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 ...

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 ...