that is more than the income limit without having to pay taxes if you have your savings in a Roth IRA. This will also have you exempted from income taxes on your annual retirement income and Social Security payments.

Now, when it comes to state taxes on Social Security benefits, this depends on what state you plan to retire in as not every state taxes SS payments.

The states that do not tax SS benefits include Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, and Wyoming.

Soon, West Virginia will also not tax Social Security benefits by the year 2022.

There might be bad news for retired residents in Illinois as their tax laws may be changed to start taxing Social Security payments. This is something to keep an eye out for updates.

Though reducing or being able to avoid taxes altogether is a great way to keep a good amount of money to yourself for retirement, other things can be done to maximize your retirement income. You also don’t want to overlook other items to save yourself money on taxes. For instance, if you are considering a move to another state that does not tax Social Security benefits, be sure to do your research on what other taxes the state does tax and at what rates compared to the current one you live in. Also, be sure to know what the cost of living is compared to where you are living right now. Overall, be sure to do the math to make sure that the move will benefit you in saving money.

As mentioned, you may also want to see what other things you can do to lessen the tax impact you might be facing when you become a retiree. Investing or rolling your savings into a Roth IRA may save you money in taxes, but you can also investigate contributing some of your savings into a health savings account (HSA). This type of account lets you invest pre-tax money and let it grow tax-free. You can also make withdrawals from it tax-free if used for qualified medical expenses.

If your Social Security benefits will be your primary source of money during your retirement years, it is important to maximize these benefits as much as you can. Though saving cash by reducing taxes is one method, it is very crucial to be pragmatic and strategic with your plans for retirement overall.

It is recommended to do as much research as possible to understand what challenges you may face in retirement so that you best prepare for it.

Carrying Your Federal Insurance Benefits Over Into Retirement by Ray Yon

Carrying Your Federal Insurance Benefits Over Into Retirement by Ray Yon

For those that have just retired or are planning to retire in the near future, you might not be sure as to what occurs to your insurance coverage that is offered to federal workers.

The only benefit that is related to insurance that does not carry over once you are retired is the Federal Flexible Spending Account (FSAFEDS).

The benefits that do carry over are the following: Federal Employees Group Life Insurance (FEGLI), Federal Long Term Care Insurance Program (FLTCIP), Federal Employees Health Benefits Program (FEHBP), and the Federal Employees Dental and Vision Insurance Program (FEDVIP).

We will go over some information on continuing these insurance benefits when you retire.

What are the requirements to continue the benefits mentioned above?

When it comes to FEGLI and FEHBP, you must have had coverage for at least five years to carry these benefits over into retirement. The five years requirement is the same for Basic FEGLI, along with each option it offers. To know more about requirements for FEGLI, what the coverage is in your retirement years, the five-year test, procedures, and more, you can find valuable information in the FEGLI Handbook, which can be found on the Office of Personnel Management’s website

For FLTCIP and FEDVIP, workers that are already enrolled when retiring can keep their benefits. Those that did not have the coverage before retiring are still able to enroll for these benefits.

Both FEDVIP and FEHBP have an open season each year that runs at the same time, which is every November and December for about four to five weeks. The coverage then goes into effect the following year on January 1st for retirees.

You can enroll in FLTCIP at any time of the year if you can pass the medical underwriting. Both you and your spouse will be able to enroll for this benefit. Also, keep in mind that your premiums are also based on the age you enroll.

Many people wonder if FEHBP costs will be different once you are in retirement. The good news is that the government contribution carries over for those that can continue their coverage while retired. You will only be obligated to pay the amount that workers are obligated to pay, which will be withheld from your benefits.

If you are currently working your federal post, more than likely you are partaking in a premium conversion that has a portion of your pay go towards your FEHBP coverage, pre-tax. This is not available to retirees.

If you are married to another federal worker, and one of you plans to retire before the other person, it may be beneficial if the federally employed person was to be paying the FEHBP premiums out of their paycheck as it is before taxes. The amount that is saved from taxes tends to be more than the savings of two plans under FEHBP rather than one plan with the spouse added to the other.

Once both of you are retirees, it may be better to switch over to two individual plans as it tends to be less in costs than one plan with an additional person.

For those that are married to non-feds, if you pass away before your spouse, they will be able to continue their FEHBP and FEDVIP benefits under yourself plus one enrollment if they are the designated beneficiary and are receiving the survivor’s benefits.

The survivor annuity requirement can be fulfilled by electing for the partial or maximum spousal survivor option when putting in your retirement claim. If the spouse has their own FEHBP coverage because they are a current or retired federal employee, they will be able to transfer or continue your FEHBP coverage to their own pay or retirement benefit pay.

If you are not retired but are still working for the federal government when you die, your designated survivors can still receive the government contribution and benefits as current and retired federal workers participating in the same program.

If the survivor’s annuity can cover the premium, the premium amount will be deducted from the annuity benefits.

When it comes to the expenses on FEDVIP, this should not change once you are retired. The premiums are determined at a group rate and will be taken from your retirement benefit each month once your retirement request has been completed. There is no government contribution for this benefit, so federal workers that are still having their retirement claims put through may receive an individual bill for this plan until their retirement claim is finished. Also, this benefit is paid with pre-tax dollars of current workers. However, for those who are retired, this benefit is paid with after-tax dollars withholdings.

For those that are curious if you can cut the cost of your FEGLI plan by cutting some of its coverage, this can be done for both current and retired federal employees whenever they wish.


Current workers can cut some or all of their coverage under FEGLI if they send in an SF2817 form to their HR office and then enroll for the FEGLI coverage that they wish to maintain. The retired workers only have to write a letter to the Office of Personnel Management. Any coverage that they wish to reduce or cancel must be detailed out and have the insured retiree’s original signature on the document. They must list their Social Security number or their retirement claim number. Also, keep in mind that coverage can only be reduced or canceled, but not increased or reinstated after cancellation once retired.

Many people may wish to cancel their FEGLI and substitute this life insurance policy for another as the premiums for FEGLI Option rises every five years until you are the age of 80. These increases after age 50 can be quite hefty, but keep in mind that this life insurance policy covers those in the federal family, no matter what their health situation or other factors may be. Other insurance policies out there do not tend to overlook these matters as they use them to determine your eligibility for life insurance.


The CSRS is Still Trucking On by Wray Mathews

The CSRS is Still Trucking On by Wray Mathews

Current federal workers under the Civil Service Retirement System (CSRS) is about 100,000, which is 4% of the federal labor force, including postal workers. A majority of these CSRS employees are 55 and older.

According to the latest information from the Congressional Research Service, which is over two years old, there were zero people under 50 that were CSRS workers. 4,200 were under 55; 32,000 were 55 to 59; 40,000 were 60 to 64; and 32,000 were 65 and older. This meant that about 67% of employees that made up CSRS were 60 and older.

As this data was from more than two years ago, the numbers should be lower now.

According to the most recent data from the Office of Personnel Management, which is also over two years old, over 90% of CSRS workers were eligible to retire. This shouldn’t come as a surprise as the CSRS program no longer took new employees at the beginning of 1984.

Though most of them are able to retire, nine out of ten CSRS employees tend to stick around past their minimum retirement age. The average age of these workers is 62.9 when they retire, with 37.5 years of service worked. In comparison, Federal Employees’ Retirement System workers average 24 years of service and retire on average at 61.2 years.

Though it still seems like the CSRS program will be completely gone within a few decades, it may not be until the end of this century.

Why? Well, nowadays, it is quite common for many older Americans to continue working past their 60s and well into their 70s. Many claim this is due to financial reasons, as well as having the purpose of doing something in their lives. Whatever the reason may be, it looks like this may be the case for the CSRS employees that are still working. Not only that, but about 30% of CSRS workers are under the age of 60, which means many of them will still be working for another decade or even two.

Along with that, since the federal government offers benefits that last a lifetime for surviving children of these employees that were disabled before 18, the CSRS program will still be around for many more decades to come.

Though a majority of the employees have been under FERS for over 25 years, the majority of the retired are under CSRS. They make up 61.8% of the retirees that are receiving retirement benefits from the federal government, which also includes the postal service members. Of the 514,000 or so survivors of federal workers that are receiving benefits, 86.2% are under CSRS.

For quite some years, federal workers have been keeping an eye out for any policy changes that would write off the CSRS employees from the accounting. Not only to finally have one retirement system to keep things simplified but also to give FERS employees the opportunity to climb up the ladder even further to where the CSRS employees are in senior and executive posts.

There have been proposals to such an idea, such as a mass buyout to those under CSRS once their numbers reached a certain percentage of the labor force. That way, it would persuade many more to retire.

There have even been speculations from some workers that the government would find a way to force CSRS employees to retire. However, with only 4% currently in the workforce, it does not seem very likely that either of these things will happen.

There has been another strong speculation concerning CSRS benefits being cut somehow, for instance, mixing the system with the FERS formula for both annuity amounts and cost-of-living adjustments.

However, at this point in time, this doesn’t seem to be the case. The latest proposals on cost-of-living adjustments from the Trump administration proposed that only a half-point be taken off the CSRS annual adjustment as opposed to zero adjustments for FERS.

A wonderful thing to have seen, however, is how both employees under these two retirement systems are mostly supportive of one another, instead of pushing the other in a direction not beneficial so that one of them can be better off.

Some Ways That the SECURE Act May Affect You by Bill Hoff

Some Ways That the SECURE Act May Affect You by Bill Hoff

The SECURE Act (which was passed into law in December of 2019), and a majority of its provisions have already started at the beginning of the year. Let’s take a look at how some of these new changes may affect you.

One significant change is on inherited retirement accounts, as the time period to deplete the account has been limited to 10 years. Before this year, beneficiaries that received a retirement account, such as a 401(k), IRA, or Roth IRA as an inheritance, had to take yearly distributions throughout their lifetimes.

This allowed many the opportunity to lay out their tax burden over decades as most IRAs pay out income considered as ordinary taxable.

With the SECURE Act in place, those that receive a retirement account as inheritance must empty the account balance within ten years of the original account owners passing. In other words, for deaths in 2020 and on, the deferred income taxes on the retirement accounts of the deceased will be completely paid within ten years.

There is also no longer a requirement to take annual distributions as long as the account is completely emptied by the 10th year. This allows the beneficiary to withdraw the inheritance during a year where earnings may be lower than usual. This could be due to being in between jobs or retirement. However, there are exemptions for certain situations.

If it is a surviving spouse that inherited a retirement account, they are exempt from the 10-year limit. They can keep the money in the account under the deceased’s name and receive distributions based on the deceased’s age. They can also roll the balance over to an account in their own name and withdraw the minimum required distributions throughout their life span.

Those that have mental or physical disabilities are exempt from the new rules as well and can continue taking yearly distributions throughout their lifetimes. Also, beneficiaries that are not more than ten years younger in age than the deceased are able to continue under the old rules as well.

In some cases, there are children of the deceased that are underage that can take yearly distributions based on how long they are expected to live until they are of age. Then they will need to abide by the new rules and deplete the account within ten years. Those that are exempt from the 10-year limit will need to use the same required minimum distribution (RMD) tables by the Internal Revenue Service before the new law came into effect.

You can review these RMD tables at IRS.GOV.

For those that have retirement accounts with trust beneficiaries, be aware. Many do this because they wish to safeguard their assets from being stripped away from credits or from being misused. The language used in these trusts may have your assets liable for higher taxes instead of lower tax rates over a span of years. This is why it is crucial to understand what all the trust setup entails if you elect it as the beneficiary.

In 2022, a provision will go into effect, which will include a special delay for certain annuities, 403(b) accounts, 457 accounts, and collective bargaining agreements.

Another change under the SECURE Act is changing the age limit to start taking yearly RMDs. It has been increased to age 72 from 70.5. When you become 72 years old, you will need to start taking these RMDs. The same calculation formulas by the IRS and rules still apply.

For some, RMDs can impose a problem as it may put them at a higher tax rate. However, for those that are charitably inclined, they are still able to donate up to $100,000 directly from their retirement account to their causes of choice, which is tax-exempt.

Due to the SECURE Act, there is no longer a maximum age limit preventing people from contributing to their IRAs. Before, once you reached 70.5 years of age, you were no longer able to make contributions. This will allow those that choose to continue working well into their 70s to still make contributions to their retirement savings.

The last change we will cover is one that will help annuities become a more popular option within workplace sponsored retirement plans than it currently is now. Though annuities have been available in workplace retirement plans, it has mainly been passed on because of expensive fees and the vulnerability to liability.

Under the new law, if fiduciaries adhere to specific rules and tests, there have been safe harbor provisions added to protect fiduciaries. This change will provide more opportunities to offer lifetime income options as a payout. Keep in mind that there are more changes due to the implementation of the SECURE Act, which affects medical expense deductions, retirement planning for businesses, kiddie tax, and 529 plans.

If you believe one of those matters will affect you in some way, be sure to do more research on the SECURE Act to ensure that you know all you need to. Also, it may be in your best interest to work with a financial professional to see how the new rules may affect you.

Proven Tips to become a TSP millionaire by Bill Eager

Proven Tips to become a TSP millionaire by Bill Eager 

As we know, inflation march has impacted one and everyone slowly, but steadily year after year, the stock market has become unpredictable. Nobody knows what will happen next, how low it will stay?


Nowadays, the increase or the decrease in the number of federal investors or we can say self-dependent millionaires highly depend on the rise or fall of the stock market. According to the survey, a currently working civil servant in Florida is expecting to save almost $2 million in his TSP in a few months’ time. Officially, the next millionaire will declare his savings, the next month. The highest saving point to date was counted in September 2018 when somebody reported 34,128 in the club. Latest reports as of last Dec. 31, state that the percentage was corrected to 19% mid-month and dropped down to 21,432.


As per the latest estimates, the average TSP balance for the participants of the Federal Employees Retirement System plan that includes around 3.3 million people were calculated to be $138,933 in January, this year. That can be easily compared to the average TSP account balance of $146,642 for the participants of the Civil Service Retirement System that are around 314,193 people. 


Surprisingly, all self-made TSP millionaires of the club, except for a few, have in common from the day they were appointed to serve their jobs. All of them have been in a job for a long duration of over 30 years. All of them invested in bulk in the C, S, and I stock indexed funds and stayed with their funds during the Great Recession of 2008-2009, the time when the stock funds were depreciating. 


The long-time haul and the stock market pushed many elected service holders into the TSP millionaire category.


But it would be great if we could know how they did it and it can be done? We have a March email from a long-time federal employee who is a retiree and is happily living his life. Yes, we are talking about Steve, who wanted to share his part of becoming a TSP millionaire. 


In his March email, he mentioned that he knew lots of storied would come up on the subject matter, but he wanted to share his. He stated that he started from ‘zero’ at the age of 35 and had seen Reagan cuts, unemployment, and a returned call to school. He was broken but fortunate enough to get a federal job. He got his job after FERS became mandatory for all new job-seekers, and he took full advantage of that time. 


He invested in the C fund as soon as it was available, and soon he invested in the S and I funds when they were available too. He gave maximum contribution from every paycheck, and when the rules allowed him to add more, he did add more. 

Though his account dropped in 2008 and early 2009, one of his coworkers advised him to take his money out of C fund, if he still had some. He replied to his advisor that he rode it down and will ride it back up. He decided to stay on the course and continued investing in C, S, and I funds.


By 2014 at the age of 62, he got retired. Some ongoing budget and political fights declared his work unsatisfying, and he had some family issues to look after. He thanked his good savings habits and the smart decision that he didn’t withdraw anything from his TSP yet. Yesterday only, he checked his TSP balance, and it says $1,225,000.


He further added that it doesn’t matter when you start. Even a late start can give you success provided you follow the right approach.”

Should You Prioritize Saving Up for Retirement or Paying Down Your Debts? By Don Fletcher

Should You Prioritize Saving Up for Retirement or Paying Down Your Debts? By Don Fletcher


Many of us encounter the dilemma of figuring out if we should be putting our money toward paying off our debts or saving up for retirement. And many of us might not have enough money to cover all our financial necessities.


Then what should you do? Should you pay off your debts first or put money into your retirement contributions?


Well, the best thing to do is to do both, if possible. At least contribute enough to your workplace retirement plan to receive the maximum match, if offered. Then take what you have leftover to put it towards your debt.


However, this isn’t always possible. So when it comes down to choosing one or the other, it depends on certain factors, like your age, if your workplace offers a contribution match, how much debt you have, and the cost of holding that debt over time.


Though it is important to save as early as you can, when it comes to age, if you have decades between you and retirement, you are in a better position to focus on just paying down your debt and creating an emergency fund.


It can be crucial to take care of the debt first as interest rates on new credit cards are currently around 17.3%, on average, to 24.54% on maximum average.


If you have debt that has high-interest rates, you will be better off getting rid of that burden instead of saving up for retirement. As you are also paying off your debt, be sure to set aside money for emergencies as a prevention method of having to use more credit or borrow money.


Once those essentials are taken care of, you can put all your attention on your retirement contributions.


It also makes sense to take care of your high-interest debt first when you have a lot of time before retirement because the market returns are not set. So during times when the market is volatile, a lot of the time, the interest you’ve earned from your retirement contributions is less than what you would have saved paying off your debts.


Now, if your employer is matching contributions, try to at least meet the minimum to get the max contribution match, as that will be free money towards your retirement you would be passing on if you fail to do so.


See if there are any other monthly expenses you can cut before allocating where your money can go. For instance, if you eat out every day for lunch, you may save more cash by making packed lunches.


When it comes to older Americans, if you do not have a lot of years between you and your retirement, you won’t have the power of compound interest as significant as someone who has decades before retiring. In this case, it may also be in your interest to take care of as much debt as possible that has high-interest rates and save up to 6 months of pay for an emergency fund.


Then go full-throttle on putting money into your retirement contributions and take advantage of the extra catch-up contributions if you are headed towards reaching the annual maximum contribution limit.


Remember, if you have matching contributions offered by your employer, be sure to at least meet the necessary amount to receive it.


No matter what boat you’re in, be sure to have your strategy and plans detailed out. Be sure to specify how long each strategy will take so that you stay on point.

Are You Planning 0n Those Social Security Taxes in Retirement? By Bill Eager

Are You Planning 0n Those Social Security Taxes in Retirement? by Bill Eager



Many federal employees have worked hard throughout their careers with the aspirations of retiring and living the rest of their lives comfortably. They have consistently set aside money into their retirement plans to help their dream of a stable retirement come true.


They are also making plans to receive their Social Security benefits as part of their retirement income.


However, many forget to consider the taxes that Social Security benefits are usually liable for. This is a mistake that can cost you a significant amount of money under a retirement budget.


If a single filer has a combined income (which is made up of 50 percent of their annual Social Security benefits, non-taxable interest, and adjusted gross income) of $25,000 to $34,000, they are liable to pay taxes on 50 percent of their SS benefits. For joint filers, you face 50 percent liability if your combined income is $32,000 to $44,000 a year.


For single filers that have a combined income of over $34,000, up to 85 percent of your SS benefits will be taxed. For joint filers, this also includes you if you bring in over $44,000 a year.


Let’s go over a scenario of how this can negatively impact you if not careful:


John is an unmarried, retired federal worker. He has a combined income of $33,000 a year. However, during a particular year where he goes on a trip to the Caribbean, he takes an extra $2,000 out of his Thrift Savings Plan to cover extra expenses. This brings his annual income to $35,000, which puts him in a category to pay up to 85 percent of his Social Security benefits instead of the usual 50 percent.


He will also face taxes on his TSP withdrawal as well, as it is a traditional tax-deferred account.


More often than not, federal workers will likely have to pay taxes on their Social Security payments. However, there are some things they can do to reduce their taxable earnings during retirement to lessen the impact of taxes.


The first strategy is to save into a Roth TSP. Since money is put in after-tax, the funds withdrawn in retirement will not be liable to taxes. This can be big savings for those that have a lot of money tucked away into a tax-deferred retirement account.


Many Americans are told and think that they will be in a tax bracket below where they are currently. However, this is especially not true for most federal workers as more than 96 percent of them are under the Federal Employees’ Retirement Plan. This means their retirement income will come from their annuity, traditional TSP account, and their SS benefits, which are all liable to taxes.


On top of that, a majority of people do not tend to lower their cost of living when they are retirees.


These are the reasons why many federal workers will have the same tax rate in retirement as they were when working.


This is why it is in your best interest to add strategies to your retirement planning now to lower the taxable earnings that you will have as a retiree.


For your retirement planning, be sure that you research all the financial decisions you make as much as possible, as they will have a lasting impact throughout your retirement years.

Trump Administration Releases Its 2021 Budget Proposal By Wray Mathews

Trump Administration Releases Its 2021 Budget Proposal, Affecting Federal Workers


In the 2021 budget proposal from the White House, President Donald Trump is bringing back up some controversial issues targeting federal employees’ health and retirement benefits.


Most of the changes asked of federal workers’ retirement benefits are similar or the same as the ones the Trump administration wanted in the first three budget proposals. Every year Congress has refused to entertain the idea.


In this 2021 fiscal budget, Trump requires employees who are enrolled in the FERS program (Federal Employment Retirement System) to donate an additional one percent a year to their accounts until the contribution of both employees and the government is 50 percent. It would eliminate the yearly cost of living adjustments for future FERS retirees and decrease COLAs for Civil Service Retirement System retirees by 0.5 percent.


Trump’s budget is asking for the abolition of the FERA special retirement supplement, which is a program developed to help people who retire before 62 years of age (Social Security availability age). This supplement is designed to help federal law enforcement employees who must retire at 59. At retirement, a person’s defined benefit annuity would be based on the High-5 salary instead of the present-day High-3 one.


The idea behind these budget requests is to bring federal compensation on par with the private sector. Unfortunately, the private sector has been moving away from offering benefits to its workers.


The budget states both the FERS and CSRS for people are factored on statutory formulas linked with the Consumer Price Index. The FERS annuitants have some protection from the economic effects because the retirement package is tied with their TSP and Social Security benefits along with the FERS annuity.


With the elimination of the FERS COLA and a drop in the CSRS COLA payments, it would effectively decrease both CSRS annuity and FERS benefits, which would ensure it matches the private sector’s benefits.


Another option the White House proposed was to decrease the statutorily-mandated interest rate of the G Fund on the TSP. The G Fund comprises government securities, so it matches the yield on either a four-week or three-month Treasury bill. TSP-administering agency officials and federal employees group are firmly against this.


Kim Weaver, a TSP spokesperson, said that in the past the agency was fervently against any changes to the G Fund interest rate, as it would become ineffective for investors and would have a significant impact on TSP participants’ retirement savings.


According to Margaret Weichert, deputy director of the Office of Management and Budget, the goal is to ensure that compensation is based on performance. She said the budget would also allow term employees access to the TSP but not for FERS.


Weichart said the benefit reductions are not applicable to current retirees, but for those still contributing to their retirement. She said the idea is to bring it in alignment with incentive-driven performance groups.


Another proposal is aimed at decreasing the amount the government contributes to insurance premiums of the Federal Employees Health Benefits Program. Right now, the government pays 72 or 75 percent of a plan’s premium, depending on which one is less. The goal is to reduce the government’s contribution to 71 percent.


These proposals are not going over well with labor groups and federal managers.


National Treasury Employees Union National President Tony Reardon said that it’s not right for an administration to gouge federal employee pay and benefits to reduce the deficit they added $3 trillion to. He also said that the NTEU would fight aggressively against these proposals and back legislation that calls for a pay increase.


Everett Kelley, national secretary treasurer of the American Federation of Government Employees, believed that the proposals are outrageous. He said that federal employees are firmly against the loss of nearly half their retirement benefits, and the AFGE will fight against it as well. Kelley also said the administration’s continued focus on affordability is nonsense. He said that the federal retirement system is fully funded and the only compensation aspect that compares to the private sector.


Renee Johnson, president of the Federal Managers Association, said that the move would hinder the federal government from hiring and keeping workers. Similar to last year’s cuts suggestions, the proposal would add to the constant challenges in recruiting and retaining employees. Just six percent of the federal workforce is 30 years or younger compared to 25 percent in the private sector.


With the uncertainty in the budget and the constant need to cut benefits, it would make it difficult to attain and retain the best of the best.

What is the Thrift Saving Plan By Joe “Flavio” Carreno

What is the Thrift Saving Plan By Joe “Flavio” Carreno


A salaried person, whether they are a government employee or private servant, remains concerned about the life that they have to spend after their retirement. Therefore, keeping in view this need for the employees, different saving plans are on the cards. But, Thrift Saving Plan is something different and has been specifically designed for federal employees. A lot of attributes of this Thrift Saving Plan (TSP) are similar to the 401(K) plan. The difference only is that this policy can only be opted by the federal servants and uniformed employees. This policy also includes the ready reserves and keeps a defined contribution plan. In the end, there is no tax on the money that has been accumulated under this policy’s plan.


Key features of the Thrift Saving Plan


Each policy possesses unique characteristics. Some of the important features of the Thrift Saving Plan have been given below.


Similarity with the 401(K) plan:


If you see the working and proceeding mechanism of the Thrift Saving Plan, you will see that all its characteristics are similar to the 401(K) investment plan. As the employer matches the contribution from the employees up to a certain limit, the same work is done in this policy by the government for uniformed and federal employees.


Tax exemption:


As most of the other insurance policies and annuities offer tax exempted money, the same in the case of the Thrift Saving Plan. The investment that you make gets accumulated with the addition of interest. So, this addition in your investment remains tax exempted and you remain in ultimate profit. So, this appears to be one of the best saving plans for federal and uniformed employees.


Investing options:


The policyholder has diverse options in this saving plan. They can invest their money in more than one place, as they possess six options to invest their money. So, this is something extra that is given to the holders of this policy, and of course, these policyholders will be under the jurisdiction of government as they are their employees.


Working of the TSP


Like all the other saving options, the main intention behind this option is also to save people from the threat of outliving income in their future life. While being in the service of the government, the policyholder contributes a fixed amount from their salary, and this fixed amount is defined by the status that the servant is serving in their department. A person with a better position will deposit the larger amounts, and a person with a lower rank will deposit amounts with respect to their own pay scale. So, the money that is invested in the accounts remains tax-deferred until it is withdrawn.

Moreover, it has already been told that there are six investing options in which money can be invested. On the other hand, there is also an option available for investors who invest in this policy. In this option, the policyholder pays the tax on the spot when they deposit the money to avoid the tax at the time of withdrawing. Now, it depends upon the policyholder whether they pay taxes at the time of withdrawing or pays taxes with every installment.

Furthermore, there is an amazing facility of switching the policy in case the policyholder quits the government job and moves into the private sector. In the line of switching options, there are 401(K) plans and an individual retirement account (IRA).

Meanwhile, a Thrift Saving Plan is a defined-contribution plan, and this plan keeps more benefits than the private sector’s retirement policies. But, the working procedure remains the same.


Investment options offered by the TSP


Here we have all the six investment options that can be taken by choosing the Thrift Saving Plan:


  1. Government Securities Investment (G) Fund
  2. Fixed-Income Index Investment (F) Fund
  3. Common-Stock Index Investment (C) Fund
  4. Small-Capitalization Stock Index Investment (S) Fund
  5. International-Stock Index Investment (I) Fund
  6. Specific lifecycle (L) funds

Specific lifecycle funds have been concluded from the combination of any securities.

If we talk about the administration of these different saving options, we will come to know that Fixed-Income Index Investment (F) Fund, Common-Stock Index Investment (C) Fund, International-Stock Index Investment (I) Fund and Small-Capitalization Stock Index Investment (S) Fund are indexed funds. All these indexed funds are being looked after by the BlackRock Institutional Trust Company. The Federal Retirement Thrift Investment Board (FRTIB) is under the agreement with this company that all arrangements regarding these funds will be seen by this specific company. The company is fully responsible for taking all the actions which are in the interest of the employees.


Advantages of the Thrift Saving Plan

This plan is popular among the government employees, and of course, this plan possesses a lot of advantages that have been given below.


Low fees:


This fee belongs to the money that you pay at the time of investment. In most of the cases, this fee is considerably high and remains anguish for policyholders. But, in the case of a Thrift Saving Plan, this problem has been readily solved by the company that looks after all the matters related to TSP. The investment fee is amazingly low, as you have to pay only 29 cents if you invest $1,000. This means the addition of $1,000 dollars will have to pay 29 cents more. If we compare this fee with the other investment plans’ fee, we have the number of $1.70, which is necessary to pay at every $1,000 investment in vanguard index funds. The cost in other index funds is also quite low, but they do not stay in competition with the TSP.


Diversification in available options:


This is the best part of the Thrift Saving Plan: huge diversification is found in the available investment options. In a Thrift Saving Plan, there are five index funds options, and the sixth one belongs to the lifecycle funds, which is a combination of a lot of security funds. The policyholder decides what they want to go with.


Roth Option:


The Roth option is an incredible opportunity that allows you to take the maximum benefit of the policy in any circumstance. A Thrift Saving Plan can only be adopted by the people who are federal servants or uniformed servants. However, if the policyholder quits the job of government and reaches out to another private organization for the job, a Thrift Saving Plan can be replaced with the 401(k) plan or individual retirement account. The money that you had invested while being in the job of government will be transferred to your account, which you will open under the rules and regulations of these policies.


Availability of the loan option:


You might come across a need for money during your investment tenure. Some of the plans do not offer the withdraw unless your plan is expired. However, this is not the case with the Thrift Saving Plan. In a Thrift Saving Plan, you can withdraw the money early as a loan. Later, you have to give that loan back with some expanded amount as a loan fee. This loan ranges from $1,000 to $50,000. Although you pay the interest on the loan, you can meet your timely need with the help of this loan.


Disadvantages of the Thrift Saving Plan


It is not necessary that certain circumstances will be ideal circumstances for everyone. What is good for one might be disturbing for another. While most people support the policies of the Thrift Saving Plan, some do not find these policies convenient enough. So, here we have some disadvantages associated with the Thrift Saving Plan;


Loan deduction fee:


You can take a loan from your own accumulated investment, but this loan costs you $50 dollars extra as a loan fee. This fee will be deducted every time you take the loan. This loan fee is deducted from the money that they give you as a loan.


Forfeiting earning of money:


A number of people consider the availability of loan options a facility. But, some of the people claim that this is the biggest drawback of a Thrift Saving Plan. They argue that you take a loan from your own money that you have to use in your future, and this thing harms your interest. Moreover, the loan fee and loan interest further tease people. So, this option might be a drawback for some of the policyholders.


90 days grace period:


In case a federal civil servant retires and has some dues to pay under the Thrift Saving Plan, they will be responsible for paying dues within 90 days. If they do not do so, they might face a lot of difficulties.


Short-time period for returning loans:


Loans are readily available for the policyholders. However, the repaying time for these loans is low. Most of the time, the policyholder is given five years to repay their loan, and in case of residential loans, this time may be extended to 15 years.



Ray Yon: Reduced Take-Home Pay As More Top Level Employees Hit Federal Pay Ceiling Of 2020

Reduced Take-Home Pay As More Top Level Employees Hit the Federal Pay Ceiling Of 2020 By Ray Yon


A growing number of long-time, top career federal employees won’t realize the full pay raise due to the arbitrary pay cap in 2020. There are several regions, such as Los Angeles, San Francisco, and Washington DC, that will be missing their pay raise due to this federal pay ceiling. Additionally, stranded employees, those with executive schedules, will see their take-home pay reduced due to higher health insurance premiums.


Finalized 2020 Pay Raise For Federal Employees


The President issued an executive order this past December, confirming that federal employees will have an average of 3.1 percent this 2020. It was an implementation of the Congress approved raise, which was a part of the bipartisan fiscal 2020 spending agreement.


This year, general schedule employees and law enforcement officers received a 2.6 percent necessary pay raise in the first pay period of January 2020, which is from January 5 to 18. This pay hike is in addition to the locality rate increase averaging at 0.5 percent depending on location.


The Federal Pay Ceiling is Equivalent to Lesser Take Home Pay


For several years, a considerable number of federal employees at the top steps of the GS-15 had their pay capped because of the executive pay freeze. Additionally, the new higher premiums, which everyone expects to arrive soon, appeared to be a significant problem. Not realizing any pay raise due to the freeze and higher premiums means lesser take-home pay.


Adverse Effects of the Pay Cap Hitting Multiple Steps in the GS-15 Ladder


In Washington DC, specifically in the Metropolitan Area, the pay ceiling only affected employees at steps 8 through 10. Moreover, federal employees in Washington are due to get the most significant pay raise adjustment of any locality area, which is 3.52 percent.


However, this same year broke the three-year run, as step 7s are now a part of the 2020 federal pay ceiling. Additionally, for GS-15s or step 10s in Washington, their annual salary should total approximately $185,509, but due to the national pay cap, their salary becomes limited to $170,800.


The Federal pay ceiling has long been a problem for GS-15 workers in New York City. Moreover, the situation has also escalated in the New York-Newark Locality as the pay cap extended to Step 6s. It has also been a problem with other high-wage areas, where salaries are associated with local private sector salaries, such as Philadelphia and Baltimore.


Meanwhile, locality regions, such as Raleigh, North Carolina, and Buffalo, New York, are experiencing the step 10 pay cap for the first time.


Major Turn Over Problem Due to the Pay Cap


The New York Times recently cited an increase in the turnover rate at the National Security Agency. The pay cap seems to have forced qualified federal employees out of the government.


While there is no tangible evidence to prove this claim, there is a high possibility that other government agencies will start experiencing a significant turnover problem. It is most likely that many of the different agency’s best and brightest will begin walking out the door and accept jobs with contractors that have better pay. Tier government employees are highly desirable considering their work experience, insider knowledge, top security clearances, and federal health benefits.


Ray Ron: Pay Cap is Sad News For All


The pay cap has enormous downsides, not only for long-time, top career federal employees. On the other hand, some localities are just about to experience the pay cap for the first time. Apart from getting stranded on the GS ladder and limiting take-home pay, these caps could also cost future retirees thousands of dollars a year during their retirement.


While plenty of localities have been experiencing pay caps for several years now, other regions are only about to reach the pay ceiling shortly if Congress doesn’t raise the pay cap anytime soon.




Why Taking Retirement Refund is Not Always the Best Case by Don Fletcher

Why Taking Retirement Refund is Not Always the Best Case by Don Fletcher


Federal employees serve under the three branches of the United States government: executive, legislative, or judicial. Some of them are politicians and their staff members, military personnel, and numerous civilians working in different state offices.

If a federal employee decides to retire but isn’t eligible for a retirement annuity, they have the option to ask for a refund of their retirement contributions in a lump sum payment. In contrast, they may choose to withdraw their contributions until they become eligible for deferred retirement.

Under the Federal Employees Retirement System (FERS), a federal employee may get a deferred annuity at age 62 with a minimum of five years of creditable civilian service but doesn’t receive a return of all retirement contributions and does not qualify for an immediate retirement benefit.

Federal employees are allowed to get deferred annuity at a minimum of 60 years old with 20 years of creditable civilian services. They can also retire at the minimum retirement age as long as they worked for 30 years with accredited private services, or even ten years of commissioned civilian services but with a reduced benefit.

What Are the Requirements to Qualify For a Refund?

Below are the eligibility requisites for a retirement refund claim:

  • Federal employees could avail of a retirement refund if they got separated from the federal government for at least thirty one consecutive days.
  • Federal workers are also eligible if they have been assigned to a position not subject to retirement reductions for at least thirty-one straight days.
  • Exiting employees should not be re-hired for a role subject to retirement reductions at the time they file for an application as well as be unsuitable to get an immediate annuity within thirty days of separation.
  • No court order would stop federal employees from receiving a refund.
  • Lastly, they should inform their current and former spouse(s) of the refund request, if possible.

When is it Beneficial to Get a Retirement Refund?

Federal Employees should consider several factors before withdrawing their retirement contributions. For one, prematurely claiming a retirement refund is a good thing when an employee has less than five years of civilian service and does not plan to return to federal employment.

Another reason is that the employee has five or more years of civilian service and has no intention to become a federal employee again. Another reasonable case is a plan to invest the funds. This presumes that the person had already done a lot of thinking and believes that it will accumulate and surpass the amount of the deferred annuity.

Don Fletcher on when is it NOT Beneficial to Claim a Retirement Refund?

Sometimes, it is not ideal to take your retirement refund. Doing so without thinking ahead would lead federal employees to a regrettable action.

The first reason is that the employee might be re-employed by the federal government and wish to receive credit for the refunded service. The federal employee will be required to make a redeposit to receive credit for those earlier years of service, plus interest. Another reason is that the employee has at least five years of civilian service, and the potential deferred annuity surpasses the amount of the lump-sum refund.

In conclusion, it’s generally wise for a federal employee to apply for a deferred annuity at age 62 because the employee can provide a survivor annuity for their spouse. Unlike a retirement refund, all deductions will void any retirement options. Even if you think that it will be more profitable to invest, it still involves a significant risk⁠—At that point, you wouldn’t have any energy left to work long enough to get back all of the savings you’ve lost.

About Don Fletcher:  Federal Retirement Expert

Don Fletcher has years of experience helping federal employees maximize their retirement benefits.  Helping thousands of federal employees through hundreds of seminars and one-on-one federal retirement benefit analysis.  Contact Don Fletcher at or (469) 358-1913

What Are Limits to Carrying Over Your Annual Leave Hours? By Don Fletcher

The 2019 leave year ended last month on January 4, and the 2020 leave year started on January 5 and will end on January 2 of 2021. In this article, we will go over how many leave days you can carry over every year along with what lump-sum payment you can expect to receive in retirement.

To begin, we will talk about how you receive your annual leave. Those that have less than three years of time served at your federal post, you receive 4 hours for every 2-week pay period. This adds up to 13 days per year.

Those that have worked from 3 to 15 years will receive 6 hours for every 2-week pay period, which adds up to 20 days of annual leave per year.

If you have over 15 years of service, you accrue 8 hours for each 2-week pay period, which adds up to 26 days per year.

For part-time federal workers, these amounts are prorated. There are also some employees, such as senior scientific and technical workers and senior executive service members, that will accrue 8 hours per pay period no matter the length of time worked.

For those of you that are apart of the Reserves or Guard will receive credit for active duty service and active duty training while you are a federal employee. For those of you that are retired military service members, credit will only be added for active duty during a war or while in a campaign for which a campaign ribbon was awarded. Active duty service will be counted if a disability occurred due to armed conflict or caused by an instrumentality of war during a war on duty.

At the discretion of an agency, those that have been given a new position or those that are former military members that had a gap of a minimum of 90 days in their service can be given credit.

The number of annual leave hours you can take into the next year and so on depends on the employment category you are under

Wage grade and GS workers can take up to 240 hours into the next year. This adds up to 30 days of annual leave. Those that have more than 240 hours will lose the time if they do not use it before the end of the year.

Those that are at the Senior Executive Service level will be able to carry over up to 720 hours, which adds up to 90 days. If you had more than this limit before October 23, 1994, your limit is that amount you had. If you have fewer hours than that amount you had at the end of any leave year, the limit will be lowered to 720 hours.

Those that work overseas can carry over 560 hours into the new years, which is equivalent to 45 days.

A Postal Service bargaining unit worker can carry up to 440 hours, which adds up to 55 days. Executive and Administrative Schedule workers of the Postal Service can carry up to 560 hours, which is equivalent to 70 days.

When you become a retiree after being a Postal Service bargaining unit worker, you will receive payment for any time you were able to carry over (with the limit in mind) into the new year along with any annual leave you accrued the year that you retire.

Any other type of federal employee that retires before the end of the leave year date will receive a payment in a lump-sum for any unused annual leave that they have. The hourly rate for which the lump-sum is calculated will be at the basic pay rate you would have gotten had you continued working until your annual leave hours had been all used up. This tends to be a big reason as to why a lot of federal workers leave just before the end of the leave year.

federal retirement savings

Not affiliated with The United States Office of Personnel Management or any government agency