Pre-Retirement To-Do List

• By Tammy Flanagan
• April 26, 2013
• comments

Are you one of the growing number of federal employees who are preparing to retire in the near future? If so, here’s a list of things that you should do to get ready:

• Attend any pre-retirement training that is available from your agency. This will be an opportunity to gain a much better understanding of your own retirement and get the latest news on what’s happening with retirement benefits. Most of these seminars will also include segments on financial planning, tax planning and even estate planning. The foundation of this training is usually a thorough discussion of the Civil Service Retirement System, the Federal Employees Retirement System, insurance, Social Security and the Thrift Savings Plan.
• Get a retirement estimate from your human resources office. By requesting an estimate prior to retirement, you can be informed of any discrepancies in your personnel records, whether you owe any money to the retirement fund for any of your prior federal service. Also, you’ll find out how your service will be credited for retirement eligibility and computation. This can go a long way in making sure you have a complete case when it is sent for processing after you retire.
• Take ...

About That Backlog…

• By Tammy Flanagan
• April 19, 2013
• comments

As most federal employees have heard, especially those who are near retirement, there’s a substantial backlog of retirement claims at the Office of Personnel Management that haven’t been fully processed and are awaiting review. As of the end of March, the backlog stood at 36,603 claims. That’s a lot less than the 61,108 that were backed up in January 2012, but if you’re a recent retiree (or planning to retire soon) it’s still not a very comforting number.

To compound the problem, there have been many more retirements so far in 2013 than anticipated. For example, OPM expected to receive around 21,000 retirements in January, since many employees take advantage of retiring at the end of the leave year to maximize the payout of unused annual leave.

This year, retirement claims submitted in January numbered 22,187. Usually after the initial flurry of end-of-year retirements, things die down for a few months. In February, OPM expected to receive only 5,600 new claims, but they received 20,374. That is almost four times the number of projected retirements. And again in March, the projection was for a moderate amount of new retirement ...

Required Payouts

• By Tammy Flanagan
• April 12, 2013
• comments

Last week’s column, Understanding Your TSP Options, left at least one commenter wanting to know more about the issue of required minimum distributions from the Thrift Savings Plan:

I would like to hear more about payout options because I don't think it's wise to leave money in the TSP past age 70 due to the withdrawal limitations and risk of an RMD (required minimum distribution) penalty. Can anyone convince me otherwise?

The Internal Revenue Code requires that you receive a portion of your TSP account beginning in the calendar year when your age reaches 70½ and you are separated from service. The portion you’re required to take is called a required minimum distribution, or RMD.

Your entire TSP account is subject to the required minimum distributions. When you have traditional and Roth balances in your account, any withdrawals will be paid proportionally from each balance. Likewise, if you have an account that has both taxable and tax-exempt contributions, your distribution will be paid proportionally from each.

The TSP calculates RMDs based on your account balance and your age, using guidelines set by the IRS. The RMD computation will vary depending on the withdrawal option you’ve ...

Understanding Your TSP Options

• By Tammy Flanagan
• April 5, 2013
• comments

Since April is Financial Literacy Month, I’ve decided to devote this week’s column to helping you gain a better understanding of your Thrift Savings Plan investment choices.

At the end of 2012, TSP plan assets stood at $330 billion, with 4.6 million participants. This translates to an average participant balance of $70,000. At the end of 2011, the G (government securities) fund held the largest balance of any of the funds, at nearly $148 billion.

Here’s a quick quiz: Why do you think there’s so much money in the G Fund?

• It is viewed as safe.
• Investors fear losing money or having a negative return.
• The G Fund is the default choice if a participant doesn’t choose a different mix of funds.
• Many employees still covered under the old Civil Service Retirement System who participate in the TSP view it as more of a savings account (short-term investment) rather than a retirement account (long-term investment).
• Many people don’t understand the other investment options.
• Many investors fear the market risk associated with stock and bond investments.

The answer is all of the above. Just because almost half of all TSP funds are invested ...

Preparing in Advance

• By Tammy Flanagan
• March 29, 2013
• comments

This week’s column is inspired by a pamphlet prepared by the National Active and Retired Federal Employees Association for its members. The publication is called “Be Prepared for Life’s Events.”

NARFE formed in 1921, the year after Congress passed the law creating the Civil Service Retirement System. It represents the interests of nearly 5 million active and retired federal workers by providing them a voice before Congress. NARFE sponsors and supports legislation to protect the retirement benefits of its members.

I think of NARFE as a friend who is watching your back. It has a long history of organizing protests of efforts to trim federal benefits, such as one that helped lead to the repeal of the 1988 Medicare Catastrophic Coverage Act.

I recently had the pleasure of visiting NARFE Headquarters in Alexandria, Va., and found an organization that doesn’t look like it’s nearly 100 years old. I’ve been a NARFE member since 1988 and still look forward to receiving the organization’s monthly magazine and the updates posted to its website.

Now that I’m beginning to phase into my own retirement, I’m trying to make time for my local NARFE Chapter. Last ...