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Advice on how to prepare for life after government.
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Are You Ready to Spend Your Retirement Savings?

Have you started to think about how you’re going to use your Thrift Savings Plan investments once you retire from federal service? Are you already retired? If you’re among the many people who have accumulated a small fortune, what are you going to do with it?

Many federal employees have used some of their retirement savings during their career by borrowing from their accounts using the TSP loan program. According to recent statistics, more than 250,000 TSP loan transactions are processed every year. In addition, more than 120,000 in-service withdrawals are processed for financial hardship as well as age-based withdrawals for employees age 59 ½ and older. Over the past few years, only about 35,000 separated participants per year have initiated monthly payments from their TSP accounts. Meanwhile, the Office of Personnel Management processes about 100,000 federal retirement claims every year.

Over the years, you’ve had to decide how much of your salary to save in the TSP and in which funds to invest those savings. Considering the TSP had a balance at the end of January of $559 billion, the 5.2 million TSP participants have done an amazing job of accumulating retirement...

Change is Coming to Health Plans

News about changes to retirement and insurance benefits always gets the attention of employees who are planning to retire as well as those who already have. Sometimes the news is good, sometimes not.

There’s already news about the 2018 insurance open season that is causing some buzz, even though open season doesn’t start until Nov. 12 (and ends on Dec. 10).

Let’s look at some of the changes on the horizon.

Supplemental Dental Insurance

This change will be of particular interest to military retirees and family members. Delta Dental is no longer going to be available for military retirees under the TRICARE Retiree Dental Program after Dec. 31, 2018. That’s the bad news, but the good news is that retired service members and their families will be eligible to participate in the Federal Employees Dental and Vision Insurance Program. Many military retirees already have the option to participate in FEDVIP due to civilian employment, but there are those who have stayed with the TRDP even though they’ve had access to FEDVIP.

Delta Dental has been the TRDP dental insurance provider and is also available under FEDVIP in a high and standard option. But even though...

TSP Withdrawal Update

I’ve been receiving quite a few questions lately about what is happening with implementation of the changes to Thrift Savings Plan withdrawal options as a result of the TSP Modernization Act signed into law last November. The short answer is it’s going to take awhile.

According to a fact sheet issued by the TSP, nothing changes until new regulations are put in place, so for now you are limited to the existing withdrawal options. You can choose monthly payments—as low as $25 per month—and leave your balance in the TSP until the new options are available. The TSP will make a broad announcement when the new options become available.

When will that happen? Kim Weaver, director of external affairs at the Federal Retirement Thrift Investment Board, which runs the TSP, said, “the law gives the TSP two years from when it was signed to implement the changes, so everything will be done by November of 2019.” The changes will require revisions to recordkeeping, forms, publications, the TSP website, and training.

So what exactly is changing? Here’s a quick recap:

  • Participants will be able to specify how much of their withdrawal should come from the traditional...

Where Retirement Is Headed

When I left federal service in 1988 as a retirement counselor at the FBI, I fully expected that my position would become obsolete within a few years, because it seemed that retirement processing was becoming automated. We were told that in the not-too-distant future, employees would only need to decide on their date of retirement and everything else would be automatically submitted to the Office of Personnel Management by an integrated computer system.

Fast forward to 2018: Paper applications continue to be used in most agencies—though they can be filled out online, which is something of an improvement. The forms require hands-on processing by human resources staff at the employee’s final agency of employment. Applications, along with supporting documents, are turned over to administrative specialists at OPM’s Retirement Operations Center, a massive underground facility in Pennsylvania.

Most employees continue to require some retirement counseling to help them understand the complex details of the application process—which is why I am still employable!

In short, we’re still waiting on for an automated system. And while it may not emerge soon, the world is changing at a speed that makes it hard to imagine what everyday life will...

Where Benefits Are Today

In last week’s column, Where Retirement Benefits Came From, we looked at the origins of the retirement system, both nationally and in the federal government. This week, let’s examine how we got to where we are today.

Recent history in regard to private sector as well as federal retirement plans starts with the invention of the employer-sponsored savings plan in 1978. At about the same time, changes in the tax code put company pension plans in jeopardy by requiring them to account for their pension liabilities. According to a 2014 article in Bloomberg Pursuits, Richard Stranger, a policy analyst on the staff of the congressional Joint Committee on Taxation, was the primary author of the 869-word section 401(k) of the 1978 tax law that created employer-sponsored plans.

The 401(k) provision encouraged employees to direct part of their salary into retirement accounts without paying taxes on it up front and established basic rules to prevent too much of the benefit from going to executives. Theodore Benna became known as the “father of the 401(k)” because he created and gained IRS approval of the first such savings plan while serving as vice president of the Johnson Companies...