Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

TSP Tax Tips

As you probably are well aware, the federal Thrift Savings Plan is about retirement savings. But it’s also about taxes. The money you put away in the TSP for your retirement years gets preferable tax treatment to provide you with a greater incentive to save now for your retirement later.

You have the option to save pre-tax dollars and allow your savings to grow tax-deferred. You can also, with the Roth option, choose to save after-tax dollars now, allowing the money to grow tax-free. That way, in your retirement years, the withdrawals will not be subject to income tax.

If you have retired and are beginning to consider your TSP withdrawal options, you also need to consider the tax consequences of your choices. The TSP offers variety of publications and a Retirement Income Calculator to help you decide which course of action is best for your situation.

Besides ordinary income taxes, your TSP funds can be subject to tax penalties for taking your money out too early–or not taking it out early enough.

According to this TSP fact sheet, if you receive a TSP distribution before you reach age 59½, in addition to regular federal income tax, you...

Changing Stakes on Claiming Social Security

As a result of a surprise move by Congress late last year, two popular strategies that can maximize Social Security retirement benefits are coming to an end.

The problem, according to the Social Security Administration, is that use of the strategies “allowed couples with financial means to obtain additional or enhanced benefits that Congress did not intend, and are contrary to the goals of the Social Security program.”

For now, those will turn 66 on or before May 1, 2016 (or maybe April 29 or 30--that’s yet to be determined for sure), can still file and suspend their Social Security retirement application for benefits to allow their spouse to file for spouse’s benefits while the other worker’s benefit accrues delayed credits. If you have reached full retirement age, but have not yet turned 70, you can file for benefits but then ask Social Security Administration to suspend retirement benefit payments.

But then things begin to change, in ways that are still murky. The Social Security Administration, who will be implementing the changes, has published a two-page flyer titled Bipartisan Budget Act of 2015, but it doesn’t include many details. Mary Beth Franklin, a well-known expert on...

A Rare Open Season For Life Insurance

Each new year brings changes to federal employee and retiree benefits. One this year that will affect almost all employees is the change in Federal Employees Group Life Insurance premiums and a rare open season for life insurance.

The last FEGLI open season was in 2004, in connection with the 50th anniversary of the program. In 2016, due to the change in premiums that took effect this month, there will be another open enrollment period from Sept. 1 to Sept. 30. Employees won’t have to prove insurability or have experienced a particular life event to participate in this rare open season. Retirees won’t be eligible to take advantage of the open season. (Both employees and retirees can decrease their life insurance at any time and there are circumstances under which employees can increase their FEGLI coverage without an open enrollment event.)

Increases in insurance coverage made during open season won’t take effect for a full year, at the beginning of the first pay period on or after Oct. 1, 2017.

Time to Review

Open season is still months away, but now is a good time to reevaluate your life insurance needs based on who would be affected...

The List: A Retirement Resources Guide

Last week, I presented The Index, my annual guide to past columns. This week, it’s The List: a compilation of resources that I use on a daily basis to back up what I say to you and to any federal employee that asks me a retirement benefits question. These resources are credible, add to your knowledge base and help you confirm that important rules haven’t changed.

The sources below provide information you should want to know so that you can prepare for a smooth transition to retirement. As they say in the carpentry business, “measure twice, cut once.” Ask questions until you understand. It’s easy to leave government, but a lot harder to come back if you left without knowing exactly what you are entitled to receive.

The Big Three

Three organizations are important in administering federal retirement benefits: The Office of Personnel Management, The Thrift Savings Plan and the Social Security Administration. If it’s been awhile since you visited their websites, you owe it to yourself to see what’s new.

Office of Personnel Management

The Index: 2016 Edition

Maybe it was the way I was raised, but I love to organize and clean house. My mom did fall and spring cleaning every year. I grew up in Pittsburgh when the steel mills were still operational, so there was a good reason for all of her effort.

This time of year, I clean house in a different way: by scrubbing the index to my Retirement Planning columns. Every year for the past 10 years, I’ve gone through the previous year’s columns to decide which ones are worth saving in the index. I also evaluate the current index to determine which columns are still relevant.

I hope you will refer to the index when you have a question about a particular retirement planning topic. Some of you may be retiring in the near future -- or maybe you’ve already retired at the end of 2015. Others may have just begun working for Uncle Sam. My goal has always been to write about a variety of topics in a way that simplifies complicated retirement benefit issues. It is my sincere hope that the columns will help you to take charge of your retirement with confidence.

Retirement Processing

Retirement Modernization...