Give the Gift of Cash

• By Tammy Flanagan
• February 15, 2013
• comments

According to Giving USA, Americans gave almost $300 billion to their favorite causes in 2011. Charitable bequests by individuals totaled more than $24 billion, which represented 8 percent of the total.

In my experience, the topic of charitable giving rarely comes up at federal retirement planning seminars. So why talk about it now? Because as federal employees have seen a shift in their retirement benefits from a single defined benefit (under the Civil Service Retirement System) to one (under the Federal Employees Retirement System) that includes a significant savings component in the form of the Thrift Savings Plan, the topic has become more timely.

Keep in mind that when CSRS or FERS retirees die, their federal retirement annuity benefits end as well, with the exception of the survivor’s annuity. There is very little cash value to a federal retirement benefit, other than the employee contributions that are generally paid to the retiree (or survivor annuitant) within a few years following the beginning of the benefit payments.

But what if your survivors are not financially dependent on you? The balance of a retiree’s TSP account might be left to loved ones who are not financially dependent (such as grown ...

A Tax To-Do List

• By Tammy Flanagan
• February 8, 2013
• comments

Last week, I wrote about things new retirees need to be aware of  as they make the transition into this new phase of life. This week, I want to focus on tax issues, and for that I’ve called on my associate, Bob Leins, CPA, for help.

But before I get to some commonly asked tax questions, I wanted to address some comments from last week’s column. Several of you said you had retired on Dec. 31, 2012, or Jan. 3, 2013, and had yet to receive any retirement benefit. Keep in mind that if your retirement began in January, your first retirement check would be dated Feb. 1, and you might not receive that check until mid-February at the earliest -- and it will be an interim payment. In the meantime, you should receive your final paycheck from your agency as well as the lump sum payment for accumulated and accrued annual leave.

By the way, the Office of Personnel Management received 22,187 new retirement claims in January. The backlog of applications now stands at 36,062 pending cases. So be prepared to be in interim status for at least a few months -- maybe more.

Now for Bob ...

A New Retiree’s To-Do List

• By Tammy Flanagan
• February 1, 2013
• comments

Don’t you hate it when you get an email or other correspondence that starts out, “This is a friendly reminder…”? It usually means you’re close to your credit limit or your payment hasn’t arrived on time.

If you are a recent retiree, you may wish you could send the Office of Personnel Management a friendly reminder that you need your first retirement check to pay your monthly bills and you’d like what you’re entitled to, not some lesser “interim” amount. Unfortunately, the reality is that it can take OPM five to eight months to process your retirement application, and in the interim you may receive only partial payments. (Here’s more information from OPM.)

You can check here to see the current status of the retirement processing backlog. OPM receives more new claims in January than any other month, because employees like to take advantage of accumulating a large sum of annual leave by retiring at or near the end of the “leave year.” So there are a lot of new retirees right now.

To Do

Although there isn’t much recent retirees can do about the claims backlog, there are a few things that ...

More on the FERS Supplement

• By Tammy Flanagan
• January 25, 2013
• comments

Last week, I wrote about the Federal Employees Retirement System Annuity Supplement. Some people refer to this benefit as the Social Security supplement rather than the FERS supplement, since the purpose of this benefit is to bridge the time between employees’ retirement under FERS and their eligibility for Social Security benefits. That’s one way to look at it: Although the FERS supplement is based only on civilian federal service, not Social Security-covered employment in the private sector or military service, it does provide supplemental income prior to Social Security eligibility.

As I noted last week, not everyone who retires under FERS is entitled to the supplement. To get one, you must:

• Be under age 62. (The supplement will end at 62, regardless of whether you apply for Social Security then or not).
• Not be retiring under the disability provisions of FERS.
• Not be applying for a deferred retirement. (A deferred retirement is payable to an employee who leaves federal service with at least five years of creditable civilian service and before being eligible for immediate retirement.)
• Be eligible for an immediate, unreduced retirement.

The latter group includes who are retiring:

• At their minimum retirement age (between 55 and 57 ...

A Little Extra Under FERS

• By Tammy Flanagan
• January 18, 2013
• comments

Almost half of all employees who retire under the Federal Employees Retirement System are entitled to receive the FERS Supplement. The supplement is a temporary boost to the basic retirement benefit designed to take the place of the Social Security tier of FERS when an employee retires at an age younger than 62. Those who retire under the Voluntary Early Retirement Authority option also are entitled to the FERS supplement when they reach the FERS minimum retirement age of 55 to 57, depending on their year of birth.

In 2011, a total of 37,839 employees retired under FERS. Of those, 18,490 were not eligible to receive the supplement, since they were retiring at 62 or later -- or on a disability retirement or an immediate or postponed “MRA+10” retirement (a reduced benefit for employees who are old enough to retire, but don’t have the minimum service required for an unreduced benefit). The supplement is payable when you retire at the MRA with 30 years or more of service, or at age 60 with at least 20 years of service. It also is payable to employees who retire under special provisions, such as law enforcement officers and firefighters ...