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June 25, 2018

Public Sector Retirement News

Federal Employee Retirement and Benefits News

Tag: Federal retirement

federal retirement

Federal retirement is a word that describes the retiring process and all the formalities involved for the federal employees of the country.

Habit for a Successful Retirement: Preparing Your TSP For 2018

Habit for a Successful Retirement: Preparing Your TSP For 2018

Many are concerned when it comes to their Thrift Savings Plan (TSP). If you don’t save enough in your TSP throughout your life then you could end up living a very uncomfortable retirement. There is plenty of information out there concerning TSP. Although it’s complicated, and you’re left to filter through all of it to make a plan of action.

Are You Saving the Right Amount in your TSP?

The Thrift Savings Plan (TSP) is very similar to private sector 401k. The TSP is referred to as a fixed contribution plan since its effects are dependent upon the amount you save as well as the performance of your investments. The higher the balance in your account, the higher your retirement money.

Payroll deductions are how contributions are made to the TSP, and you can determine how much you contribute. You can either choose a specific dollar amount, or just use a percentage of your pay. Nevertheless, the IRS places a limit each year on the highest contribution one can make into the TSP.

Catch up Contributions and Regular Contributions are the two types of contributions, and each of them has its own rules.

Regular Contributions

This particular type is available to all eligible employees of all ages. The maximum for yearly Regular Contributions in 2018 is $18,500. You’ll be able to make contributions to Traditional TSP and/or Roth TSP in whatever combination you desire, but the total amount cannot surpass $18,500.

Catch Up Contributions

These are an additional amount beyond the Regular Contributions. You can begin to make Catch Up Contributions at any time starting at age 50. Another requirement for Catch Up Contributions is being on course to attain the year’s maximum Regular Contribution. The maximum Catch Up Contribution for 2018 is $6,000. If qualified, you can contribute to Traditional TSP and/or Roth TSP in whatever combination you desire, but it cannot be more than $6,000.

Automatically your Regular Contribution carries over from year to year until you change it. However, Catch Up Contributions must be re-elected yearly.

Note: No FERS Match is included in the TSP contribution limits. The FERS Match is a separate amount and it doesn’t in anyway affect the limits of the TSP contribution.

Retirement Success Habit

The account balance of a strong TSP begins with good and regular savings habits. There are certain habits that the people who save the most usually follow. At about this time each year, they evaluate the next year’s TSP contribution limits, and they determine the amount they’re saving currently.

To determine the amount you’re saving in TSP this year, you’ll require your present Earnings and Leave Statement, a calculator, and then a pen and paper.

Step 1:  On your LES, put a circle on every TSP/Roth TSP contribution amount recorded each pay period. (Don’t use the year-to-date amount.)

Step 2:  Beginning with Regular Contributions, multiply your TSP Regular Contribution x 26 pay periods.  Carry out this step again for Roth TSP Regular Contributions. Combine the two to obtain your total yearly Regular Contributions.

Step 3:  Then, determine your Catch Up Contribution, if relevant. Multiply your TSP Catch up Contributions x 26 pay seasons. Redo this step for Roth TSP Catch Up Contributions. Join the two collections to get your cumulative yearly Catch Up Contributions. Note: A few years you will have an additional pay date, implying you’ll receive 27 paychecks.  For this study, the regular 26 pay periods are employed.

Always Room for Improvement

Think about ways that you can minimize some daily expenses and improve your TSP savings in 2018!  Small modifications can yield big outcomes. For example, pack a lunch once or twice a week rather than always buying lunch at work. You can also skip the latte and make your own coffee at home. It can help to write down some goals for your 2018 TSP savings, which could then give you the opportunity to find ways to achieve them.

If you take care of your TSP now then it will take care of you in retirement.

Are you going to be ready as you near retirement? Reach out to your financial professional for help if you have any outstanding questions when it comes to your TSP.

 

New TSP Bill Adds More Withdrawal Options for Federal Workers and Retirees

New TSP Bill Adds More Withdrawal Options for Federal Workers and Retirees

 

The U.S. Senate passed a new TSP bill this week and it is now heading for President Donald Trump’s desk. If signed into law, federal workers who’ve signed up for the Thrift Savings Plan will have additional withdrawal options and more flexibility in their accounts.

 

This legislation, called the TSP Modernization Act, passed through the Senate with a unanimous vote. This comes just one month after the House of Representatives passed the bill. Now it is ready for the president to sign into law if he so chooses. But even if he does sign it into law, the effects won’t take place right away.

 

Starting in February of next year, the Federal Retirement Thrift Investment Board will reportedly be finished with establishing all the guidelines for withdrawals. They first began writing the guidelines back in September, out of the expectation that the legislation will get signed into law.  Their original focus for the guidelines was regarding the withdrawals for post-separation, source-specific, and in-service.

 

The FRTIB wants benefits delivered to participants as quickly as possible. However, they’re not 100% confident about what is going to happen because the guidelines and requirements are still being worked out. But the agency is going to be contacting participants of the TSP and let them know when the new changes to their plan will be in effect.

 

For all the ex-federal employees, they are currently only allowed a single partial post-separation withdrawal. They can choose to receive an annuity payment, one lump-sum payment, or monthly payments. Once the new TSP bill is signed into law, participants can make multiple partial post-separation withdrawals and set the timing of them based on their particular needs.

 

Federal workers over 59 ½ years of age who are still employed can have several age-based withdrawals.

 

Participants of TSP can receive their payments either quarterly or yearly. If they want to alter the amount of the withdrawal payment, they can do so whenever they want. They can put a stop to their periodic payments too while just letting their existing balance remain on their TSP. Also, participants who schedule ahead of time for periodic payments can either buy an annuity or have a partial withdrawal.

 

The election deadline for TSP withdrawals will be eliminated under the TSP Modernization Act. The way it is right now, retired TSP participants who are over 70 ½ years old have until April 1st to choose when to take the post-separation withdrawal. This month refers to the year in which they first meet both of the requirements just mentioned.

 

The FRTIB has acknowledged how anxious the participants of TSP are to have more freedom when it comes to their withdrawals.

 

TSP participants took part in a survey recently about how satisfied they were with their current withdrawal options. Many of them said they were not satisfied. Roughly 62% indicated they liked the flexibilities proposed and about 74% of current participants want to transfer funds within a decade after their retirement to another plan from their current accounts. These 74% claim they want to look someplace else for better flexibility. About 85% of participants who are separated want to transfer funds to accounts which offer a lot more choices.

In a partnership between the FRTIB and Gallup, there was a special survey conducted with roughly 39,000 of the participants of TSP. They only received answers from 6,725 of those people. Out of this number, 89% of them claimed to be extremely satisfied or at least satisfied with the current overall way in which TSP works.

 

F Fund

 

A request was recently released by the FRTIB in which they wanted to propose having a manager for the Fixed Income Index Investment Fund (also known as the F Fund).

 

As of October 2017, there was $28.2 billion worth of assets in the F Fund. This fund tracks and analyzes the Barclays Capital U.S. Aggregate Bond Index.

 

The F Fund and the other funds of TSP are managed by BlackRock. According to the new contract, the term will be for 1-year and it will have four options that are yearlong.

 

For help with your own TSP, be sure to contact a financial professional.

Roth IRA vs. Roth TSP: Which One Should Federal Employees Consider Investing In by Steve Holmes

Roth IRA vs. Roth TSP: Which One Should Federal Employees Consider Investing In

By Steve Holmes

Steve Holmes’ work includes facilitating the acquisition of Revocable Living Trusts and funding a customized trust for each client by focusing on maximizing income, deferring taxes, and preserving capital.  seeks to provide customers the best possible return with safe financial products that provide peace of mind for their retirement. Safety and no-to-low risk is his mantra.

 

Federal employees often wonder what happens when they no longer earn their income.  They often dip into their savings and make some investments. Federal employees have the option to invest in retirement savings option such as Roth IRA and Roth TSP.

 

Although both accounts are similar in nature, they are not the same.

 

In their similarities:

 

Both are after-tax accounts. This is one of the largest after-tax account advantage compared to other kinds of savings account. These accounts mean you’re taxed on contributions – no taxes on withdrawals are assessed so long as the requirements are met. Thus, your retirement finances may not cause you as much stress.

 

You must wait five years to request a withdrawal. Although ROTH accounts offer tax-free withdrawals, there is a five-year waiting period. You are permitted to withdraw funds after five years, and if you’re at least 59 1/2 years old.

In their differences:

 

There are contribution limits. Now, the Roth TSPs are going to be higher than the TRAs. The limits for Roth TSP are $18,000 for people under the age of 50 and $24,000 for people older than 50.  The IRAs have a limit of $5,500 for people under 50 and $6,500 for people older than 50.

 

The employer match is only available on Roth TSPs, not Roth IRA.

 

Loans are available on Roth TSPs, but not IRAs. If you have a Roth TSP, you can borrow no more than $50,000, or 50 percent of the balance.

 

There are income caps on the Roth IRAs. Regardless of your household income, you can transfer $18,000 if you’re younger than 50 and $24,000 if you’re older than 50 to your Roth TSP.

 

There are income caps for the Roth IRA. You can only contribute the entire amount if the Modified Adjusted Gross Income for your household is less than $33,000 for individuals and less than $196,000 for couples. The MAGI is the AGI but only after you include certain deductions such as rental losses or student loan interest.

 

Nearly all federal employees are eligible to have a Roth TSP they can contribute to. However, they must have a paycheck and have a permissible retirement plan to open the Roth TSP account.  A person does not need to be a federal employee to open a Roth IRA.

 

When it comes to investments, TSP contributions can be made via a TSP plan while IRAs can be distributed to various plans – real estate investments, annuities, and CDs.

 

Are Federal Employees Eligible To Invest In Both?

Yes, a federal employee can choose to make contributions to either one or both at the same time if they don’t need the money for other things. However, before making investment decisions, it’s a good idea to consult a financial professional.

 

Steve Holmes
Steve Holmes

Contact Steve Holmes

Phone: 

Office: 865-769-3773

Cell: 865-951-9438

 Email: [email protected]

 

 

More Steve Holmes Articles:

Article: FEGLI-Eligibility After Retirement by Steve Holmes

SBA Demonstrates Ineffective Use of Early Federal Retirement Offers

retirement benefits

Report on Failure of Early Federal Retirement Offers

The failure of the Small Business Business Administration (SBA) to effectively execute the early federal retirement offers was highlighted in a recent report. This report was shared by the Inspector General of the agency. It stated that the effort made by the SBA to reshape its workforce via buyouts and early retirement was unsuccessful in achieving any of the goals it has set.

 The Beginning

In fiscal 2014, the SBA had requested the authority to make use of early federal retirement through its Voluntary Early Retirement Authority and Voluntary Separation Incentive Payment program so that it could easily increase the population of early-career employees, address workforce skill gaps and manage budgetary constraints.

 The Mistakes

Though the three-pronged goals of the SBA were clear enough, it failed in the efforts because of the reason highlighted in the IG report. It states that the plan to implement early federal retirement lacked measurable objectives and included inaccurate information. SBA also failed to act on the proposals shared by a consulting firm that involved changing the SBA’s service model.

The Changes

During the efforts to hire better professionals, the agency ended up spending USD 2.1 million for employees who chose to retire early. However, even after their retirement, the positions largely remained the same. Through this program, the agency succeeded in vacating only 149 positions overall. Out of those, 54 were filled without making any meaningful changes to the job description or occupants’ responsibilities.

Sensible Suggestions

It’s clear that the SBA had failed to implement the program to achieve the desired results, the Inspector General has also shared a bit of advice on the matter.

He suggested that the agency should carry out a report entitled lessons learned in which it mentions the performance of the 2014 early federal retirement program. He also added that the agency must develop procedures to make sure that if any such programs are initiated in the future, they operate as per VERA and VSIP regulations. They should also be in accordance with the guidance shared by the Office of Personnel Management.

The Agreement

SBA officials have agreed with the report. They have also decided that they will implement the recommendations by September this year.

Conclusion

On the whole, it can be seen that though the aims of the early federal retirement program by the SBA were good enough, major flaws were seen in its implementation as the effort to renew federal workforce failed miserably. The positions and job descriptions remained the same even with the new hires which made the entire process quite unnecessary. Other agencies seeking to renew their own federal employee workforce by offering a retirement program would do well to learn from the mistakes made by SBA and not repeat the same themselves. Though SBA has admitted that it has made serious errors and has promised to implement the IG’s recommendations by September this year, it will be interesting to see whether it can do it by September or not,

Leaving Federal Service – Retirement Benefits

Leaving Federal Service – Retirement Benefits

 

Federal Employees Retirement System
Leaving Federal Service – Federal Retirement Benefits

Federal employees are asking questions about retirement and what happens to their retirement package when leaving federal service.  With a new presidency and the proposed budget for 2018, there is set to be quite a few changes in the coming years for the majority of the US. Included in these changes. Therefore, we want to review this question today and assess the retirement benefits for all federal employees!

 

Before launching into the finer details, we should always remember the name of this 2018 budget; ‘proposed.’ As of yet, nothing is absolute and history tells us that things can change before the final budget is completed. Essentially, it acts as the starting point for negotiations so many of the policies can change, and we could even see none of the proposals come into place; we just cannot be certain at this point. However, preparation is the key to success, and we’d rather help you for something that doesn’t happen than leave you completely unprepared.

 

Eligible for FERS Retirement

 

Nowadays, a significant amount of federal employees are at an age where they can retire. Of course, the reorganization of agencies is likely to lead to extensive use of the Voluntary Early Retirement Authorities (VERA) too. Below, we’ve created a table showing the criteria for early retirement as well as voluntary retirement.

 

CSRS – According to a recent report, nearly all employees can apply for an early retirement with the vast majority also being eligible for voluntary retirement.

 

Type of Retirement Minimum Age Minimum Service
Early 50 20
                                                Any 25
Voluntary 55 30
60 20
62 5

 

 

If you’re considering taking an early retirement from CSRS, keep in mind the 2% charge per year that applies for as long as you’re under the age of 55. After you reach this age, the charges will stop.

 

FERS – Although very similar, FERS differs slightly in that they offer an option for reduced retirement and this is known as ‘MRA +10’.

 

Type of Retirement Minimum Age Minimum Service
Early 50 20
                                                Any 25
Voluntary MRA (55-57 Years) 30
60 20
62 5
Reduced MRA 10

 

Also different, there is no reduction as a result of age like in CSRS. However, there is a 5% reduction for those who choose a reduced retirement until they reach 62 years of age.

 

As long as you meet the criteria laid out in either of the tables above, this means you have the right to retire at any moment. In the business, you ‘join the club’ because you qualify for retirement. Although you aren’t forced to retire straight away, it’s always good to know you have the option under your belt rather than feeling restricted.

 

When You’re Note Eligible for FERS Retirement

For some, they won’t quite fit the criteria and thus aren’t retirement eligible but what does this actually mean? Often called ‘deferred retirement,’ all you need to reach a pension somewhere in the future, is creditable civilian service of five years. Furthermore, you should also leave all retirement contributions on deposit with OPM.

 

With FERS, nearly every employee who leaves before they become eligible is covered, and this requires the same deferred retirement criteria as laid out previously. If we use a 42-year old FERS employee as an example, let’s say they have 19 years of experience and have left all contributions on deposit. In this case, the MRA +10 criteria means they become eligible for a deferred pension at the Minimum Retirement Age. For every year they are under 62 years though, there will be a 5% reduction. If they wanted to avoid any reductions, the 62+5 criteria means they’ll be eligible at 62 years. With deferred pensions, the retiree cannot continue their enrolment in FEGLI or FEHB.

EPA Offering Buyouts to Reduce Personnel

It seems that many agencies are accepting president Trump’s idea of reducing the number of federal employees and the EPA Offering Buyouts is proof positive that Trump’s vision of a smaller government is becoming a reality. The Environmental Protection Agency has recently initiated steps to buy out certain personnel. The EPA has decided not to hire more workers unless it becomes necessary. It is believed that the agency may offer voluntary retirement as well. The impact of these changes on retirement benefits and federal retirement can just be guessed right now because no one knows the exact impact.

EPA Offering Buyouts
The EPA has begun offering buyouts to reduce the number of Agency employees

How the EPA Offering Buyouts Will Impact the Agency

The EPA has begun offering buyouts to reduce the number of federal employees in the Agency. The Agency has about 15,000 employees at the moment. This decision was probably taken because of an executive order by President Trump that was released last month and talked about streamlining agencies through the federal government.

How was the Message of Reducing Federal Employees at EPA Conveyed?

The message of reducing federal employees was conveyed via a letter sent by the Acting Deputy Director of EPA, Mike Flynn. This letter was sent to all the regional administrators. The content of this letter stated that the White House had asked federal government agencies to start taking immediate actions that are aimed at reducing the workforce.

The letter further stated that as per the said guidance, the EPA offering buyouts to start an early buyout or early out program. Flynn also mentioned that the goal was to complete the program by the end of the year.

No Hiring

Flynn also mentioned that though the governmentwide hiring freeze has been lifted, new recruitments at the EPA will not be encouraged. The resource situation of the agency is such that it has to opt to stay away from external hiring.  This hiring freeze is not aimed at restricting recruitment for all the positions as there can be limited exceptions that are permitted on a case-by-case basis.

Setting of a Trend

Though the memo has minimal details about the agency’s plan to reduce the number of federal employees, it can be probably one of the several plans that will be submitted by various agencies.

Targeted Approach

It is also a fact that EPA has been a central target of the Trump administration as the President of the country, Donald Trump had earlier promised that he would reduce the agency to tidbits. The budget he has proposed would slash the funding of the agency by 30 percent and cut around 3200 federal employees. It will also obliterate funding for Superfund cleanups, climate change research and scrap over 50 programs. The efforts being made towards improving the energy efficiency, cleaning up the great lakes and funding infrastructure projects in the Native American communities are among the scrapped plans.

Understanding the Buyout

Those of you who don’t fully understand what the EPA Offering Buyouts will mean to federal employees must know that buyout is also known as a voluntary separation incentive payment. It is a cash payment that is made to a federal worker to tempt him or her to leave voluntarily. The maximum amount of money that can be offered per person is $25,000. This payment is taxable which means that the take-home value is reduced by a few thousand dollars at least.

Federal workers who are selecting this option must leave by a specified date, and they are not allowed to return to federal employment within five years unless they manage to repay the entire pretax buyout amount.

Is Early Retirement Offers on EPA Agenda?

In most cases, the buyouts are coupled with early retirement offers, but in the case of EPA, it is not clear whether they are on the agenda or not. For those of you who don’t know, Voluntary Early Retirement Authority lets federal employees retire before they reach the standard combinations of years of service and age.

The two most vital federal retirement systems are Federal Employees Retirement System and Civil Service Retirement System. The latter applies to people who were hired before 1984 which consists of less than 10 percent of the workforce. These people are now older and closer to retirement on an average.

Early retirement offers allow employees in either of the two systems to retire at any age with 25 years of service or age 50 with 20 years or service. It is potentially subject to a reduction in one’s retirement benefits.

Why are Layoffs Unpopular?

Laying off the federal workers or Reduction in Workforce is not preferred by federal agencies because it requires a tedious, expensive and disruptive process. RIFs have been out of trend as Agencies have not used them for decades and they try to avoid them. Agencies prefer other methods like cutting down the travel and other expenses as well as cutting down the feds via attrition.

Conclusion:

Federal employees have been under the scanner since President Trump took over. The attempts to reduce the number of feds have been initiated at EPA by offering buyouts. The agency may also offer early retirement options which may badly impact retirement benefits and federal retirement.

Five Key Steps Towards Federal Retirement and Financial Security by Carol Singer

Five Key Steps Towards Federal Retirement and Financial Security

by Carol Singer

If you’re concerned with your Federal Retirement and financial security you may want to look into the social security administration’s “National social security month” to learn more about the benefits of social security and your thrift savings plan. These plans can be applied to the federal employees & retirees.

thrift savings plan
Federal Retirement and Financial Security and how Social Security and the Thrift Savings Plan will impact your retirement

Steps To Help You With Your Federal Retirement and Financial Security

Step 1:

The crucial step towards keeping maximizing your social security is to first understand how social security works.  Understand that Social Security is not just simple as it might looks and that there are thousands of potential claiming solutions that you could elect.  Once you understand the different ways you can claim your Social Security benefits and how that might be impacted by other income source (like your TSP and the therefore impacted by potential taxes on your TSP Withdrawals) you will be able to make a more informed decision.

Step 2:

Performing verification is the next crucial step to do under the mySocialSecurity account. Assuming that the Social Security Administration has an accurate record of your earnings could cause you to lose out on some of your benefits; you should check the earning record inside the statement of your account.

Step 3:

The Social Security Administration suggests that estimating your social security benefits with the help of using their calculators/tools under the My Social Security Account section can be beneficial for you. Using these estimates along with tsp considerations and thrift saving withdrawals options can be a major step toward finding the perfect solution to maximizing what you will receive from your FERS / CSRS Annuities, TSP and Social Security combined.

At the same time, you can calculate how much you are entitled to receive social security benefits at different ages. You should be careful with the words like “on average” & “approximately” as most of the federal employees earn more than the average wage earner. According to the data received from the Bureau of Labor, the average salary of US workers in the year 2016 was $44K. This is because the formula used by many retirees for the calculation of SS benefits replaces the major percentile of higher earners with the low wage earners.

Step 4:

The next consideration is to apply for your security benefits online. Online applications are easy to complete & are readily available. The representatives will call you to help you out with your doubts related to social security. At the same time, you have to mention the amount withheld inside the remarks section of the application from as current online application doesn’t address the federal income tax withholding. This can be achieved if you want to have your money withheld for taxes. Apart from that, if you are applying for the social security schemes after the attainment of perfect age for retirement, then you should indicate whether or not you want to receive the six months of retroactive benefits in place of remarks section.

Step 5:

The fifth & final step regarding your social security is to manage your benefits with the help of online tools or with the help of your personal mySocialSecurity Account.

Conclusion

Your social security retirement benefits will be based on your earnings history and inflation-indexed calculations.  Your thrift savings plans and your social security benefits will impact one another as income from either source could cause the other to be taxed at a higher rate.  You should carefully weigh the various social security claiming options along with thrift savings plan withdrawals options. At the same time, you should not forget your taxes on your TSP funds & all other TSP considerations while having the social security benefits.

 

Carol Singer
Carol Singer

Contact Carol:

Phone: 505.310.1474

Email: [email protected]

 

Other Carol Singer Articles

Obtaining the Best Federal Employee Life Insurance by Carol Singer

The Correct Way of Saving for Retirement by Carol Singer

Is FEGLI Right For You, Right Now? By Carol Singer

What Are the Fastest Growing Retirement Plans?

A recent report has highlighted some of the fastest growing retirement plans and how the assets of the top 1000 retirement plans in the US are growing. The topper in the list is the popular TSP or Thrift Savings Plan. Other plans have also performed well recently, and according to the Pensions & Investments’ annual survey, corporate sponsored 401(k) plans outperformed the TSP during this most recent period. This information will come in handy to people who are planning to invest in a retirement fund or are considering switching from their existing plan.

Retirement Benefits

The Assets of The Fastest Growing Retirement Plans

The Pensions & Investments’ annual survey that was released recently stated that assets of all 1,000 largest retirement benefits plans of the US grew to USD 9.39 trillion as on September 30, 2016. It is 6.2 percent more than the figures of 12 months earlier. It is even the highest level in the history of the Pensions & Investments’ annual survey.

Defined Benefit Pension Plan Assets vs. Defined Contribution Plan Assets

During the survey period, of 12 months, the assets of defined benefit pension plans in the top 1000 grew by 4.9 percent to a total of $6.12 trillion. In contrast, the assets of defined contribution like the TSP or 401(k)s rose by 8.6 percent and reached the level of $3.28 trillion.

Expert Opinion

Jeff Boettcher, Principal of BWM Advisory, LLC of Scottsdale, Arizona stated that every year this survey illustrates how important these resources are to individuals as well as the economy in general.  Mr. Boettcher went on to say that these investments represent the largest pool of investable assets anywhere in the world.

Defined Contribution vs. Defined Benefit Plans

Among the 200 retirement plans listed as the largest, the worth of assets was USD 6.79 trillion on September 30, 2016. It is 6.2 percent higher than a year earlier. Of this, about USD 1.96 trillion belongs to the DC plans; it is up by around 8 percent. In contrast, approximately USD 4.83 trillion belonged to DB plans. It is up by about 5.5 percent.

The Gap

The survey revealed that there was a gap between the number of public and corporate funds reporting a double-digit asset growth. About 25 of the top 100 corporations in the top 200 saw the assets grow by 10 percent or more. In contrast, only four of 77 public plans saw the assets grow by 10 percent or more.

Key Reason

Consultants think that the reason behind the gap mentioned above is the longer duration of corporate pension funds’ propensity to invest in fixed-income assets.

Top 5 Largest Retirement Benefits Plans

The survey results stated that all five of the largest retirement plans in the country are public plans and their rankings have been the same as last year. As expected, the federal retirement thrift savings plan that is based in Washington DC is the largest retirement plan of the country and had $485.58 billion in assets on September 30, 2016. It has increased by about 9.5 percent a year before.

The second position, the California Public Employees’ Retirement System, in Sacramento, had $306.63 billion in assets and saw an increase of 7.3 percent from the last year. Three others in the top 5 ranking were California State Teachers’ Retirement System, West Sacramento, New York State Common Retirement Fund, Albany and New York City Retirement Systems. They were worth $193.87 billion, $184.46 billion and $171.57 billion respectively. They saw an increase of 6.6 percent, 6.3 percent, and 10.6 percent in that order.

Corporate vs. Union Plans

Chicago-based, The Boeing Co, was the largest corporate retirement plan. It has assets worth $107.38 billion, and it has increased by 5.3 percent. Western Conference of Teamsters Pension Trust, Seattle is the largest union plan with $37.24 billion in assets. It has been holding steady from its $36.91 billion in assets a year before. Its overall rank is 45.

Survey Details

Pensions & Investments has compiled a survey of 1,000 largest retirement benefits plans since the year 1979. The process of the survey includes reporting, data gathering and verification that is done by the entire U.S. editorial team of the news organization.

The questionnaires are sent to over 1,300 fund sponsors available in the organization’s database. Then the largest 1000 were identified based on the completed surveys, database searches, and follow-up phone calls & emails.

Conclusion:

Based on the asset growth of the Defined Contribution plans listed, it is clear that people continue to trust the value of their retirement plans. The survey also suggests that althought the Thrift Savings Plan is the largest in terms of assets, it is not the plan that is increasing in size the fastest. Whether the comparison is because Federal Employees are aggressively seeking alternatives to their TSP or because the performance of the underlying funds has been impacted for one reason or another is difficult to ascertain but worth considering if you are faced with the question about what to do with your retirement funds.

Few Federal Employees are Leaving Jobs Due to Election of President Trump

Before the presidential elections took place last year, many federal employees were of the opinion that they would leave their jobs if presidential candidate Donald Trump was chosen for the oval office. Well, the elections are over now and he is the new President. But are the feds leaving their jobs? No, because they probably like the comforts of a government job as well as the annuities they get as a part of FERS retirement system.

federal employees

Surveys Said Many Federal Employees May Leave if Donald Trump becomes the President

There were many surveys in which many federal employees stated that they will leave the job if Donald Trump comes to power. In one survey, 25 percent federal workers said that they might leave if he comes to power. In another survey, only 65 percent of the feds said that they would commit to keeping their jobs if he came to power. As many of the federal workers are older, one expects the federal retirement numbers to see a jump in January. But did it happen?

January Numbers Did Jump

OPM has reported that the January numbers have jumped dramatically and the number of backlogged applications was up by 53 percent in January as compared to the last month, i.e., December 2016. After seeing these figures one assumes that the feds are keeping up with their opinion of leaving a federal job post retirement. But all is not as it seems.

But Not Much

These figures are not much when one considers the fact that an annual surge of retirements always takes place in January as most feds decide to quit in the final month of the year. While one remembers the fact, it can be seen that the figures in January 2017 are actually lower than the previous five years.

In the data shared by OPM, it was highlighted that the number of new retirement benefits claims of federal employees was 15,317 in January 2017 while they were actually higher, 15, 423 in January 2016. In January 2015, they were at 18,629 while in January 2014, they were 17, 383. These numbers were 22, 187 in January 2013.

Older Feds Will Dominate

As per the figures of September 2015, almost 28 percent of the federal employees were 55 or older than that. Many of the federal workers opt for leaving the service when they qualify for federal retirement pension. Even when that happens, 25 percent of the US workforce will comprise of people who are 55 years of age or older in 2020.

The Love for Federal Jobs

One of the reasons why people stick to federal jobs no matter whether they like the new president or not is that they receive a retirement annuity for the remainder of their lives. The federal retirement system is so lucrative that people love it immensely.

How Many Ineligible Federal Employees Retired Post Election

Unfortunately, the data on the number of federal employees who retired post-election without being eligible is not revealed yet. It will be sometime later when people will get to know that how many of the recent retirees were eligible for it and how many took retirement without even being eligible just because they didn’t like the new president.

No Surge Foreseen

Given the recent federal retirement application data, it is clear that many federal employees are not planning to retire in bulk due to the presidential election. If that were to happen, it might have happened till now.

Not a Lie

Some people may assume that as the federal retirement figures didn’t jump drastically post-electoral results, many federal employees (of the 35 percent who said that they would retire if Donald Trump wins) were lying. It is a misconception, people should realize that the respondents probably didn’t shift their loyalties and might have voted for Hillary Clinton, the Libertarian candidate or the green party candidate. Some may have actually retired earlier than planned.

Just an Opinion

It is highly probable that many federal employees were just expressing their political opinion in a dramatic manner while answering the survey questions. Some of them might even have hoped that the answers they are giving might steer other voters away from President Trump. Some may even think that they would resign but couldn’t resign due to financial responsibilities or other such reasons.

Simply put, the federal employees might have thought that the election results were one of the reasons for leaving but it was not the main or the only reason for quitting a lucrative job with numerous benefits. They might have also changed their minds later on.

It is also possible that the government will lose many federal employees who are young and don’t like the election results.

Conclusion

It can be seen that though many federal employees don’t like the fact that Donald Trump is their new president, they are not considering quitting due to the benefits like annuities offered by the FERS retirement system.

Government Provided Federal Retirement Contributions

All the people who are eligible for federal retirement are interested in knowing the amount of contribution that is being done by the federal government. It helps them to plan their finances in a better manner and assists them to be well prepared for the future. If you are also one of the people who are eligible for federal retirement contributions, you must read this article to get a handle on how things are vs. how people assume things to be. It might turn out to be an eye-opener.

federal employee retirement PSRetirement helps federal employees maximize their retirement through education, knowledge and proper planning.

The Statement on Federal Retirement Contributions

A report by Heritage foundation stated that the federal government contributes up to 18 percent of a federal employee’s pay for federal retirement. Some people analyzed the contributions they are getting and the results they got were below 18 percent. So were they wrong in doing the math? Let’s find out by digging out some facts.

What’s Included in Federal retirement Contributions by the Government?

Once you understand about the factors included while stating that federal government contributes 18 percent of the employee salary in federal retirement, you might get some clarification. Therefore, we should have a look at the included factors first.

OPM has estimated that the total contribution made by the government to the federal retirement or federal employees’ retirement system is 13.2 percent for the employees who were recruited before the year 2014. This 13.2 percent is achieved by reducing 0.8 percent employee contribution from 14.0 percent costs.

OPM also estimated that the contribution is 11.1 percent the employees that were hired either in 2014 or even later than that. It includes 3.1 percent employee contribution. It is pertinent to add here that an additional 1.3 percent contribution by the employees goes towards paying the CSRS obligations that are unfunded.

It should also be mentioned that all the federal employees get an automatic 1 percent contribution to their thrift savings plan by the federal government. It can even be up to an additional 4 percent in matching contributions.  Considering all these factors, the total government contributions can indeed be from 15.1 percent to a maximum of 18.2 percent.

Total Compensation of Federal Employees including Federal Retirement Contributions

The contribution of the federal government to the financial compensation of all the federal employees is considerably higher than the salary earned by each federal worker. The overall compensation package includes several other items and contributes to computations. The average federal employee’s total compensation that includes all the salary and benefits is more than $123,000.

Conclusion

It is hoped that the aforementioned explanation would act as a guide to all the federal workers who are confused about government contributions to the federal retirement. The explanation is as simple as it can be and includes all the vital points that will help the federal employees to plan their retirement in a better manner. It will also throw a light on the facts which may motivate some federal employees to stop worrying so much if the government is already contributing 18 percent to their federal retirement.

In contrast, some federal employees who had a misconception that the federal government contribution towards their federal retirement is high and didn’t save up much might get face the reality and start saving up better rather than relying solely on the federal retirement system only. No matter how much contribution you are making as a federal employee or how much the government is paying to boost your federal retirement, it is always advised to not put all your eggs in one basket and look for multiple sources of income in retirement. It would save you from the embarrassing and highly uncomfortable situation of running out of money in retirement. Won’t you agree?

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.
A new rule announced by IRS says that the taxpayers who fail to move funds from one retirement benefits fund to another won’t get penalized hastily.

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.

Manning City Council to get Retirement Benefits

The members of Manning City Council will have access to health insurance and retirement benefits starting spring 2018. This decision was made recently. A few people have shown their displeasure with the decision. They argue that the decision should be taken when it is to be implemented rather than 2 years before. Some even stated that people should have a say on the issue.

Why are Retirement Benefits and Health Insurance Benefits being offered now?retirement benefits

The Council members had the option of getting the retirement benefits and the health insurance benefits because of the state insurance and they were considered to be full-time employees. Now the ordinance needs to be modified so that the members can get the employers portion of it. These details were shared by Scott Tanner who serves as the Manning Administrator.

He also added that the ordinance would not be effective until April 2018 when the next council is supposed to be elected.

The Opposition

Pro Prothro who is a local businessman as well as the Clarendon County Chamber President has challenged the decision taken to amend the ordinance. He says that the timing of the proposal is not good. He admitted that the council members had the right to take the decision legally but he didn’t like the fact that the change is approved today while it will be effective after two years. The situation after 2 years is hard to guess. No one can decide the cost of retirement benefits and health insurance benefits at that time accurately.

Prothro accepted that the council members should get paid for their time. But he insists that the change should be tabled till January 2018 because getting statistical data on healthcare costs would be an easy thing to do then.

Another Opponent

Another opponent of the change, Art Lambert said that the council’s Rules of Procedure don’t allow the council members to fix their own salaries especially when they are in the office. He thinks that the council members should consider whether it’s appropriate for them to take this step.

Lambert also expressed doubt on the exact date when the council’s decision to change retirement benefits and health insurance was proposed. He claimed that he had studied all the minutes and could not find the record of this change. He also had the opinion that people should get the opportunity to vote on the matter and so it should be a referendum.

Calculating the FERS Supplement by Paul Kalra

A Lesson on Calculating the FERS Supplement by Paul Kalra

FERS Paul Kalra

There are many FERS annuitants who are able to retire prior to the age of 62, and who are eligible for the SRS (Special Retirement Supplement). You can meet such requirements if you have retired:

  • Following the MRA (Minimum Retirement Age) after putting in at least 30 years of service;
  • At age 60 with at least 20 years of service; or
  • Upon either an early voluntary or an involuntary retirement at age 50 after having 20 or more years of service, or at any age after at least 25 years of service, when it has been determined that your agency is undergoing a major reorganization, a RIF (reduction in force) or a transfer of function. (In this situation, you will not receive the SRS until you have reached your Minimum Retirement Age).

As Social Security retirement benefits cannot be received until you reach at least the age of 62, the Special Retirement Supplement can help you with bridging your income until the time that these benefits are paid out.

In order to determine roughly how much you will receive from your SRS, you should first obtain an estimate of benefits from the Social Security Administration. Each year, Social Security provides a statement of estimated benefits, so you will be able to easily find the dollar amount of estimated benefits that you are likely to be receiving at age 62.

Next, take this dollar amount and multiply it by your years of FERS service (rounded off to the nearest whole number). Once you have done so, divide this figure by 40. This will provide you with the approximate amount of FERS supplement that you should receive.

As an example, if the amount of Social Security benefit that you are estimated to receive at age 62 is $5,000 and you have put in 30 years of FERS service, then the calculation will be as follows:

$5,000 X 30 / 40 = $4,500

In running this calculation, your estimated FERS Supplement benefit would be approximately $4,500 per month. It is important to note, however, that certain situations such as obtaining outside employment following retirement could have an impact on the amount of benefit that you ultimately receive.

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Federal Retirement benefits reporting addressed by FASB

Recently FASB has come in the news because they released two different proposals this past week that are aimed at addressing some of the reporting issues that federal officers face regarding their Federal Retirement Benefits.

FASB’s proposals address federal retirement benefits concerns:

Proposed Accounting Standards Update (ASU), Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post retirement Benefit Cost is the name of the proposal put forward by the agency. It addresses the major concern of presenting the fixed benefit cost on a net basis to combine elements with a variety of predictable values. All the users of such statements have let FASB know that the net benefit cost’s service cost component is almost always treated in a different manner when compared to other constituents.

According to this proposal, the employer would file the cost component of the service in the same line of items as the other costs of compensation that arise from the rendered services of the employees that have been affected by the period. There is other information in this regard mentioned in the proposal as well.

All the changes that have been made complying to the proposal would be applicable to all the employers regardless of the fact that they are for-profit or not. The only requirement is that they should offer benefit plans that are defined or other post-federal retirement benefit plans or any other benefits for that matter.

 

5 Things You Must Do If You Are Eligible for Federal Retirement

federal retirementIf you are a Federal employee who is counting the days to his or her retirement then you must remember to do certain things. These things will help you to get your money soon after retirement and would save you from any unforeseen financial trouble.

How to make Federal Retirement Easy on You?

  1. Check your service records: If you are among those people who are about to retire in a few years, you may want to start checking your federal service records and make sure there are no loopholes. If you have any time lag then you may want to prepare an explanation of the same to speed up the process of your application.
  2. Connect with HR: You may also want to connect with the HR department (ORM) to see that they have all the data required to process your federal retirement Also, check that your crucial details like address are not misspelled or obsolete. Remember, a little mistake can cause a lot of time delay.
  3. Save Some Money: It would also be smart for you to start saving some money for the days when your retirement benefits application is being processed by the concerned departments. As you will not have a regular income, you may want to pay up your bills in advance. It will save you from embarrassments like having to borrow a few bucks from your friends or relatives.
  4. Track Your Application: The progress of your application can be tracked online in all cases. These online checks will let you know how soon you will get your money and you will not have to visit the respective office every now and then. If you really need the money you can also request the concerned department to process your application a bit faster.
  5. Be Prepared for Different Outcomes: The outcome of the entire process can be different in unusual cases. For instance: If a retired employee has had a divorce and is bound by law to take care of the spouse financially, the employee would get only half of the amount unless the matter is studied by the respective authorities. So you must be prepared for these obstacles in advance and discuss your case with an expert to avoid feeling disappointed in the end.

It is assured that these steps if taken at the right time will make your federal retirement process much smoother.

Things to know about federal retirement and taxes

phased federal retirement [Photo credit: Lending Memo]

If you are a servant of the federal government, then there is nothing you would look forward to more than achieving your federal retirement and enjoy the benefits that follow. The road towards retirement isn’t always an easy one but if you follow the right procedures and fund the right account then when the time comes, you normally have what you would hope for. Here is a list of things that we believe every federal retiree or future retiree should know:

Things to know about federal retirement:

  1. The federal income tax will purpose all of the incomes that you get out of retirement. This is inclusive of TSP, Social security and IRAs etc. So, this entails that the amount you will lose to federal income tax will be dependent upon the marginal tax bracket within which the income lies.
  2. It doesn’t matter if you are getting a CSRS or a FERS pension, it won’t be fully taxable. The reason being that you made the contributions from dollars that were already taxed. This does make sense because otherwise you would be taxed twice.
  3. The deductions because of TSP don’t affect the retirement income either. This is because retirees can’t make TSP contributions.
  4. The payroll taxes will not be deducted from your retirement income but only from your earned income. So, you won’t be parting with any money pertaining to your Social security tax or the Medicare tax.
  5. Around 85 percent of the Social security benefits are taxable. The specific amount is based on the provisional income. This is a very important keyword and to find out the figure, you can add ½ of your social security, some non-taxable income and all of your taxable income. This provisional income will then be compared with certain thresholds meant for joint and single filters.

 

Looking to start your savings or retirement accounts?

military retirementA recent study that was conducted by the ORC international and the Federal Credit Union of the Navy revealed that the military youngsters are incredibly and remarkably more inclined towards taking up the savings and/or the retirement funds than the youngsters from the general population. Saving money is something everybody wants to do but not many are able to do it because it’s definitely easier said than done. Everybody is aware of the importance but not many are able to get started without facing challenges. For those who have just joined the military or have been there for some time now, there are enough retirement accounts opening facilities for them to be able to be satisfied:

An emergency fund is one of the best avenues to take upon in this regard. Emergencies can never really be avoided because of their sudden transpiring nature. What we can do however is to be prepared once we are faced with any predicament. For people that can have retirement accounts or savings’ ones for that matter, an emergency fund can go a long way. You can just get it opened without any hassle and don’t touch it unless you absolutely have to. Make small additions to it every month and you should be able to have money when your car needs a sudden repair or any other such out of the blue emergence of something.

The best way to make your retirement accounts filled with money all the time is to take small steps. Don’t try to be extravagant and put all of your month’s salary in there. Another thing to remember in this regard is to start as early as you can. Often officers start late in their service tenure and when they reach their retirement they don’t have much in their accounts to look forward to. There are many avenues to take upon like the IRAs, 403(b)s and the 401(k)s etc. in this regard.

 

Details about the new military retirement system

military retirement system
(the-military-guide.com)

Soon we will be hearing from the Defense Department regarding the new military retirement system that’s set to be put in to effect from January the 1st of 2018. There are some intricate details regarding the system that are to be shared and everybody is looking forward to hearing something that they would like to hear.

Details about the new military retirement system:

During 2016, the armed personnel can expect the implementation of the financial education programs that are going to be spread across the whole force and will allow the service members that are eligible to get help regarding making decisions of selecting retirement packages. They can either get enrolled in a new retirement plan or just go with the rudimentary benefit that is given under the grandfather clause. Even though, as mentioned the plan will not be put in to practice before 2018, all the already in service troopers will be offered the traditional grandfather clause that is part of the basic 20 year retirement system.

If you entered the troops after January 1st 2006, then you will have the liberty to choose between the 401 (k) system and the offered one. This would definitely create an ambience of uncertainty as 2018 approaches near for the people that are in the middle of their services.

The troopers who came before 2006 and have served for over 12 years, will be given the chance to opt for a waiver but because this ensures few financial fruits, not many would like to make the switch.

There have been cases where the Pentagon has forcefully asked some of the troops to take upon retirement plans but with the new military retirement system and its launch, it’s expected that things are going to get a lot more open to choice of the military.

The Last of the Government Research Chimpanzees are Retiring

research chimpanzees

The Government is retiring the last of the research Chimpanzees

There have been some chimpanzees used by the government for scientific research purposes but now the National institutes of health has decided to send the final few research animals into federal retirement. These research chimpanzees include some that were present in the Texas facilities. They will be moved to the nearest federal sanctuary as soon as some space is cleared out for them.

This is not something to be surprised of for most of the people as the government had already made such remarks and indicated that one of the closest ancestors to the homo sapiens will cease to be used as research specimens. During 2014, the national institutes of health had announced that soon all the chimps that were serving as lab rats will be retired and this looks like something to do with that announcement.

In the past week, the labs had cleared the chimps and it was said that they are no longer going to be subject to experiments in the lab anymore. The main director of NIH stressed during his last speech that the research on chimps in the world of today is no longer something pragmatic and it’s finally time for us to move on.

The first thing on the mind of the NIH board apparently will be to send the 20 chimpanzees that they currently own to the Chimp haven which is a government owned and funded chimp sanctuary up in Los Angeles. After that more animals are destined to follow and be placed in other sanctuaries that are spread out across the country.

Here’s hoping that steps like these mean an end to the exploitation of these animals and they can finally spend some years without having to abide by the rules formed by the human scientific civilization. Steps like these can only be lauded.

Medicare Premiums to Rise for Some Retirees

medicare premiums

On Monday, November 1, President Obama signed legislation that averts what, for many federal retirees, would have been a very large increase in their Medicare Part B insurance premiums. Instead of facing a $50 plus increase, federal retirees who do not receive Social Security payments will see an increase of about $19 a month. This includes a $15.80 a month increase in their basic premium, plus a $3 monthly surcharge.

Retirees whose Social Security income covers their Medicare Part B premiums will see no increase. Current law limits the increases in Medicare insurance premiums that Social Security recipients must pay.

Increases in Medicare premiums may be no larger than a recipient’s increase in Social Security payments. For the 2016 calendar year, there will be no increase in Social Security payments, consequently Social Security recipients are protected from 2016 increases in Medicare Part B premiums.

However, this “hold harmless” provision only applies to retirees whose Social Security income pays their Medicare Part B insurance. Before the November 1 legislation became law, other Medicare Part B beneficiaries would have faced a premium increase from $104.90 to $159.30 per month.

No such “hold harmless” protection exists for Federal retirees who do not get Social Security. Without a change in legislation, these retirees would have had to pay the extra $50 plus in monthly Part B premiums.

To offset lower revenue for the Medicare Trust Fund, Medicare beneficiaries will pay a $3 per month surcharge, for about five years beginning in 2016. Social Security recipients will not pay the $3 surcharge in 2016. However they will pay the surcharge in any future years when their “hold harmless” provision does not apply.

The November 1 legislation reflected a broad-ranging budget and debt-limit agreement negotiated between the President and the Congress. The legislation avoids a default on U.S. Government debt payments. It also raises caps on federal defense and non-defense spending. An additional provision of this legislation caps the increases in Medicare premiums.

— by John Zottoli