10 Things You Probably Don’t Know About Federal Retirement

• By Tammy Flanagan
• July 19, 2013
• comments

How much do you know about the federal retirement system? Do you think you could pass not only introductory and intermediate courses on retirement, but Retirement 301, too? If so, you’d have to get decent scores on all of the retirement quizzes I’ve offered over the years.

Even if you do have deep knowledge of retirement rules, practices and procedures, there might be a few things you don’t know. Here are 10 things only the true experts know about retiring from a federal career.

1. Employees who separate from federal service in the year they reach age 55 are generally able to withdraw a partial payment or monthly payments from their Thrift Savings Plan accounts without incurring an additional 10 percent tax penalty. (See Important Tax Information About Payments From Your TSP Account, Page 7)
2. There is a special computation for Civil Service Retirement System employees who have performed service abroad after 1986 with the Central Intelligence Agency, Defense Intelligence Agency or National Security Agency that provides a more generous retirement computation. There are also special rules for crediting certain service performed abroad for those under the Federal Employees Retirement System. (See Chapter 50, CSRS and FERS Handbook ...

Midcareer Checklist

• By Tammy Flanagan
• July 12, 2013
• comments

If you're like me, when you plan your summer vacation, you’ll make a list of what you need to do and bring, so you don’t forget anything important. You should treat your retirement the same way.

Here’s a midcareer checklist to refer to as you evaluate your retirement goals.

Review Your Personnel Records

The most important factor in determining your retirement eligibility and computing your benefit is your length of creditable service. If there is an error in your records, you may not be able to retire when you had planned and you may not be entitled to the benefit you had expected. Your service computation date is the date that reflects your continuous federal service. Remember that your service computation date for leave purposes may be different from your retirement service computation date. The latter is not determined until you request a retirement estimate -- and then again when your agency prepares your records for retirement processing. By this time, if there are missing records, it’s too late.

Your federal career must be properly documented with records that show the beginning and ending dates of all periods of civilian and military service. Your current agency ...

Benefits and Same-Sex Marriage

• By Tammy Flanagan
• July 5, 2013
• comments

For many years, I’ve been getting questions from federal employees in same-sex relationships about their ability to list their partners as spouses for survivor benefits and as family members for insurance benefits. I’ve always felt uneasy when I had to let them know this wasn’t possible, even though an opposite sex couple living in a common-law relationship could extend such benefits if they lived in one of the 16 states that recognize common-law spouses.

Thirteen states and the District of Columbia currently have laws that allow same-sex marriages. Now, in the wake of last week’s Supreme Court decision in United States v. Windsor, same-sex couples in these states who are legally married and in which at least one partner is a federal employee have access to family insurance coverage and can provide spousal survivor benefits. (See the Office of Personnel Management’s memo on the decision here.)

These new benefits will require same-sex married couples to understand a myriad of rules and regulations that up until now have not applied to them. Let’s look at some of them.

Benefits for Surviving Spouses

I’ve written about this issue several times over the years. Here are ...

How Much Money Do You Need to Retire?

• By Tammy Flanagan
• June 28, 2013
• comments

For many years, magazines, newspapers and other media have promoted a rule of thumb for retirement planning: To retire comfortably, you must be able to replace 80 percent of your pre-retirement income. Over my years of teaching pre-retirement classes, I’ve observed that many employees are closer to the 80 percent threshold than they think, once they add up all of their sources of retirement income.

The 80 percent figure stems from "replacement ratio" studies conducted by Aon Consulting and Georgia State University for 20 years, in which researchers cull data from the Bureau of Labor Statistics Consumer Expenditures Survey, which details how U.S. consumers, including older households, spend their money.

The study relies on gross pay, and assumes that after you retire, the withholdings for retirement from your salary will cease and you will pay less income tax on your retirement income than you paid on your salary. The withholdings that stop at retirement include:

• Retirement itself: For employees under the Civil Service Retirement System, that amounts to 7 percent of pay. For those under the Federal Employees Retirement System, the figure is 0.8 percent for most employees.
• Thrift Savings Plan funds: In 2013, you can contribute ...

What To Do With Your TSP

• By Tammy Flanagan
• June 21, 2013
• comments

If you’re like many federal employees, a big question you’ll have at retirement is what to do with the savings you’ve accumulated in your Thrift Savings Plan account. But before you can answer this big question, you must consider several other smaller ones:

Are you going to continue to work after you retire? If so, you probably won’t need to begin monthly withdrawals from your TSP. You may continue to leave your money invested in the TSP and make interfund transfers as needed to rebalance your account to minimize risk and maximize growth.

You will no longer be permitted to contribute new money to your account or to borrow from your TSP once you are retired, but you can remain invested in the C, F, G, S, and I Funds, along with the five Lifecycle funds. You also can transfer the money to your new employer’s 401(k) plan or to an Individual Retirement Arrangement.

Are you retiring past age 70 ½? If so, you will need to factor in required minimum distribution rules, whether you leave your money in the TSP or move it to an IRA. You may be able to avoid required minimum ...