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Posted on Saturday, 18th May 2019 by

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Those approaching age 70 ½ and older are often perplexed about their Thrift Savings Plan RMD withdrawal options and how to efficiently manage the transaction’s proceeds. Some of the concerns are your TSP balance decreases with each withdrawal, annual income and taxes increase, and the earned income potential vanishes for the cash you now have in hand. There are many ways to use this windfall for the benefit of you and your heirs.  If you are required to take an RMD this year review TSP Changes & Required Minimum Distributions (RMDs) to determine your RMD amount and understand the process.

The first thing that came to mind for me was the potential increase in federal taxes, Pennsylvania doesn’t tax retirement account withdrawals. When you withdraw an RMD from the TSP, section 5 of the TSP-77 Request for Partial Withdrawal form requires an automatic 10% federal tax withholding for RMD distributions, 20% for an early withdrawal. They give you the option to increase your federal tax withholding and many use their RMD to pre pay taxes.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Your RMD may be sufficient to avoid paying estimated quarterly taxes on other investment income such as realized capital gains, dividends, and interest that is earned on taxable investment accounts throughout the year. If you sold investments this year for capital gains and/or have dividends and interest income from taxable investment accounts, you can use your RMD to cover all or a major portion of your tax liability this year.

Many reinvest their RMD if they have sufficient income from their annuity and Social Security to cover expenses. Unfortunately, you can’t request an in-kind TSP transfer like you have the option to do with other retirement accounts. In-kind transfers allow plan participants to transfer shares from their retirement account to a taxable account to cover their RMD withdrawal.  The transferred shares must cover the full RMD on the date of transfer.  You can’t transfer TSP funds to a private sector account, only cash.

In-kind transfers offer those with other retirement accounts to retain their equity positions and simply transfer them to a taxable brokerage account. This is beneficial for those who don’t want to lose one of their core stock, bond, or mutual fund holdings.

One of the safest investments for your TSP cash is to buy short term Treasury Bills (T-Bills) direct from the government through their Treasury Direct program. Treasury bills are issued for terms of 4, 8, 13, 26, and 52 weeks and they are currently earning just over 2.4%. All you have to do is open an account online and transfer funds direct from your savings; at maturity the Treasury deposits your initial investment plus earned interest back into your savings account. You can elect multiple reinvestments if desired.  You might also find attractive CD rates at local banks, we recently found one local bank offering 13-month CDs at 2.6%.

Another option is to reinvest your RMD in one of your taxable brokerage accounts, possibly in a tax-efficient investment. To reduce future taxes, invest in municipal bonds, index funds that typically don’t generate significant capital gains or individual tax efficient mutual funds. Funds such as Vanguard Tax-Managed Balance Fund (VTMFX) or the Vanguard Intermediate Term Tax-Exempt Investment fund (VWITX) are considered tax efficient.

Your RMD could raise your income sufficiently to increase you and your spouse’s Medicare Part B premiums due to your Modified Adjusted Gross Income (MAGI). Medicare Part B premiums are income adjusted.

At age 70 ½ federal retirees have at least three potential sources of annual income to rely on: your FERS or CSRS annuity, Social Security if eligible, and now your TSP RMDs.  If you worked for other private sector employers or owned a small business you may have other retirement accounts to draw from.  You must take RMDs from your retirement accounts to avoid a costly penalty. Effective management of your retirement accounts can grow your retirement savings and possibly reduce your future tax liability. Take care when making your RMD elections this and every year.                                      

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Helpful Retirement Planning Tools / Resources

Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.Be Sociable, Share!

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    Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH

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    Posted on Friday, 10th May 2019 by

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    I have two short updates to cover before starting Trust but Verify. First, Joe wrote after reading It’s Time to Get Real that you need to check your individual state’s document requirements when applying for the new REAL ID. Your State may require different forms of ID and residency documentation than what Pennsylvania requires. He lives in Illinois and went to renew his driver’s license, upon arrival they advised him that only certain state driver’s license facilities accept REAL ID applications.

    I also mentioned in the same article that I recently ordered replacement birth certificates. My daughter and her husbands’ birth certificates were rejected by the Post Office when they applied for passports. According to the Post Office, birth certificates must now include the names of both parents and a raised seal.  I also discussed how to replace lost documents that you may need for your retirement application and for other purposes in a recent article titled Replacing Lost or Stolen Documents.

    I received a full refund from the PA Office of Vital Records because I am a veteran. I originally checked veteran status on my replacement birth certificate application and thought I had to pay for my wife’s certificate. They returned the check stating that both the veteran and spouse receive replacement birth certificates at no cost! A welcomed surprise. We need new certificates to apply for passports.

    Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

    Trust but Verify

    Doctor’s visits create significant anxiety for many patients of all ages. According to a recent study,“30%–40% of patients who are diagnosed with hypertension on the basis of their office blood pressure measurement alone have normal out-of-office blood pressure, according to ambulatory blood pressure measurements.”

    Many suffer from what is called White Coat Hypertension. Anytime they get near a doctor, any doctor, their blood pressure goes through the roof causing erroneous blood and intraocular eye pressure readings. I believe this syndrome may result in premature high blood pressure diagnosis and treatment. High blood pressure also elevates eye intraocular pressure causing concerns for glaucoma patients. This is far more common than previously thought.

    If you have been diagnosed with high blood or intraocular pressure (glaucoma) consider whether or not you suffer from White Coat Hypertension. Buy a home blood pressure wrist monitor and compare your home readings to those taken at the doctor’s office. Your office blood pressure readings may not be a reliable indicator and comparison to your home readings may put an entirely different light on whether or not you have a problem or need treatment. 

    The impact of White Coat Hypertension on your eye’s intraocular pressure (IOP) is more difficult to ascertain. Your doctor has a variety of tools to measure IOP; the Goldmann Tonometer, Tonopen, and the new ICare Tonometer. All have their advantages and disadvantages. If you have thicker corneas the Goldmann may not be as reliable, it is calibrated at a fixed cornea thickness. They do have compensation tables available however many doctors hesitate to use them. The Goldmann and the Tonopen use numbing drops while the new ICare Tonometers require no medication to measure IOP. An easy to use ICare Home model is now available from some physicians. The ultimate indicator of glaucoma progression is loss of sight and optical nerve damage as indicated by the perimeter and Optical Coherence Tomography (OCT) tests, not pressure alone.

    There should be a national protocol established for patients that exhibit white coat hypertension tendencies to avoid misdiagnosis and unnecessary treatments. If your doctor doesn’t use the techniques listed below, ask your physician to use them for your checkups.

    The following office procedures make sense for patients that suspect they have this condition or know they have this tendency:

    1. The doctor should annotate white coat hypertension tendencies on your chart.
    2. Initially limit the patient’s exposure to the primary care physician. When the patient has to see a medical assistant, then a fellow, complete scheduled tests, and finally see the doctor; the patient’s blood pressure and IOP readings won’t be reliable. With each medical provider interaction, the patient’s anxiety escalates.
    3. Shortly after signing in, a highly trained medical assistant or the doctor should take the patient’s blood pressure and IOP readings. A patient’s anxiety increases as time passes in the office. The sooner they take the patient’s baseline pressure readings the better. 
    4. Glaucoma patience with this condition should request their IOP readings be taken before any other checks including blood pressure readings. Basically, the patient’s blood pressure readings are always high in the office so they obsess over this. High blood pressure is known to elevate IOP.
    5. Scheduled testing should be done after the baseline blood pressure and/or IOP is taken either by the doctor or trained medical assistant.
    6. The doctor should Provide breathing instructions to patients during blood pressure and IOP tests. Holding your breath causes elevated pressure readings. Doctor’s should offer pamphlets that include breathing exercises and suggestions on how to reduce anxiety.
    7. The patient can purchase a home blood pressure cuff monitor and take the readings to your next doctor’s visit. For patients with glaucoma, ask the doctor to provide an ICare Home IOP monitor for several weeks and bring your readings with you to your next office visit.
    8. Have the physician compare the home monitor readings to the office visit baseline readings to determine the patient’s true blood pressure and IOP readings.

    If you suffer from or believe you may suffer from White Coat Hypertension, discuss this with your physician and have them incorporate the above protocol for future office visits. It makes sense to be an advocate for your health issues; question your doctor, ask for clarifications and get a second opinion if warranted.

    Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

    Helpful Retirement Planning Tools / Resources

    Disclaimer:
    Opinions expressed herein by the author are not an investment, health care, or benefit recommendation and are not meant to be relied upon in investment, health care or benefit decisions. The author is not acting in an investment, medical, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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      Posted in LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION, WELLNESS / HEALTH

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      Posted on Saturday, 27th April 2019 by

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      Most sign up long before age 70 for a myriad of reasons. I decided long ago that I would defer my benefit until I absolutely had to apply. Next month I start collecting Social Security at age 70 and can’t believe the time has come so quickly, yet I look forward to reaching this milestone.

      Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

      Social Security was a life saver for my family when my father died in 1951 at the young age of 41. My mother was left with four small children, I was 22 months old at the time. There wasn’t any savings or insurance policies to fall back on, my parents lived paycheck to paycheck. Fortunately, we were able to collect Social Security which provided just enough for the basics.  Mother received $25 a month for each of us when dad first died, increasing to $36 in the late 1950s. Without it we would have been destitute. To this day, I don’t know how mom was able to handle everything on her own. She was a rock!

      There are many options when signing up for Social Security benefits. The question for many is, should I take my benefit at age 62, 66, 70 or somewhere in between?  I wrote a comprehensive article about this subject last year that you will find helpful:

      I decided to wait until age 70 for many reasons. First and foremost was my desire to provide my wife with the highest possible benefit upon my death. A surviving spouse can elect a death benefit that equals the full amount of the deceased spouse’s benefit. I have my annual Social Security statements back to 2011 when I was 62. My monthly benefit has almost tripled by waiting until age 70.

      The Windfall Eliminate Provision (WEP) was another factor. It basically reduces CSRS annuitants Social Security Benefit if you have less than 30 years of substantial earnings years. FERS Social Security benefits are not subject to WEP.

      If a CSRS retiree has 20 or less substantial earning years employment, where they paid into the Social Security system, their benefit can be reduced by as much as $463 in 2019. Since I continued to work in my business after retiring from federal service, I was able to accumulate 28 substantial earning years. My monthly benefit will only be reduced by $92.60. Actually, I intend to work as long as I’m physically and mentally able so each additional year worked will increase my Social Security benefit.

      When I turned 66, full retirement age, I applied for Social Security and immediately suspended so that Mary could collect a higher spousal benefit. This action allowed me to grow my benefit 8 percent a year over the next 4 years.  Mary applied at age 62. Since I applied and suspended my benefit in 2015, I don’t have to reapply, my benefit will start automatically after my 70th birthday next month.

      This safety net is a valuable asset for retirees and well worth what we pay into the system. I determined it will take me 7 to 8 years to deplete my contributions. If I’m blessed to live to age 78 or into my 80s, hopefully longer, I’ll still have these benefits to rely on as long as the politicians don’t take them away. If you are approaching age 62 explore your options and make the best decision on when to collect based on your personal situation. There isn’t any “one” right way. You have to do what makes sense for your circumstances.

      Explore your options.

      Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

      Helpful Retirement Planning Tools / Resources

      Disclaimer:
      Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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        Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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        Posted on Thursday, 11th April 2019 by

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        Anyone that plans on traveling in the future, applying for a passport or needs access to a government building will require a REAL ID. Without this document travel by plane or anywhere out of country will be impossible.

        Graphic excerpted from the DHS website

        According to the Department of Homeland Security (DHS), the REAL ID program was passed by Congress in 2005, the REAL ID Act enacted the 9/11 Commission’s recommendation that the Federal Government “set standards for the issuance of sources of identification, such as driver’s licenses.” The Act established minimum security standards for state-issued driver’s licenses and identification cards and prohibits Federal agencies from accepting for official purposes licenses and identification cards from states that do not meet these standards.

        Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

        Pennsylvania along with Alaska, Oregon, Montana, Oklahoma, Missouri, Kentucky, and Maine were all a little late to the game. California is still under review. Pennsylvania just started processing REAL ID Driver’s Licenses this spring.  I was one of the first to apply for and receive my new PA Driver’s License that serves as a REAL ID.  The process was fairly simple and straight forward with just a few wrinkles along the way.

        Flight restrictions started on January 22, 2018. Passengers with a driver’s license issued by a state that is still not compliant with the REAL ID Act (and has not been granted an extension) will need to show an alternative form of acceptable identification for domestic air travel to board their flight.  To check whether your state is compliant or has an extension, click here.  Passengers with driver’s licenses issued by a state that is compliant with REAL ID (or a state that has been issued an extension) will still be able to use their driver’s licenses or identification cards.

        The DHS website states that, “starting October 1, 2020, every state and territory resident will need to present a REAL ID compliant license/ID, or another acceptable form of identification, for accessing Federal facilities, entering nuclear power plants, and boarding commercial aircraft.  This is what they call “card-based” enforcement.  The card, itself, must be REAL ID compliant unless the resident is using an alternative acceptable document such as a passport. The Act does not require individuals to present identification where it is not currently required to access a Federal facility (such as to enter the public areas of the Smithsonian) nor does it prohibit an agency from accepting other forms of identity documents other than documents from non-compliant states (such as a U.S. passport or passport card).

        If you need to replace lost documents review “Replacing Lost or Stolen Documents” that I wrote last year.

        To obtain my REAL ID I had to present proof of identity, my Social Security Card, and proof of Pennsylvania residency.

        If you are a U.S. Citizen, acceptable documents include:

        • A United States birth certificate with a raised seal
        • A valid U.S. Passport or Passport Card
        • Certificate of U.S. Citizenship or Consular Report of birth abroad
        • Certificate of Naturalization

        Lawful permanent residents have several documents they too can use to obtain the new ID.

        For proof of Pennsylvania residency, I only had to show my PA driver’s license.  They also list your veteran status on your real ID; in Pennsylvania they print a small American Flag with VETERAN typed below. I took a copy of my DD-214 form with me however it wasn’t necessary. You are allowed to self-certify veteran status however you must sign and agree that, “all information contained herein is true and correct. I understand that any misstatement of fact is a misdemeanor of the third degree punishable by a fine up to $2,500 and/or imprisonment up to 1 year (18 Pa.C.S. Section 4904(b))”

        My driver’s license was due for renewal so I was able to take care of everything in just one visit to the local Penn Dot office.  You have to have current and updated documents including a birth certificate with raised seal and other original documents to not only get a REAL ID but for passports and passport cards.  Passports have a slightly different ID requirements, your birth certificate must have both parents listed on the raised seal certificate.

        My daughter and her husband recently applied for a passport and the clerk rejected their birth certificates. Their official state issued certificates from the 1980s didn’t list their parents on the document. I didn’t need this for our REAL ID, they accepted our raised seal birth certificate that I ordered from the State back in 1987. We ordered new birth certificates from Vital Statistics last week so that we can apply for passports this year.

        If you intend to travel in the future or visit a federal facility now is a good time to get your new ID card. It doesn’t take long and the process isn’t complicated, it just takes a little time to gather your  documents, and head to your local driver’s license renewal center.

        Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

        Helpful Retirement Planning Tools / Resources

        Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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          Posted in ESTATE PLANNING, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, Travel

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          Posted on Saturday, 30th March 2019 by

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          Federal employees have been waiting for months to receive their 1.9% pay raise. Agencies are now processing back pay retroactive to the beginning of the year and the updated 2019 pay charts are available online for your review. We are currently in pay period 7 that ends April 13. When your agency’s payroll office processes the backpay, all should see a welcomed increase in their bank account balance

          Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

          The new locality pay charts are also available for review. The 1.9% increase is a function of the base rate increase of 1.4% plus a locality adjustment. Therefore, your raise, depending on your locality adjustment, will range from a low of 1.66% for the (Rest of the US) chart covering areas not included in a specific locality chart to a high of 2.27% for those working in the Washington DC, Baltimore Arlington area.

          To estimate your backpay use the TOTAL INCREASE Percentage listing on the locality table for your area.  For example, Joe works in the LOCALITY PAY AREA OF VIRGINIA BEACH-NORFOLK, VA-NC. He is a GS-11, step 7 earning $74,842 a year. Multiplying Joe’s gross wages of $74,842 by .0187 (1.87% as listed on the locality pay table) equals $1,400, his 2019 pay increase. Divide this figure by 26, the number of pay periods, and Joe will be receiving an extra $53.85 a pay. If Joe received his backpay in pay period 9 he would receive an extra $485 in his pay less taxes.

          This may not seem like much, however if you increase your TSP contribution by just 1 percent after receiving your backpay, your retirement fund will grow considerably over time.  In Joe’s case, the 1 percent increase in his TSP will take $28 of his $53.85 increase each pay, he will still have a little extra to spend. Yet, he will be saving an additional $748 a year towards retirement.

          Again, this doesn’t sound like much until you look at compounded interest over say the next 20 to 30 years. Saving just $28 biweekly at 4% interest will grow to $22,368 in 20 years and will reach $42,301 in 30 years! That same savings at a 6% growth rate would be worth $28,222 in 20 years and $61,331 after 30 years. A little goes along way and it pays to start early.

          Another option for many would be to use part of their backpay with additional contributions biweekly to establish an emergency fund. Possibly set up an allotment to your local Credit Union to get started. A recent report indicated that over half of those working didn’t have any savings, none at all.  In that same report more than 60% couldn’t come up with $1,000 for an emergency!  With the recent government shutdown in the rear view mirror now is a good time to evaluate your spending habits and prepare for the unexpected.

          Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

          Helpful Retirement Planning Tools / Resources

          Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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            Posted on Friday, 15th March 2019 by

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            Jodi recently emailed me suggesting that most Life Insurance companies emphasize what coverage they provide including accidental death and dismemberment. She was searching for a general policy statement other than simply the costs associated with each type of coverage. She wanted to know about dismemberment and accidental death coverage, the exact coverage she was paying for, and a copy of her policy. She closed with, “I don’t need another formula for how much money it provides. I have looked for 30 minutes. If you could just email the likely one to two-page insurance policy it would be great.”

            I received a “Federal Employees Group Life Insurance Program Certificate” when I first started working for government. It explained much of what Jodi wants except for the insurance options and amounts that you elect when you enter federal service. You need a copy of your election forms for that information and those still working can review their electronic Official Personnel File (eOPF) to obtain a copy.

            Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

            Federal annuitants can request a copy of their FEGLI Insurance Coverage, FEGLI Verification, by calling OPM at 1-888-767-6738 or printing a copy of this document from OPM Services Online.  I printed out a copy of my FEGLI coverage from the online service for my records. The FEGLI Verification of coverage document states, “Using the information given, you can determine the amount payable at any time in the future. The insurance issued under the Group policy is term insurance. It builds no cash or loan value.”

            The Certificate I received years ago lists accidental death and dismemberment coverage, the cost at the time of basic coverage, conditions, how to file a claim, and much more. It looks like a standard folded policy without your specific coverage listed. I’ve kept this certificate all of these years in my insurance file with a copy of the elections I originally made and updated the information when I retired. With this information, my heirs will know the amount of my coverage and who to contact when the time comes to collect; hopefully, many years down the road.

            Unfortunately, the certificate, Form G. 3385-G – Feb 1969, isn’t available. However, OPM provides two printable pamphlets, a booklet for retirees and the FEGLI program Handbook, and other resources like FAQs that you can review and download for your home insurance file. These documents cover anything and everything you need to know about your FEGLI coverage.

            There is a contact number on our free Retiree’s Master Contact List for the FEGLI administrator’s office. They only process claims and can not provide a summary of your coverage.  Active employees must contact their HR office to review their eOPM for this information, retirees must contact OPM or download their insurance coverage from OPM’s Online Services as noted above.

            FEGLI Fundamentals

            FEGLI coverage provides group term life insurance. Term insurance doesn’t build cash value or paid-up value. It consists of Basic life insurance coverage with three options. In most cases, if you are a new Federal employee, you are automatically covered by Basic life insurance and your payroll office deducts premiums from your paycheck unless you waive the coverage. In addition to the Basic, there are three forms of Optional insurance you can elect. You must have Basic insurance in order to elect any of the options. Unlike Basic, enrollment in Optional insurance is not automatic — you must take action to elect the options.

            Accidental Death and Dismemberment (AD&D) Benefits

            AD&D coverage is an automatic part of Basic and Option A insurance for employees at no additional cost. Complete details of this coverage begin on page 35 of the FEGLI Handbook.

            There is no AD&D coverage:   

            • With Options B and C; 
            • For annuitants or persons insured as compensationers; and
            • During the 31-day extension following termination of coverage.

            Accidental death benefits are paid to your beneficiaries; accidental dismemberment benefits are paid to you, the insured.

            Accidental death and dismemberment (AD&D) benefits are payable when you sustain bodily injury solely through violent, external, and accidental means, and as a direct result of the bodily injury, independently of all other causes, and within one year afterwards, you lose your life, limb (hand or foot), or eyesight. 

            • Loss of hand means loss by severance at or above the wrist joint, or equivalent loss, as determined by OFEGLI. 
            • Loss of foot means loss by severance at or above the ankle joint, or equivalent loss, as determined by OFEGLI.
            • Loss of eyesight means total and permanent absence of any usable vision in one eye. 

            Accidental Cost Benefits

            Accidental death benefits, if payable, are payable in addition to “regular” FEGLI benefits. Under Basic insurance, accidental death benefits are equal to your Basic Insurance Amount (BIA), but without the age multiplication factor.  These benefits are payable in addition to your Basic insurance and any Optional insurance payable.

            Under Basic insurance, accidental dismemberment benefits for the loss of one hand, one foot, or eyesight in one eye are equal to one-half of your BIA.  For the loss of two or more of these in the same accident, benefits are equal to your full BIA.

            Note: Total AD&D benefits for a single accident, no matter how many losses occur, cannot be more than your full BIA.

            Extra Benefit/Age Multiplication Factor

            If you are under age 45 and covered under Basic insurance, you automatically have extra coverage without paying additional premium.  This Extra Benefit increases the amount of Basic insurance payable at the time of your death, if you die before age 45.

            To determine the amount of the Extra Benefit, multiply your Basic Insurance Amount (BIA) by the appropriate age multiplication factor as follows: 

            Living Benefits

            Living benefits are life insurance benefits paid to you while you are still living, rather than paid to a beneficiary or survivor when you die.  You can elect a living benefit if you are diagnosed as terminally ill with a life expectancy of nine months or less, and you have not assigned your insurance.  If you are physically or mentally incapable of electing living benefits, an individual having power of attorney can apply for living benefits on your behalf. 

            Only Basic insurance is available for a living benefit.  Optional insurance cannot be paid as a living benefit.  If you are an employee, you can elect either a full living benefit (all of your Basic insurance) or a partial living benefit (expressed as a multiple of $1,000).  Annuitants and compensationers can elect only a full living benefit.

            Life Event Changes for Employees

            FEGLI life events are:

            • Marriage
            • Divorce
            • Death of a spouse and
            • Acquiring an eligible child

            If an employee has a life event under FEGLI, he/she may elect Basic insurance and any and all Optional insurance coverage, including up to the maximum number of multiples of Option B and/or Option C coverage. For the FEHB program there are more situations where life events permit changes to your health care coverage between open seasons. There are time limits for these changes that you must adhere to or lose the opportunity to make the changes you desire.

            The time limit for making a FEGLI life event election is 60 days after the date of the qualifying event.  You must file the election with your employing office using the Life Insurance Election (SF 2817-or is electronic equivalent) along with proof of the event.  

            You can either file the election before the event, to be followed up with the necessary proof within 60 days after the event has taken place, or you can file the election and provide the necessary proof no later than 60 days after the date of the event. 

            Annuitants also can take advantage of certain life events. Life events covered include you move, divorce, marry, have a baby, step-child, or foster child, your child reaches age 26, you reach age 65, your spouse dies, your former spouse dies or remarries before age 55, your child dies, you can’t handle your own money, or when you die Review OPM’s “Life Events and Your Retirement and Insurance Benefits (For Annuitants).Generally, annuitants can only decrease their FEGLI benefits after retiring.

            Here are a series of articles about FEGLI coverage that you may find helpful:

            It’s wise to Evaluating Your Insurance Needs prior to making any changes. Your insurance needs change with age and circumstance over time.

            Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

            Helpful Retirement Planning Tools / Resources

            Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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              Posted on Monday, 4th March 2019 by

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              The TSP currently requires that you make a full withdrawal election after you turn 70½ if you haven’t initiated any of the withdrawal options and have separated from federal service. If you fail to do that, the TSP initiates an account “abandonment” process. Fortunately, the new law passed in late 2017 establishes more flexible withdrawal options and does away with this requirement. You won’t be required to make a full withdrawal election when the new law is implemented in September of 2019. You will be required to take a Required Minimum Distribution (RMD) starting at age 70 ½.

              Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

              Under the new rules, when implemented, you can satisfy the RMD requirement by taking a partial withdrawal or installment payments. If you take no action or just don’t withdraw enough to meet your RMD, the TSP will automatically send you the remaining RMD amount.

              If your account has already been abandoned, you’ll be able to restore the account without making a full withdrawal election. Your restored balance can remain in the plan (subject to RMDs) with all the new withdrawal options available.

              These changes are good news for everyone and especially for retirees that wish to keep their funds in the TSP when they reach age 70 ½. The new withdrawal options fall into the following categories:

              • Multiple age-based (for those 59½ or older) in service and post-separation partial withdrawals will be allowed.
              • You’ll be able to choose whether your withdrawal should come from your Roth balance, your traditional balance, or a proportional mix of both.
              • You will no longer be required to make a full withdrawal election after you turn 70½ and are separated. (You will still need to receive IRS required minimum distributions (RMDs).
              • If you’re a separated participant, in addition to the option of monthly payments, you’ll be able to choose quarterly or annual payments, and you’ll be able stop, start, or make changes to your installment payments at any time.

              Many, like myself, that will soon turn 70 or have recently reached that milestone need to know what steps to take to remain in the TSP when the deadline for withdrawing our account arrives.

              I talked with Rob, a customer service representative at the TSP. He advised me that the rules will change this September as reported to accommodate RMD distributions. If you will be age 70 ½ this year and do nothing, the TSP will automatically send out your first RMD next March for 2019. For all subsequent years your RMD will be sent to you in December.  If you do nothing this year and let the TSP send you the automatic payment next March you will receive two RMDs in 2020, one in March for your 2019 RMD and the second will arrive in December for 2020. This could increase your income sufficiently to cause your Medicare Part B premiums to increase.  

              To avoid receiving two payments in one year, you can take a partial withdrawal this year for the amount of your RMD using their TSP 77 form.  This form can be filled out online, just sign on to your TSP account and search for this form. You can also request a copy by calling the TSP at 1-877-968-3778. Rob assured me that the partial withdrawal would be counted as your first RMD and the TSP won’t send a duplicate payment in March. They will automatically send your next RMD in December of 2020, and each year thereafter.

              If you withdraw an insufficient amount from your TSP account to cover your RMD the penalties are severe, 50% of the shortfall plus the income tax owed. You will also have to add your distribution to your federal tax return and pay taxes on them. Your RMD distribution is taxed as ordinary income. To determine the amount of your RMD according to Kiplinger’s, “divide your year-end account balance from the previous year by the IRS life-expectancy factor based on your birthday in your current year.” Use the tables in IRS Publication 590-B to determine your life-expectancy factor.  Kiplinger’s also has an online 2019 RMD calculator that you can use.  I called the TSP and had them calculate my RMD to determine how much I needed to request for my partial withdrawal.

              A word of caution for those who have Medicare B coverage, your Modified Adjusted Gross Income (MAGI), may increase as reported on your IRS tax return. You may have to pay the standard Medicare B premium amount and an Income Related Monthly Adjustment Amount (IRMAA). This extra charge is added to your Medicare Part B premium based on your income. Another factor kicks in for those who decided to hold off collecting their Social Security until age 70.  The added Social Security income along with the RMD distribution can easily increase your Medicare part B premium significantly.

              The main advantages of the TSP system are their extremely low managements fees, averaging $0.40 per $1,000 invested in 2018 or .04%. It would be difficult finding funds outside of the TSP paying fees this low, however some index funds are close to this figure today. Expense ratios may also be expressed in basis points. One basis point is 1/100th of one percent, or .01%. Therefore, the 2018 TSP net expense ratio of .04 % is 4.0 basis points.

              You also have the advantage of investing in their diversified portfolio of funds including one that is guaranteed to never decrease in value, the Government Securities Investment (G Fund). The G Fund offers the opportunity to earn rates of interest similar to those of U.S. government notes and bonds but without any risk of loss of principal and very little volatility of earnings.

              The G Fund’s investment objective is to produce a rate of return that is higher than inflation while avoiding exposure to credit (default) risk and market price fluctuations. It is one of the only funds that is guaranteed to never decrease in value. The G Fund interest rate calculation is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity. As a result, participants who invest in the G Fund are rewarded with a long-term rate on what is essentially a short-term security. Generally, long-term interest rates are higher than short-term rates.

              There are many funds to choose from including their Life Cycle Funds that provide hands free investing for those targeting a specific retirement date.

              Before leaving the TSP evaluate your options. Here is a list of articles and resources that you may find helpful when considering leaving the Thrift Savings Plan.

              Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

              Helpful Retirement Planning Tools / Resources

              Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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                Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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                Posted on Sunday, 24th February 2019 by

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                The President signed a spending bill fully funding the federal government through September of this year. The bill authorized a 1.9% pay raise for federal employees. It will take time for all of the agencies to load the updated tables into their system and we will post the new 2019 pay tables as soon as OPM releases them.  As of February 24th, the new pay tables were not yet available on OPM’s website.  Fortunately, the raise will be retroactive back to the first full pay period of 2019. All will get a larger check with the backpay included soon.

                With the longest government shutdown in history behind us it is a good time to establish an account for exigencies that may arise in the future. We just went through a painful shutdown that impacted hundreds of thousands of federal employees. Many were not prepared and didn’t have the reserves they needed to make ends meet for an extended period. It’s a good time to evaluate where you are financially to prepare for the next emergency in your life.

                Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

                This should be a wakeup call to all federal employees to establish emergency savings if they haven’t already. Now is an excellent time to begin. With the new raise and a lump sum back payment coming, either add to your existing savings or start an emergency account now.

                Many feel they can’t save, they live paycheck to paycheck. There are ways to make it painless. Since a raise is on the way, retroactive to the beginning of the year, start an emergency account with the retroactive increase. Then, grow your account by setting up an allotment to your local credit union or bank for half of the 1.9% increase each pay. Those who already have a savings account, increase your allotment by at least half of your scheduled increase. You will still see more in your paycheck and at the same time your savings will grow each and every pay.

                If you are within 10 years of retirement, I suggest increasing your savings allotment to as much as the full amount of you increase each year. When I retired my take home pay was the same as it was 10 years prior and conversely my credit union account grew substantially. You can use this technique to pay off your mortgage before retirement or to simply feather your retirement nest egg.

                Another option is to open a Treasury Direct account and send an allotment each pay to purchase Savings bonds.  I Bonds are inflation adjusted and currently paying 2.83%. EE Bonds are paying .10%, however, if you hold EE Bonds for 20 years, the Treasury guarantees the bonds will double earning and effective rate of 3%. 

                I believe I Bonds are a better option for those approaching retirement and for anyone else that may need to cash in their bonds in less than 20 years. Also, inflation has been low for the past 10 years and interest rates are still rising. The interest earned on your bonds are tax deferred. You don’t have to pay income tax on the interest earned until you cash them in. You will have to set up a Treasury Direct account before your first purchase.

                There is a downside to EE and I Bonds, you can’t cash them in for one year after the purchase. Any bonds puchased in the previous 12 months can’t immediately be turned into cash.

                Thankfully, the raise has come and now it’s up to you to prepare for the inevitable down the road. There will always be times in our lives when we well need to fall back on our savings.

                Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

                Helpful Retirement Planning Tools / Resources

                Distribute these FREE tools to others that are planning their retirement

                Disclaimer: Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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                  Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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