Changes You Can Believe In

By Tammy Flanagan

January 16, 2009

Every year, there are changes in the way Social Security, Medicare and federal retirement benefits are calculated. Likewise, there are changes affecting federal salaries, the Thrift Savings Plan and other programs. All of these will factor into your long-term retirement planning efforts.

Let's take a look at some of the specific changes this year.

Salaries

The average federal pay increase for 2009 is 3.9 percent. Here's a link to the 2009 General Schedule locality pay tables.

For those employees working under the National Security Personnel System, keep in mind that the increase consists of three parts:

Social Security

Medicare Part B

The monthly premium for Part B, covering physician care and outpatient services, remains $96.40 in 2009, the same as it was in 2008. This premium represents only 25 percent of the cost of Part B; the government pays the rest for most Medicare beneficiaries.

As in 2007 and 2008, about 4 percent of Part B enrollees with higher incomes will pay a higher premium based on their income last year. In 2009, if you file your taxes as "married, filing jointly" and your modified adjusted gross income is more than $170,000, you will pay a higher Part B premium. For all other types of filing status, if your modified adjusted gross income is more than $85,000, you will pay a higher Part B premium. If your income has gone down because of the death of your spouse, a divorce, or some other circumstance, you should contact Social Security to have your premium adjusted. Here's a fact sheet that explains the higher premiums.

CSRS and FERS

Here's the rundown on annual changes to the two federal retirement systems:

Thrift Savings Plan

The Internal Revenue Service annual limit on what employees can contribute to their Thrift accounts will be $16,500 for tax year 2009, a $1,000 increase from 2008. FERS employees need to be sure not to exceed the $16,500 limit before the end of the year so they won't lose matching agency contributions. The limit on catch-up contributions for 2009 will increase by $500, to $5,500. Here are some frequently asked questions about TSP contributions and limits.

In addition, a new law places a one-year suspension on receiving a required minimum distribution payment from an individual retirement account or defined contribution plan in 2009. This law only will affect participants who have turned 70 ½ years old. Here is a TSP notice on this provision.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.


By Tammy Flanagan

January 16, 2009

http://www.govexec.com/pay-benefits/retirement-planning/2009/01/changes-you-can-believe-in/28367/