There are two (perhaps even three) meanings to the phrase, “keep confidence.” For the first meaning, it means to not share information with other people and maintain some confidentiality of the information. The second meaning could be to have a level of confidence; believing in the success of the endeavor. For the third meaning, it could be both of these.

Simply put: it’s important to have some level of confidence while believing the endeavor (goal) you are working toward will be successful – that everything about that goal is kept private.

This is what an attorney-client relationship needs to have. From the time of the first phone call about a case, confidence in keeping the information private is a necessity. People must feel secure that their information and case are not shared with others outside the circle. Should the case move forward, you must have confidence that it will be successful.

Both parts are necessary to ensure a successful resolution for the outcome, even if there were some instances of uncertainty.

U.S. postal workers and federal employees that suffer from a medical condition that prevents them from carrying out essential components of their job, they should have confidence that the information they share remains private.  This is because they have numerous elements working against them.

-The employee’s agency Human Resource Department often shares sensitive data, which weighs heavily in favor of

-Medical problems should only be discovered to people in the “must-know” positions.

-Sensitive decisions about the employee’s health, working status, and future should stay private and only with those who must know.

Keeping that confidence is extremely important for both instances. The one thing federal or postal employees can feel secure about is that anything shared with their attorney who is filing for their client’s Federal Disability Retirement benefits with the U.S. Office of Personnel Management is kept in confidence – no matter how that meaning is implied.

The government shutdown has continued, it has broken all records, and we’re here to talk about real lives. Not even considering the four million contractors for the moment, around 800,000 federal workers have been affected which means they’re either working for free or sitting at home waiting for news. Either way, more and more people are getting dragged into harm’s way in the following ways;

Day-to-Day Expenditure

First and foremost, as we’ve already mentioned, 800,000 people have now missed their first paycheck. While some are having to tighten the purse strings slightly, others may struggle to pay for student loans, bills, credit cards, mortgages, and, perhaps worst of all, food.

Debt

While some companies are providing relief for their customers (more on this later!), this isn’t a universal effort, and many workers will now struggle to pay student loans, credit cards, and loans. Of course, this leads to a devastating impact on their credit scores.

Loans

Not only are families struggling to pay existing loans, but some are also forced down a one-way street that leads to a new loan (just to pay for simple things like food and keeping a roof over their head).

Mortgages

According to Zillow, around $249 million is due in monthly mortgage payments by government workers not currently getting paid. Within the same group, around $189 million is paid for rent per month. With this in mind, just under 40,000 mortgages are expected to be affected because of delayed loans and even short-staffing at the Federal Housing Administration. For those relying on FHA-insured loans, this problem is exacerbated.

Employees of Employees

Just think how many nannies, gym instructors, babysitters, and dog walkers are hired by the 800,000 affected workers. With workers now losing income, the mortgage and loans will take priority, and these professionals will also lose income. Additionally, less income means no eating in restaurants, taking cabs, or visiting the cinema. When a large chunk of workers have less disposable income, it has a huge knock-on effect on others too.

Savings

While not everybody has savings, some are lucky enough to have emergency funds…but is it really lucky? Suddenly, thousands of people are dipping into their retirement money, and this can be potentially crippling for later life (especially if it can’t be replaced quickly enough!).

Government Assistance

Finally, we should also note that low-income households could lose their support. For example, contracts for hundreds of government-funded homes have now expired which means low-income families are seeing delays to repairs. Furthermore, there has been some assurance for food assistance for February but what if the shutdown goes beyond this? Programs such as the Supplemental Nutritional Assistance Program (SNAP) could lose funding and be forced to cease activity.

Available Help 

As mentioned previously, some companies are doing all they can to help federal employees, and we’ve listed some examples below. If you think you’re going to miss a payment of a loan, mortgage, or any other debt, it’s worth getting in contact with the lender to see what they can offer!

• For many national and local banks, they’ve decided to allow low-rate loan programs, a waiver of fees, and even the breaking of certificates of deposit earlier than normal.
• Assistance programs have been set up by many credit unions including Space Coast, FedChoice, Justice Federal, Navy Federal, and Launch Federal.
• Payment schedules and reduced fees are available with Verizon, Sprint, AT&T, and T-Mobile.
• Relief could also be available through mortgage companies, credit card companies, and lenders.

Now is when you should make sure you are fully prepared if you count yourself amongst the millions of retirement-aged Americans ready to say goodbye to the full-time workforce in 2019.

The transition to your next phase of life, whether it be retirement or semi-retirement, should receive more than just a passing glance.

Every day, over 10,000 baby boomers turn 65. Of course, not everyone is ready to finish working at that age exactly, which means someone your age on the verge of retiring may have a situation very different than your own.

According to a 2015 study conducted by Voya Financial, nearly 60 percent of workers had to stop working before they wanted to, due to things such as layoffs or health issues. Adversely, others have worked continuously, long past the age they once assumed they would retire.

And while there are retirees who may have been scrounging and saving for decades towards this eventuality, there are others who have yet to even consider what their transition away from 40-hour work weeks may look like.

No matter where you fall on that spectrum, experts implore you to take some time to make sure you’re covering all your bases, financially, no matter where you fall on that spectrum.

Terrence Herr, the Chicago-based certified financial planner and managing partner at Herr Capital Mangement says that more often than not, he finds that people are a bit apprehensive about retirement.

As you move on to this next phase of your life, here are some things you may want to consider.

Expenses: Keeping Track

Heading into retirement, you should have a clearer picture of your expenses and how that might change, even if you already have a general idea of what you already spend.

For example, while you may spend more on travel, entertainment, or other hobbies when you’re no longer spending the majority of your time at work, while other expenses, such as office attire, or the costs of commuting, no longer apply.

Linda Rogers, a CFP and owner of Memphis, Tennessee based company Planning Within Reach recommends to track spending for the next few months if you’re uncertain.

Paying off things such as mortgages, credit cards, and other debts are good marks to strive for before retirement, and while that may or may not be an obtainable goal, the less debt you have, the better off you are.

Health Care: The Often Overlooked Cost

Regardless if you retire at or past the age of 65, you’ll be eligible for Medicare. However, things like vision, dental, and long-term care are not included in that.

Factors such as income (the more you make, the more you pay), surcharges for late-enrollment (if you don’t meet an exclusion, after missing sign-up when you were first eligible) and other circumstances like additional coverage and to what degree, will affect the amount you pay for Medicare.

Either way, you’ll need to find your own coverage if you are under the age of 65.

There is also COBRA, a federal program which states that employers with more than 20 employees must allow ex-workers, including those who have recently retired, to be able to retain their current health care coverage, but only if the full price of all premiums is paid for by the ex-worker. This is for people who may face a lapse in coverage between plans. Many employers partially cover the cost of premiums for active employees, but when it comes to COBRA, they normally decline to do that.

There are potentially other options, including an Obamacare (also known as the Affordable Care Act) is another option, and contingent on your current financial income, you could be eligible to take advantage of that. Depending on your income, you may receive a subsidy if you go that route. Less popular routes could be available too, which would encompass all short-term plans. These will come with less-comprehensive coverage and are normally an option that is the only viable option for people without any pre-existing conditions.

The fact is that, according to research from Fidelity Investments, your typical 65-year-old couple will spend $280,000 on health care over the course of the rest of their lives. This is taking into consideration that as your age rises, so do expenses when it comes to health care.

Social Security: Knowing Your Strategy

Even though at age 62 you can start drawing from Social Security, the longer you put off taking those monthly checks, the larger they will be. If you can hold off until at least age 70, your yearly benefits will increase by 6 percent to 8 percent.

However, your current income can alter your Social Security benefits, as most people don’t wait until their 70 to take advantage of them. And with the number of 60-somethings still fully or partially a part of the workforce, it’s important to take that into consideration.

According to the Bureau of Labor Statistics, in 2017 more than half (54.7 percent) of people aged 60 to 64 were still employed in some capacity, at least part-time. That number drops to a third (31.2 percent) when it comes to the people aged 65 to 69.

The government-determined retirement age is between 66 and 67, based on your birth year. If you start drawing from Social Security before then, the amount you can make from your employer without affecting your benefits may be limited.

$17,640 will be the limit, in 2019. Benefits will be lowered by $1 for every $2 you earn beyond that.

This money will be returned to you once you’ve reached the age of full-retirement, but please remember that up to 85 percent of your Social Security benefits are eligible to be federally taxed, depending on your income.

After this, your Social Security benefits will not be affecting, no matter how much money you make from working.

In 2019, please note that $1 will be subtracted from your benefits for every $3 you earn above $46,920 if you happen to be one of those people at full-retirement age who optioned to take advantage of this early.

Tax Strategies: Evaluating Your Income

In retirement, sources of income can vary Individual income sources may vary in retirement and may include retirement savings such as a 401(k) or another retirement account, Social Security, health savings accounts, pension, business or income trusts, or taxable savings and investment accounts.

As Rogers says: “Many people have a few different types of assets, so they want to be smart about which they tap into.”

Taxes may vary with different sources of income. Capital gains taxes may be owed on certain withdrawals. Roth IRAs or Roth 401(k) plans are tax-free, while withdrawing from traditional IRAs or 401(k)s are taxed as ordinary income.

Older Workers and Retirement Savings

Required withdrawals could force you into a higher tax bracket, depending on your current income level. At age 70.5 you will have to take ‘required minimum distributions’ (RMDs) from your traditional IRA or 401(k) accounts. Roth 401(k) plans have RMDs, while Roth IRAs do not.

That means before the RMDs kick in you should move your assets into your Roth IRA, or at least tap into those funds, so your taxes don’t suddenly increase.

What you pay for Medicare may additionally be affected by your annual income. People who earn more pay more, so it is wise to know your coverage could be affected by your income.

Retirement Accounts: Checking for Risks

Your post-retirement income plan, your IRA or 401(k) should be a mix of investments if it makes sense.

Stocks yield the best returns but are the riskiest endeavor, so how much of your portfolio you devote to them is contingent on how much you’re willing to gamble, and how much income you might need in your retirement.

Making Sure There Is a Cushion

Sequestering several years’ of income away from the stock market is recommended. Financial advisors suggest keeping these funds in money markets, as cash, or possibly in other less risky investments.

“Don’t risk the money you need in the next two or three years. You can stomach volatility in the market if you have three years of income that is safe and not subject to those ups and downs,” Herr, of Herr Capital, says.

Otherwise, to produce the annual income needed to live, you may have to sell your investments at a lower price, if the market is down.

Emotional Preparation

Retirement can be a lot more precarious for people whose work was a big part of their self-identity, may financial advisors claim.

Rogers says: “Often, for the first couple of years they’re happy, but then some people can get depressed.”

Pursuing other hobbies, fostering friendships, and volunteer work can help keep loneliness and boredom at bay. For some retirees, teaching and sharing their specialized knowledge is where they can derive personal satisfaction.

Also get comfortable with the idea of seeing your assets shrink instead of blossom.

At this stage of a government shutdown we normally reach a point where one party comprises on an issue, but this just doesn’t seem to be the case with either House Democrats or President Trump. With this in mind, we are curious to investigate any potential endings to this shutdown, and whether or not they are likely to lead to a solution of any kind.

Compromise for Speaker Pelosi

The Democrats had big plans in the House and aren’t be able to express themselves fully with the current situation. Could Nancy Pelosi agree to a compromise for the amount President Trump is hoping to use for the wall? In truth, the answer to this is a resounding ‘no’ because, as her first major test in the role, she’s likely to want to show strength to fellow Democrats and therefore won’t yield to Trump’s request.

Compromise for President Trump

On the other hand, new polls seem to be blaming Trump for the shutdown so he could agree to a proposal put forward by the Democrats. In the short-term, most government agencies would receive funding while the long-term would hold a continued battle for the funding of the wall. Is this likely? Back in December, Trump agreed to a similar deal but was soon put under pressure by Ann Coulter and Rush Limbaugh on their conservative talk show. Therefore, his stance has strengthened since, and he’s unlikely to go down this route.

White House and Congressional Democrat Compromise

Thirdly, despite eluding Washington for many years, we could see a compromise on immigration between these two parties. Senator Lindsey Graham (Rep) has already discussed a so-called ‘trade-off’ where ‘DREAMers’ are protected, and Trump receives funding for the wall. For many who left their countries due to a particular crisis and were offered temporary visas, they could also receive protection.

Senate Republicans’ Anxiety Prevails

For many Republican senators, they face election in 2020 so are becoming more and more anxious about their reputation back home as the shutdown continues. Could these Republicans approve the funding bill which has already been passed by the House and approved by the Senate?

For Mitch McConnell, just one Republican up for election, he doesn’t see the point in challenging the president and isn’t willing to bring a bill to Trump when the chances of him signing are slim anyway. Furthermore, the likelihood of Congress overriding a Trump veto is just as slim. Even if the Senate managed the required two-thirds of support, the Republicans are still unlikely to join with Democrats in overriding.

Emergency

Failing all else, a national state of emergency could be called by the president and the wall could receive funding from the Pentagon. Separate action would be required from the president and Congress for government agencies to be funded. If President Trump were to declare an emergency at the border, it could lead to all sorts of court challenges, and many of Trump’s advisors have suggested he doesn’t have the authority to act in this way. Meanwhile, some Republicans have warned a national emergency could open the door for equally powerful actions from future Democratic presidents.

There have been changes in control in the House that Employee Organizations have seen as an opportunity to help in address two issues in federal retirement, which is paying full FERS COLAs right away and rolling back required contributions increases raise to ensure they all pay the 0.8 percent as traditionally required.

Working out the Kinks in the System

The federal government believes that all employees should be given equal treatment, but when it comes to the retirement benefits, this does not usually apply. Even worse, the political leaders do not want to spare the time to discuss how this issue can be eliminated.

With the mid-term elections came changes in who’s in control of the House, which was initially controlled by republican, but switched to Democratic. This process came in handy with an increase of up to 100 new members sent to Washington. These are people who probably know little or nothing about the retirement benefits, but they can be taught with time.

Take an example of 10 years ago when changes in the control of the House lead to a rapture of activities on federal retirement, all which were meant to help in getting the kinks out of the system. These are issues that had always been there, despite not being recognized for years, yet nothing had been done about them.

There were a few changes on the CSRS benefits for employees that worked part-time, but the main changes revolved around FERS. There was one FERS worker who left, withdrew his retirement contributions, and later in the years returned to the government to claim the previous years of service toward their annuities. The employee, however, had to repay the money with interest, and this option is always available under CSRS.

At that moment, even employees that had taken part in the creation of FERS in the 80s were not sure of why the differences between CSRS and FERS even existed. There were a few outstanding efforts and, although they did not get rid of the bugs, the change of control to Republican the following year may have stopped the momentum.

Remaining Kinks

The remaining bugs are the differences in COLA policy between CSRS and FERS. The CSRS retirees qualify for full inflation adjustments, regardless of their age, while the FERS retirees, even the disabled, do not qualify for COLA until they are 62 years old. What’s more is that the FERS workers pay one of the three levels of contributions for their retirement savings based on the year they were hired. This policy was adopted after the enacted 2012 – 2013 laws.

Workers are taking advantage of the new changes and believe it is the time to address the two issues. It is time to pay the FERS COLAs in full immediately, and roll back the required contributions increases.

Trump has just announced a deal to temporarily put an end to the government shutdown that has been considered one of the longest ever.

Speaking from the White House, Trump said that this temporary end would let the unpaid federal employees (nearly 800,00 of them) have a chance to catch up on their bills.

This temporary deal has an expiration date of Feb. 15.

Here’s what can be expected:

Today the shutdown is expected to end.

The bill passed by Senate that goes to the house for additional approval allowed the government to be reopened this afternoon.

Once the House votes then the bill goes to Trump for his signature.

Trump has agreed to sign and has also called for a showing of bipartisanship in order to end the impasse over the border wall’s funding.

Funding for wall is not part of deal

President Trump agreed to reopen the federal government, but there was no funding for the wall included as a part of this deal.

The parts of the federal government that were shut down will be allowed to reopen for three weeks.

However, the issue of the money requested for the southern border wall isn’t disappearing. In fact, President Trump is giving lawmakers until February 15^th to compromise on some sort of border security.

State of the Union?

Since President Trump’s State of the Union address was postponed as a result of the government shutdown, does that change things?

According to Nancy Pelosi, who Trump has had a bitter back-and-forth with, the State of the Union has not been planned yet because she had told him that when the government was reopened they would discuss a mutually agreeable date.

Since lawmakers now have 21 days to negotiate a deal, it’s not really clear exactly what could happen next.

New legislation was introduced for government employees to access their TSP (Thrift Savings Plan) accounts without the normal penalties that come with it. For those deemed excepted (and find themselves working through the partial government shutdown), bill H.R. 338 will fill gaps in earnings without any fees or penalties.

For federal employees, they’re well aware that withdrawals under this exception normally will not be allowed. However, thanks to Congressman Mark Meadows, the allowance would be introduced until the end of the shutdown (as long as it passes into law). As soon as the shutdown ends, any amount taken from the TSP can be repaid in the shape of ‘catch-up’ contributions. For those struggling to make ends meet and fend off creditors, this could be a very important legislation.

According to Meadows, responsible for the legislation, this is a sensible approach so federal employees can get the money they deserve while working through the partial government shutdown. While Congress and President Trump debate over funding for the wall, workers have some options to meet their financial needs and reduce the risk of financial difficulties (both in the short- and long-term).

Meadows’ Statement

In a recent statement regarding the bill, Meadows noted his passion for federal workers getting what they deserve while continuing to work through the government shutdown. As a contributor in Congress, he wants the best solution for workers who are working just as hard now as they normally do with regular pay. Furthermore, he wants the bill to be voted on quickly, so federal employees have some help before it’s too late.

For Meadows, this is an interesting change of position since federal workers were outspoken against the Congressman not so long ago when he said working without pay during a government shutdown was ‘part of what you do’ when choosing public service as a career. He also noted how all government employees know that they may be required to work during these difficult times. Yet, it wasn’t ‘lost’ on him that financial hardship can result from these circumstances.

Since these comments, Meadows has been a huge contributor to this bill, and he has even asked to have his salary withheld while the shutdown goes on. In fact, he has gone even further by saying that all Members of Congress should have their salary stopped during a shutdown.

TSP Assistance

During this difficult time, loan payments are still required in many cases…but the TSP has decided to step in. In order to suspend loan payments and prevent defaulting on a TSP loan, there’s no longer a need to show proof of furloughs. If you want to suspend loan payments, get in contact with the TSP today!

In America, the financial exploitation of the elderly is a growing problem as baby boomers are becoming senior citizens. The following are practical steps that individuals can take to safeguard their money in retirement.

A serious problem within the realms of various states is financial abuse of elderly Americans.

According to the Securities and Exchange Commission (SEC), almost 6.6% of Americans that are 65 years or older have lost their money through exploitation, fraud, or theft. SEC highlights that financial exploitation of the elder is emerging as the form of elder abuse that is most prevalent in the United States. The issue of elder financial abuse is forecasted to get worse in the coming years in this country as each day approximately 10,000 people are turning the age of 65.

Luckily, there are various steps that senior citizens can follow as they age to protect themselves from such fraud and manipulation, either form scammers or in other cases by friends and family. A majority of senior citizens also require protection from themselves as money management can become a difficult task as their physical and cognitive functions decline with age. The following are five ways of protecting yourself:

1. Automate your finances

Most Americans are increasingly being left on their own when it comes to dealing with money management in their retirement. According to Cerulli Associates, an asset management fund, it highlights that in 2017 about $14.5 trillion in the U.S. was held in self-directed retirement accounts. This is a huge amount of money to manage, and in most cases, it becomes difficult for seniors to handle their finances due to a decline in their physical and cognitive functions. Based on this reason, senior citizens should automate their finances. It is important for them to have all their income sources such as Social Security, pension funds, and disability payments deposited into their bank accounts directly. In the same case, regular bills including utilities, insurance, and mortgage or rent payments should be from their bank accounts on certain days every month. Through automating finances, it could be easier to manage and to track all the money that is going in and out of their accounts.

2.  Require an authorized signer

Another manner for these individuals to protect their finances is through setting up a signer that is authorized on their bank account. A signer that is authorized will have the authority to sign checks and make deposits and withdrawals on behalf of the account holder. This ensures that they have access to their account information, such as balances and activity. However, the authorized signer will not have ownership over your bank account and has no rights to your account’s assets. This is unless the owner designates them as the account beneficiary in case of their death. The setup is not the same for a joint account. A joint account holder shares the ownership of the bank account and the money in it and has the ability to withdraw all the money in the bank account and close it.

The authorized signer you select should be an individual you trust; whether it is an adult family member, friend, or a neighbor. To make that trusted individual an authorized signer means allowing that person to have a look at what is taking place in the bank account and ensure that nobody makes a transaction that is large or unusual without permission. To choose an authorized signer that you trust is critically essential in this situation.

3. Establish a power of attorney

The most common way elderly Americans protect their finances is by establishing a power of attorney. This translates to giving a trusted individual authority to managing your financial affairs and your property if you cannot manage them on your own, even on a temporary basis. Power of attorney is not similar to a will because it’s specific to making sure that while you are alive your wishes are followed rather than after death. It can be possible to have more than one power of attorney, or agent. A majority of lawyers recommend this approach since it ensures no single individual can act or make a decision when it is regarding your property and money. This can reduce the risk of fraud, theft, or financial mismanagement when you stipulate that two or more agents make combined decisions together about your affairs.

Generally, agents can access your bank accounts, manage investments, file tax returns, deal with health insurance, and sell the property. A power of attorney in place is used when seniors do not have the mental capacity to make financial decisions on their own. It is also used if elderly individuals still possess their mental faculties, but due to infirmity or illness, they require help to manage their finances. It is required that the necessary forms are obtained in order to award the power of attorney in the state that you reside. When the forms are complete they should be reviewed by a lawyer and have your signature, as well as those of the agent(s) you have designated, in front of a notary public. Generally, there are two forms of power of attorney. One is for your financial decisions and the second is for medical decisions.

4. Avoid cash

It is not advisable to keep huge amounts of cash in your house, especially in a wallet or purse where other people can access it easily. Paying using a bank or credit card is more appropriate since it offers an electronic record. This is useful if a person makes fraudulent purchases using your card, as a paper trail can be helpful for the bank or the law enforcement when it comes to identifying the culprit and recovering your money. Furthermore, they are good to spot and decline unauthorized charges before you even noticing any discrepancies. On top of that, even when there is an unauthorized charge that has been accepted, federal law limits your liability to $50, and the majority of U.S. credit card issuers offer a fraud liability of $0.

Elderly people are used to having cash on hand since they used to live in times before ATMs and online banking. However, to deal in cash is a hazard as it can go missing instantly. To try to keep a trail of your financial transactions is safest as you or the signer you authorized, an agent, lawyer, or banker, can review it.

5. Get an annual credit report

You can request for a free credit report from every major credit bureau in the U.S. such as Equifax, Experian, and TransUnion every year since this is a right for every American under the federal law. The credit reports can also be requested at www.AnnualCreditReport.com. A credit report is composed of any financial activity that is unusual or potentially fraudulent involving your accounts. This includes credit cards that you may not have ordered or purchases that are unauthorized. If you or another person notices financial activity that is unusual, it is recommended to report it to the three credit bureaus and financial institutions that you regularly do business with. They can cancel the fraudulent credit cards and put a hold in place to safeguard your accounts.

To grow old is accompanied by a lot of challenges, adjustments, and responsibilities, including making sure to protect your finances from fraud, manipulation, or theft. Financial abuse of the elderly is becoming a real and growing problem. The best way to be sure that your retirement years are comfortable and free from financial stress is to acknowledge the problem and take the necessary steps to protect yourself.

An annuity offers you income that is always guaranteed for as long as you live. Such retirement savings vehicles do not offer any sort of tax benefits by allowing earnings to grow tax-deferred. Small parts of your annuity payments are subject to federal income taxes. Allow us to highlight various ways annuities are taxed by the IRS.

Initial Tax Considerations for Annuities

The manner in which the IRS taxes your annuity will depend largely on the way you acquired the money you used to buy it. For instance, if you are utilizing funds from a Roth individual retirement account (IRA) or Roth 401(k), you will be permitted to not pay federal income taxes. This can also apply to the full balance of the annuity, and it includes your initial payment amount and any interest or dividends that you got during its life. Contrarily, annuities that are bought using non-Roth assets grow tax-deferred, but with federal income taxes down the road.

There are different types of annuities, such as indexed or variable, and varying situations that impact tax liability. Also, tax laws and rates change frequently, and you cannot possibly be sure about when you will start to take withdrawals, so you cannot know for sure what the situation will be when it comes to taking money out of your annuity. Nonetheless, you can proceed to make some educated guesses in regards to common scenarios.

Qualified or Non-Qualified

Again, the key factor to determine how the IRS is going to tax your annuity is based on where you received the money to buy it. From the viewpoint of the government, this determines if your annuity is either qualified or non-qualified for tax purposes.

A qualified annuity is one that you bought with money that you had not paid taxes. For example, if the premiums used to pay for an annuity originated from a tax-deferred retirement account like a traditional 401(k) or traditional IRA, it will be a qualified annuity. You will be required to pay normal income taxes on any future annuity payments that are qualified. It is important to understand that annuity payment is counted as ordinary income. Generally speaking, this is not a favorable capital gains rate.

A non-qualified annuity is one that you bought with money that you have already paid the taxes on. For instance, if you write a check from your taxable bank or a brokerage account to paying a premium for the annuity, it is considered a non-qualified annuity. The IRS refers to it as the post-tax purchase money. Individuals that have a non-qualified annuity will not have to pay taxes twice on the money that was used to purchase it. However, you may owe taxes on interests and earnings that have been growing to tax-deferred in the annuity.

Period or Lifetime

The type of annuity that you have will also impact your tax liability in the future. Many different subsections include fixed, variable, immediate and deferred annuities. For this, only period and lifetime annuities will be highlighted.

The guaranteed regular amount is paid in a lifetime annuity; this is usually per month for as long as you live. A period annuity is one that offers you regular payments for a given number of years.

Based on period annuities, you will simply multiply the number of payments by the payment amounts. Thus, if you have a 10-year annuity that will be paying you $12,000, a return of 10 times should be expected, which amounts to $120,000.

Individuals with a lifetime annuity face a slightly complicated matter when calculating their expected return. To figure out your tax liability with a lifetime annuity, first you must estimate your life expectancy, followed by the number of years you are expecting to receive payments, based on the size of the annual payments.

For instance, let’s say you have a lifetime annuity that is paying you $12,000 per year. You are at age 65, and based on the IRS longevity table, you will be expected to live to 85, which is another 20 years. In turn, through multiplying the 20 years and $12,000, you will receive $240,000 as your expected return.

Annuity Taxes Put into Practice

Based on the post-tax purchase money for annuities that are non-qualified, you can take that basis and divide it by the expected return. The result of the equation is the percent by the amount of each payment that is not going to be taxable. To ensure things are more tangible, you should multiply the percentage with the amount of every payment to figure out the exact amount won’t be subject to federal income taxes.

For instance, let’s say you paid for a lifetime annuity that is $90,000 and has an expected return of $120,000. By dividing $90,000, which is the basis by the expected return of $120,000, it gives you 75%. Then, through multiplying 75% with the amount of every payment, you will be able to see the amount of the payment that won’t incur taxes. Therefore, if the $120,000 annuity assumes that you have a life expectancy of 20 years, the monthly payments would come to $400. From that amount, $300 (or 75%), would be tax-free.

This is merely a simple example of what you may encounter in real life. Various situations might be subject to higher or less taxation.  If you live longer compared to the longevity table of the IRS, you could be taxed on all of your lifetime annuity payments that take place after you have reached the IRS longevity table forecasted maximum age. It is a good idea to consult with a financial advisor. Tax professionals, in particular, can assist you before you decide to buy or take withdrawals from the annuity.

If you feel that you have exhausted all your options for boosting your retirement savings, it is advisable to consult a financial advisor that specializes in retirement planning in the past.

For many, 2019 is going to be a year of change – this extends to retirement savings options and various other retirement plans. The battle for the protection of investors will rage on, and Congress will continue their discussions to avoid heavy cuts in pension benefits. With so much to look for, we’ve broken down four of the most important retirement policy topics to watch closely in 2019!

Savings Plans

In 2016, the Government Accountability Office stated that around 33% of all private sector workers didn’t have a retirement plan sponsored by their employers. With this in mind, 2019 is going to be a big year in this regard as many states launch automatic sign-up programs for those without an IRA or 401(k). Although employers aren’t required to make matching contributions, they will be required to create automatic payroll deductions in many states.

Starting in 2019, California’s plan is expected to reach over seven million workers. Elsewhere, Illinois will start in 2019 while others are in the planning phase (including Connecticut, Vermont, and Maryland).

Investor Protection

Who’s looking out for the interest of investors? Well, this has been an ongoing battle and the SEC want to introduce a ‘regulation best interest’ standard whereby brokers look after the financial interests of their clients (rather than their own interests). Additionally, this standard would alert clients to all conflicts of interest.

So far, the term ‘best interest’ has been a cause for much debate. According to an AARP representative, disclosure forms need to be simplified, and investors need to be provided with the most important information pertaining to financial decisions. How to achieve this is something potentially to be discovered this year.

Saving Pensions

In recent times, there’s been a risk to over one million pension benefits as an insolvency crisis is averted by a special congressional committee. Known as ‘multiemployer pension plans,’ certain plans covering 1.3 million retirees/workers are currently underfunded. Thanks to financial crises in 2001 and 2008, it’s thought the underfunding has reached nearly $50 billion.

Seen as the federally-sponsored insurance backstop when plans are defunct, the Pension Benefit Guaranty Corp predicts no funds after 2025 for their own multiemployer program. While the Multiemployer Pension Reform Act was agreed back in 2014, it was soon opposed by consumer groups and retiree organizations.

What’s the solution? The special committee missed the deadline for replacement legislation in November, but a draft proposal has been suggested. Rather than cutting benefits, the proposal would use existing taxpayers and pension plans to raise money. This year, there’s still plenty to discuss in order to save the plans and protect both retirees and workers.

Social Security Expansion

Finally, the newly-formed House is expected to hear plans for a Social Security overhaul this year. Now controlled by the Democrats, the majority of winning candidates support the expansion of benefits. In addition to this, Rep. John Larson created an expansion legislation which has amassed 200 co-sponsors – Larson now chairs the Ways and Means Social Security Subcommittee.

Expected to get a hearing and even reach the House, the bill suggests a 2% boost to all benefits, a larger maximum benefit for low-income workers, and a larger cost-of-living adjustment. How will this be financed? The taxation cap on wages would be lifted, and a higher payroll tax rate would also be introduced.

Summary

From these four issues, it’s easy to see that 2019 is going to be a big year for both US workers and retirees in the private and public sectors.

Whether married or separated, you should know that the law gives your spouse certain rights regarding your funds’ withdrawal from your TSP. TSP will always put these rights into considerations whenever you want to make withdrawals.

If you are married and you are a FERS participant who wants to make full withdrawal rather than the joint life annuity, your spouse must agree and is entitled to a joint life annuity by the law, with 50 percent level payments, survivor benefit, and no refundable cash. If your spouse does not surrender his/her rights to the annuity, then you cannot make withdrawals through any other method.

If you fail to get your partner’s waiver on the by the required timeframe or date when you should make the withdrawal, the TPS will have to purchase a survivor and joint annuity for the two of you (you and your spouse) with your TSP account.

If you’re a CSRS participant and you are married, TSP has to notify your partner before letting you make withdrawals, informing them on the annuity option you have chosen for withdrawal.

However, there are some cases where exceptions are granted to your spouse’s rights requirements. An example is when their whereabouts are unknown. You need to apply for such exemptions by filling in Form TSP-16 titled as Exception to Spousal Requirements and submit it handy with the required documents to the TSP Service Office as directed on the form.

The requirements for the exceptions are stringent, and you must have proof that the circumstance indeed exists. If it is in a case of separation, prenuptial, restraining or protective agreement, or divorce, you there has to be a further explanation on why you want to apply for exceptional circumstances.

After visiting a farming convention to see how the shutdown may be affecting federal employees, President Trump holds firm in his reasoning for funding the border wall. During his visit to the American Farm Bureau Federation convention in New Orleans, President Trump cited a ‘humanitarian crisis’ as the main reason and noted how he is passionate about the ‘wall’ and ‘barrier.’

With the US Department for Agriculture currently restricted in its operation, it took Trump just short of 30 minutes to address the shutdown and offer farmers support; he noted how the USDA would continue to do ‘everything in its power.’

For many farmers, it has been difficult with the suspension of crop payments, as well as loan applications going unprocessed. However, Trump said he was a ‘friend of the farmer’ and suggested they should focus their efforts on lobbying the Democrats in Congress to back his plans for the wall.

Desperation for Farmers

For the National Association of State Departments of Agriculture (NASDA), they had one thing on their mind – the reopening of the federal government. So far, farmers around the country have had no access to assistance programs thus rendering the new farm bill redundant. Jeff Witte, President of NASDA, said that problems would only get worse for farmers as the shutdown continues.

For the National Farmers Union, their Twitter account has been updating the world with real stories of how the shutdown is affecting lives. After opening a special hotline, they said stories had been ‘pouring in’ whether it’s farmers unable to renegotiate a loan, unable to access disaster assistance or even people with decades of experience facing foreclosure.

Farmers on Trump’s Trade Policies

While speaking to the Farm Bureau, Trump touched upon his trade agenda; another area of concern for many farmers. With trade wars against certain countries, including China, alongside new tariffs, the whole farming industry seems to be united against these policies. Along with other concerns, the actions have increased the prices of numerous agricultural products that farmers rely on to make a living.

For Trump, he believes his trade agreements can offer farmers more business; especially with the proposed agreements with both Canada and Mexico. With trade barriers removed, President Trump suggests US farmers may see an increase in their exports. However, this is all still speculation as the agreement between the US, Canada, and Mexico hasn’t yet passed through the Senate – Trump has already requested quick approval from lawmakers.

Despite potential positive relations with these two countries, things haven’t been so pleasant with China and the European Union. Above all else, Trump believes the ‘trade tactics’ of both have been unfair.

Proposals and Hope

Is there hope for the farming industry? Towards the end of the speech, President Trump said those who rely on migrant workers won’t have to worry since they’ll have easier passage than ever into the country. Furthermore, he applauded the work of farmers, says the administration is fighting for them, and noted how farmers had ‘always led the way.’

Thrift Savings plans investments are typically easier to comprehend than other retirement planning options so dealing with a financial professional regarding TSP investments is not required, but still highly recommended. Reaching out and working with a financial advisor is recommended in order to give you the opportunity to ask questions that relate to things such as investing as well as other topics.

“Ask Questions” is a very helpful brochure found in the Securities and Exchange Commission website, and it includes many questions to be asked of any financial advisor you are opting to work with. Some example of these types of questions that follow are adapted from the most recent SEC’s brochure.

Regarding financial products:

Are these investments registered with the SEC and in my state securities agency?

Why do you think the investment is appropriate for me?

Are there fees associated with the investment?

What about the risks related to this investment?

About mutual funds:

What is the performance of these funds over a particular period?

What are the major specific risks associated with this fund?

How does the fund perform in comparison to its peers?

What fees are associated with this fund, mainly sales fees?

About the adviser:

How much are they paid?

What are your training, experiences and the certifications you have received?

Has SEC ever disciplined you, a state regulator or other entities such as FINRA?

Can you provide the names and contact information of your major long-term clients?

What is your knowledge about federal retirement and benefits?

General questions:

How much fees and commission will I pay?

How often will I get statements?

What it the amount of money that I will receive if I sell my investments now?

It is recommended to take notes while talking to the advisor. SEC has come up with a form used to take notes in a conversation with the broker or financial profession. It can be found here.

The government shutdown we are currently experiencing officially has become the joint third-longest shutdown in US history (at least on record). A meeting between President Trump, Nancy Pelosi, and Chuck Schumer, to talk about funding for the wall, ended with the former walking out.

Unfortunately for the 800,000 workers expected to miss out on pay as a result, Sarah Sanders, White House press secretary, has already stated on President Trump’s commitment to the wall who even said that he would be willing to continue the government shutdown for months (and years!). For Democrats, they believe the wall to be an extreme measure and one that doesn’t use resources effectively. Instead, they support tunnel detection, drones, and other forms of technology as a boost to border security.

President Trump’s Plan

In total, the President wants to spend $5.6 billion on border security and the wall is just one component of this. Of course, the term ‘wall’ itself has been the subject of much discussion; Trump has changed his definition from a ‘concrete’ wall to a ‘steel fence.’ The Democrat stance hasn’t really changed; they’re happy to discuss the immigration issue, but once the shutdown is over. For Sen. Dick Durbin, the government being shut down is completely unnecessary while talks occur.

Ending on Sunday, we’ve seen many days filled with so-called ‘meetings’ between Vice President Mike Pence, senior congressional aides, and other White House officials. As of yet, however, no deal has been agreed. Earlier in the weekend, a budget justification was requested by the Democrats since this wasn’t included in the 2019 budget – this was not fulfilled.

On Wednesday 9th, the shutdown then became the second-longest (19 days) on record, and there’s still no end in sight. Although a nightmare situation for federal workers, at least there is some relief as Pelosi announced that some funding would be provided by House Democrats and the introduction of certain bills. This is essential to receive tax refunds; without these bills, millions expecting refunds would be let down as those in charge at the IRS may be furloughed.

Of course, this would have to pass through the White House and Republicans first. In addition to this, it’s also a short-term measure that doesn’t resolve the long-term problem. Back in 2013, now the fourth-longest shutdown, the battle was over the Affordable Care Act, but this came to an end after 16 days. For this current shutdown, it all began three days before Christmas when a quarter of all federal departments were forced to close after running out of funding. Since then, 800,000 employees have either been furloughed or have continued working but without pay.

With the longest ever shutdown at 21 days, it looks as though we’re going to exceed this and set all kinds of new records. In 2013, it was the Republicans who eventually conceded defeat and, in later polls, they also took the blame for the shutdown. In 1995/96, spending cuts were the topic of conversation between Republican House Speaker Newt Gingrich and President Clinton – this led to three weeks of inactivity at a governmental level. For this particular shutdown, no blame was apportioned, but the two parties actually came together to agree a seven-year budget plan.

With President Trump walking out of the most recent meeting, this doesn’t exactly inspire hope that an agreement is within touching distance. Unfortunately, it’s the workers who are suffering now, and the consequences of such discussions are getting more severe with each day that passes.

Currently, the federal government is undergoing a partial shutdown which, as was envisaged at the start, has caused financial concerns for thousands of federal workers. According to recent statistics, around 800,000 federal employees are either expected to work without pay or be furloughed. Of course, bills don’t stop during this time, and the US Office of Personnel Management has already provided federal workers with a sample letter for talking with creditors.

Rather like the US Office of Personnel Management, we’re in the interest of providing much-needed solutions…which is why we have some financial advice for the months ahead!

Manage Spending

Firstly, if you’ve never budgeted your spending before, now is the time to start. Are there areas of your life where spending can be reduced for the meantime? If you’re concerned about student loans or your mortgage, always keep the creditor up-to-date; this way, they’re aware of your financial position and can suggest potential solutions.

Look for Help

You aren’t alone, ask your agency if you’re being furloughed and the resources with which they can provide you. Elsewhere, some federal credit unions, such as the Congressional Federal Credit Union, are offering short-term relief loans. For the first 60 days, the Union’s loan comes with a rate of 0%.

Access the Emergency Fund

By all accounts, this situation would be considered an emergency so access your emergency backstop if you’re concerned about your next paycheck. However, we recognize this is something not available to all workers. In fact, 22% of Americans only have enough savings to cover three months of expenses – 23% have none at all.

If you don’t have the recommended three to six months’ worth of expenses in savings, you should be looking for a line of credit (federal credit union) or, alternatively, a 0% interest furlough loan. As mentioned previously, the 0% interest will eventually come to an end so bear this in mind. With the Congressional Federal Credit Union’s loan, the rate increases to 4% after 60 days.

Meanwhile, some will find emergency funding in a home equity line of credit. With the average rate of interest currently at 5.64%, this is significantly lower than the average for credit cards; Bankrate suggests the latter exceeds 17.50%.

If you’re interested in this option, always remember the drawbacks to such a solution. Not only is the interest rate variable, but it also won’t be tax deductible if the money isn’t used for home renovation.

 Be Careful

If there’s one piece of advice you take from this guide, we recommend being cautious and not making rash decisions. The following three ‘solutions’ are incredibly risky;

Credit Cards – As we’ve already seen, the interest rates on credit cards can be excessive. Also, the cash advances offered normally come with a charge of up to 5%.

Margin Loans – For those with a brokerage account, you always need a minimum balance and maintaining this can be difficult considering market volatility. If you fall below the minimum, a ‘margin call’ is made by the brokerage firm and they could request a deposit within just 24 hours. Suddenly, you’re looking for additional money to deposit into the account.

Retirement Plan – Finally, you might be tempted to borrow from your retirement plan; in fact, all furloughs expected to last over 30 days enable workers to take loans from a TSP. Not only will the withdrawn money stop working in the market, but you’ve also got to find the same money after the furlough to repay the retirement savings. Without repayments, the loan could be considered permanent, and this means dreaded tax.

You have probably heard about the plans to increase the tax-deductible contribution that you can make on elective retirement plans like TSP in 2019 but did not understand what that meant. How will it affect those contributing from their military pay?

What this means is that if you are a part of TSP, the maximum contribution allowed will rise from $ 18,500 to $19,000. However, you can only manage to save that much if you take actions and plan well. If you are making deductions from your military pay, it is up to you to work on making adjustments if you wish to maximize the amount.

How is that done?

To change your contributions plan, you have to go to my myPay website. At the site, you will be asked to specify the percentage of the base pay that you want to contribute to TSP. That is the percentage that will be withheld from each paycheck.

If you play a part in the Blended Retirement System, the Defense Department matches your contributions to up to 5% of your pay. Also, you can decide to contribute 100% of your basic earning, special earning, incentive and bonuses to your TSP account. If you are in the military zone, you will be able to save more. You should note that you cannot contribute your allowances to the account.

How do you know your maximum TSP contribution?

You can only tell DFSA the percentage of your earning to withhold as your contribution. So how do you calculate the proper percentage that will maximize your TSP? Here is a simple illustration on the same.

From 2019, the maximum contribution will be $19,000. Take that amount and divide it by 12 to know your maximum monthly contribution. The result will be about $1,583.33 per month to help you reach your goal. You then divide $1,583.33 by your 2019 salary to know your percentage.

If you are an E-5 with at least six years in service, in this case, your base pay in 2019 will be $3,001.36 per month. This is equivalent to 53% of your base pay every payday. If you are an O-3 with four years service, it will be 28% which is $1,583.33 divided by your base pay of $5,671.52.

It may sound like a lot as it is over half of your base pay in case you are an E-5.

You should not forget about allowances and other special pays that have to be drawn along the base pay. If you are a military member in operation, there are limited places and ways to spend your money. The best decision is to contribute as much as you can to TSP.

Some individuals may opt to withhold nothing and instead put the entire amount. Doing that will only make you lose the DoD 5% match. It is recommended that you contribute 5% of your base pay every payday to help you get the DoD 5 percent match rather than throwing the free money away.

Keeping up with the military pay changes

The pay benefits keep changing, and you must make efforts to ensure that you are up to date with all the updates and your earnings.

Although the separated workers cannot make savings to their TSP, which is only made through payroll deductions, they still have the allowance of rolling money into their TSP accounts and to keep managing it. These rollovers are only done on qualified accounts, and they are not treated as contributions to TSP.

You will be allowed to roll the money into your TSP account even if you have started taking distributions. You should, however, note that not all employer plans and IRAs are qualified for this allowance. If you have a Roth balance in your TPS, you will be allowed to roll the Roth plan from your previous or subsequent employer into the TSP. You are however not allowed to roll a Roth IRA into your TSP balance. That is just how the law demands.

If as a federal worker you have a traditional balance in your TSP account, which most people do, you are permitted to roll pre-tax money from your employer and IRAs plans into your TSP. The money will include everything entailed in a basic deductible IRA, (which means that you could deduct your contributions from your earnings for federal income tax) and the income portions of a non-deductible IRA (where the IRA deductibles are nondeductible).

You can also roll over your pre-tax money into any employer-sponsored plan from a previous or subsequent employer.

Some people tend to wonder if after leaving TSP, they could go back after separation. The answer to this is no. You cannot go back just anyhow. You have to get a job, be re-employed and then create a new TSP account. In such case, you will be categorized as a re-employed annuitant, and you could be allowed or denied the chance to contribute to the TSP. It is best if you look for resources and understand more on the same.

Most individuals wish that they could go back into the TSP after separation. For example, you could opt to roll your account into IRA as you search for better withdrawal choices. Later, TPS comes with more defined and better withdrawal options which promote flexibility for all. At this point, you will want to get back to TPS, and you find it better.

If you are already a retiree who does not wish to return to federal service for re-employment, you will have no chances of getting back. However, if you still have some desires for getting back to the federal services, you could get re-employed and try out your luck to see if you will be granted the chance to contribute to the TSP.

With the government shutdown causing havoc for government workers, there is at least some relief as a number of banks have promised help through consumer assistance programs. With 800,000 workers expected to work with no pay or be furloughed, the battle between President Trump and Congress over the border wall rages on.

For these federal workers, day-to-day survival has become a difficult task with incoming bills and other expenditure requirements. Following from the help offered by the US Office of Personnel Management, Wells Fargo has suggested a reversal of overdraft fees for those affected by the shutdown. Additionally, forbearance and payment assistance programs could be available for loan, mortgage, and credit customers.

Alongside Wells Fargo, Bank of America has offered its own support. Although the extent of the support very much depends on the circumstances of the individual, help could include loan modifications and fee waivers.

Consumer Support

For customers of Wells Fargo, Bank of America, Citi, and Chase (JPMorgan Chase & Co), the easiest way to see if you’re eligible for support would be to dial their number. Chase has encouraged all customers to dial a newly-created care line (1-888-356-0023), and Citi has promised assistance for those facing hardship. Even if it’s a simple waiving of fees, this is better than receiving no help at all.

Financial Advice

If you’re a federal worker and have some concerns over your financial situation in the coming weeks and months, we have some simple advice for you here today!

Draw a Simple Budget – Whenever the word ‘budget’ is used, people think of spending hours drawing up spreadsheets and using advanced budgeting programs on the internet. In truth, all you have to do is write down your main expenses on a piece of paper. Instantly, it’ll be easy to differentiate between the ‘necessary’ expenses and the ‘luxury’ expenses.

While on this note, there’s nothing wrong with contacting your federal agency and asking them directly what resources they have for help and whether you’re going to be furloughed. Also, many federal credit unions are helping workers in the short-term by providing furlough relief loans.

For anybody with mortgages, student loans, and other debts, don’t bury your head in the sand. Instead, pick up the phone and update them to your financial situation. With many agencies, they offer employees help when contacting landlords and creditors for relief.

Emergency Cash – For many Certified Financial Planners (CFPs), they recommend keeping cash stored somewhere for emergencies; typically this is enough for at least three months of expenditure. Unfortunately, research suggests only 47% of Americans have emergency savings for three months so you might be looking for other sources of cash. If this is the case, 0% interest rates can be found with a line of credit or furlough loan from a federal credit union.

Even though this interest rate is likely to increase after 60 days, it’s much better than a credit card which can charge upwards of 17%. Alternatively, a home equity line of credit (HELOC) can offer interest of 5.64%, but the interest isn’t deductible for taxes because you won’t be using the money for home improvements.

Sources to Avoid – To finish, we should explain the three sources of cash to avoid; credit cards, margin loans, and your retirement plan. While the first two lead to excessive charges and difficulty in maintaining a minimum balance, the latter could be treated as a permanent loan, and therefore bringing tax into the equation, if you can’t afford to reimburse your plan within a certain time limit.

Conclusion

If you belong to one of the banks mentioned above, why not contact them today to see what help they offer?

Pension envy refers to an individual wishing they could swap their retirement plan with other employees in the office for one reason or another. Would you say that you have a touch of pension envy? If so, you’re not alone.

Many, if not the majority, of federal employees who are under the old Civil Service Retirement System (CSRS) have envy towards their workmates that are in the Federal Employees Retirement System (FERS). Majority of fed retirees have coverage under CSRS that was replaced in the mid-80s by FERS.

Many FERS employees would move to the CSRS program in a heartbeat if it was possible. Currently, some federal and postal employees are under FERS (that replaced CSRS) in the mid-1980s. Employees in 1987 were offered the choice to remain in CSRS or move to FERS.

The design of FERS was meant to shift more of the retirement to employees away from the government employer. It is done this way in many private companies. Compared to CSRS, FERS workers are offered a reduced life annuity. However, individuals receive and pay for coverage of social security. This allows them to qualify for a government contribution to match up to 5 percent for their Thrift Savings Plan.

Together with saving the government the costs, FERS was designed for its portability. Most of the people signing up for government service jobs do not retire from their work, and that makes FERS portability better.