Federal benefits
Retirement Benefits Savers Get a Gift from IRS
The Internal Revenue Service of the USA has given a special gift to all the retirees who have some retirement benefits saving. It has allowed them a chance to explain why they didn’t stick to the 60-day deadline while moving their money from one IRA to another or from a 401(k) to an IRA. Earlier, the retirees just had to pay tax for missing the deadline and they didn’t get a chance to explain the situation. Experts are still advising to make the money transfer online.
IRS reduced the Worry of Retirement Benefits Savers
IRS has considerably made the life of a retiree easier as the rule of moving retirement benefits funds from one IRA to another and from a 401(k) to another within just 60 days cost a lot of money to the retirees earlier and harmed their nest eggs. When a retiree failed to move the funds in time, he or she had to pay taxes for the full amount. If the person moving the funds was 59 and a half years of age, he or she had to pay an additional penalty.
Avoiding the Risk
In order to avoid the risk of paying extra tax, the financial experts advised the retirees to do an online transfer of their funds. Not only it’s very convenient but it’s quicker too. It ensures that the funds are transferred smoothly within a few days.
The Mistakes
Some retirees had to pay extra tax because they had a misconception that the account they have moved their funds to a qualified retirement account while it was not the case. Some even made the mistake of losing the distribution check.
Expert Opinion
The founder of IRAhelp.com and a certified public accountant, Ed Slott says that this move of IRS is a big deal and it will help a lot of people. He says that when people had to pay full taxes due to a small mistake, they lost their tax-advantaged status.
Slott adds that people who didn’t submit the funds on time usually did it inadvertently rather than trying to pull something over on the IRS. He also said that there was a costly appeals process so only a few offenders pursued it. He concluded by saying that online transfer is still the best practice.
The Circumstances
IRS has announced that the new rule would be effective immediately and has shared a list of circumstances that allow a person to be excused for not submitting the retirement benefits savings in a new account on time. Some of these circumstances are severe damage to the residence of the taxpayer, death in the family of the taxpayer, serious illness of a family member, a postal error, etc. In such circumstances, the taxpayer must immediately provide a written self-certification explaining why or she missed the window.
Fraud Protection For Retired Federal Officials
Fraud protection is something of paramount importance in the skeptic and cynical world of today and where social security and other veteran benefit policies are protected against fraud, federal retirement benefits is not.
This is something that was always in the attention of the law forming bodies and now courtesy a bill put forward by Sen. Heidi Heitkamp and James Lankford is possibly going to rectify this issue once and for all.
Mr. James Lankford is the head of the governmental affairs committee on regulatory affairs and federal management and the homeland security department of Senate. He has in strong words emphasized on the fact that once this bill of his gets passed, strict penalties will be carried out against any financial over lookers who are found guilty of committing fraud against a federal officer. He further said that the current rules are not clear nor firm and it was high time somebody changed that.
The payee fraud prevention act encompasses both the FERS and the CSRS retired officials. James said that he was made aware of the issue by several retiree advocate groups that were constantly trying to make things right. During this period, he was trying to reduce the retirement wait tenures. On average, a federally retired officer has to wait around eight months (if not more) before first being able to enjoy their benefits and this is definitely something in demand of attention.
The recent OPM data security breach has stolen the main spotlight inside the agency and in the eyes of media as well but Lankford believes that even though security vulnerabilities need to be removed and data centers be made a lot securer, he can’t let millions of employees suffer because of fraud.
Seeing such positive efforts made by senators only proves to us that there are in fact people striving to make this nation a lot more prosperous one. Here’s hoping that it continues.
Federal Employee Benefits Protected against Taxation
Federal Employee Benefits Protected against Taxation
Changes to a federal tax law now protect the federal employee benefits of a public safety officer who was disabled or killed in the line of duty. Congress unanimously approved the “Don’t Tax our Fallen Public Safety Heroes Act,” which was later signed by President Obama this summer. The purpose of the bill was to clean confusion in current tax law to ensure that families of public safety officers that died or suffered debilitating injury while on duty would not have to pay for benefits received.
Section 1201 Benefits
This legislation addressed federal benefits paid out through Section 1201 of the Omnibus Crime Control and Safe Street Acts of 1928. This act made it possible for the families of fallen public safety officers to receive death and education benefits. These federal benefits apply to law enforcement officers, firefighters and other first responders who die or sustain disabling injuries while on duty.
Current benefit totals are just over $205,000 for deaths and injuries occurring after October of 2014. Additionally, educational benefits total a one-month sum of just over $1000. The legislation provides that the government cannot tax any money provided to surviving dependents of a public safety officer who died from an injury sustained with on duty. However, taxes may be applied if the money would have been payable even if the injury that resulted in death took place off the clock. This exclusion does not apply to disability benefits.
Workmen’s Compensation Exclusion and Death Benefits
Before the passage of this legislation, state based agencies used workmen’s compensation exclusions to rule that death benefits were not taxable. However, this required each employer to submit a private letter with the IRS to ensure that the beneficiaries are free from taxation on these benefits. This process often took weeks. The new legislation makes it clear that these benefits cannot be taxed, clearing up paperwork and time for employers and agencies.
Dave Reichert, a Republican from Washington, told house members that, “When a public safety officer has been catastrophically injured or killed in the line of duty, their families should not also have to deal with paying taxes on the benefits they received after that loved one has paid the ultimate price while protecting their fellow Americans. The sacrifices of our men and women who wear the badge keep us safe, and now we have the opportunity to help provide for those that they leave behind,” according to Lexology.
This act only applies to federal taxes, though most states are likely to follow suit as many follow federal tax law to compute state taxes.
A second act, the Public Safety Employees Retirement Act extends an exemption that currently allows state public safety employees to withdraw from their federal retirement plans without a 10 percent penalty, provided that are 50 years of age or older. This additional exemption only applies to law enforcement officers, firefighters, and air traffic controllers. Congress passed this bill last month and the president signed the bill into law, offering more flexibility for individuals who routinely put their life on the line in the name of federal employment.
Federal Employees Have New Union Leader
Federal Employees Have New Union Leader
The National Treasury Employees Union instated Tony Reardon as president of the Union. The Treasure Employees Union is the second largest federal employee union. Reardon has spent the last 25-years working as a staff member for the NTEU, but has never actually held federal employment. He won the election with 89 percent of the vote.
Reardon will replace former executive vice president, Colleen M. Kelley who served as president for 16 years. Members of the National Treasury Employees Union comprise federal employees from over 31 different department and agencies totaling some 85,000 members.
Reardon says some of the most pressing issues surround federal benefits include fair pay. He wants to address multiple pay freezes as well as years when pay increased only 1 percent. He said that ensuring federal employees receive fair pay is especially important.
Additionally, Reardon is a proponent for protecting government retirement benefits. He said, “We want to make sure we are protecting federal retirement. Federal employees deserve a secure and fair retirement. They signed on with the expectation they would get that modest retirement, and ultimately they earned it,” according to a question/answer session with the Washington Post.
Reardon also noted that proposals to weaken the federal retirement program are particularly disheartening, considering that so many individuals of government retirement age do not have enough money saved up for retirement. “Federal workers spend their professional lives serving their country and deserve the modest retirement income they were promised and earned,” he said.
Ensuring that all federal agencies, and particularly the IRS, will also be a major focus on Reardon’s time as union president. Reardon feels that providing fair budgets is essential to ensuring that all agencies function properly. He noted that ensuring the IRS has enough funding is vital to the success of the rest of the federal entities because the IRS funds the rest of the government.
Finally, Reardon wants to help protect safeguard employee rights. There have been several moves to remove the union from the IRS entirely, which Reardon says would be a mistake. “Eliminating or restricting due process will discourage workers from speaking up and expose employees to unfair treatment,” he said in the question and answer session.
Reardon says he plans to work from former president Colleen Kelley’s groundwork to protect federal employment and federal benefits.
While Reardon has never been a federal employee, he has worked for the NTEU for 25 years and served as the vice president for the NTEU. His tenure as vice president put him in the position to serve as a chair of the IRS term bargaining team as well as a chair of the U.S. Customs and Border Protection term bargaining team. He has worked closely with many federal employment organizations and spent more than 10 years as the NTEU Chief Operation Executive. His leadership and management skills include day-to-day operations, NTEU convention organization and national training conferences.
Colleen Kelley oversaw major changes to federal employment benefits during her tenure including sick leave credit in the FERS that can used toward retirement. She was also integral in the integration of flexible spending accounts as well as saving many FDA labs.
Do You Have a Federal Retirement Individual Action Plan
Building your Federal Retirement Individual Action Plan (IAP) starts first with building your Financial Plan – the key element to your retirement future. In order to achieve our collective goal of retiring with comfort and security, we must underscore the inescapable urgency of identifying and setting goals. Without setting SMART goals we cannot develop a workable financial plan, a sensible budget or an Individual Action Plan (IAP).
Federal Employee Retirement Priorities
We all philosophically know the difference between ‘WANT’ and ‘NEED’. Prioritizing need over want is the age old challenge. There is nothing wrong with ‘wants’. As a matter of fact, wants often push us to succeeding. The challenge is being able to know the difference between want and need and utilizing that knowledge to choose options and decision-making strategies that are critical to the SMART goals we set in our lives.
The Federal Employee Financial Plan
One of the most important components of financial planning is the decision-making process. As we think about retirement, it is imperative that we make choices that maximize our capacity to accomplish SMART goals with perhaps a different level of income. Decision-making, like goal setting may need to be modified depending on changing circumstances and other factors. However, there is a process of effective decision-making used by most of us without ever consciously thinking about it. We are constantly setting goals consciously or subconsciously. We must analyze data when determining what we can afford and what we cannot. We create plans to turn thoughts into action, the implementation process. Lastly, we monitor how things are working which often calls for modifying the original plan we put in place. Are you ready to put your retirement plan in action.
P. S. Always Remember to Share What You Know.
Recommended Articles
For Postal Employees – LiteBlue and the TSP
Federal Retirement Benefit Analysis
Thrift Savings Plan (TSP) Withdrawal Options
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
Federal Retirement Benefit Analysis
Federal Benefits: Keeping Abreast of Federal Benefit Changes
Keeping Aware of Federal Benefits Changes
Provisions and guidelines for postal and federal benefits may change often. We need to stay alert for any and all changes that impact our federal retirement benefits now and in the future, The more we know about how our federal retirement benefits work in once we retire the better our next new adventure will be. Let’s discuss a few policy changes that have taken place within the last year.
The Supreme Court declared that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional. Therefore some benefits that had been previously denied to certain categories of individuals have now been extended to them. Based on the ruling, the Office of Personnel Management (OPM) has extended marriage-based federal benefits under its purview to federal employees, annuitants, and their same-sex spouses who have legally married in a jurisdiction that permits same-sex marriages, without regard to where they currently live or work. The policy change as stipulated by OPM is deemed a qualifying life event (QLE) which allows changes to be made outside of open season generally 60 days from the date of implementation.
The United States Postal Service (USPS) is following the same provision but for the purpose of family member definitions under leave programs, the Family and Medical Leave Act (FMLA) and relocation. Further for FMLA relevant to a same sex spouse who lives in a State that does not recognize same-sex marriage, the right to leave under FMLA was initially on a temporary basis pending directions from the United States Department of Labor (DOL).
The Department of Labor issued guidance after that period and made it effective on the date the Supreme Court made its ruling (June 26, 2013) declaring that same-sex spouses may be eligible for FMLA Leave to care for a seriously ill spouse or for activities related to a spouse’s military deployment.
It should be noted that DOL’s guidance verifies that only employees living in a state recognizing same-sex marriage can use FMLA leave for an action related to their same-sex spouse. Therefore, the expanded rights are not applicable to same-sex couples who legally marry in one state, but live in another state that does not recognize same sex-marriage.
There are some other policy changes that we will discuss in a separate post regarding other federal benefits. I believe firmly that it is always easier by the inch than the mile to digest all the information that constantly becomes a part of how our benefits work now and how they will work in retirement.
P. S. Always Remember to Share What You Know.
Federal Employee Viewpoint Survey
Federal Employee Viewpoint Survey: What You Think Matters
Arriving in the mailboxes of Federal Employees will soon be the 2014 Employee Viewpoint Survey. Employees have until early June to complete the survey. Every federal employee should actively participate in the survey because what you say matters. Employees know and understand what is happening in their agencies better than any other single source.
Participating in the Federal Employee Viewpoint Survey allows leaders in the Federal Government the opportunity to really see how they are doing. It determines what strategies need to be employed in order to make government agencies more efficient and customer-centered.
The Employee Viewpoint Survey gives employees an open opportunity to say what they feel, offer suggestions and ideas as to how to make government better. The Viewpoint Survey not only asks questions, but allows participants to comment. Even if you will be retiring soon, don’t fail to participate in the Survey. You have perhaps witnessed some things others may not have had the opportunity to see and the Federal Viewpoint Survey helps you share you knowledge.
When the Federal Viewpoint Survey arrives, don’t leave it on the table or forget about it in your briefcase, do yourself a favor and respond because what you say as a Federal Employee matters. What you say drives the forward movement of agencies throughout the federal workforce.
P. S. Always Remember to Share What You Know.
OPM and UMUC: Partnership for America’s Greatness
OPM and UMUC Partnership
The Office of Personnel Management (OPM) has partnered with the University of Maryland, University College (UMUC) to ensure federal employees and their families acquire the skills needed to compete on the global stage.
The partnership offers current federal employees, their spouses and dependent children a 25% discount on out-of-state tuition, to help address the fact that tuition is becoming increasingly costly and unaffordable for many families. OPM’s forward thinking is certainly a plus for the federal workforce. In a time when the economy is still trying to find momentum, it is critical that resources are gathered and utilized in the most efficient manner possible.
Federal employees, in addition to all of the great employee and the federal retirement benefits afforded to them, can take advantage of the partnership advantage starting as early as the Summer of 2014. The programs provide the 25% tuition discount in most undergraduate courses and some graduate courses. Courses are available on-line making it convenient to fit the busy schedules of the federal workforce.
Federal employees can look forward to a Summer of Education for themselves and their qualifying family members. Federal employees may enroll in degree-granting programs, certificate programs or just take a few classes to enhance their professional profile or simply to learn something new.
P. S. Always Remember to Share What You Know.
Social Security – Background
~~SOCIAL SECURITY-BACKGROUND
As we continue building our laundry list of things we need to know and do in order to prepare to retire well, Social Security is a major item on our list. The Social Security Act was signed on August 14, 1935 some 15 years after the Civil Service came into being on August 1, 1920. When the Social Security Act first came into being, it was only a retirement program for the primary worker. It was not until many years later around 1939, that benefits for survivors and the retiree’s spouse and children were added. Disability benefits were not a part of the program until 1956.
Today we look at the Social Security Act from a much smaller view than it was originally structured. The Act was extensive in its original format and contained provisions for national unemployment compensation, Aid for Dependent Children and assistance to states to support a number of health and welfare programs.
Today we think of Social Security as a core part of the retirement structure for employees of the Federal Employees Retirement System (FERS) as well as those employees under the CSRS Offset program. Individuals under these systems have social security deducted from payroll, while employees under the old Civil Service Retirement System (CSRS) do not.
CSRS employees may, however, be eligible for social security benefits because they worked in non-federal jobs where they paid into social security or via spousal or survivor benefits because of a spouse’s covered employment. The history of the Social Security Act and its expansion to cover the categories of spouses and survivors has been of great benefit to many families.
Two legal requirements may impact Social Security benefits for CSRS employees: the *Government Pension Offset and the * Windfall Elimination Provision. The Government Pension Offset does not affect CSRS Offset employees but the Windfall Elimination Provision might, depending on the beneficiary’s earned outside income while drawing Social Security benefits.
*DEFINITIONS: Government Pension Offset – This law affects spouses, widows and widowers who may qualify to receive a pension from a federal, state or local government where Social Security taxes were not paid from your work and may cause your Social Security spouse’s widow or widower’s benefits to be reduced.
Windfall Elimination Provision – Your Social Security benefits may be reduced if you receive a pension based on work you performed in a government agency or employment in another country where your employer did not withhold Social Security taxes from your salary.
We will discuss both Government Pension Offset and Windfall Elimination Provision in greater detail in a subsequent post.
P. S. Always Remember to Share What You Know.
Click HERE for information on Windfall Elimination Provision
Click HERE for information on Government Pension Offset
Click HERE for information on Social Security
Click HERE for information on CSRS
Click HERE for information on FERS
How To Retire Happy
~~HOW TO RETIRE HAPPY
The first step to making sure you are happy in retirement is to understand that YOU MATTER. Many of us subconsciously define ourselves by our jobs and job titles. When those things no longer exist, we may begin to wonder about the significance of our lives and our future. It is simply human nature to want to feel important in the lives of others. However, to really feel how important you are in the lives of others, you must first place value on your own life. You really do matter because you are you, a wonderful being who has contributed more than you know to helping to make our country thrive.
Federal and postal workers make up the largest workforce in the world and they perform some very important tasks. They help to keep the world moving. An unfortunate thing that I hear in many of the educational seminars I have performed, is that these same employees don’t think of themselves that way. Their biggest mistake is to not maintain a happy outlook at all times. It is understandable that losing the routine of work itself, the relationships we build with colleagues, the connection to an environment, an office or defined destination to go to, and just that daily schedule leaves many people wondering if they really matter.
It may take a little time to figure out just how important you are. But while you are figuring that out, we already know how important you are and that you really do matter because the work you performed has charted a path for that work to continue and make a difference in the continued growth of our nation. In a future post, we will discuss some interesting thoughts about our psychological profile. Remember YOU MATTER.
P. S. Always Remember to Share What You Know.
Plan Building: How Do I Get Started?
~~HOW DO I GET STARTED WITH A PLAN?
By now you are probably asking – How do I get started setting goals that are SMART and putting a plan into action? You get started by first simply writing down what you desire your retirement picture to reflect. Write down your goals, evaluate and analyze them so they fit your circumstances and values.
Create a strategy that is doable with short, intermediate and long-term goals with time horizons that are based in reality. Make certain that the plan you create can be put into action without causing undue stress on your emotional and financial well-being. Lastly, make room to monitor and track the movement of your plan, leaving time and space to modify the plan as circumstances and conditions change in your life both for you and your family.
A plan that starts out SMART ends with giving you in retirement the lifestyle you desire and deserve.
P. S. Always Remember to Share What You Know.
FEGLI – 75% Reduction Election
FEGLI: 75% Reduction
There are some dates or time periods that are important when discussing FEGLI. Although, we are clearly in the year 2014, I am still going to discuss dates prior in the event retirees or family members of retirees are a bit unclear about what is happening with the life insurance carried into retirement from the federal service.
If you retired prior to December 9, 1980, your BASIC FEGLI coverage (watch the video) begins to decrease by 2 percent of the face value every month starting with the second month after you reach the age of 65 or when you retire whichever comes later. The decrease in face value continues until it reaches 25 percent of the original face value. The coverage is free.
If you retired on after December 9, 1980, but prior to January 1, 1990, you would have elected a reduction of 75 percent, 50 percent or No Reduction. This is where we can be clearer so that there is a complete understanding of the elections with no confusion.
Let’s talk about what the 75 percent reduction election means. If you chose the 75 percent reduction during the periods outlined, your BASIC life insurance will begin to decrease in face value by 2 percent every month starting with the second month after you turn 65 or your retirement date, whichever is later. The decrease is ongoing until it reaches 25 percent of the original face value. This insurance coverage is free for you. You pay no premium.
I am a huge proponent of – it is easier by the inch than the mile. For that reason, I am going to discuss each percentage reduction election separately. I think we will have a better understanding if we do it that way. Agreed?
P. S. Always Remember to Share What You Know.
RELATED TOPICS – More Federal and Postal Insurance Information
Federal Employees Health Benefits (FEHB)
Federal Flexible Spending Account (FSAFEDS)
Federal Long Term Care Insurance Program (FLTCIP)
Federal Employees and Medicare
Federal Employee Dental and Vision Insurance Program (FEDVIP)
FEGLI – The Order of Precendence
FEGLI: Order of Precedence
Now that we have discussed how a death claim will be paid. Let’s discuss to whom the death benefit will be paid. The Federal Government uses what is termed an Order of Precedence. The FEGLI Order of Precedence has no attachment to your Will. The Federal Government does not get involved in Wills and Probate. Instead, if there is no assignment of your FEGLI (Life Insurance) and no valid court order exists then the order is as follows ranging from first to sixth and in that order:
1. Designated FEGLI Beneficiary(s).
2. If no designation – widow or widower
3. If neither 1 nor 2 exists, your FEGLI will pass to the child or children. If any child or children is deceased, then equal shares will be paid to the descendants of the deceased child or children. If minors are involved, then the court will usually appoint a guardian to receive payment for the minor children.
4. If the above situation does not exist, then to the parents in equal shares or the whole to the surviving parent.
5. If none of the conditions above exists, then to the administrator or executor of the estate.
6. If all five of the conditions do not exist, then the next of kin as designated by the State in which the deceased lived – not the state in which the deceased died.
When planning your retirement future, it is important to gather and understand as much information as possible. Discuss the information with family and loved ones you trust. You can also check with your HR office about your current beneficiary designations and possibly with a qualified local FEGLI expert who can help you with your insurance selections and decisions.
P. S. Always Remember to Share What You Know.
RELATED TOPICS – More Federal and Postal Insurance Information
Federal Employees Health Benefits (FEHB)
Federal Flexible Spending Account (FSAFEDS)
Federal Long Term Care Insurance Program (FLTCIP)
Federal Employees and Medicare
Federal Employee Dental and Vision Insurance Program (FEDVIP)
More About FEGLI – FEGLI Option C
FEGLI Option C
In previous articles we discussed Basic insurance and Options A and B and various FEGLI rates. Now let’s talk about the third option under the Federal Employees Group Life Insurance – Option C. Option C is Family Insurance. As with Options A and B, Option C’s premiums are also based on age. Coverage continues into retirement and you pay the full cost of premiums.
Option C provides life insurance for your spouse and unmarried, dependent children, excluding foster children. Option C covers your spouse between 1 and 5 multiples of $5,000 and the children between the same multiples of $2,500.
With Option C you have two opportunities to make an election — first at retirement and shortly before your 65th birthday. Even if you are already 65, you still have two opportunities to make an election at retirement and shortly after retirement.
With Option C, you may choose two levels of coverage at first election: Full or No Reduction for all multiples. With Full Reductionq, at age 65 the amount of your Option C will start to reduce at 2% a month until it reaches zero.
However, if you chose No Reduction, at the first election, the full amount of your Option C will continue until your death unless you change to Full Reduction. At the second election, you can also choose Full or no Reduction for any or all multiples under Option C.
A Special Note: If you choose not to stop the future reduction of coverage when you reach age 65, your premiums will cease and your coverage will drop 2% per month for approximately 50 months, after this period your coverage will cease. If you choose not to end coverage, your premiums will continue.
Take your time in examining and understanding your options so that you will be pleased with the decisions you make to protect you and your loved ones.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
FEGLI – Option A Standard
FEGLI Option A – Standard Insurance
The Federal Government offers 3 other insurance options and we’ll discuss each in separate posts. Let’s begin with Option A- Standard Insurance.
You are entitled to continue your Option A into retirement. Option A is worth $10,000 and the cost of coverage will be your full responsibility. Premiums do increase with age. With the second month after you reach age 65, or the second month after your date of retirement, if you are already 65, your Option A will be reduced by 2% of the $10,000 or approximately $200.00 per month until it reaches $2500. $2500 will be the amount paid as a death benefit. At age 65 premiums will cease.
Many federal employee wrongly assess that $10,000 will be payable upon their death. So we want to emphasize that the amount payable under Option A is $2500 upon your death. It is a good measure to discuss insurance options with your family members or someone you trust so that they will understand what to expect from your coverage and the benefits your survivors are eligible to receive.
When preparing for retirement ask all the questions you can think of that might help you reach your retirement goals and retire well. After all, it is your life and you deserve to have the best information possible to take you into your next new adventure with confidence.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
