ANNUAL LEAVE: At the time you retire, the Postal Service will pay you for up to a maximum of up to 440 hours of earned annual leave. You will lose any amount over 55 days of annual leave (55 days x 8 hours daily= 440 hours maximum). It should be on your next scheduled USPS paycheck.
BENEFICIARIES: Check the information on beneficiaries you have previously chosen for your Government Life Insurance, Civil Service Retirement System (CSRS), Federal Employee Retirement System (FERS), earned annual leave, and earned compensation. There is a separate form for each benefit. The order of beneficiaries is your designated beneficiaries or if the order is not designated, then the order is spouse, child/children in equal shares, parents, executor or estate administrator, brothers and sisters, or next of kin in that order.
COUNSELING SEMINARS: You need to attend a pre-retirement counseling seminar, if one is available at your USPS agency, at least five (5) or more years before your retirement. Many postal agencies only offer one pre-retirement individual counseling session within in a three (3) year period after you become eligible for retirement due to age and years of service. It’s a crying shame, but that’s the way things happen. Better yet, you should attend a National APWU Retirees Department Retirement class hosted by the APWU Region, State and/or Area Local/Local or enroll in a three (3) day National APWU Retirees Department Counseling Seminar which is being scheduled in each region. This way you may become an APWU Retirement Counselor in your APWU Area Local/Local, State or Region.
DATE OF RETIREMENT (CSRS): For voluntary retirements, CSRS annuities should begin on the 1st, 2nd, or 3rd day of the month. If you retire on one of the first three days of the month, your first OPM annuity check is payable the first day of the following month. If you retire on any other day of the month, your first OPM annuity check is payable the first day of the second month which follows. If you retire the 4th day through the last day of any month, for example, August 4th through August 31, then your first OPM annuity check is payable October 1st. Waiting one extra day will cost you one additional month of OPM annuity pay!
DATE OF RETIREMENT (FERS): In the Federal Employee Retirement System (FERS), voluntary retirements begin only on the first day of a month. FERS employees should retire on the last three (3) days of the month, if possible. For example, if you retire on August 31 under FERS, your first OPM annuity check is payable October 1st. Under FERS, retiring on other days earlier in the month will cost you extra days of additional OPM annuity pay.
GOVERNMENT PENSION OFFSET (GPO): You may also be entitled to benefits based on the Social Security covered earnings of your spouse or former spouse. However, this benefit may be affected by the Government Pension Offset (GPO), another provision of the Social Security law. For more information, see Congress & Legislative link and scroll down to the Legislative Fact Sheet on Government Pension Offset (GPO). We urge you to contact your Congress and ask them to Co-sponsor and support the legislative bills already introduced in the 108th Congress to repeal this unfair law.
HEALTH INSURANCE: You must be enrolled in your Federal Employees Health Insurance Benefits (FEHB) Plan program for a five (5) year period prior to your date of retirement to continue your health insurance coverage as a retiree. After you retire, you pay approximately thirty (30) percent of your health insurance premium and USPS pays about seventy (70) percent. This is a big change in the formula you enjoyed before you retired when USPS paid approximately eighty-three (83) percent and you paid about seventeen (17) percent due to the USPS/APWU collective bargaining agreement. Welcome to the real world!
HIGH THREE AVERAGE EARNINGS PAY: Your high three average earnings pay is figured on thirty-six (36) months of continuous base pay only. It does not include overtime, night differential, Sunday pay, or lump sum payments.
INCOME PROJECTION: If you will have any housing cost (mortgage or rent) or other significant loans/credit card debts after retiring, you will need approximately eighty (80) percent of your current USPS salary to retire comfortably. If you have no rent/mortgage or other substantial loans/credit card debts after retiring, sixty (60) percent of your salary will probably suffice.
INTERIM PAYMENTS: Generally, as soon as the Office of Personnel Management (OPM) gets all your retirement records from USPS, OPM will provide interim payments averaging more than eighty-five (85) percent of your final retirement benefit. Usually, the next month’s check will be your regular annuity amount plus a make-up of the remaining amount due from your first payment. The third OPM annuity check you receive, if not sooner, should be your regular monthly annuity amount. OPM will withhold deductions for federal income taxes, health and life insurance coverage, and your $2.00 monthly APWU retiree union dues, provided you have completed the APWU Retired member Form 1187 and mailed it back to the National APWU Retirees Dept.
LIFE INSURANCE: To keep your Federal Employees Government Life Insurance (FEGLI) group policy coverage, you must have been enrolled in the program for the five (5) years of service immediately preceding your retirement date or for all service since your first opportunity to enroll in the program.
LWOP: The only way LWOP can delay your postal retirement by reducing your years of service credits is if you take over six (6) months of LWOP in a calendar year.
OFFICIAL PERSONNEL FOLDER (OPF): Get a copy of your Official Personnel Folder (OPF) from USPS Personnel or Human Resources office at once, including all military records. Your retirement is based on the Form 50’s in your folder. Check your Personnel folder and files each and every year of your employment. Your retirement is determined by the highest three years of your consecutive yearly base pay. There is approximately a twenty (20) percent error in USPS record keeping. Your expenses of copying the personnel records in your folder will save you beg bucks down the road!
SICK LEAVE (CSRS): In CSRS, for every 22 days of sick leave, you are credited for one month of service. 2080 hours of sick leave equals one year of credit for CSRS employees only. Accumulated sick leave can be used for additional monthly and years of service for retirement.
SICK LEAVE (FERS): If you are in FERS, you get no credit for accumulated sick leave for extra monthly and years of service to retire.
SOCIAL SECURITY BENEFITS: Telephone the Social Security Administration 1-800-772-1213 or go on line to their web site www.ssa.gov to ask for a “Request for Earnings and Benefit Statement” on you to get a record of your earnings under Social Security, and if you will be eligible, an estimate of the payment you may receive. Remember, the estimate you receive may not include reductions to your Social Security benefits due to the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). You should schedule an appointment with your local Social Security office to personally get an estimate of your benefits, including any reductions which may be caused by the GPO and/or WEP provisions.
SPOUSAL OPM BENEFITS: In compliance with the Spousal Equity Act of 1984, your spouse must agree and sign a notarized paper for you not to make your spouse a beneficiary of your OPM annuity. If the spouse chooses not to be a beneficiary and the annuitant dies, the spouse cannot get health insurance benefits coverage!
SURVIVOR’S BOOKLET: Every potential APWU retiree member should purchase the APWU Survivors Booklet costing only $3.00 from the National APWU. This treasure chest publication allows for personal information to be stored in one place for your use and your spouse/family. If you pass away, the information in this booklet is especially important to you, but also to your survivor or loved ones.
THRIFT SAVINGS PLAN (TSP): You are urged to contribute a maximum deduction to your Thrift Savings Plan (TSP) to realize a higher income return on retirement. Retirement for FERS employees is like a three-legged stool, that is, FERS, Social Security, and TSP. You cannot usually afford to retire if you don’t build up your Thrift Savings Plan account to the maximum.
VERIFICATION OF RECORDS: All periods of civilian and military service should be verified in your Official Personnel Folder (OPF) files. You must take the initiative on your own to request copies of all your personnel records and keep these copies in a safe place where you know where they are located. Request copies each and every year to update your files for retirement some day! I bet you can’t wait to get started!
WINDFALL ELIMINATION PROVISION (WEP): Any Social Security Administration estimate of the payment you may receive is not adjusted for the Windfall Elimination Provision (WEP), which is a provision of the Social Security law after 1984 that reduces the Social Security covered benefits of many former Federal and Postal employees. For more information, go to the Congress & Legislative link on this web site and scroll down to Priority Legislation and Legislative Fact Sheets to read about how the Windfall Elimination Provision may affect your retirement. We urge you to contact your Congress and ask for their Co-sponsorship and support for legislative bills already introduced in the 108th Congress calling for the repeal of the Windfall Elimination Provision (WEP). We think these bills have a good chance of getting out of Committees and going to the floor for serious debate and passage this time around the horn!
YEARS OF SERVICE OPM MAXIMUM PAY: If you have forty-one (41) years and eleven (11) months of combined service at the time you retire, you will be paid eighty (80) percent of your high three continuous years of service. For CSRS employees, sick leave can increase your OPM annuity over the 80 percent maximum. FERS employees do not get any credit for accumulated sick leave in figuring their retirement!
Did you know there is a Retirement Seminar available online via LiteBLUE? Feel free to refer employees to the "My Life" tab on LiteBlue www.LiteBlue.usps.gov Retirement information at your fingertips 24 / 7.
Also, did you know that full-time career employees eligible to retire within the next 5 years can request an annuity estimate for optional retirement via PostalEASE. https://ewss.usps.gov/esymain.htm . PTR and PTF employees will need to contact the HRSSC to obtain an annuity estimate. A full explanation of the NARECS annuity estimate printout is available through www.liteblue.usps.gov by viewing the Online Retirement Seminar NARECS segment. Employees will need their Employee Identification Number (EIN) and PIN.
There's a ton of retirement information available at http://www.opm.gov/retire/ . In addition, there are retirement counselors at the HRSSC that can answer employees' retirement questions. Disability retirement questions should be directed to the HRSSC. That number is 1-877-477-3273, menu option 5, listen for the retirements prompt.
VC Program Is Not an Urban Myth
Voluntary contribution accounts are available only to CSRS and CSRS-Offset employees; those employees may invest an amount equal to up to 10 percent of their career federal basic pay in such accounts, where the money earns interest tax-deferred until withdrawn. Withdrawals are allowed either as lump-sums at any time or as annuities at retirement. Although the voluntary contributions program has existed for many years, many employees still are unaware of it, as are many personnel officials. Some employees who have expressed interest in opening such accounts report they have been met with either blank stares or outright statements that no such program exists. Also, there is a degree of confusion with the Thrift Savings Plan; some employees have been told that the TSP superseded the VC program. In fact, the two programs are separate and participation in one does not affect the other. To open a VC account, file form SF 2804 at the address on the form.
Thinking About Retirement?
1. Five years before you are eligible to voluntarily retire, you can contact the Human ResourcesShared Services Center (HRSSC) at 1-877-477-3273 and select option 5 to request an annuity estimate. You can also request an estimate by logging into www.liteblue.usps.gov <http://www.liteblue.usps.gov/> , and select Postalease.
2. Although you can select any date to retire once you become voluntarily eligible, there are certain times of the month under both the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) that may be more advantageous to you. For example, if you are covered by CSRS the best time to retire is either on the last day of the month or the 1st, 2nd, or 3rd day of any month and your annuity is effective the following day. On the other hand, if you fall under FERS you should retire at the end of the month so your annuity will be effective on the first of the next month.
3. To initiate a voluntary retirement, employees are encouraged to contact the HRSSC within 180 days of their desired retirement effective date by calling 1-877-477-3273 and selecting option 5. The HRSSC will request your annuity estimate and order your Retirement Kit.
4. A retirement specialist at the HRSSC will be assigned to your case and will ensure that your retirement application is processed from the beginning to the end. The HRSSC will:
· Validate your service history by reviewing your personal records.
1 Upon receipt of your Retirement Kit, you are asked to contact the HRSSC retirement counseling line to arrange your individual retirement counseling session.
2 Conduct your individual retirement counseling session by reviewing your application and discussing a variety of other information concerning your retirement and answering any questions you may have. Following the counseling session, you will mail your application back to the HRSSC for processing.
3 Review your application to ensure that all the appropriate documents are included and signed
4 Complete the processing of your application by forwarding your application to the Accounting Service Center (ASC) who verifies your earnings and forwards your application onto the Office of Personnel Management.
5. Because of your many years of service, the Postal Service wants to ensure that your retirement is processed timely and as smoothly as possible. The retirement specialists at the HRSSC have years of experience and are thoroughly trained to make sure that your retirement application gets the personal attention it deserves throughout the process.
Please share this information with your employees or post on your employee bulletin boards.
Linda L. Jennings, PHR HR Generalist (Principal)
Hawkeye District
The APWU has a lot of information on their web page about retirement.
The APWU does presentations on CSRS and FERS retirements all across the nation. You can contact the Retirees Department at APWU and they can help you with setting up a class or where one may be in your area.
Date 08/05/2008
HRlS Annuity Estimate as of Pay Period 16 of 2008
note: Retirement Type: Early Out
1.Estimate based on retirement effective date shown, assuming Retirement Computation Date (RCD) is correct and you have at least 5 years civilian service in addition to any military service. Office of Personnel Management (OPM) will compute exact amount of annuity.
2. Estimate computed as if all required retirement contributions are in retirement fund. Necessary deposits for non-career service, redeposits for prior civilian service, and post-1956 military deposits not in the fund may affect estimate accuracy.
3. Retirement contributions reflect total withheld from salary during present USPS career appointment, and does not include contributions made at another agency, during a prior USPS appointment, deposits or redeposits, or voluntary contributions.
4. High 3 average salary reflects average of past three years basic salary. Does not include higher level (HL), leave without pay hours (LWOP), overtime, night differential, awards, etc. OPM will include HL and LWOP and compute on the consecutive 3 year period providing the highest average if other than this period.
5. If total service exceeds 41 years, 11 months, annuity is 80% of high3 average salary. Additional annuity allowed for unused sick leave.
6. OPM’s annuity computation prorates part-time service performed after April 6, 1986. Estimate does not include proration, which may affect estimate accuracy.
7. Military service after 1956 included in RCD without “post-1956″ deposit to the fund will cause annuity to be reduced at age 62 if eligible for a Social Security benefit. Employees whose first career hire began 09130182 or later must complete deposit before service credit allowed.
8. Survivor annuity amount reflects full survivor annuity.
9. Health insurance premium reflects monthly rate for federal annuitant.
10. Terminal leave payment reflects earned annual leave balance or allowed maximum balance after forfeited hours.
11. Annual leave and sick leave hours represent hours earned as of pay period prior to date of printout issued (date in upper right corner), not retirement effective date.
12. Premium costs for post-retirement life insurance coverage are for no reduction of insurance for each option, except Option A, and based on present age group as of estimated retirement date. Lower levels of insurance coverage will reduce premium costs.
The CSRS Retirement Guide, EL-502, provides detailed information on the various retirement facts noted on this printout. Contact personnel for a copy of the EL-502 or go to HTTP:/BLUE.USPS.GOV/CPIM/FTP/HAND/EL502/WELCOME.HTM on the USPS intranet.
Publications on the following are also available
Thrift Savings Plan (TSP) WWW.TSP.GOV
Social Security Administration (SSA) WWW.SSA.GOV
Federal and state income taxes WWW.IRS.USTREAS.GOVfor federal tax information Federal Employees’ Group Life Insurance (FEGLI) WWW.OPM.GOV/INSURE/
Federal Employees Health Benefit Program (FEHB) WWW.OPM.GOV/INSURE/HEALTH/
Social Security information and benefit estimates must be obtained from Social Security.
Period covered in this annuity estimate - 9/1/2005 thru 1/1/2009
The USPS has a template letter that they are sending out to people who are retiring.
The Office of Personnel and Management (OPM) administers both USPS retirement programs - the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). The CSRS generally applies to employees who received a career appointment before January 1, 1984 while the FERS applies to employees whose initial career appointment was January 1, 1984 or later, and CSRS employees that elected to transfer to FERS. Both systems have the same purposes, however, both operate under a unique set of guidelines and rules.
Many employees believe that USPS retirement benefits are some of the most substantial in the nation. Many, upon reaching retirement age, are shocked to learn that they will be facing a 50% to 75% or more loss in income after retirement. Although, postal retirement benefits may not be all that public legend has them to be, they can provide a secure retirement with the proper planning. Below, are brief overviews of each retirement system. (Information is deemed reliable but not guaranteed.)
How about a little Q&A this week? I am always impressed by the number and variety questions I receive. Retirement is obviously on the minds of many people in government right now.
But before I get to your questions and comments, I need to clarify something from my recent column on the Medicare Part B late enrollment penalty.
In that column, I wrote about the 10 percent surcharge added to the Part B premium for every year older than 65 that a person is when he or she enrolls. But according to Social Security regulations, the penalty only goes back to age 65 if the individual was not covered by health insurance through their own or a spouse's current employment.
In the example I used, the employee didn't retire until several years after turning 65 and neglected to enroll in Part B during the eight-month special enrollment period following her retirement. If she decides to enroll now, she would only incur a 10 percent surcharge on the premium for Part B for the months that have passed since her retirement, not since she reached 65. So, to use another example, if a person enrolled in Part B at 70 after retiring from federal service at 69, she would incur only a 10 percent surcharge, not 50 percent.
Now, on to the questions and comments.
Military Service Credit Deposit
I joined the federal government about four years ago and paid off my military service credit deposit right before my third anniversary, when the first interest accrual was due. I was very disappointed to find out the only acknowledgement I got from my agency was a one-liner that acknowledged it was paid in full. Nowhere in the document does it acknowledge the amount paid or the amount of time bought back.
The record of your military service deposit will be retained by your payroll office until you leave federal service. When you retire, that record will be submitted to the Office of Personnel Management along with a form indicating your deposit has been paid in full and what period of military service was covered. If you choose not to pay a deposit for military service, your agency will send a form to OPM noting that fact when you retire. This form provides a warning of the consequences of not paying the deposit.
You can request confirmation from your payroll office of the amount you've paid and the fact that your deposit has been paid in full. When I worked in a federal benefits office years ago, we would encourage our employees to keep their canceled checks showing their military deposits had been paid.
Seasonal Service
There are a whole bunch of folks (including me) who started as seasonal employees with land management agencies such as the Forest Service and Bureau of Land Management in the late '80s or early '90s, but we didn't get positions that paid benefits for close to a decade. Although our service computation dates reflect our seasonal time (in case of a reduction in force and for leave category purposes), we don't currently have the option to make a deposit and buy back time that will count toward an earlier retirement. So, most of us are looking at working into our 60s. I'd like to have the option of buying back those years as a seasonal. Have you heard of any move by OPM or Congress to allow this?
I understand your dilemma and wish something could be done to allow you to receive credit for federal service that wasn't covered by contributions to the Federal Employees Retirement System. Employees with seasonal, temporary or other "nondeduction" civilian service before 1989 can make a service credit payment into FERS to receive credit for the service. But the FERS law did not allow credit for such service performed after 1988. I can see how this can be unfair to employees who work at agencies that use a lot of seasonal employees.
I'm not aware of a bill yet that would allow for post-1988 nondeduction service to be paid into FERS.
Refund Regrets
I was 20 and worked for three years before quitting and taking my Civil Service Retirement System retirement. It was about $3,800. I came back three years later, and no one told me about paying back the money to the retirement fund. Over 10 years after that I attended a retirement seminar where I discovered I owed a redeposit. I checked into it and it was over $9,000 with additional interest due. I was told by my personnel office that it was OK if I couldn't pay it back, it would just come out of my annuity when I retired. I attended another retirement seminar eight years later and found out the money is taken from your annuity until you die, not until it is paid back. I refinanced my house to pay the $17,900 at that time. I still wonder where the government can invest the money to make that kind of return.
If it makes you feel any better, the decision to pay back a refund has a positive as well as a negative angle. You paid back $17,900 to avoid an actuarial reduction to your retirement, which is designed to provide the same value (taking into account interest) of total lifetime benefits as would have been payable if contributions had remained (or been paid back) to the retirement fund.
If you retired at 60 and owed a $20,000 redeposit (including refunded CSRS contributions and any interest that has accumulated), the actuarial factor is 188.7. OPM would divide $20,000 by 188.7 and your retirement benefit would be permanently reduced by $106 per month. By paying back your redeposit, you've avoided this reduction. And by keeping the money in the equity of your house until you paid back the $17,900, your house was able to appreciate enough so you had $17,900 in equity to use for the payback.
In this economy, some people might say you did the right thing at the right time considering you might have refinanced your home at a lower interest rate and were still able to use some of the funds to permanently increase your CSRS retirement benefit. But I agree that there should be a way for all employees to be made aware of these issues closer to their entry into service, rather than when they are nearing retirement.
Military and Medicare
I would like to see an article discussing Medicare, the Federal Employees Health Benefits Program and TRICARE. My husband turns 65 in 2-1/2 years. Should he apply for Medicare? Right now, Blue Cross Blue Shield FEHBP is our primary and TRICARE is secondary.
Military retirees and their family members become eligible for TRICARE for Life at 65. Medicare Parts A and B are required if you enroll in TFL. Although it is acceptable to have additional coverage such as FEHBP, it is not necessary. OPM will allow a retiree or a retired couple who both have Medicare and TRICARE for Life to suspend their FEHBP coverage indefinitely. OPM has more information on this topic.
Part B or Not?
My current plan is to sign up for Medicare Part A at 65 and continue with FEHBP coverage into retirement at age 70, in lieu of Medicare Part B. Is this a feasible scenario? Does having Part A in any way commit me to having Medicare as a primary payer? Thanks.
Your FEHBP plan will not drop you if you do not sign up for Medicare Part B at age 65. Therefore, if you don't enroll you will still have health coverage. Your FEHBP plan will benefit if you do enroll in Part B when you are retired, since by law Medicare would be the primary payer on most claims. Check the language in your FEHBP 2009 brochure to find out what benefits or incentives your plan provides if you have Part B as primary payer on your outpatient claims.
Keep in mind that if you are in good health, you may not receive as much in Part B coverage benefits as it will cost you in Part B premiums. So keep your focus a little further down the line. You may experience some decline in your health as you age. One suggestion would be to consider enrolling in a lower cost FEHBP plan that waives co-payments and deductibles when Part B is primary. The SAMBA standard option and plans offered by the National Association of Letter Carriers and the Government Employees Hospital Association are two examples of plans that have less expensive premiums than Blue Cross Blue Shield and waive most out-of-pocket expenses when Medicare is primary payer.
The goal for many retirees is to receive quality health care at a reasonable cost and to have the freedom to choose your own providers. This can be accomplished by combining Medicare A and B with a reasonably priced FEHBP plan. If you live in an area that is serviced by an HMO, such as Kaiser, or an open access plan, such as Aetna, these also might provide relatively low-cost options for health care after 65. And keep in mind that even though the 2008 open season has ended, the rules allow you to change health plans outside of open season when you turn 65.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.
For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.
A Windfall That Will Blow You AwayAugust 13, 2008 - 2:00am
Most people would love to have a financial windfall. A chunk of unexpected money that appears out of nowwhere. But there is another kind of windfall. It is a formula that can eat into the Social Security benefit anticipated by tens of thousands of long-time (CSRS) federal workers, school teachers and employees of some nonprofits.
It also takes a huge chunk out of the Social Security benefits received each month by millions of retired federal and postal workers.
Many federal and postal workers are unaware of the "Windfall" law until they retire and start drawing Social Security benefits. Then it gets ugly. We asked financial planner Ed Zurndorfer to explain how it works, and who it hits. This isn't fun reading, but it is important to know:
Most Americans pay into the Social Security system by having the Federal Insurance Contribution Act (FICA) tax deducted from their paychecks. Currently, the FICA tax of 6.2 percent is applied to an employee's wages. During 2008, FICA tax is withheld on the first $102,000 of an employee's wages.
Many individuals, including federal employees covered by the Civil Service Retirement System (CSRS), Americans employed in foreign countries by foreign employers, and some state public employees do not contribute to Social Security. In spite of their not being able to contribute to the Social Security system in their jobs, many of the aforementioned individuals have at some time during their working careers been able to earn the required minimum 40 "quarters of coverage" or credits to qualify for Social Security retirement payments. Before 1983, these workers were able to receive the maximum benefits from both Social Security and their public pensions.
However, in 1983 Congress passed the "Windfall Elimination Provision" (WEP) in order to eliminate this advantage. In particular, if an individual is covered by a public pension plan (such as CSRS) and has less than 30 years of "substantial" Social Security covered earnings while working in the private sector, the amount of Social Security benefits they receive will be reduced. The Social Security benefits are reduced for affected individuals; those:
reaching age 62 after December 31, 1985;
becoming disabled after December 31, 1985; or
becoming first eligible for a monthly pension after December 31, 1985 based on non-covered Social Security employment.
Why did Congress create the WEP in 1983? Perhaps the motivation to create it was to remove any possible inequalities of Social Security benefits of employees not paying into Social Security but paying into a government retirement plan. These employees would earn their 40 credits outside of federal service and subsequently earn Social Security benefits that are as relatively high as those benefits earned by employees who paid into Social Security their entire working careers. The "inequality" problem occurs because the threshold for coverage of Social Security retirement benefits is rather low and monthly retirement benefits accrue rather quickly at the lower end of the earnings scale.
For 2008, full retirement benefits accrue at 90 percent of the first $711 of an individual's average indexed monthly earnings (AIME) and then accrue at a lesser rate of 32 percent, finally reaching an accrual rate of 15 percent. The most important thing for federal employees to understand is that the WEP will reduce, but will not eliminate, an individual's Social Security benefit by as much as 55 percent.
Which federal workers are affected by the WEP and how do they determine how the WEP affects their Social Security benefits? The Social Security Administration (SSA) has a publication, SSA Publication No. 05-10045 (downloadable at www.ssa.gov) which explains the WEP. Perhaps the most important portion in the SSA publication is the table (reproduced below) that shows the effect of the WEP on an affected annuitant's Social Security benefits.
CSRS and CSRS-Offset employees, and "Trans-FERS" (employees who joined FERS in 1987 or 1998 after working at least five years under CSRS), could be affected by the WEP. FERS-covered employees are not affected by the WEP because they have regularly paid into Social Security. With respect to CSRS-Offset employees (many of whom are entitled to two Social Security checks - one check based on federal CSRS Offset service and the other check based on non-federal service), the WEP could affect the Social Security retirement check that is based solely on non-federal service.
To calculate the potential reduction of the WEP on affected individual's Social Security retirement benefit, he or she needs to reference two tables on the SSA Web site at www.ssa.gov and follow these three steps.
Step 1.
Determine the number of years of "substantial" earnings. An individual needs to look at his or her Social Security statement (received annually) and determine how many years of "substantial" Social Security wages he or she has accumulated. The SSA has a table on its Web site (at www.ssa.gov/pubs/10045.html) that lists "substantial" earnings per year since 1937. For example, "substantial earnings" during 2005 was $16,725.
Step 2.
Once the number of years of substantial earnings has been established, the reduction in benefits is found by referring to the WEP chart on the SSA Web site at www.ssa.gov/retire2/wep-chart.htm. For example, suppose a 62 year CSRS annuitant (age 62 is the "eligibility year" or ELY) with 15 years of "substantial earnings" begins to receive Social Security during 2008. On the chart under "20 or less years" of substantial earnings, this individual's Social Security would be reduced by $355.50. For example, if the individual was to receive a monthly benefit of $600, then the actual benefit due to the WEP reduction would be $600 less $355.50, or $244.50 per month.
Step 3.
There is a limit on the WEP reduction equal to 50 percent of the non-Social Security pension (e.g. CSRS). For example, if the CSRS annuitant above receives a CSRS annuity pension of $300 a month, the WEP reduction would be limited to $150.
Some other considerations about the WEP:
The WEP does not affect an individual who continues to work and is drawing Social Security benefits. For example, a federal employee who has reached full retirement age continues to work for the federal government and is drawing his or her own Social Security retirement benefits. Those benefits will not be affected by the WEP. The WEP takes effect once the individual retires from federal service.
If a federal annuitant affected by the WEP is married, then his or her spouse (or former spouse) is eligible for half of the annuitant's Social Security retirement benefit ("spousal/former spousal" benefit). This assumes that the spouse's or the former spouse's own Social Security benefits are less than half of the annuitant's Social Security benefits. However, spousal/formal spousal Social Security benefits are also affected by the WEP. If the annuitant dies and the spouse/former spouse is entitled to the deceased's Social Security ("survivor" benefit), then the WEP no longer applies. In other words, the spouse/former is entitled to the deceased federal annuitant's full Social Security benefit without a reduction for the WEP.
Because the effect of the WEP is not included on an individual's Social Security annual reporting statement, many federal employees are shocked when they start receiving their Social Security retirement or disability benefits. As a result of Congressional hearings that provided woeful tales of individuals who expected Social Security payments based on the information provided by the SSA but ended up with much less, Congress passed the Social Security Protection Act of 2004. This law requires better disclosure of payment adjustments due to the WEP.
Ed Zurndorfer is a Certified Financial Planner and Enrolled Agent in Silver Spring, Maryland. He is also a registered representative with Multi-Financial Securities Corporation (Branch A9X), member FINRA/SIPC, also located in Silver Spring, Maryland.
Hong Kong Phooey
Nearly Useless Factoid
Discover Magazine explains How to Turn Your Fist Into a Block-Breaking Machine. It's pretty cool, but then I realized I couldn't remember the last time I needed to chop a block in half.
"You only retire once," the saying goes -- although I've met some people who are on their second or third retirement. Still, it makes sense to be careful about picking just when to leave.
As I expected, the Best Dates to Retire 2009 column I wrote last week generated some concern among readers about choosing the absolute best date. During the past week, I've consulted with Bob Leins, my colleague at the National Institute of Transition Planning, who is a tax specialist. He provided some tips on choosing the best time of the year to plan your retirement from a tax perspective.
Such considerations further clarify the dates I selected as best on the calendar published last week, so it's worth spending a little time thinking about how leaving during different seasons of the year might affect your retirement.
In the Spring
If you are not trying to cash in 448 hours of unused annual leave before the end of the leave year, then you might consider March 31, 2009, if you're in the Federal Employees Retirement System, or April 3 if you're under the Civil Service Retirement System. Why?
All annual leave will be paid at the new year's salary rate regardless of which pay system you're covered under.
A few months at the new salary rate could help you get a bigger high-three average salary, which is the basis for the CSRS and FERS basic benefit computation.
Having some earned income in your year of retirement will allow full Individual Retirement Account eligibility for both you and your spouse.
Working a few months as a federal employee in your final year will allow for one last push of contributions into your Thrift Savings Plan account. It's possible that someone could retire at the end of March and still contribute the maximum amount ($15,500 in 2008, plus an additional $5,000 in catch-up contributions for those 50 or older) by dividing the amount of contributions by the number of pay periods remaining until retirement.
This extra tax deferral of final salary into the TSP may put you in a lower tax bracket. If you've been buying savings bonds during your career or making other taxable investments, this might be a good time to begin cashing them in. What else are you going to live on if you are putting most of your final paycheck in the TSP?
Late Spring/Early Summer
Retiring on June 30 (FERS) or July 3 (CSRS) provides many of the same benefits as an early spring retirement. There is an almost even split between half a year as an employee at full salary (allowing retirement contributions to continue and IRA participation) and half as a retiree (or someone who has begun a second career).
An added bonus next year for CSRS employees is that if they choose July 3 as their retirement date, their last day on the job actually would be July 2; July 3 is a federal holiday and it comes the end of a leave period. A day of pay for enjoying a holiday and a earning your final leave accrual isn't exactly a golden parachute, but it's still a nice way to go out.
Late Summer/Early Fall
Sept. 30 (FERS) or Oct. 2 (CSRS) provides the same benefits as a spring or summer retirement. In addition, you'll have only three months of retired pay in 2009, which is less devastating to your taxes if you are beginning a second career. Usually, new retirees are placed in an interim status while the Office of Personnel Management finalizes their claims. During this time, only a partial retirement payment is made. A retroactive payment to provide full retirement benefits might not be paid until the following year, and this might shift some taxable income to 2010.
Note that I'm deliberately using "might" instead of "will" in this situation, because it's possible you won't go into interim status. Some claims are finalized within days of receipt and the full annuity payment is reflected in the first retirement check.
If you are earning a high salary in your last year of employment, you may have maxed out on Social Security tax. (In 2008, the maximum taxable wage subject to 6.2 percent FICA withholding is $102,000). If a lump-sum annual leave payment or income from a second career received in 2009 pushes you over the maximum taxable limit, it won't be subject to FICA tax.
Here's another tip for high-income earners: If you are facing the alternative minimum tax, you may be able to reduce state tax withholding for your final salary payment and your lump-sum annual leave check to reduce the amount of state income tax that you have to pay.
End of the Year
If you're considering departing in the final days of a year, remember one thing: receiving a big lump-sum payout the following year for your unused annual leave along with 12 months of retirement income could push you into a higher tax bracket in your first year of retirement. This is especially true for those who are retiring from their federal career on a Friday and starting a new career on a Monday, adding additional earned income to retirement benefits.
But the impact of a change in tax brackets can be slight and if you're income is high enough that the alternative minimum tax is applicable without consideration of the lump-sum leave payout, then getting all of the money in one year actually could be a good thing. Also, the accumulated leave and the final salary qualifies for an IRA contribution.
Next week, I'll handle some individual questions from readers about the best dates to retire.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.
Ten Really Dumb Things To Avoid
08/07/08 02:00
Whether you are 20 years from retiring, or pulling the plug in a couple of months, there are things you should do, and things you should not do. So what are they? How can you maximize your benefits to make sure your retirement diet won't center around dog food?
We asked financial planner (registered investment adviser) John Bernards for a little help (as in "you do all the work") and he sent us the Dirty Ten. Today we give you the first five tips. Tomorrow the rest.
Here goes part one.
In a sense, you have been planning for your retirement ever since you started working. Maybe you have been contributing to a 401(k) plan or maybe you've been socking away money in an IRA, but without a doubt, you are looking forward to your golden years. And we want you to enjoy those years without worrying about having to take out a reverse mortgage on your house.
For many people, retirement is not the stress-free vacation from financial concerns that they envisioned. Bad planning is often the culprit. What follows is a list of ten common mistakes that retirement-age individuals often make as they try to manage their own financial affairs. Naturally, our careful planning will avoid these pitfalls so that you can relax, confident of your security in retirement.
Outliving your assets. We live in an era of unprecedented progress. Medical and technological advances have improved the lives and longevities of Americans, and at age 65, life expectancy is 81.6 years for a man and 84.5 years for a woman. As an increasing number of Americans celebrate their 90th and 100th birthdays, financial professionals must recognize the probability that a client's retirement may last just as long as his or her working days. How to ensure retirement income for 30 or 40 years after your last paycheck must be the focus of your wealth manager.
Favoring accumulation over distribution. You may have spent years trying to grow your assets. Now it's time to draw on your accounts. And while this may appear to be a simple matter of selling a particular stock, there is something of an art to taking distributions. Determining which assets to liquidate and when to do so requires careful analysis of projected returns, income streams, and taxable consequences.
Ignoring the impact of inflation. A couple will often say something like, "All we need is $60,000 per year, for the next 20 years. It's simple." It is not, however, quite as simple as it may seem. Assuming a 4-percent inflation rate for the next 10 years, the couple would need almost $90,000 if they wanted to maintain their current lifestyle. If they lived 20 years, they would need to draw more than $130,000 after year 19, all because of inflation. What's worse, year-over-year increases in the price of prescription drugs and medical supplies have far outpaced the inflation rate as measured by the Consumer Price Index, forcing the retirement community to scramble for income they had planned on saving or passing on to heirs. Prudent financial guidance requires that you factor in the "real" value of your asset growth and income needs.
Uncertainty about social security. Many people believe that once they hit early retirement age, they should immediately begin receiving social security benefits. Other retirees have been advised to wait as long as possible before drawing distributions. While there is no "right answer" for everybody, there is a right answer for you. Depending on your health, life expectancy, retirement goals, and sources of income, you may want to receive social security benefits beginning at age 62 (your early retirement age), your full retirement age (between 65 and 67), or even age 70. Because there is no time at which it is mandatory to take benefits, determining just when you should begin receiving social security is a critical component of retirement planning. Consult with a trusted wealth manager.
Incorrectly titling your assets. It is not uncommon for a client to own accounts that name an estate as beneficiary, fail to list a contingent beneficiary, or that are jointly held. Nonetheless, the consequences can be quite severe. In some cases, you or your relatives may be dragged into a probate court, creditors may gain access to your wealth, your inheritance might fall into the hands of people other than those whom you intended, and you may incur significant tax consequences. Allow your advisor to conduct a thorough beneficiary review, and it could save you millions of dollars. John Bernards
When they retire, most federal and postal workers are better off than their private sector peers. Retirement benefits are linked to inflation (a perk unknown in the private sector) and health insurance is for life. Some of the recent private sector buyouts required employees to find their own health insurance. Many, if not most, private company 401(k) plans do not have make any kind of matching contributions to employee accounts.
Financial planner John Bernards says there are 10 things you should or should not, do when planning your retirement. And after you have retired. Yesterday's column (link to it?) included 5 of those tips. Here are the rest:
Overlooking the impact of changes in tax law and issues of tax efficiency. There are few areas as poorly understood by the general public as tax law. Partly, this is because there are so many laws regarding taxation, but it is also because the law is constantly changing. Since 2000, federal legislation has drastically modified marginal and capital gain rates, tax treatment of dividends, IRA distribution rules, and estate and gift tax rates. To complicate matters, much of this legislation is set to expire in 2011. Failing to consider tax law changes could render an investment plan ineffective, while taking advantage of tax law could save you a substantial sum. It is also important to consider tax-efficient planning-not only for yourself, but for your heirs, too. There are a variety of strategies that can ease the tax burden on your beneficiaries, and you may consider the possibilities of a charitable gift, an annuity, a charitable remainder trust, or a private foundation.
Mistaking diversification for asset allocation. Some people believe that the key to investing lies in owning a variety of assets. They focus on quantity of positions, claiming that by holding 10 stocks, they hold a "diversified" portfolio. This statement, while to some degree accurate, hardly protects them from the market's fluctuations. Why not? The reason can be found in the distinction between diversification and asset allocation. While diversification merely mandates distributing assets across a number of investment vehicles, asset allocation requires that the investments are spread across a variety of asset classes, some of which have low correlations to each other. By investing in large, medium, and small companies; by holding bonds, real estate, and cash; by owning international assets; and by investing in both the growth and value style boxes, you can capture all of the market's upswings while gaining solid downside protection.
Allowing yourself to be influenced by the media. It is a known fact that the market always overreacts. Bullish news sends it soaring, and bearish news exacerbates bad times. More than any other factor, media commentary can escalate bubbles and trigger sell-offs. The long-term investor (with a time horizon of more than one year) knows that today's hot IPO according to MSNBC has a good chance of losing value over the next five years. Intelligent investors cannot be influenced by the banter of talking heads. Markets experience cycles, and you cannot escape the ups and downs through hyperactive trading in response to the word on the street.
Underestimating your financial needs. Before meeting with a wealth management specialist, investors often believe that their retirement needs are met. Despite their own confidence, many of these individuals are completely unprepared for the future, and lack any semblance of a clear financial plan. Unaware of the various insurance and investment products specifically designed for retirees, unfamiliar with tax laws and asset allocation theories, and unqualified to act as their own distribution specialist, these investors often find themselves in difficult situations. You might be a superstar at your job, but you are probably ill-equipped to formulate a retirement plan for you and your family. For financial security in retirement, seek professional guidance.
Not getting an annual financial checkup during retirement. The world is constantly changing. Tax laws are modified, new products are introduced, and personal circumstances and goals can shift. As all of these things happen, it is necessary to monitor your investments, review your distribution plan, and discuss your life. Your portfolio may need to be rebalanced, and your risk tolerance may need to be reevaluated. For all of these reasons, it is critical that you meet with a retirement wealth manager - at least Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser.annually - so that you can sleep soundly and enjoy your retirement years. John Bernards
John, by the way, is a Certified Financial Planner™ and a Chartered Federal Employee Benefits Consultant. He is a founding partner of The Harvey Group. You can reach him at (703) 549-5488 or email john@steveharveyllc.com.
Did you know there is a Retirement Seminar available online via LiteBLUE? Feel free to refer employees to the "My Life" tab on LiteBlue www.LiteBlue.usps.gov Retirement information at your fingertips 24 / 7.
Also, did you know that full-time career employees eligible to retire within the next 5 years can request an annuity estimate for optional retirement via PostalEASE. https://ewss.usps.gov/esymain.htm <https://ewss.usps.gov/esymain.htm> . PTR and PTF employees will need to contact the HRSSC to obtain an annuity estimate. A full explanation of the NARECS annuity estimate printout is available through www.liteblue.usps.gov <http://www.liteblue.usps.gov/> by viewing the Online Retirement Seminar NARECS segment. Employees will need their Employee Identification Number (EIN) and PIN.
There's a ton of retirement information available at http://www.opm.gov/retire/ <http://www.opm.gov/retire/> . In addition, there are retirement counselors at the HRSSC that can answer employees' retirement questions. Disability retirement questions should be directed to the HRSSC. That number is 1-877-477-3273, menu option 5, listen for the retirements prompt.
Thanks
Linda Jennings, PHR
HR Generalist (Principal) Hawkeye District
Click Mid-Career Financial Planning Seminar for the retirement system you’re under
Click Filter
Click the date and location you want
Enter your name and office, click Submit Application to class
If you want to enroll your spouse, go back to class list and type in their name, your office and click Submit again.
Planning for your future?
Attend a Mid-Career Financial Planning Seminar
This is an INTRANET connection, so you must enroll on a USPS computer.
ANY career employee may attend
If you have difficulty, call Cynthia Smith at 515-251-2224 to enroll.
Please post on bulletin boards. ALL CAREER employees may attend. These informational sessions are done off the clock (on your own time).
July 9,
CSRS 2:00-5:00pm.
FERS 6:00-9:00pm
August 19,
CSRS 2:00-5:00pm.
FERS 6:00-9:00pm
Enroll NOW at this link
USPS Retirement Planning Seminar
Employees within 5 years of retirement may attend
July 24,
CSRS 2:00-5:00pm.
FERS 6:00-9:00pm
Enroll NOW at this link
Hawkeyeintranet.usps.gov
Click Information Technology
Click Training Classes
Click Sign up for a Class
Click Class/Event Filter dropdown arrow
Click Retirement Planning Seminar for the retirement system you’re under
Click Filter
Click the date and location you want
Enter your name and office, click Submit Application to class
If you want to enroll your spouse, go back to class list and type in their name, your office and click Submit again.
This is an INTRANET connection, so you must enroll on a USPS computer.
If you have difficulty, call Cynthia Smith at 515-251-2224 to enroll.
Please post on bulletin boards. CAREER employees planning to retire within 5 years may attend. These informational sessions are done off the clock (on your own time).
When you retire from the federal government you will have the option to keep your Federal Employee Health Benefits Plan and to sign up for Medicare. And pay premiums to both. Keeping the FEHBP plan is a no-brainer. Do it unless you have a spare $300,000 laying around to pay medical bills for yourself and a spouse. That's the amount many experts say a couple over 65 can expect to rack up in bills as they age. Fortunately your federal health plan will pay the lion's share of most of those bills.
But the Medicare question is more complicated.
A reader named Marilyn is facing that choice. She asked us to give a yea or nay. Here's her question:
When an employee retires and keeps their Blue Cross and Blue Shield insurance, then do they keep their standard option only which is probably the best thing to do, or do they keep the basic option and get Part B of medicare? Please comment on this and what experts think for the future FERS employees and for the already retired employees under the CSRS.
We passed the buck on to experts at the National Active and Retired Federal Employees. This is their reply:
We at NARFE do not track what health care coverage changes CSRS or FERS federal retirees make when they become eligible for Medicare. We do however receive a great many questions from FEHBP enrolled federal retirees when they are faced with the decision.
What federal retirees need to understand is that after they enroll in Medicare it becomes their primary health insurance coverage and their FEHBP plan is now secondary coverage supplementing the benefits Medicare pays.
Enrollment in Part A hospital is free to most federal retirees and should not be declined.
Enrollment in Part B medical requires paying a premium each month in addition to the monthly FEHBP premium.
Some federal retirees find coverage under their current FEHBP plan to be adequate for their needs particularly since they all provide prescription drug coverage benefits that Part B does not. Those retirees often opt to stick with their FEHBP plan and not enroll in Medicare B.
For those retirees whose medical circumstances (or peace of mind) require them to have as much health insurance coverage as possible, the monthly premium cost for both can be a strain.
During the next annual Federal Benefits Open Season period those retirees should review FEHBP plans they are eligible to enroll in to get the coverage they need to supplement Medicare at a lower premium cost.
But as my father used to advise "look before you leap". While the lower cost options have similar coverage to the higher options there is a reason why they are less expensive. Lower cost options may restrict enrollees to using the plan's preferred providers to get any benefit coverage and they may not offer the same prescription drug benefits as the plan's standard or high option.
Medicare & FEHBP, Who Needs It?
The Federal "Five-Year Requirement" and Your Federal Health and Life Insurance
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John Grobe is a retired federal employee with over 25 years of experience in federal human resources and President of Federal Career Experts, a training and consulting firm that specializes in federal employee retirement and career transition issues.
With Federal Employees Health Benefit (FEHB) open season approaching in November, it might be helpful to take a look at the "five-year requirement". While we're at it, we'll look at how the five-year requirement applies to your Federal Employees Group Life Insurance (FEGLI).
Most federal employees are aware that, in order to carry your FEHB into retirement, you have to have been enrolled for the five-year period immediately preceding retirement (with few exceptions). There is generally a great advantage in being able to carry your FEHB into retirement. Uncle continues paying his share for as long as you remain enrolled.
A few things of which you should be aware are:
The five years refers to enrollment in the program. You do not have to remain in the same plan for five years.
Your spouse does not have to be enrolled for the five years immediately preceding your retirement in order to be covered. You can bring your spouse on your insurance at any time before retirement, or even after retirement. Be aware that if you die after retirement but before bringing your spouse on your FEHB, your spouse will not be able to continue FEHB, even if you have elected a survivor annuity.
If you are enrolled as a family member on the FEHB policy of your spouse, that counts towards the five-year period the same as if you were enrolled on your own.
Tricare is viewed as equivalent to FEHB, and time spent on Tricare counts towards the five years.
FEGLI has the same five-year requirement, but there are a few differences between FEGLI and FEHB.
First, FEGLI open seasons are not regularly scheduled. In fact, the last FEGLI open season was in 2004 and the changes that were made in that open season were not effective until September 4, 2005. That means that if you enrolled in or changed your insurance four years ago, you have to wait another two years to meet the five-year requirement. When does 6 = 5? When FEGLI is involved.
OPM has not announced the next FEGLI open season, but I would expect that there would be one in 2009, with changes effective in 2010. You may cancel or drop your FEGLI at any time. Open seasons are only necessary for enrolling or increasing your level of coverage.
FEGLI options B and C also have options regarding the level of coverage. In option B you may have multiples of 1 to 5 times your salary, and in option C you may have options of 1 to 5 times the amounts of $5,000 for a spouse and $2,500 for a child. If you have options B and C when retiring, you can only carry over the lowest level of multiples you had during the last five years. For example, if you had option B coverage of 2X your salary and changed to 3X your salary in the most recent open season, you would have to wait until after September 4, 2010 to retire in order to carry the 3X coverage into retirement.
It looks like a certificate of deposit, only better. The "bank" that issues it, owned and operated exclusively by Uncle Sam, is as safe as it gets. The CD-like instrument can be opened for as little as $25. And it offers a government-guaranteed rate of return for 12 months. That rate is reset each January by the Treasury Department.
This long-term investment is funded with after-tax dollars. That means when you withdraw it, before retirement, you pay taxes only on the earnings. You've already paid them on the money you put in.
Finally, if you don't want a lump sum payment prior to retirement, you can use the money in your account too boost the amount of your lifetime, indexed-to-inflation civil service annuity.
Oh, and it is paying 3.875 percent through the end of this year.
So what is it and what's the catch?
It's called the Voluntary Contributions program. Although it's been around for years, many feds (and many federal HR offices) have never heard of it. Or, if they have, they confuse it with the Thrift Savings Plan which is completely different.
The catch? The VC program is only open to current federal workers who are under the old Civil Service Retirement System. Retirees can't join it. Retirees and active workers under the FERS retirement plan cannot join the VC.
Here's how it works:
You open your VC account with the Office of Personnel Management.
Once established, you can invest up to 10 percent of your lifetime federal earnings into the VC. It is the ideal plan for people who, after maxing out their after-tax contributions to the TSP, still have cash in hand. Maybe you won the lottery, maybe you got an inheritance, or maybe you saved it. Whatever. You can invest (on an after-tax basis) in the VC. Unlike the TSP (pre-tax investments by payroll deduction) the VC program accepts after-tax dollar deposits by personal check. And they must be in $25 increments. That means you can put in $25, $200, $500 or any amount provided it does not exceed 10 percent of your total federal earnings.
The interest rate on the VC is set by the Treasury and is good for 12-months. This year (2009) it is 3.875 percent. Last year the VC accounts were paying 4.75 percent.
Many HR offices don't know anything about the VC program. Exceptions are the NIH, the Navy and a few other agencies with first-class benefits information programs. But you don't need your agency's help. To find out more about it (in pdf form) click here.
(This article first appeared in the September/October 2008 issue of The American Postal Worker magazine.)
The APWU continues to pursue the re-employment of postal retirees in new retail outlets. One of the crowning achievements of the 2006 contract negotiations was the agreement under which Postal Service retirees would be eligible for part-time positions in retail outlets.
However, this agreement was never implemented because federal law stipulates that when retiree annuitants return to work for a federal agency, their annuity must be offset by the salary they earn. The Office of Personnel Management (OPM) may grant waivers of this requirement, and if a waiver is granted, there is no offset. This exception should be the rule.
H.R. 3579, a bill currently before the House of Representatives, would allow federal agencies to reemploy federal employees on an “as-needed” basis. The APWU supports this legislation. In seeking its passage, we would like to see an amendment that explicitly mentions retired postal workers.
In testimony this spring to the Subcommittee on Federal Work Force, Postal Service, and the District of Columbia, APWU President William Burrus said.
“The workforce of the future will, of necessity, include a blend of the young and old, with each category contributing their special skills to the task of growing our economy. The old model of restricting the contributions of an earlier generation is outdated and limits our national potential. The federal government should be an example of the workforce of tomorrow.”
APWU members (both retirees and active employees) must join the fight for this legislation. Please write your congressional representatives and ask them to support H.R. 3579.
So you've set your retirement date and discussed your plans with those who will be affected by your decision. Your co-workers and family members all have assured you that you've made the right choice and you're beginning to picture your new life.
Even if you've picked a date almost a year away, though, there are things you should begin to do to make sure the process is a smooth one. Here's a brief checklist.
Complete your retirement application. This should be done at least three months before your retirement date (or as soon as possible after you've made the decision to retire if you are leaving in less than three months). You might need some time to research and ponder decisions regarding survivor benefits, previous federal service and insurance options. Here are links to the relevant forms: Civil Service Retirement System Application, Federal Employees Retirement System Application.
Request a final retirement estimate from your human resources office. You might have an estimate you requested a year or more ago. But now that you've set an exact date, you'll be able to get a more accurate calculation. Then you can review it and ask questions to be sure you understand how it was computed and that it accurately reflects your career. Remember, it still will be only an estimate. The Office of Personnel Management must finalize the amount you receive.
Make decisions regarding any service credit payments that are outstanding. These unpaid "deposits" can permanently affect the amount of your retirement benefits. If you're not sure about this issue, here are four columns that address it:
If you're divorced, consider the implications. Does your former spouse have any rights to a portion of your retirement, survivor benefits, or Thrift Savings Plan funds? You will need to submit a copy of your divorce decree with your retirement application if your former spouse was awarded a survivor annuity under CSRS or FERS. For more information, see D-I-V-O-R-C-E (Aug. 24, 2007).
Request that state taxes be withheld from your benefits, if necessary. OPM will automatically advise you regarding federal income tax withholding. (Here's a withholding calculator from the OPM Web site.) But it's up to you to request to have state income tax withheld. Some states won't tax your retirement payments; others will, but not necessarily at the same rate as other income. Here's a summary of state tax rules for 2007.
Make a plan to withdraw your TSP funds. Don't send in a withdrawal request until you have been out of government for at least 30 days. It's important to allow time for your agency to notify the TSP that you are no longer a current employee. Here are some forms and publications to get you started:
TSP 77, Request for Partial Withdrawal When Separated
TSP 70, Request for Full Withdrawal When Separated
TSP Book 2, Withdrawing Your TSP Account after Leaving Federal Service
Contact the Social Security Administration if necessary. Here are a couple of situations where it might be: If you're old enough and eligible to begin receiving Social Security benefits; or if you already are receiving benefits because you are over the full Social Security retirement age, but are getting ready to retire and collect a CSRS retirement. You can contact SSA on its Web site or by calling 800-772-1213.
Reevaluate your insurance needs. You may be able to reduce your life insurance if your kids are now grown and your house is paid off. Here's a calculator to determine how much Federal Employees Group Life Insurance you are currently carrying and how much it is costing you. You may also want to consider purchasing long-term care insurance if you don't already have a policy.
Make sure you'll be eligible to maintain your Federal Employees Health Benefits Plan coverage into retirement. To continue coverage, you must have retired on an immediate annuity, and have been continuously enrolled (or covered as a family member) in any FEHBP plan for the five years of service immediately preceding retirement -- or if less than five years, for all service since your first opportunity to enroll. You can continue coverage under the Federal Employees Dental and Vision Insurance Program into retirement without having five years in the plan. And retirees can enroll in FEDVIP coverage during annual open seasons.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.
If you are among that group of people who will be retiring in the next few weeks, let me be among the first to offer congratulation on your career of dedicated federal service. As a final send-off, here are some tips for your last days on the job.
Review your final retirement estimate. You did get a retirement estimate, didn't you? If not, now's the time to ask human resources for one. Check the dates and reported salaries, analyze your survivor options, if applicable, and look for any comments that were added. Make sure you understand what it says. Much of what goes on this final estimate will be the same information that is transferred to the Office of Personnel Management and used to determine your retirement benefit.
Stay connected. Ask for the best way to contact your retirement specialist and payroll office after you retire (phone, e-mail or U.S. mail). A specialist can be helpful if you have a question about your retirement computation, insurance coverage or service history. And if you have a question about your final leave payment, your final Thrift Savings Plan contributions, taxes on your leave payment or your final pay check, you will want to be able to contact your payroll office.
Stay in touch. Be sure to remember to keep your address and contact information current with your agency during the transition period (after you retire and prior to your communications from OPM). Let them know if you are moving, going on a trip across the country, or spending the winter in Florida. The same goes for OPM and TSP officials. You will probably be placed in an "interim" retired status while OPM is finalizing your claim. That means OPM might need to contact you in the first few months following your retirement while they review all of your application materials. Throughout your retirement, it is important to update your address if it changes.
Sign everything. Your retirement application needs a signature. You need to sign a form called Certified Summary of Federal Service before retirement. It provides a list of your federal service attached to the documentation of your service that is going to be used to compute your retirement. Look this over carefully, to be sure all of your federal service is accounted for. If your spouse is waiving full survivor benefits, a notarized consent must be provided. Ask your retirement specialist to review your application to be sure you've completed all of the forms and filled in all of the blanks. This should be part of the retirement process.
Copy everything. You should maintain a copy of your retirement application as well as all the supporting documentation. If you have questions, you may wish to refer to the application or to your service history documents. Of course, you should have maintained copies of your service history throughout your career, but if you don't have copies of your Notification of Personnel Actions (SF 50's) and your military records, be sure to obtain a copy before these documents leave your agency.
Designate beneficiaries. You also should have copies of your beneficiary designations for your retirement, life insurance and TSP account. To be valid, they must be certified by OPM, your agency or the TSP. If you don't have copies, it might be a good time to file new beneficiary designations. The forms are available here.
Make IRA contributions. My friend Bob Leins, an accountant, offers this tip: If you retire on Dec. 31 or Jan. 3, your last pay check and your payment for unused annual leave will arrive in 2008, and thus will be counted as earned income for 2008. You will be able to make an IRA contribution of $5,000 and if you are 50 or older, you can make an additional $1,000 catch-up contribution. Some people may qualify for Roth IRA contributions, depending on your 2008 income. You cannot contribute to the TSP from your lump sum annual leave payment, however. If you are retiring later in 2008 but before the end of the year, you can plan to contribute the maximum to your TSP account prior to your retirement by adjusting your payroll allotment. Here's some additional information on traditional vs. RothIRA's.
If you're in NSPS... If you are retiring under the National Security Personnel System, to be eligible for a performance payout you must be in NSPS on the day of the payout. This means you will miss out on the payout by leaving on Dec. 31 or Jan. 3. You may have to decide if getting the lump sum leave payment for more than 240 hours is more important than the performance payout you are due to receive. In this case, you may want to postpone your retirement until Jan. 31 (if you're under the Federal Employees Retirement System) or Feb. 1 (if you're under the Civil Service Retirement System). For more information, see my columns When to Retire (July 20) and Best Dates to Retire 2008 (July 27).
Empty out your FSA. Be sure to incur expenses in your health care flexible spending account prior to your date of separation. If you have a 2007 balance, you will not be able to submit claims for expenses incurred after your date of separation.
And Finally... If you are reading this and thinking you would like to retire, but you don't know where to start, here's a checklist for employees who are thinking about retirement.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.
The Windfall Elimination Provision and CSRS Offset Retirees
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John Grobe is a retired federal employee with over 25 years of experience in federal human resources and President of Federal Career Experts, a training and consulting firm that specializes in federal employee retirement and career transition issues.
I was looking at some of the comments on my article "Windfall Elimination and Your Retirement Future" (WEP) and several readers asked for some information as to what the WEP does to CSRS Offset retirees. Now, CSRS Offset folks are an exclusive bunch; and if you don't know what I mean by CSRS Offset – you are not one of them.
CSRS offset employees are employees who were vested in CSRS as of 12/31/1986, had a break in service of over one year and chose CSRS Offset over FERS upon their return to federal service. The fact that they are vested in CSRS is what makes them subject to the WEP.
The good news is that many CSRS Offset employees have enough years of substantial earnings under Social Security to either eliminate or mitigate the WEP. A link to the Social Security factsheet on the WEP was included in the September 26th article and the sheet contains a list of what constitutes substantial earnings.
It takes 30 years of substantial earnings to eliminate the WEP. More than 20 years of substantial earnings can mitigate it. To determine how many of these years you have, take your most recent Social Security Statement and compare the annual earnings out of which Social Security taxes were withheld with the substantial earnings thresholds. If you've got 30 – you're home free.
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John Grobe is a retired federal employee with over 25 years of experience in federal human resources and President of Federal Career Experts, a training and consulting firm that specializes in federal employee retirement and career transition issues.
The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) are two provisions of the Social Security law that affect Social Security benefits to which CSRS retirees may be entitled. Like many other aspects of retirement rules and regulations, they can cause a good deal of confusion among current and prospective CSRS retirees. Consider the names themselves:
The Windfall Elimination Provision does not eliminate a Social Security benefit to which you are entitled on your own earnings record. It will, however, generally drastically reduce it.
The Government Pension Offset's offset of any Social Security benefit to which you would be entitled on the earnings record of another is usually so severe that it completely eliminates such benefit.
These two provisions were introduced in the 1980's in an early attempt to shore up the Social Security system and public employee supporters in Congress have been trying to repeal or revise them since then.
In fact, these two provisions do not target only CSRS employees. They apply to anyone who has earned pension benefits based on work not covered by Social Security (i.e., work from which Social Security deductions had not been withheld). This would include CSRS Offset employees and FERS employees who transferred from CSRS after having five years of civilian service (enough to entitle them to a CSRS retirement benefit).
The remainder of this article will take a look at the Windfall Elimination Provision. A future article will review the Government Pension Offset and discuss legislation about the repeal or modification of WEP and GPO.
The Windfall Elimination Provision affects only Social Security benefits to which you are entitled based on your own earnings record. As long as you have earned 40 credits (formerly known as quarters of coverage) you will receive some kind of Social Security benefit.
The Social Security System has a need-related component that is designed to replace a much greater portion of a low wage earner's income than that of the high wage earner. CSRS employees, and others who have earned a retirement benefit based on work that was not covered by Social Security, most likely have many years in their Social Security earnings record where they had little or no employment covered by Social Security. They would look like a low wage earner to the Social Security system, even though they had been working at a good job and earning a pension the entire time.
Describing how Social Security retirement benefits are computed would take up too much space here, but Social Security uses a much higher (90%) computation factor for the lowest portion of Social Security earnings. For retirees who are entitled to a pension based on work not covered by Social Security, that computation factor could be as low as 40%.
If you have 20 or fewer years of substantial earnings (most of us CSRS folks) your benefit will be computed using the 40% factor. For years over 20, the factor increases by 5% a year until it reaches 90% after 30 years. A Social Security Factsheet on the WEP is available here and has a chart on what constitutes substantial earnings.
We all should be getting Social Security Statements from the Social Security Administration on an annual basis. If we have already earned 40 credits, there will be an estimated benefit listed. Unfortunately, the SSA computers do not know that we are CSRS employees who are subject to the WEP. You can go to the Social Security website and use their WEP calculator, or you can try this computation:
If the monthly benefit shown on your Social Security Statement is less than $680, cut it in half
If the monthly benefit shown on your Social Security Statement is greater than $680, subtract $340 from it.
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If you are a federal employee who has 25 or more years of federal service, chances are you are thinking hard about becoming one member of the "retirement tsunami" predicted by the Office of Personnel Management that will be overwhelming federal agencies in the next several years.
If you are thinking hard about retirement, you face an important decision: Where do you want to live?
This can be a complex decision. When you are working, the decision about where to live is often made by where your job is located and where you can make the most money. You may decide to move to the Washington, DC area while an active federal employee to build up your retirement annuity because you are likely to make more living in the Washington metropolitan area than in many other areas of the country.
On the other hand, you may find that big-city living isn't for you when you retire. If you bought a nice house for $100,000 in Alexandria, Virginia back in 1978, that house may be worth $600,000 or more now depending on the usual real estate factors (location, location and location). You could sell the house, take the money from the sale and move.
There are advantages to living in Washington or any other big city but there is more congestion, higher taxes, and that $600,000 or more you may get from selling your house may buy a magnificent luxury condo on the ocean or in the mountains or a beautiful golf resort far away from the stresses of your former life as a hard-working federal employee (Check out the options at this one Florida beach and golf community which has advertised on the FedSmith site.). Of course, there are also more restaurants movie theaters, and other entertainment venues in a large city than you will find in areas with a smaller population. And, if you are retiring, you will want to consider where your children, relatives and friends may be living and how far away you want to move from these people important to you.
There are also considerations such as climate. If you like warm weather, you might be inclined to check out cities in Florida where the weather is warmer than most other parts of the country. In some parts of the state, housing is relatively inexpensive and there are communities that cater to retirees. Phoenix and Southern Calilfornia are other retiree hot spots and they all have some advantages. (Check out Looking for a Warm, Sunny Retirement Haven?)
When you retire, you have choices that you do not have when you are working. If you have always wanted to move to a different area, you can do so--or at least you are not restricted by your job from moving.
There are also financial considerations. One of the biggest considerations is taxes. Some states give retirees a tax break. It may not sound like much but the extra money you may find yourself handing over to state and local taxing authorities during the last few decades of your life can make a difference in how well you live.
Several readers have written in recently asking about the best states for retirees with the primary consideration being taxes. Below you will see a list of states that do not tax income from federal pensions. Before you check over the list and start packing your bags, please note these very important disclaimers because your situation may be different than that others.
First, this is a broad list. Our American tax structure is horrendous. It is complex, difficult to understand, expensive to administer and you will probably need a tax lawyer or a tax adviser to tell you about any complications you may encounter. Just because your former office mate found that a state was ideal, you may find it is a tax hell for reasons that did not apply to your colleague.
Second, there are numerous variations on state and local taxes just as there are with federal taxes. I am not a qualified tax adviser and don't make any claim to know the details of the tax structure of all states and localities--including those you may be considering as your retirement haven.
Third, tax laws change and may change quickly (even after you make the big move). What may have been accurate several years ago may no longer be accurate. Check with your tax adviser for any changes that may have occurred during the recent sessions of the legislature in a state in which you have a particular interest. I have put together a list from several sources based on relatively recent information but make no claim as to the accuracy today or next month or next year. Pay your tax adviser for the most recent advice you can get for the particular state and town you are considering before making your big move.
For example, several lists of states with no income tax do not include Florida. Florida does not have an income tax. It did have an intangible personal property tax under which a person paid a small percentage of tax based on the total value of stocks and bonds. That tax was eliminated in the past year so Florida is now a state that does not have an income tax. If you are a retiree in Florida and have substantial assets in mutual funds, bonds or stocks, your income just went up because you no longer have to pay this tax.
In fact, when you research, you will find different value and lists because of how the figures are calculated. But, to assist you in making your decision, here are some lists that may be a good starting point. (Check out this retirement housing guide as well.)
Here are ten states that exempt all federal, state and local pension income from taxes:
Alabama
Hawaii
Illinois
Kansas
Louisiana
Massachusetts
Michigan
Mississippi
New York
Pennsylvania
Several other states also do not tax pension income but have various restrictions. For example, some states have different tax rates depending on the years in which government service was performed, or the date on which a person retired, or the date on which the government service was first started. One example: North Carolina does not tax annuities beginning with 1998 if an individual had five years of government service as of August 12, 1989.
Perhaps you are planning to retire but work part-time. Which states offer the best deal on state income taxes?
Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not have a personal income tax. Tennessee and New Hampshire claim not to have a personal income tax but that isn't entirely true. They do tax income from interest and dividends.
Sales taxes can also play a role in your decision. Sometimes, a state with a low income tax rate (or no state income tax at all) will make its money from high sales taxes. Before you decide to retire, sell your house, and move to your retirement paradise and buy a new Mercedes, check out the sales tax rate. A tax of 9% on that expensive luxury car may make a difference in your decision. Check out these states with the highest tax rates (including an average for city and county tax rates) as compiled by the Retirement Living Information Center:
Tennessee (9.4%)
Louisiana (8.7%)
Washington (8.5%)
New York (8.25%)
Arkansas (8.15%)
Alabama (8.05%)
Oklahoma (8.05%)
California (8.0%)
And where is your lowest tax burden as a percentage of total income?
Alaska (6.6%
New Hampshire (8%)
Tennessee (8.5%)
Delaware (8.8%)
Alabama (8.8%)
On the other hand, you may want to avoid Vermont (14.1%), Maine (14%), New York (13.8%) and Rhode Island (12.7%).
Are you confused now? No one said our tax structure was designed for the convenience of individual citizens. But pay close attention. The COLA you get with your federal annuity will not make you rich and you will probably want to cut down on your expenses before you make your final retirement decisions.
For Some Retirees, Health Insurance Is Tax-Free
__
By Stephen Barr
Thursday, September 27, 2007; D04
Since 2000, federal employees have been able to pay their health insurance premiums on a tax-free basis. The tax code does not extend this perk to federal retirees, to their dismay.
But a little-noticed provision in 2006 Pension Protection Act has made an exception for retired "public safety officers." They can request that up to $3,000 from their annual pensions be deducted to pay for medical insurance and long-term-care insurance.
The Internal Revenue Service, for 2006 tax returns, defined public safety officers as firefighters, law enforcement officers, chaplains and members of a rescue squad or ambulance crew.
Eligibility criteria may be updated by the IRS later this year when it issues a new version of the tax guide for civil service retirement benefits (publication 721), used by many federal retirees when preparing their income tax returns.
The Office of Personnel Management has determined that the pension law applies to the two major federal retirement programs, the Civil Service Retirement System and the Federal Employees Retirement System. Retired federal public safety officers whose pensions include a direct payment to a health insurance company or long-term care insurance company may claim a tax exclusion on their federal tax form and lower their federal income tax, the OPM said.
The provision in the new pension law has caused some confusion among federal retirees about who is eligible to claim the tax break. Some retirees believe they performed public safety jobs but held job titles, such as technician, that are not listed in the IRS tax guide.
"Frustration regarding who is eligible for the tax exclusion could be eliminated if all retired federal workers were offered the tax relief," said Dan Adcock, assistant legislative director at the National Active and Retired Federal Employees Association, known as NARFE.
In the group's September magazine, Adcock said the pension law "sets a new precedent of providing retirees with tax relief that will make their health costs more affordable."
NARFE has lobbied Congress in recent years to extend the tax advantage, called "premium conversion," to federal retirees.
Earlier this month, the House Committee on Oversight and Government Reform approved a bill sponsored by Rep. Thomas M. Davis III (R-Va.) that would allow all federal civilian and military retirees to pay their monthly health-care premiums with tax-free deductions from their annuities and allow active-duty military personnel to deduct from their taxable income certain supplemental premiums or enrollment fees for Tricare, their military health insurance.
John W. Warner (R-Va.) and James Webb (D-Va.) have introduced similar legislation in the Senate.
The Davis bill would provide average saving of $820 a year for federal retirees, according to a government estimate. The median federal retiree pension is $1,879 per month, the House committee said.
But the bill carries a high price, about $12.7 billion over 10 years, according to the most recent estimate by the Congressional Budget Office. Although many House members have signaled support for the legislation, the House Ways and Means Committee has not taken it up.
Through a partnership with Lions World Services for the Blind, the IRS has hired 673 employees after providing them with job training that uses adaptive technologies. The IRS, through its employment program, has hired an additional 126 visually impaired computer programmers, the EEOC said.
The award was presented by Naomi C. Earp, who chairs the EEOC, as part of the agency's annual "Freedom to Compete awards. EEOC began the awards in 2002 as part of an initiative to champion access to employment opportunities by all individuals.
The Internal Revenue Service was honored yesterday by the Equal Employment Opportunity Commission for its efforts to hire persons who are blind or have visual impairments.
This message is generated by the NARFE Global Email Messaging System (GEMS). Please do not reply to this message. If you wish to reply to this message, please compose a new message to the sender. To stop receiving these messages, simply visit our web site at www.narfe.org and remove your e-mail address from your membership record or email us at memsrvcs@narfe.org
The convention is over and it was quite interesting.First of all the temps were hot, the machines were cold and Las Vegas is VERY expensive so it wasn’t all fun.
The retiree conference was put together very well by Director Judy Beard. While other crafts got out early we were there until the last minute.Just goes to show that we do have a lot of things to cover even though we are retired.Director Beard covered several new things that will be available to chapter presidents.We will be able to download our membership on the computer.This will help us track our members and note when someone drops membership.Judy also wants to start having retiree workshops at state conventions.We will look into that for next year’s state convention.
In the future retirees will belong to the chapter in the local they retired from not the area where they live.I’m not sure this is a good thing.It could have an impact on our chapter and the retiree.Just a few examples are does the retiree who moves to a sunnier climate not have the right to participate in a retiree chapter in that area that he/she moved to?Also in our case what happens to the members we have from the BMC who does not have a chapter?These are questions that I am waiting to hear from Director Beard.
There was a lot of discussion on political issues at the convention and as you probably know by now, the delegates voted to endorse Senator Barrack Obama for President.For retirees there are several good reasons for this endorsement.McCain says the funding of Social Security is a disgrace but Obama is opposed to privatization or higher funding by the lower and middle class people.Obama also co-sponsored the repeal of the WEP and GPO.McCain did not.Obama supports tax credit for long term care and assistance for elderly to avoid nursing homes.McCain wants to tax our health care coverage including the portion paid by the government.Just a few things pointed out to us at the retiree conference.
Also announced at our meeting was that our National Union is willing to pay retirees $75.00 per day for every day that they work for the AFL-CIO Labor 2008 campaign.You must have contributed to APWU COPA to be eligible for this payment.That contribution must be recorded at the national level.If you are interested please contact me so I can submit your name for payment.
The conference was also addressed by NARFE Director of Retirement Benefits Services, David Snell.He did a very interesting presentation regarding Medicare, our federal health benefits and the drug program.He also discussed the impact of WEP and GPO on our members and their spouses especially surviving spouses when our member passes away.
In our meetings we also had discussions on workshop ideas for retiree meetings.I wrote down as many as I could and will be looking into having some of these workshops at our future meetings.
All in all the conference and convention was very productive but I had forgotten how frustrating they can be.Many a time some of the resolutions were upsetting but I have to thank the Iowa delegates because when it came to retiree resolutions they asked for my opinion and voted the way I requested.THANK YOU SO MUCH.Also thank you to our chapter for sending me
Barb Versteegh
Retiree Fall Meeting Minutes
September 9th, 2008
Minutes from the APWU Retiree’s Meeting September 9, 2008
The semi-annual retiree’s meeting was held at the APWU hall on September 9, 2008. Twenty-eight members/spouses attended.
Socializing began at 10 a.m.
Stan & Elizabeth from IPTV gave a presentation on HD Conversion, which will be complete midnight February 18, 2009. Each channel has a number of channels, i.e. 11.1, 11.2, 11.3, 13.1, 13.2 & so on. All converter boxes will have a remote. You have to have the remote for the converter box. There is an EPG button (Electronic Program Guide) on the remote.
There is no difference between an analog or HD antenna. Smart antenna’s interface with the converter box. They only work in town.
For more information on the digital transition, visit www.iptv.org or call 800-532-1290.
The meeting was called to order at 11:00 by President Barb Versteegh with the Pledge of Allegiance.
The minutes of the last meeting and treasurer’s report were read and approved.
Leon Morlan was not present. Therefore, there was no safety report.
Barb VerSteegh’s Report:
APWU Picnic will be on September 20, 2008. All retirees are invited. Barb will have a convention report in the next issue of the paper. Access the following website for Retiree issues, www.apwuiowa.com.
Resolutions voted on at the National Convention:
Allow spouses of retirees to have full membership rights after paying the $24 a year dues failed to pass.
Another resolution failed that would have required the national union to pay elected retiree delegates to conventions at the pay rate they had when they retired.
A resolution passed that will raise the retiree dues by $1.00 per month with this dollar to be returned to the local retiree chapter. This resolution failed at the retiree meeting but passed at the full convention although all Iowa delegates at the convention voted no.
Barb is trying to get the $1.00 increase waived for our chapter.
Barb reported that there are two new programs through the Voluntary Benefits Program that are provided to retiree members free of charge. They are an Identity Theft Protection and Concierge Services. Also provided to retiree members is $1500 Accidental Death Coverage.
All Retirees are invited to the September 17th Union meeting. Betty Brim-Hunter will give a presentation on the AFL-CIO Labor 2008 Campaign. The National Union will pay retirees $50 - $75 per day to work it. You must have contributed to APWU COPA to qualify for this pay.
Access www.apwu.org to see if your COPA contributions have been recorded.
Absentee Ballots for those who live in Polk County, give them to Robin Arnold and she will deliver them.
Robin Arnold spoke on the Employee Free Choice Act (EFCA)
Old Business:
Bill Cram, Vice President, spoke about checking your health plan for nursing home coverage or supplemental coverage.
Bill stated he is not a candidate for re-election of any offices.
Harold Nolan made a motion to give the ladies who helped with the Retiree Luncheons, $400 worth of gift certificates. Motion passed.
Harold Nolan made a motion that Jon Arnold, Secretary Treasurer, will get the door prizes for the Retiree Luncheons. Motion passed.
Harold Nolan made a motion to thank Jon Arnold for his help with the Retirees by purchasing a $50 gift card to a restaurant, (for each meeting). Motion passed.
Election of Officers:
: Barbara VerSteegh
President
Vice President
Bill Cram nominated Harold Nolan who declined.
Bill Cram nominated George Bates and he accepted.
Recording Secretary
Sergeant-At-Arms
Trustees
Door Prizes:
$15 Fareway Gift Card – Robert McLaughlin
$25 Fareway Gift Card – Ward Mellerup
The next meeting will be held May 12, 2009.
A spaghetti and meatball lunch was served.
Motion to adjourn at 11:46 P.M.
These minutes are respectfully submitted by Viola Schlegel, Secretary, DMI- APWU Local 44, for Frances Miller.
: Lloyd Weems, Ralph Crowell, Harold Nolan: Carol Tyler: Karen Alexander: George Bates
Managers to familiarize with recommendations below regarding the Postal Flu Plan
http://www.opm.gov/retire/ or view an online video retirement seminar at http://www.connectlive.com/events/uspsretirement/redirectindex.html. The second link may also be accessed via liteblue under the My Life tab, Benefits Management, and Retirement Seminar Online. joann.k.rose@usps.gov requesting info for CSRS or FERS or both. Please include your home address in the email as the packet will be mailed out. Once you are finished reviewing the materials, please return them in the pre addressed envelope provided in the packet.
If you are considering retirement and are looking for information we can help!
You can get retirement information from 2 different online sources. Information on retirement and benefits can be found at
If you prefer to have hard copy information the Training Department has CSRS and FERS workbooks & DVDs that are available to be checked out. They cover the CSRS & FERS Retirement Benefits, Insurance Programs, Thrift Savings Plan, and Social Security Benefits. If you would like to check this info out, please send an email to
RETIREMENT INFORMATION
Questions and Answers on Benefits, Pay, and Leave Under Voluntary Early Retirement Authority
NOTE:
For more information related to any questions and answers presented in this document, you should review the VIDEO segments in the Retirement Information Seminar Online under the ‘My Life’ tab on LiteBlue at https://liteblue.usps.gov.
RETIREMENT
Question 1.
What is Voluntary Early Retirement (VER) Authority?
Answer
Voluntary Early Retirement, or "Early Out," as it is commonly referred to, is a strictly voluntary option that allows eligible employees to retire early.
Question 2.
Where can I find the most current information on VER?
Employees covered by the Civil Service Retirement System (CSRS) and employees covered by the Federal Employees Retirement System (FERS) are eligible if they meet the following requirements:
(1) At least 50 years of age with at least 20 years of service, or any age with at least 25 years of service, and
(2) At least five years MUST be creditable civilian service, not military service. Employees may use military service to meet the balance of service required for eligibility.
CSRS employees must have been employed under CSRS for at least one year out of the last two years, but the service need not be continuous.
Question 4.
Are all employees who meet the above requirements eligible?
Answer
No, only those employees who are in specific locations where there is a substantial delayering, reorganization, reduction in force, transfer of function, or other workforce restructuring or shaping, and who are likely to be separated or subject to an immediate reduction in the rate of basic pay or are identified as being in positions that are becoming surplus or excess to the agency’s future ability to carry out its mission effectively.
Question 5.
What is the major difference between Voluntary Early Retirement and Optional Voluntary Retirement?
Answer
The age and service requirements are less under VER than under optional. Early retirement may carry a penalty in the annuity computation.
Question 6.
I meet the service requirement with 20 years of service, but not the age requirement. Would my 50th birthday be the earliest date I could retire?
Answer
Yes, provided your birthday is within the offer window. For retirement purposes an employee legally meets the age requirement the day before a birthday. For example, an employee meeting the service requirement who will be 50 years old on October 4 would be eligible to retire if the last date of the VER offer would be October 3.
Question 7.
Is there a time period for retiring under Voluntary Early Retirement?
Answer
Yes, each early out offer will have a 'window' during which applications may be accepted. The window dates will be established at the time of the offer.
Question 8.
I have submitted an application for disability retirement, but I now meet the eligibility requirements for Voluntary Early Retirement. Can I cancel my application for disability and take advantage of this offer?
Answer
Yes, an application for disability retirement may be withdrawn at any time prior to approval from OPM. Also, applications may be submitted for more than one retirement for which you qualify (discontinued service, MRA, etc.), and OPM will review each separately.
Question 9.
I will not meet the service requirements. Can I use my accumulated sick leave balance to meet the years of service requirement?
Answer
No, neither your annual nor your sick leave balance can be used to meet eligibility requirements.
Question 10.
I am a FERS employee who meets the minimum retirement age (MRA) and have at least 10 years of service but less than 20 years. Am I eligible?
Answer
No, 20 years of service is the minimum to qualify for the VER. (You are eligible to retire under a FERS MRA + 10 optional retirement with a reduced annuity.)
Question 11.
How much money can I expect to receive on a monthly basis?
Answer
If you are offered a VER opportunity, you will receive an estimate of the annuity you will receive as of the effective date for retirements processed under your offer.
Question 12.
Will my annuity be reduced?
Answer
CSRS/CSRS Offset employees:
If you are under age 55, your annuity will be computed using a voluntary optional retirement annuity calculation based on total creditable years and months of service and average high-3 salary. Then, your annuity will be reduced at the rate of two percent for each year (or by 1/6th of one percent for each full month) that you are under age 55. This reduction is permanent — your annuity is not recomputed when you reach age 55.
FERS employees with a frozen CSRS component: The portion of your annuity based on a benefit that you accrued and retain under CSRS frozen service is subject to the reduction mentioned above for CSRS/CSRS Offset employees.
FERS employees without a CSRS component: No reduction.
Question 13.
How is high three average salary determined?
Answer
Your high-3 average salary is the highest figure obtained by averaging your basic salary during any 3 consecutive years of service, with each rate weighted by the length of time it was in effect. Basic salary includes higher-level pay and cost-of-living adjustments (COLAs), but does not include territorial cost of living allowance (TCOLA), overtime, bonuses, night differential, premium pay, military pay, lump sum terminal leave or annual leave exchange payments, etc. In most cases, the last 3 years of basic salary are the high-3 years. If you have a period of higher basic salary prior to the last 3 years, OPM will compute your annuity based on that earlier period, even if that period of service was with another federal agency.
Question 14.
When will my annuity start?
Answer
Your annuity will begin on the first day of the month after the effective date of retirement.
Question 15.
When I first started working, I was in a position for which no retirement contributions were deducted from my pay. How can I get credit for this time?
Answer
CSRS/CSRS offset employees:
FERS employees without a CSRS component:
If the service was performed prior to January 1, 1989, it will not count toward retirement eligibility or in computing your annuity unless a deposit, with interest, is made prior to the final adjudication of your retirement application. If the service was performed on or after January 1, 1989, it is not creditable under FERS, and a deposit cannot be made for this service. If the service was performed prior to October 1, 1982, it is creditable in full toward retirement eligibility and in computing your annuity if you make a deposit. However, if you don’t make a deposit for this service, your annuity will be reduced by ten percent of the amount of the unpaid deposit, plus interest. If the service was performed on or after October 1, 1982, it will be used to determine retirement eligibility, but is not creditable for annuity computation purposes unless you make a deposit, with interest, for this service.
FERS employees with a frozen CSRS component: The portion of your annuity based on a benefit that you accrued and retain under CSRS frozen service is subject to the creditability rules and calculations as mentioned above for CSRS/CSRS Offset employees.
Question 16.
I previously withdrew my retirement contributions. What impact will this have on my retirement annuity?
Answer
CSRS/CSRS offset employees:
FERS employees without a CSRS component:
If the refunded period of service was covered by CSRS, you may deposit FERS contributions for this period. However, if the period of service was covered by FERS, no redeposit is possible, and the years are not creditable. This period is creditable in establishing your retirement eligibility—that is, in meeting the service requirements. However, if the service for which you received a refund terminated before October 1, 1990, you will not be required to make a redeposit and full credit will be allowed in the annuity. However, your annuity will be actuarially reduced based on the amount you owe and your age at retirement. If the service terminated after October 1, 1990, you will be required to make a redeposit in order to receive credit in the computation of the annuity.
FERS employees with a frozen CSRS component: The portion of your annuity based on a benefit that you accrued and retain under CSRS frozen service is subject to the creditability rules and calculations as mentioned above for CSRS/CSRS Offset employees.
Question 17.
If I take Early Voluntary Retirement, will I be eligible to withdraw my retirement contributions and take a reduced annuity?
Answer
No. The Alternative Form of Annuity/Lump Sum option is presently available to only those employees documented to have a life-threatening affliction, and who separate with immediate entitlement to an annuity, other than disability annuity.
[NOTE: Questions 18 through 24 apply to FERS employees ONLY]
Question 18.
What is the Special Retirement Supplement?
Answer
FERS employees only:
It is an annuity supplement only for FERS employees paid by the Office of Personnel Management (OPM), which estimates the Social Security benefit earned by your FERS years of service. It is paid until you become eligible for a Social Security benefit at age 62. However, under VER, this supplement is payable only if you have reached your MRA — your earliest optional retirement age. If you are separating at less than MRA, the supplement will not be paid until you reach your MRA.
Question 19.
I am a FERS employee and my annuity has both a CSRS component and a FERS component. Can I still receive the Special Retirement Supplement?
Answer
FERS employees only:
Yes, if you had one full calendar year of service subject to FERS computation rules.
Question 20.
How is the Special Retirement Supplement computed?
Answer
FERS employees only:
The supplement is computed as if you were age 62 and eligible for a Social Security benefit when the supplement begins. By law, OPM first estimates what your full career (40 years) Social Security benefit would be. Then it calculates the amount of your civilian service under FERS and reduces the estimated full career Social Security benefit accordingly. For example, if your estimated full career Social Security benefit is $1,000 monthly and you have worked five years under FERS, OPM will divide five by 40 (0.125) and multiply ($1,000 x 0.125 = $125 monthly). The result would be your Special Retirement Supplement, before any reductions.
Question 21.
Do salary or wages earned after I retire affect the supplement?
Answer
FERS employees only:
Yes. Your Special Retirement Supplement, like Social Security benefits, is subject to an earnings test. It is reduced if you earn more than the exempt amount of earnings (determined each year by Social Security) in the immediately preceding year.
Question 22.
Can my FERS basic benefit also be reduced because of earnings over the earnings test limit?
Answer
FERS employees only:
No.
Question 23.
How long will I continue to receive the Special Retirement Supplement?
Answer
FERS employees only:
The Special Retirement Supplement will continue until the earlier of (1) the last day of the month before the first month for which you would be entitled to Social Security benefits or (2) the last day of the month in which you reach age 62.
Question 24.
What if I don’t apply for Social Security benefits at 62 or I’m not eligible for them? Can I continue to get the Special Retirement Supplement after I’m 62?
Answer
FERS employees only:
The supplement ends at age 62, regardless of whether or not you receive benefits from the Social Security Administration.
NOTE: End of questions that apply to FERS employees ONLY. The following questions apply to both FERS and CSRS employees.
Question 25.
If I am receiving military retired pay, how can I receive credit for military service?
Answer
To receive credit, retired pay must be waived and a post-1956 deposit must be made, unless your retirement is based on exception criteria. You should check with the Human Resources Shared Service Center (HRSSC) if you were injured in combat or in the line of duty.
Question 26.
If I decide to make my Post 1956 military deposit, when should I do that?
Answer
Completed deposits plus applicable interest are required prior to retirement; however, you may initiate this payment while completing the retirement application package. The payment is acknowledged and full credit is allowed.
If you currently have a military deposit in progress through payroll deductions or periodic lump sum payments, contact the HRSSC at 1-877-477-3273, option 5, to determine the remaining balance of your military deposit.
For more information related to Post-56 military deposits, go to the Retirement Seminar Online under the ‘My Life’ tab on LiteBlue at
If you are eligible for retirement under VER you will receive further information from the HRSSC, which is your source for retirement information while you are an employee. If you would like to learn more about retirement, the U.S. Office of Personnel Management (the separate government agency that administers the federal retirement plan) provides extensive information. Do NOT call OPM, since they cannot respond to questions from employees. You may refer to the OPM web site:
I'm divorced. What effect, if any, will a court order have on my application for early retirement?
Answer
None. If your court order is on file with the Office of Personnel Management (OPM), OPM will see to it that all payments are made in accordance with the court order. If a copy is not on file at OPM, you must attach a certified copy in its entirety, and any attachments or amendments, with your application for retirement.
CSRS VOLUNTARY CONTRIBUTIONS
Question 29.
I previously made voluntary contributions to the Civil Service Retirement System. Will these contributions be refunded to me as excess contributions?
Answer
There will be no automatic refund, but you may apply for this at any time before you retire. Otherwise, your annuity will be increased according to the Voluntary Contribution regulations.
SOCIAL SECURITY
Question 30.
How would Voluntary Early Retirement affect my Social Security benefits?
Answer
In terms of Social Security, taking a Voluntary Early Retirement is the same as Optional Retirement. If you qualify for Social Security, you may receive full benefits beginning between age 65 and 67, depending on your date of birth. You may apply to receive actuarially reduced benefits as early as age 62.
Question 31.
Will my Social Security benefit be reduced because I will be receiving a CSRS annuity?
Answer
Your Social Security benefit may be reduced under the Windfall Elimination Provision (WEP). WEP lowers the percentages used to compute benefits for all workers who have less than 30 years of Social Security-covered employment and who have earned an annuity from employment not covered by Social Security, such as a CSRS Annuity. The Social Security Administration publishes information on this provision on its web site:
This provision in the Social Security law affects the Social Security benefit of a CSRS retiree who did not pay Social Security taxes, but expects to receive a Social Security benefit as a spouse or surviving spouse. This provision does NOT affect CSRS Offset and FERS annuitants. The Social Security Administration publishes information on this provision on its web site:
How do I obtain more information about Social Security?
Answer
Social Security offers several pamphlets, books and fact sheets. For more information or free publications, contact your local Social Security office, or call 1-800-772-1213, or refer to the web site:
Your current health benefits coverage will transfer into retirement provided you meet the eligibility requirements of:
(1) retiring on an immediate annuity, and
(2) continuous coverage in the FEHB program for the five years immediately preceding retirement or since your first opportunity to enroll (if less than five years).
For employees who do not qualify under the preceding requirements, the Office of Personnel Management has the authority to grant pre-approved waivers to employees who have been:
Covered under the FEHB Program continuously since the beginning date of the OPM-approved VER; and
Retire during the OPM-approved VER period; and
Take Voluntary Early Retirement.
Question 37.
Will my health benefits cost go up?
Answer
Your premium payment will increase to the level paid by all other federal annuitants (and federal employees) rather than receiving the more favorable Postal Service employer health benefits contribution. This means the same health plan may be approximately twice as expensive for an annuitant as it is for a postal employee.
As an annuitant, you would pay for health coverage through monthly withholding from your annuity, instead of paying through biweekly withholding from your paycheck (12 payments annually instead of 26 payments annually). Of course, each payment is higher when you pay on a monthly basis.
Tax regulations do not permit you to receive the tax break you receive as an employee under the pretax payment of health insurance premiums provided by the Postal Service.
Question 38.
I am covered under TRICARE/CHAMPUS. Will this coverage count toward the FEHB five-year requirement?
Answer
Yes, as long as you are covered under an FEHB enrollment at the time of retirement. In addition, you must have enrolled in the FEHB program within 60 days after you lost coverage under CHAMPUS in order for it to be considered as part of the continuous FEHB coverage.
Question 39.
What happens if I cancel my health benefits enrollment when I retire?
Answer
If you cancel your FEHB enrollment as an annuitant, you will NEVER be able to reenroll, unless you become reemployed in a position that conveys coverage, or you canceled your FEHB to enroll in a Medicare managed care plan, Medicaid or TRICARE and that coverage ends.
Question 40.
If I cancel my FEHB enrollment to be under my spouse's FEHB enrollment, will I be able to reenroll under my own coverage at a later date?
Answer
Yes. As long as you are continuously covered under an FEHB enrollment, you remain eligible to make any of the same enrollment elections/changes that an active employee would be eligible to make.
Question 41.
My health benefits were terminated due to 12 months of LWOP, but I have since reenrolled. Will this period of LWOP count against the five year requirement to continue coverage?
Answer
No. The termination of your health benefits due to 365 days in LWOP status is not considered a break in the continuous coverage necessary for continuing FEHB coverage into retirement. However, the period during which the termination is in effect does not count toward satisfying the required five years of continuous coverage. In addition, you must have re-enrolled within 60 days of returning to pay and duty status, or at the end of the first pay period your pay becomes sufficient to cover your premium, in order to meet eligibility requirements.
Question 42.
Where can I find more information on health insurance in retirement?
Answer
If you are eligible for VER, you will receive further information from the HRSSC, which is your source for such information while you are an employee. If you would like to learn more about health insurance during retirement, the U.S. Office of Personnel Management (the separate government agency that administers the federal health insurance and retirement plans) provides extensive information. Do NOT call OPM, since they cannot respond to questions from employees. You may refer to the OPM web site:
You are eligible to continue your current life insurance coverage into retirement provided you meet the eligibility requirements of:
(1) Retiring on an immediate annuity, and
(2) Continuous coverage of each election in the FEGLI program for the five years immediately preceding retirement/or since your first opportunity to enroll (if less than five years), and
(3) You did not convert to an individual life insurance policy.
Accidental death and dismemberment coverage ends when your employment ends.
After you make your life insurance election, you may have opportunities to reduce your coverage, but not to increase it. Employees who assigned their insurance or have taken living benefits may not reduce or cancel their coverage.
Question 44.
What about the premium costs?
Answer
Basic insurance: If you are eligible and continue your coverage, you will pay premiums, which will be withheld from your annuity, until after you turn 65. Then, if you elected the 75% Reduction, you will not pay any more premiums. If you elected higher coverage, you will continue to pay premiums, although the cost will not increase with your age.
Optional insurance: If you are eligible and continue your coverage, you will pay premiums, which will be withheld from your annuity. The
You may compute the cost of your premiums on OPM’s FEGLI Calculator at
What about the coverage amounts? Will they change?
Answer
Basic insurance: If you are eligible and continue your coverage, you elect a 75% Reduction, 50% Reduction or No Reduction in coverage. If you elect No Reduction, your coverage stays the same; otherwise, it begins to reduce when you turn 65.
Optional insurance: If you are eligible and continue your coverage:
Option A (Standard) continues until you turn 65, when it begins to reduce.
You elect how many multiples of Option B (Additional) and/or Option C (Family) you wish to continue and whether you want a Full Reduction or No Reduction for your Option B and/or Option C coverage. With No Reduction, your coverage stays the same; otherwise, it begins to reduce when you turn 65.
Question 46.
If I take Voluntary Early Retirement, I will not meet the five year requirement to continue my FEGLI optional coverage. Can I convert this coverage to an individual policy?
Answer
Yes. You may convert the amount of your FEGLI Optional coverage to an individual policy as long as you have not assigned your insurance.
Question 47.
I filed a Designation of Beneficiary, Form SF 2823, with my employing office. Will my designation remain valid after I retire?
Answer
Yes. Any valid designation on file in your official personnel folder will remain valid unless your annuity terminates or you change or cancel the designation. Changes or cancellations after retirement must be submitted directly to OPM.
Question 48.
Where can I find more information on life insurance in retirement?
Answer
If you are eligible for VER, you will receive further information from the HRSSC, which is your source for such information while you are an employee. If you would like to learn more about life insurance during retirement, the U.S. Office of Personnel Management (the separate government agency that administers the federal life insurance and retirement plans) provides extensive information. Do NOT call OPM, since they cannot respond to questions from employees. You may refer to the OPM web site:
If I retire under VER, are there any special Thrift Savings Plan (TSP) advantages, penalties or rules?
Answer
There are no differences in TSP provisions for retirement under VER versus separation or optional retirement. You will have the same withdrawal choices and tax consequences as any other separated or retired employee with the same separation or retirement date and age.
Question 50.
If I retire under VER, can I keep on contributing to TSP?
Answer
No. Following retirement, you are not eligible to make additional contributions to or borrow money from your TSP account. You may continue to reallocate money among the TSP funds.
Question 51.
If I retire under VER, can I take out my TSP money?
Answer
Yes. If you retire, you will receive extensive information regarding your TSP withdrawal options and also whether you may leave your money in TSP.
Question 52.
How long will it take me to get my money?
Answer
Withdrawal of funds may take at least two months following separation and after the receipt of properly completed forms by TSP.
If you have an outstanding TSP loan, this would delay any TSP withdrawal because you cannot withdraw funds from your TSP account until you have repaid your loan in full or until your loan has been declared a taxable distribution.
Question 53.
If I withdraw money from my TSP account, will I have to pay taxes?
Answer
Yes. All persons, including those who retire under VER, will have to pay federal income taxes on any amounts withdrawn from TSP. Those taxes are due on both withdrawn TSP contributions and TSP earnings. After all, TSP is a tax-deferred savings plan, which means you didn't pay taxes when you contributed to your TSP account or on any earnings in the account.
Also, if you retire before the year that you reach age 55, then any amount that you withdraw from your TSP account before you reach age 59 1/2 is subject to an early withdrawal penalty tax of ten percent. However, this penalty tax does not apply to amounts received under certain withdrawal options, such as an annuity or rollover to an Individual Retirement Arrangement.
Question 54.
I'm a FERS employee. Will I forfeit my Agency Automatic (one percent) Contributions or earnings on those contributions, or am I vested?
Answer
All employees eligible for VER are fully vested in their TSP contributions and the earnings on those contributions, including any agency automatic or matching contributions for FERS employees.
Question 55.
Where can I find more information on TSP?
Answer
If you are eligible for VER retirement, you will receive further information from the HRSSC, which is your source for such information while you are an employee. If you would like to learn more about TSP, the Federal Retirement Thrift Investment Board, (the separate government agency that administers TSP) provides extensive information. You may call the TSP Service Office at 1-877-968-3778, TDD use 1-877-847-4385; or access the TSP web site at:
I participate in FSA. What happens with my FSA if I retire?
Answer
If you are a Flexible Spending Account (FSA) participant, your participation ends the day after the date of your retirement.
Question 57.
If I retire, can I still file FSA claims?
Answer
You may request payment only for the expenses of services or items received up to and including your retirement date. Any services or items received after that date are not eligible for payment except as explained in the next paragraph. (Your deadline for submitting FSA claims does not change — they still will be processed if they are received by the FSA Customer Service Center by September 30 of the year following the plan year.)
However, if you retire on December 31, you are eligible for the 2-½ month FSA Grace Period following the plan year, which is from January 1 through March 15. If you still have funds left in your FSA, you can claim eligible expenses for services or items received during the Grace Period, but only if your retirement date is December 31.
Question 58.
Will I still have to pay the full contribution that I pledged if I retire?
Answer
If you are enrolled in FSA, you must pay a full pay period contribution for any pay period during which you are on Postal Service rolls. If you are on Postal Service rolls even for only the first day of a pay period, you will still have to pay your full FSA contribution for that pay period. (The payroll system does not prorate your FSA contribution.)
The collection of FSA contributions (including the collection of missed contributions) relates strictly to the amount of the contributions you were scheduled to make each pay period while you were an FSA participant. What you actually claim, whether it is more or less than what you were scheduled to contribute each pay period while you were an FSA participant, does not affect what you must pay in contributions.
If you missed contributions you were scheduled to make from your paychecks because you were on Leave Without Pay (LWOP) or had low pay, you must make up the missed contributions. If you missed contributions, you cannot reduce what you owe by not filing claims. These rules apply to any type of separation, including a Voluntary Early Retirement.
Question 59.
Can I continue my FSA account coverage into retirement?
Answer
The Postal Service FSA program is not available to you as an annuitant. (Under Internal Revenue Service (IRS) tax rules, all employers may only make FSAs available to employees, not retirees.)
LEAVE
Question 60.
If I separate from the Postal Service under VER, what will happen to my accumulated sick leave?
Answer
No payments are made for accumulated sick leave.
CSRS/CSRS Offset employees: If you separate from the Postal Service under VER, you can receive additional service credit towards your retirement or survivor annuity.
FERS employees: If you separate from the Postal Service under VER, your sick leave is not credited towards additional service credit for annuity computation purposes unless you transferred to FERS from CSRS and your annuity has a CSRS component. In this situation, you can receive additional service credit based on the sick leave balance you accrued at the time you transferred to a FERS or your sick leave balance at the time of your retirement, whichever is less.
Question 61.
If I separate from the Postal Service under VER, what will happen to my earned and unused annual leave?
Answer
You may be eligible for a lump sum payment for your accumulated annual leave carried over from the previous year; annual leave earned and unused in the current year including amounts over the carryover maximum; as well as any unused donated leave. And, for full-time and part-time regular employees, holidays that fall within the terminal leave period.
Question 62.
If I separate from the Postal Service under VER and have earned and unused annual leave, will I be paid holiday leave for any holidays which occur after my separation date but before my annual leave would be exhausted?
Answer
Yes. Annual leave is spread over the appropriate number of days following your separation date and extended one day for each postal holiday which occurs during that time period. For example, if you have 160 hours of earned and unused annual leave and two holidays would occur in the four weeks (40 hours per week) after the date of your separation, you would receive terminal leave pay for 176 hours (160 hours of earned and unused annual leave plus 16 hours of holiday leave).
Question 63.
I am a supervisor who participated in the Annual Leave Exchange Program. What effect will this have on my terminal leave payment?
Answer
As stated in the letters notifying individuals of their eligibility to participate in the Annual Leave Exchange Program:
"When an employee retires or separates from the Postal Service before earning sufficient leave to cover the amount exchanged, the excess leave exchanged will be offset against the previously accumulated leave balance when calculating the employee's terminal annual leave payment."
Question 64.
If I separate from the Postal Service under the VER, what will happen if I am indebted to the Postal Service for unearned annual or advanced sick leave?
Answer
If you are indebted to the Postal Service for unearned annual or advanced sick leave, you must refund the amount paid for the unearned leave. If you do not refund the amount of the indebtedness, deductions will be made from any funds that you are due upon your separation.
SEVERANCE PAY
Question 65.
If I separate from the Postal Service under VER, am I entitled to severance pay?
Answer
No. If you voluntarily retire from the Postal Service, you are not entitled to severance pay.
UNEMPLOYMENT COMPENSATION
Question 66.
If I separate from the Postal Service under VER, can I apply for unemployment compensation?
Answer
Yes. At the time of retirement, you will receive an SF-8, Notice to Federal Employees About Unemployment Insurance, advising you of your right to file a claim for unemployment compensation. While any employee who is separated may apply for unemployment compensation, most states exclude from eligibility those applicants who have voluntarily retired from employment. Furthermore, Federal law requires states to reduce the weekly unemployment amount by the weekly amount of any government or other pension, retirement, or retired pay.
The following infection control measures are contained in the Postal Service Pandemic Flu Plan. While there is no pandemic declaration, given the nature of the swine influenza outbreak, it is prudent to ensure that managers are familiar with these measures. Managers should contact Area Medical personnel regarding coordination with local public health authorities. The Area Medical personnel will communicate with local public health authorities.
Managers and supervisors should consider implementation of the following infection control measures to protect USPS employees and customers to the extent feasible:
§ Release employees who become ill at work.
§ Increase attention to sick leave use and other employee absences; this may include directly contacting the employee.
§ Eliminate non-critical business travel, especially to areas of the country experiencing the most flu-like illness.
§ Coordinate with local public health authorities to establish guidelines concerning sick employees’ return to work.
§ Promote social distancing between employees and customers.
§ Provide personal protective equipment (PPE), such as approved and fit-tested respiratory protection devices for the Inspection Service, Postal Police, and medical personnel. Although current federal guidance does not recommend PPE for general workers, the USPS policy on voluntary use of appropriate filtering face-piece respiratory protection and gloves will continue. Appropriate training will support the voluntary use program.
§ Where appropriate, use telework or alternative work schedules for applicable employees and alternative work locations to ensure that work is performed in the safest manner possible for employees and customers.
§ Post infection control guidelines in prominent locations, i.e., personal hygiene steps, what to do if you become ill at work.
The entire plan and supporting documents are on PolicyNet:
ONLINE VER INFORMATION. Information for the voluntary early retirement (VER) offer can now be found on Blue and LiteBlue. As a reminder, this VER offer has an effective retirement date of Dec. 31, 2008, and is open to all eligible USPS employees in clerk, mail handler, supervisor of distribution operations and supervisor of customer services positions. Look for the VER website on Blue and LiteBlue under "Hot Topics." Go to: http://blue.usps.gov/hr/edr/csfp/ocg/hrssc_vera.htm <http://blue.usps.gov/hr/edr/csfp/ocg/hrssc_vera.htm> to access the VER website on Blue. Go to: https://liteblue.usps.gov/news/ver2008/hrssc_vera.htm <https://liteblue.usps.gov/news/ver2008/hrssc_vera.htm> for the same information on LiteBlue. To visit the VER website from home, log on to LiteBlue. You'll need your Employee ID and PIN to access LiteBlue.
APWU President William Burrus met with postal officials July 8 regarding USPS plans to offer early-retirement opportunities to 40,000 employees. “I conveyed our strongly-held belief that the Postal Service is required to bargain with the union over Voluntary Early Retirement opportunities,” Burrus said.
“I also reiterated our request for all pertinent information,” he said, “including the Postal Service’s request to the Office of Personnel Management requesting authority to offer early-outs, and OPM’s response.” Under the law, federal agencies, including the Postal Service, must receive approval from OPM to offer Voluntary Early Retirement (VER) **See below information** opportunities to their employees.
Postal officials indicated that OPM has approved the request, and agreed to provide the union with the requested information. “We will review the information once we receive it and engage in further discussions with management,” Burrus said.
U.S. Office of Personnel Management -
Voluntary Early Retirement Authority
Description
Voluntary Early Retirement Authority (VERA) allows agencies that are undergoing substantial restructuring, reshaping, downsizing, transfer of function, or reorganization to temporarily lower the age and service requirements in order to increase the number of employees who are eligible for retirement. The authority encourages more voluntary separations and helps the agency complete the needed organizational change with minimal disruption to the work force. By offering these short term opportunities, an agency can make it possible for employees to receive an immediate annuity years before they would otherwise be eligible.
An agency must request VERA and receive approval from the Office of Personnel Management (OPM) before the agency may offer early retirement to its employees. The approval from OPM will stipulate a period of time during which the option will remain available. Agencies such as the Department of Defense that have been granted agency-specific VERA are not required to seek OPM approval for their use of this option.
Employee Coverage
Voluntary Early Retirement offers apply to employees covered under both the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). When an agency has received VERA approval from OPM, an employee who meets the general eligibility requirements may be eligible to retire early. The employee must:
Meet the minimum age and service requirements -
At least age 50 with at least 20 years creditable Federal service, OR
Any age with at least 25 years creditable Federal service;
Have served in a position covered by the OPM authorization for the minimum time specified by OPM (usually 30 days prior to the date of the agency request);
Serve in a position covered by the agency's VERA plan; and
Separate by the close of the early-out period.
Effect of Early Retirement on Annuity
Employees considering an early retirement must consult with their human resources office and follow agency procedures to receive an annuity estimate and obtain advice specific to their personal situation.
CSRS Annuity
Commencing date of annuity - If the employee retires on the 1st, 2nd, or 3rd day of a month, annuity begins the following day. Otherwise, annuity begins the first day of the month following retirement.
Calculation of annuity - Annuity is calculated based on the average high-3 salary and years and months of creditable service. Unused sick leave can be used for additional service credit. If the employee is under age 55, this calculation is reduced by one-sixth of one percent for each full month he/she is under age 55 (i.e. 2% per year).
FERS Annuity
Commencing date of annuity - Annuity begins the first day of the month following retirement.
Calculation of annuity - FERS Basic Annuity is calculated based on the average high-3 salary and years and months of creditable service. Under FERS, unused sick leave can not be used for additional service credit, unless the employee is a FERS transferee with a CSRS component. A FERS transferee with a CSRS component receives credit for unused sick leave; the amount of credit will be the lesser of:
The employee's sick leave balance as of the date of transfer to FERS; or
The employee's sick leave balance as of the date of retirement.
There is no annuity reduction in FERS for employees who retire on an early voluntary retirement under age 55. A FERS Transferee with a CSRS Component in his/her annuity, who retires before age 55, will have the CSRS portion of the payable annuity reduced by one-sixth of one percent for each full month he/she is under age 55. No reduction will be applied to the FERS component of the annuity.
A FERS Annuity Supplement is payable to an employee who has completed at least one calendar year of FERS service when he/she reaches Minimum Retirement Age (MRA). MRA is age 55 to 57, depending on date of birth. The annuity supplement is payable until eligibility for Social Security begins at age 62, subject to an earnings limitation.
Effect of Early Retirement on Benefits
Health Benefits: Employees retiring in conjunction with a VERA or Voluntary Separation Incentive Payment (VSIP) authority must have been covered under the FEHB Program (1) for the last 5 years of their Federal civilian service in order to continue such coverage in retirement, or (2) if less than 5 years, for all service since the employee was eligible for these benefits unless these requirements are waived.
OPM will grant pre-approved waivers to employees who have been:
Covered under the FEHB Program continuously since the beginning date of the agency's latest statutory VSIP authority, or OPM-approved VSIP or VERA authority; and
Retire during the statutory VSIP or OPM-approved VSIP/VERA period; and
Receive a VSIP; or
Take early optional retirement (i.e., VERA); or
Take discontinued service retirement based on an involuntary separation due to RIF, directed reassignment, reclassification to a lower grade, or abolishment of position.
Coverage as an annuitant is identical to coverage as an employee, but premiums are not paid on a pre-tax basis.
Life Insurance: Federal Employees Group Life Insurance can be continued through the retirement system provided the employee has carried the coverage for at least five years prior to retirement. Value and cost depend on elections made at retirement.
Discretionary Authority
As with any incentive, when approved by OPM, this authority is used at the discretion of the agency. Each agency must develop a VERA plan to explain why the authority is needed, how it will be implemented, and which employees will be eligible.
Employment After Voluntary Early Retirement
Non-Federal employment: Employees who take voluntary early retirement are not subject to any restrictions regarding their annuity, should they subsequently accept non-Federal employment. EXCEPTION: Employees covered under FERS who qualify for the annuity supplement could have the supplement reduced or discontinued due to an earnings limitation.
Federal employment: If an annuitant (i.e., a retired Federal employee) is hired under a Federal appointment, the annuitant is then considered a "reemployed annuitant." This means the annuity will continue, and the new Federal salary will be offset by the annuity, unless the employing agency seeks and is granted a waiver of the salary offset by OPM. If the reemployed annuitant works full time for at least one year, the annuitant may apply for a supplemental annuity. If the reemployed annuitant works full time for at least five years, the annuitant may then choose either a supplemental annuity or a re-computed annuity.
References
5 U.S.C. 8336(d)(2)(D) for CSRS
5 U.S.C. 8414(b)(1)(B) for FERS
5 CFR Part 831.114 for CSRS
5 CFR Part 842.213 for FERS
“We do not oppose Voluntary Early Retirements,” he explained, “but we do object to any plan to offer them selectively and exclude some employees from eligibility,” he said. “We also believe that for this VER, which is not the result of contract negotiations, severance pay must accompany an offer of early retirement.”
“We intend to pursue our concerns over this matter,” Burrus noted. “As we receive additional information, we will share it with our members.”
Subject: National VER Authorities
This is an update of where we are with the upcoming implementation of the National VERs for craft and supervisory positions. We expect to have an OPM approval for the initial VER request for the clerks, mail handlers, SDO and SCS positions as early next week. We do not expect to receive the second OPM VER approval for Maintenance, Motor Vehicle, Carriers and Rural Carriers crafts until the end of July.
Some of you have asked for the list of VER eligibles but because we have not established a firm VER effective date, these names will not be provided. For your planning purposes, we can provide raw numbers of VER eligibles by districts and by craft for the first group (clerks, mail handlers, supervisors) with a proposed VER effective date of December 31, 2008. These reports will be available to you by the middle of next week. The second group (MV, Maintenance, Carriers) will have a later VER effective date and this report will be provided the week of July 7th. Once we have established firm VER effective dates, we will provide the names of VER eligibles as a part of our normal process to implement VERs-timelines and guidelines.
In the meantime, we have started to develop preliminary plans for the implementation of the national VER, including discussions with HRSSC and Eagan as it relates to the massive volume of VER offer packages and annuity estimates that will be mailed. Labor Relations (Bill Jones and John Dockins) will coordinate national notifications and we plan to have a national Communication Plan (Maria Pell). A teleconference will be scheduled within the next two weeks to get your input and to discuss the preliminary plans for the implementation of the VERs.
It appears that anyone with 25 years of service will be eligible for a Voluntary Early Retirement. FERS employees will have the age penalty waived. The APWU is asking for incentives.
APWU to Meet With USPS Over Possible 'Early Out' Offer
Burrus Update #08-08, July 3, 2008
The union has learned unofficially that the Postal Service has requested from the Office of Personnel Management (OPM) the authority to offer early retirement to 40,000 postal employees. In response to an inquiry from my office, a meeting with Postal Service headquarters has been scheduled for Monday regarding these reports.
No specifics of the early-retirement plan will be available until full discussions have taken place with the USPS. The union interprets the national agreement as requiring negotiations over early-retirement offers, and a written demand for official notification and bargaining has been forwarded to postal management.
The Postal Service is experiencing serious revenue shortfall as a result of the slumping economy. Mail volume is down significantly, and revenue is not keeping pace with inflation. What was touted as “a new business plan” in the Postal Accountability and Enhancement Act of 2006 (PAEA) serves only to place a cap on rate increases in response to the mail-volume loss. Excessive workshare discounts and the increased focus on contracting postal activities generate budgetary losses that cannot he recovered through internal efficiencies. It is within this environment that the postal monopoly and six-day delivery are being re-evaluated, which guarantees we will be seeing proposals for revolutionary change.
APWU is demanding bargaining on any proposal to offer “early outs.” We believe that all APWU-represented employees should be eligible, and that there should be monetary incentives for interested employees.
As more information is made available, the union membership will be informed.
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Attorney Robert R. McGill specializes in federal disability retirement cases helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS. For more information about his legal services, visit his CSRS and FERS Disability Retirement Website.
This is a time of economic turmoil, where job security is in question, the financial markets appear to be in a constant state of jittery hiccups, and the expanding Federal deficit is looked upon with trepidation. Such issues are considered "macroeconomic" in scope, and impacts both the private sector employee as well as the Federal sector employee. When a medical condition or disability is thrown into the mix, impacting a Federal employee and his or her inability to perform the essential elements of one's job, then it becomes a "microeconomic" issue.
The difference between a macroeconomic issue and a microeconomic issue involves a simple distinction: When it impacts your neighbor, it is the former; when it impacts you, it is the latter.
Fortunately for Federal and Postal employees, disability retirement benefits exist as part of the "employment package" which constitutes the career-choice made when one decided to forego the private sector. This may have occurred for many complex reasons, or for a combination of some or all: job security; career opportunity; total benefits package; consistent COLAs and step increases; disability retirement benefits. The list is not exhaustive, but for purposes of this article, it is the latter benefit which this article will focus upon.
Disability retirement benefits – perhaps it was merely a minor footnote in the total employment opportunity which was considered before accepting a position as a Federal or Postal employee. Yet, as with all things medical, it is a benefit which becomes important only when the necessity arises. When one is twenty-something, one is invincible; when thirty-something, somewhat vulnerable; when over forty, the aches and pains of a lifetime begin to take their toll. For the Federal employee who finds that he or she is facing not only a medical condition (which would be serious enough), but further, that the medical condition is impacting one's ability to perform one or more of the essential elements of one's job – the prospect of having the security of disability retirement benefits transforms that formerly "minor footnote" into a wise employment choice of great foresight at the beginning of the employee's career.
The Office of Personnel Management website and many other sources provide the "basics" involving the eligibility requirements, the "process" involved in filing, and the various administrative steps one must go through to obtain Federal Disability Retirement benefits. The initial application is submitted to the Office of Personnel Management (it must be filed with them within 1 year of being separated from Federal Service, or one forever loses the right to file) – if still will on the rolls of the Federal Government, or recently separated from service but not more than 31 days, then the application must first be routed through the Agency personnel department; if separated from Federal Service for more than 31 days, then the application is submitted directly to OPM in Boyers, PA.
If, once the Office of Personnel Management reviews the disability retirement application, the agency finds that you meet the eligibility criteria, then the process ends, you are happily retired, and your annuity checks will be directly deposited into you bank account. If it is denied at the initial stage, however, then you have the right to "Request Reconsideration" of the denial. Such a request for reconsideration must be submitted to OPM within thirty days of the denial; during this process, you may request an additional thirty days within which to obtain, and submit, additional supporting medical documentation to bolster your case. If your Request for Reconsideration is denied, then you will be accorded the opportunity to file an appeal of the entire matter to the "Third Stage" of the process – the Merit Systems Protection Board.
Thus, as you can see, the process of attempting to obtain disability retirement is not a simple matter. It is a "benefit" – one which all Federal and Postal employees under FERS and CSRS "signed onto" as part of the "total employment package" with the Federal Sector. However, as with most benefits, it must be fought for. To "win the fight", it is important to be knowledgeable about the "rules of the fight".
Here are some basics to know:
To be eligible for a disability retirement annuity under the FERS or CSRS, a Federal or Postal employee must establish by a preponderance of the evidence that:
He or she has completed 18 months (for FERS) or five years (for CSRS which, presumably, all CSRS employees already have the minimum eligible period of federal service) of civilian service;
while employed in a position subject to FERS or CSRS, he or she became disabled because of a medical condition (note, however, that unlike OWCP – Department of Labor requirements, the medical injury or condition does not need to be caused at or by the job; indeed, one may have received the injury while skiing in the Alps and still be eligible for disability retirement), resulting in a deficiency in performance, conduct, or attendance, or, absent such deficiency, the medical condition must be incompatible with either useful and efficient service or retention in the position;
the disabling medical condition is expected to continue for at least one year from the date the application is filed; and
accommodation of the disabling medical condition in the appellant's former position or in an existing vacant position must be unable to be accomplished by the agency. 5 U.S.C. § 8337(a); 5 C.F.R. § 831.1203(a).
The Federal employee need not prove that he or she is "totally disabled"; rather, the standard of proof which must be met is to merely show that he or she is unable, because of disease or injury, to render useful and efficient service in the position occupied. Baumann v.Office of Personnel Management, 42 M.S.P.R. 257, 259 (1989). "Useful and efficient service means (1) acceptable performance of the critical or essential elements of the position, and (2) satisfactory conduct and attendance." 5 C.F.R. § 831.1202.
There are multiple complex surrounding legal issues which may clearly impact a disability retirement application. For instance, an employee's removal for physical inability to perform the essential functions of his or her position constitutes "prima facie evidence" that a federal employee is entitled to disability retirement. Bruner v. Office of Personnel Management, 996 F.2d 290, 294 (Fed. Cir. 1993). This is often referred to as the "Bruner Presumption".
Based upon this presumption, the burden then shifts to OPM to produce enough evidence from which a reasonable fact finder could conclude that the appellant did not qualify for disability retirement. Trevan v. Office of Personnel Management, 69 F.3d 520, 526 (Fed. Cir. 1995); Klein v. Office of Personnel Management, 71 M.S.P.R. 366, 370 (1996). OPM can, of course, meet its burden of production to rebut a presumption of disability "by demonstrating a lack of objective medical evidence providing a reasoned explanation of how certain aspects of a particular condition render the employee unable to perform specific work requirements." Trevan, 69 F.3d at 526-27 (citations omitted).
If the Office of Personnel Management meets its burden of production, the Merit Systems Protection Board then considers the totality of the evidence in deciding the disability issue, including objective clinical findings, diagnoses and medical opinions, testimony of all parties, review of all submitted documents, subjective evidence of pain and disability, evidence relating to the effect of the applicant's condition on his or her ability to perform in the grade or class of position the employee last occupied, and evidence that the applicant was not qualified for reassignment to a vacant position at the same grade or level as the position which was last occupied. Dunn v. Office of Personnel Management, 60 M.S.P.R. 426, 432 (1994), dismissed, 91 F.3d 169 (Fed. Cir. 1996). Regardless of the shifting burdens of production, the disability retirement applicant always retains the burden of persuasion – meaning merely that at all times, the applicant is the "primary person" to establish entitlement to disability retirement.
Then, of course, there are more recent wrinkles in the process – for example, where the Merit Systems Protection Board more recently held that a removal of an employee based upon "extended absences" can be considered "equivalent" to a removal for inability to perform for medical reasons where it is accompanied by specifications showing that the decision to remove was based upon medical documentation which suggested that the appellant was disabled and unable to perform his or her duties.
Such are the legal mazes which potentially confront a Federal Disability Retirement applicant – and those mentioned herein are the "tip of the iceberg".
Conclusion
When a medical condition enters into the fray of life, the greatest consequential impact always involves the financial stability and security of the Federal or Postal employee. In these times of economic turmoil, it is important to know the eligibility criteria, the administrative procedures involved, and the potential legal impediments which comprise the totality of the process called, "Federal Disability Retirement".
If a medical condition or injury begins to impact one's ability to perform the essential elements of one's job, it is important to consider all available options – including disability retirement. In considering such an option, it is vital that the Federal or Postal employee become armed with the knowledge necessary to secure the financial future for not only him or herself – but also for one's family. While the concept of disability retirement may have begun as a "minor footnote" at the beginning of one's career, let it not remain so when the need arises at the sunset of one's life.
What Happens to Your Benefits If You Die After You Retire?
By John Grobe
Thursday, December 4, 2008
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John Grobe is a retired federal employee with over 25 years of experience in federal human resources and President of Federal Career Experts, a training and consulting firm that specializes in federal employee retirement and career transition issues.
This is a follow-up article to several recent articles on the topic of federal employee benefits. The earlier articles are: What Happens to Your Federal Employee Benefits if You Die While Still Working?, Leaving Government Before Retirement? What Happens To Your Benefits?, and If You Die Before You Retire, What Happens to Your Benefits? A Response to Readers' Questions.
This article considers the question: What happens to your benefits if you die after you retire?
Your spouse will be able to keep your health insurance if two conditions are met. First, you must have elected a survivor annuity. Second, your spouse must be enrolled with you on a self and family policy on the date of your death. If these conditions are met, you spouse will be able to continue your health insurance and Uncle will continue to pay his share.
Your life insurance will be paid to your designated beneficiary. If the amount of your insurance is $5,000 or greater, your beneficiary will not receive a check. Rather, they will receive a money market account and a checkbook for the account.
Speaking of beneficiary forms, do you know who your beneficiaries are? If you have any doubt, you may wish to check your Official Personnel Folder (OPF). The last thing you want is having your ex-spouse walking off with all you have saved over your career.
If you elected survivor benefits for your spouse at the time of retirement (or at the time of marriage, if after retirement) your spouse will begin collecting a survivor benefit after your death.
Under CSRS, survivor benefits can be as much as 55% of your annuity. You may elect lesser amounts, but spousal consent is required at the time.
Under FERS, survivor benefits can be either 50% or 25% of you annuity. Spousal consent is required for the 24% survivor benefit.
COLAs are paid on survivor benefits for CSRS and FERS. If your spouse remarries before the age of 55 they forfeit their survivor benefit.
If you did not elect a survivor benefit, your designated beneficiary is entitled to a refund of any of your contributions that have not been paid to you. OPM views you as recouping your contributions dollar-for-dollar beginning at retirement, so if you die more than a few years after retirement, there will be nothing to recoup.
Your TSP will go to your designated beneficiary. Your beneficiary may either take the money all at once (paying all the deferred taxes at once) or spread it out over his/her lifetime (paying all the deferred taxes a little bit at a time). If your spouse is a federal employee/retiree, they may combine your TSP account with their own.
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