Beneficiary Beware

• By Tammy Flanagan
• May 24, 2013
• comments

You might want to keep this column attached to your TSP-3 beneficiary designation form.

My associate Joe Sullender, senior vice president for investments at Wells Fargo Advisors, recently became aware of a potential tax consequence of leaving your Thrift Savings Plan balance to your spouse in a beneficiary participant account. After reading what comes next, you might decide you need to consult a CPA, an estate planning attorney and a financial adviser if you inherit an IRA, 401(k) or TSP account.

If you are married, it is most likely you would want your spouse to inherit the balance of your TSP account. This would happen automatically through the standard order of precedence if there is no designated beneficiary on file, in which case the spouse is first in line to inherit the benefit. If your spouse's share is $200 or more, the TSP would maintain the beneficiary participant account and invest the entire share in the Government Securities Investment (G) Fund until your spouse makes a different investment choice or withdraws the money as a single payment, monthly payments, annuity or a combination of these options.

In the case of a non-spousal TSP participant account -- which is different ...

The Great Claims Processing Pileup

• By Tammy Flanagan
• May 17, 2013
• comments

Last week, the House Subcommittee on Federal Workforce, Postal Service and the Census met to hear testimony on the following question: "Is the Office of Personnel Management Processing Federal Worker Pension Claims on Time?" Last month, I addressed the issue of the retirement backlog in a column. Dozens of people posted comments afterwards, many of them recent federal retirees who indicated OPM is indeed making progress in reducing the backlog of claims and processing retirement applications in a timely manner.

At the hearing, Ken Zawodny, associate director of OPM for retirement services, testified that this year, the processing time for the average retirement case is less than 90 days, down from 136 days in 2012.

But OPM is clearly concerned about maintaining progress in reducing that even further. This year’s budget sequester has caused the agency to eliminate overtime for claims processors. At the same time, ongoing efforts to cut the postal workforce have added more retirement applications to the pile.

From January through April 2013, OPM received more than 60,000 new retirement applications -- 43 percent more than during the same period in 2012, and 44 percent more than projected. Still, the efforts of OPM employees resulted in ...

Picking the Very Best Date to Retire

• By Tammy Flanagan
• May 9, 2013
• comments

At a class I taught this week, an employee covered under the Federal Employees Retirement System shared two retirement estimates he had requested for dates at the end of this year and early next year -- specifically, Dec. 31, 2013 and Jan. 31, 2014. Those are both good dates for FERS employees to consider, as I noted in my annual Best Dates to Retire column last week.

The employee was not sure which date would work best for him and wanted my opinion. Retiring on Dec. 31 would mean he would be paid for all of the annual leave he carried over from 2012 plus what he is now accumulating in 2013. But he would only receive credit for 50 percent of his unused sick leave if he chooses to retire at the end of December. He wanted the Jan. 31, 2014 estimate to show what he would receive as credit for his full balance of sick leave and an additional month of service.

The benefit was definitely more money every month if he waited until Jan. 31. But he would have to give up the 208 hours of annual leave that he could have received in a lump sum payment ...

Best Dates to Retire 2014

• By Tammy Flanagan
• May 2, 2013
• comments

Download the Calendar: Best Dates to Retire 2014

It’s that time of year again. Are you thinking about retiring next year? This column is designed to help you find the most advantageous date for your departure. (If you’re planning to retire sometime this year, check out my Best Dates to Retire 2013 column.)

Keep in mind that setting your specific retirement date is not the same as deciding when you can afford to retire or for that matter, when you are mentally prepared to retire. This column is designed for those employees who are financially ready and mentally prepared to transition to the next phase of their lives. For some, that will involve a traditional retirement, complete with travel plans, possibly relocation to a retirement destination and lots of leisure activities. For others, it is a steppingstone to a new career.

Before we look at the calendar, here are a few things to remember.

The 30-Day Retirement Month

A retirement month is not exactly the same as a work month or for that matter, a calendar month. The Office of Personnel Management pays retirement benefits based on a 30-day month, so that each month of retired pay equals ...

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 ...