Posted on Friday, 24th February 2023 by Dennis Damp

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I receive many FEGLI insurance coverage questions throughout the year. Especially from those working on their retirement paperwork and require coverage clarifications. One subscriber recently asked if FEGLI is considered term insurance, if so, does the term expire at a given age? Others are paying high Part B premiums and aren’t sure they can continue paying them, especially in retirement on a fixed income.

 

 

The Federal Employees Group Life Insurance (FEGLI) program offers group term life insurance protection; the policies don’t build cash or paid-up value. It doesn’t expire unless you cancel coverage.

Before selecting what options to carry into retirement, evaluate your insurance needs to make prudent FEGLI election decisions. Annuitants should perform the same analysis to determine if they are under or over insured before reducing or canceling coverage.

FEGLI CONSIDERATIONS

What FEGLI insurance options to carry into retirement is a critical issue for employees planning their retirement. Making uninformed decisions could either leave your family with burdensome debt down the road or negatively impact your monthly income for you and your spouse.

New hires and younger employees often take their FEGLI coverage for granted until later in their careers. Typically, life insurance is the last thing on millennial’s, those in their twenty and thirty-somethings, mind. When approaching retirement insurance takes on a new meaning, especially for those who we will eventually leave behind.

This article covers your FEGLI options, life event changes, and how to cancel coverage if desired for active employees and annuitants.

FEGLI OPTIONS

Basic

FEGLI Basic insurance costs are reasonable and if you are under age 45, you automatically have extra coverage without paying any additional premium. This Extra Benefit increases the amount of Basic insurance payable at the time of your death. If you are age 35 and earning $64,875 a year, your Basic Insurance Amount (BIA) is $67,000, $2,000 over your annual base salary rounded up to the next thousand dollars. At no additional cost, the policy holder’s Basic coverage doubles to $134,000!

From age 35 to 44 the extra amount reduces each year until it stops at age 45. If you are in this age group and would like to know what your total coverage would be, use OPM’s FEGLI Calculator. It provides the exact amount of coverage for every scenario.

If the death is accidental, an additional $67,000 for a total of $201,000 would be paid out! The premium for this coverage is a meager 16 cents per thousand or $10.72 biweekly at any age while working. A good deal by any standard.

Accidental Death and Dismemberment coverage provides additional funds in the event of a fatal accident or an accident that results in the loss of a limb or eyesight. For benefits to be paid, the loss must occur not more than one year after the accident and be a direct result of bodily injury sustained from that accident, independent of all other causes. AD&D Insurance is provided at no additional cost. Accidental Death & Dismemberment coverage is an automatic part of Basic and Option A insurance for employees.

You can elect a 75%, 50% or no reduction when retiring. The 75% reduction is free starting on the first month after your 65^th birthday. A Premium of $0.75 per thousand for life with a 50% reduction, and the no reduction cost per thousand of coverage is $2.25 monthly. Retirees can convert to the 75% free reduction at any time.

Part A (Standard)

Part A Standard coverage is a flat $10,000 with an additional $10,000 accidental death coverage if you are under 45. The premiums increase with age however they are relatively low. Most who elect Option A keep it in retirement because at age 65 it’s free. The maximum cost for an annuitant under age 65 is currently $13 a month. At age 65 the insurance reduces 2 percent a month until the coverage decreases to $2,500.

Part B (Salary Multiples)

Part B provides insurance coverage from 1 to 5 salary multiples, and the premiums increase with age. At age 55, with a salary of $95,000, each multiple would cost $0.39 per thousand or $37.05 monthly, five multiples would cost $185.25.

The premiums increase every five years. At 60, the premium increases to $0.867 per thousand or $82.36 per month for each multiple, $411.82 per month for all five! At 80+ the premium maxes out at $6.24 per thousand, that would be $592.80 monthly for each multiple or $2,964 a month in this example! Much too high for most to consider keeping.

Obtain term insurance quotes from private insurance companies prior to retiring to compare costs. Many can’t cancel all of their FEGLI coverage because of health issues. Other insurers typically require a physical.

Another option is to cancel or reduce your number of Part B multiples and consider, before retiring, selecting the no or 75 % reduction of your Basic benefit if that would be enough coverage for you.

Part C (Family)

Family coverage includes $5,000 for a spouse and $2,500 for each child under age 22 in your household. You can elect up to 5 multiples and the premiums adjust as you age. When you retire you elect either a full reduction benefit or no reduction. If you elect full reduction your multiple coverage will stay in force until you reach age 65. At age 65 the premiums stop and your coverage reduces 2% a month for 50 months when coverage ends.

You can elect no reduction and the premium costs per multiple ranges from 52 cents per multiple at age 35-39 to $16.90 per multiple from age 80 and up. If you don’t have private insurance for your spouse, this coverage will fill the gap.

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LIFE EVENTS

All federal employees and annuitants experiencing a life event, no matter where they are at in their career, need to evaluate their insurance needs and fully understand benefit options. This is an ideal time to review and increase your coverage if needed and to obtain life insurance for a spouse and qualifying children. No physicals are required for life event changes.

Retirees

Retirees are only able to change FEGLI beneficiaries, they can’t add family members or elect expanded coverage. However, retirees can make significant changes to their benefits for life events. They can add a new spouse and children to their FEHB program and annuitants can elect to provide a survivor annuity for a new spouse if they do it within the required time period.

Employees

An employee may elect Basic, Option A, B and/or C insurance within 60 days following a FEGLI qualifying life event. These events are: marriage, divorce, spouse’s death, or the adoption of an eligible child. For option B and C, employees may elect up to 5 multiples based on the life event. You have 31 days before the event to 60 days after the event to make changes. After that you must wait for an open season and they are few and far between for the FEGLI program.

Federal employees that marry can add family coverage for FEGLI and FEHB coverage within the time period mentioned above. If you don’t elect FEGLI life insurance coverage for your new spouse and children you will only be able to add coverage if an open season is announced. They seldom offer FEGLI open seasons.

Federal employees that marry can add family coverage for FEGLI and FEHB coverage within the time period mentioned above. If you don’t elect FEGLI life insurance coverage for your new spouse and children you will only be able to add coverage if an open season is announced. They seldom offer FEGLI open seasons.

However, if you neglect to add a spouse and your children to your FEHB health insurance program when you first marry, within the 31 days before to 60-day period after the event, you can always add them to your health plans during the next annual open season.

For more information on life event changes read my article titled Qualifying Life Events, Don’t Lose Your Benefits.

CANCELING or REDUCING COVERAGE

Federal retirees, unless they have assigned their life insurance, may cancel Basic or Optional life insurance coverage at any time. Any cancellation or reduction of life insurance coverage must be in writing and have an original signature by the insured retiree. Include your retirement claim number (CSA number) or social security number and specify what action you want taken. You can’t increase your coverage after retirement, or reinstate any coverage that you cancel.

SUMMARY

Basic coverage, from my perspective, is well worth the cost and most should consider keeping it in retirement. It is a fixed cost and the premiums don’t increase with age like options A, B and C. Plus, I elected the 75% reduction at retirement and when I turned 65 my premiums stopped. The full insurance amount decreased 2% a month until it dropped to 25% of its original value. You can elect to carry 50 or 100 percent of your Basic insurance into retirement. However, you will continue to pay a Basic Premium for that coverage for life.

Confirm Your Coverage & Beneficiaries

Annuitants can review their Blue Book, “Your Federal Retirement Benefits,” to determine what coverage they carried into retirement. My FEGLI benefits are listed on page 9 of this valuable resource. You can obtain updated copies from OPM. Active employees must contact their HR office.

The Blue Book doesn’t list beneficiaries. If you aren’t sure who is listed, contact OPM and consider submitting in an updated SF-2823 beneficiary election form. This is critical for those who divorced or their original benificiaries passed on.

Additional Resources

Use the following links for OPM’s FEGLI Calculator and to view the premium charts for employees and annuitants:

• FEGLI Premiums for Annuitants
• FEGLI Premiums for Employees
• OPM’s FEGLI Calculator

Finally, it all depends on how much coverage you need. In my personal situation I obtained whole life coverage when I was still in my 20s and that insurance, along with the 75% reduced FEGLI Basic insurance, was more than sufficient for us.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Federal Employees Group Life Insurance Guide
• Which Way is Up – A Retiree’s Conundrum
• Is the Stock Market Keeping You Up at Night?
• TSP Guide
• TSP Considerations
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Federal Employee Benefits, FEGLI, Insurance
Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 17th February 2023 by Dennis Damp

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On December 29, 2022, the Retirement Enhancement (SECURE) 2.0 Act of 2022 was signed into law. This second installation of the 2019 SECURE Act introduces several changes affecting the Thrift Savings Plan. This legislation will directly affect plan participants.

I held off writing an article about these changes until the Thrift Board published guidance on the subject. The TSP is an Individual Retirement Account (IRC) under Internal Revenue Code (IRC) § 401(a). Therefore, certain rules and regulations associated with IRAs and 401 (k) plans may not apply to the TSP.

Required Minimum Distributions (RMDs)

The age required to start RMDs was raised from 72 to 73 starting on January 1, 2023, and then to age 75 starting on January 1, 2033.

Under SECURE 2.0, retirement account holders who turn 72 on or after January 1, 2023, need to begin taking RMDs at age 73. Anyone that turned 72 on or before December 31, 2022, is not affected by this change and needs to continue taking their RMDs as scheduled.

The TSP has issued limited guidance with more to follow including the information in the previous paragraph. However, under the new law, those turning 72 in 2023 can now hold off on taking the first RMD until December 31, 2024―a full year later. You also have the one‐time IRS option to delay that first RMD to no later than April 1, 2025. However, if you exercise that option and wait until April 1, 2025, you’ll be required to take two distributions that year, satisfying your first and second RMD.

Originally, ROTH accounts under the 401(a) laws were subject to RMDs, this has fortunately changed under the new 2022 SECURE Act. TSP Participants are no longer required to take ROTH RMDs prior to the account owner’s death.

Catch-Up Contributions

Changes to participant catch-up contributions begins January 1, 2024. This change allows account holders with wages below $145,000 in the preceding year to choose traditional or Roth accounts for catch-up contributions. Federal payroll offices were notified of these changes.

If the participant’s wages exceed $145,000 in the preceding year, all catch-up contributions must be treated as Roth. Your contributions will not be tax deferred like the traditional 401(a) contributions are.

Beginning on January 1, 2025, the catch-up contribution limit for participants ages 60-63 will be increased to the greater of (1) $10,000 or (2) 50% more than the regular catch-up amount in 2025.

Decreased Penalties

The new law dramatically reduces the penalty for failing to take an RMD down from 50% to 25% of the mandatory withdrawal amount, still high by any standard. However, the penalty drops to 10% if the amount you missed is withdrawn, and file a corrected tax return with the IRS within the applicable period.

I-Bond Update

Rosemary asked if she had to wait a year after purchasing an I-Bond before buying another. She bought one last April and thought she had to wait until April of 2023 to purchase another.

You can buy up to $10,000 each calendar year online through Treasury Direct and an additional $5,000 in paper bonds with your income tax return. Anyone can purchase up to $10,000 in new I-Bonds on the first of day of the year even if you bought one in December of the previous year.

I purposely overpaid my estimated quarterly federal income taxes in 2021 with the intention of taking advantage of this option. It worked; last year when the I-Bond rate was 9.62% the Treasury sent me 12 paper bonds in the mail! They sent a mix of bonds ranging from as low as $50 to as high as $1,000.

I overpaid my estimated income taxes again last year in order to purchase another $5,000 in paper I-bonds this year. Where else can you get a 6.89% return on your investment today! I’m waiting for one more tax form; it looks like I’ll be doing it again.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Which Way is Up – A Retiree’s Conundrum
• Is the Stock Market Keeping You Up at Night?
• TSP Guide
• TSP Considerations
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Catch-Up Contributions, I Bonds, Secure Act 2.0, TSP, TSP RMDs
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 10th February 2023 by Dennis Damp

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According to Janet Yellen’s memorandum to congress the U.S. Treasury will be unable to fully invest the portion of the Civil Service Retirement and Disability Fund (CSRDF) not immediately required to pay beneficiaries beginning January 19, 1923. The Postal Service Retiree Health Benefits Fund (PSRHBF) investments will be suspended as well until the debt ceiling is raised.

The Treasury announced temporary G Fund limitations until Congress raises the debt limit. According to the Thrift Savings Plan (TSP), “As of January 23, 2023, the U.S. Treasury was unable to fully invest the Government Securities Investment (G) Fund due to the statutory ceiling on the federal debt.”

The Treasury Department describes the debt limit as the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.

The debt limit does not authorize new spending commitments. It simply allows the government to finance existing obligations that government made in the past. If a compromise isn’t reached, a government shutdown could occur.

G-Fund Impact

The TSP stated on their website that G Fund investors remain fully protected and guaranteed by the federal government. This statutory guarantee has effectively protected G Fund investors many times over the past 30 years. G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.

Preservation of capital is the G Fund’s investment objective along with generating returns above those of short-term U.S. Treasury securities. Currently, short term 8-week Treasuries are yielding around 4.65% and the G-Fund yielded .34% in January. As the Federal Reserve continues to raise rates, our G-Fund rates will follow suit. If the current .34% rate is maintained through this year it would result in a yield of over 4%.

Updates

National Debt Crisis

The IRS collected $4.1 trillion in 2021 and refunded $1.37 trillion for a net collection of $2.973 trillion dollars after refunds. The federal government spent $6.82 trillion dollars in 2021 by borrowed 56.5 cents of every dollar it spent! The federal reserve simply made a book entry for this deficit spending and then purchased that amount of our Treasury bonds to fund the government and flood the country with cash; driving inflation through the roof.

Their excessive spending hasn’t Improved since I wrote “Unreasonable Expectations – The Debt Crisis”  January 2021 when the COVID crisis was the excuse for the shortfall.

The Treasury can use special measures to avoid a US payments default. They have until June of this year before we would default on our debt. Our representatives have time to put their heads together, compromise, and come up with realistic ways to cut spending and fund the government. Hopefully, common sense will prevail for the good of the country.

TSP Installment Payments Update

A number of our newsletter subscribers didn’t receive their scheduled installment payments in January as we mentioned in our last newsletter. The TSP posted this clarification on their website last week.

“The TSP has a programming issue that is preventing some participants from setting up installment payments in the amount they desire. We are in the process of addressing this issue. In the meantime, a temporary work-around is for you to request partial withdrawals instead of installment payments until we fix the programming issue. Note: The minimum amount for a partial withdrawal is $1,000, and you must wait at least 30 days between requests.”

I-Bond Interest and Taxes

Madeline asked when she should expect to receive a 1099-INT statement from the Treasury for the I-Bonds she purchased last year. A 1099 is only sent out after you redeem your savings bonds at treasurydirect.gov or sent bonds to them for redemption. If you cashed your paper savings bonds at a local bank, that bank should provide you with your 1099.

You can elect to pay annually if desired. The advantages of savings bonds are that you don’t pay state tax on the interest earned and your interest income is tax deferred until you cash them in.

Savings Bond 1099 Guidance

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Which Way is Up – A Retiree’s Conundrum
• Is the Stock Market Keeping You Up at Night?
• TSP Guide
• TSP Considerations
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Debt Ceiling, Debt Crisis, Government Spending, TSP Investments
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 3rd February 2023 by Dennis Damp

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Updated 5-10-2025

Forward this to others who may find this information helpful.
They can sign up to receive my free Retirement Planning Newsletter.

It’s a good time for those planning their retirement to assess their financial situation and take the necessary steps to secure their future. Federal employees have received higher cost-of-living adjustments (COLAs) over the past few years, including an 8.7% increase for CSRS and a 7.7% increase for FERS employees in 2023.

Thrift Savings Plan Considerations

Contributions

The Thrift Savings Plan (TSP) elective deferred contribution limit for 2025 is $23,500 for FERS employees, with an additional $7,500 catch-up contribution available for those aged 50 and over. If you aren’t currently contributing up to these limits, consider increasing your TSP contributions this year by at least one or two percent of your pay. Even with inflation continuing to soar, now is the time to invest prudently for your future. Your take-home pay will still increase year to year with this modest contribution increase.

Under a change made in SECURE 2.0 Act, a higher catch-up contribution limit applies for employees aged 60, 61, 62, and 63 who participate in these plans. For 2025, the higher catch-up contribution limit is $11,250; these contributions can reduce your annual income tax while you are still working.

Social Security Tax Limit and Medicare Premiums

Higher earners will pay Social Security taxes in 2025 on earnings up to $176,000, and Medicare premiums for Part B increased slightly this year to $186.00 per month for most who have signed up for Part B.

BLUE Book (Benefit Summary Booklet) – Updated 5-10-2025

Request an updated retirement benefits booklet through https://www.servicesonline.opm.gov. All retirees receive a comprehensive multi-page pamphlet titled “Your Federal Retirement Benefits” from OPM when they retire. My booklet is 28 pages long. Request your updated copy by selecting the Document Section, the last item listed on the Dashboard’s main menu, and clicking on “Request Booklet.” You now have the option to request a download version to expedite delivery.

If you haven’t signed up for OPM’s Online Services, follow the sign-on guidance in my article titled “OPM Services Online Access Changes.” Their website’s document section also provides quick access to your 1099-R forms and downloadable annual and monthly annuity statements.

Many annuitants order a copy each year with their updated benefits information and place the booklet in their retirement or estate planning file. If you lost your original copy, request a copy of the original booklet you received when you first retired to compare it to the most current version.

This booklet is a wealth of information, including personal statistics such as your CSA number, monthly benefit, survivor benefits, life insurance elections, contributions, and tax information. It also provides details on how to contact OPM, COLA adjustments, and other relevant information, as well as instructions on updating your address.

If you haven’t signed up for OPM’s Services Online, you can still request a copy from OPM by calling 1-888-767-6738. However, be aware of long wait times, and they occasionally use an automated reply that states, “We are receiving an extremely high call volume; please call back later.”

You can email them at retire@opm.gov or send a written request to the U.S. Office of Personnel Management, 1900 E Street, NW, Washington, DC 20415-1000. I sent OPM an email last month to confirm it was still usable; they replied back a week later, stating, “You may direct your questions to this email. Please be sure to include your CSA number, name, and details of how we can help you.” OPM advises, “The internet is not a secure environment for transmitting personal information via email.”

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Which Way is Up – A Retiree’s Conundrum
• Is the Stock Market Keeping You Up at Night?
• TSP Guide
• TSP Considerations
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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Posted on Friday, 20th January 2023 by Dennis Damp

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Federal annuitants typically receive their updated Annuity Statement, with the COLA increase added, early January. OPM’s 1099 R Tax Forms aren’t available until the end of January by regular mail while my Social Security’s SSA 1099 from was received January 10^th!

Download Your Forms Now

Registered users of OPM’s Retirement Services Website can download their Annual Annuity Statement and 1099R form now. I downloaded mine this week.

OPM sends out updated annuity statements anytime there is a change that affects our annuity. Next month we will receive another paper statement showing FEHB healthcare and FEDVIP premium changes. The February statement is already posted and available for download on their retirement services website.

New statements are sent out throughout the year whenever there are changes to checking/savings allotments, income tax withholding, and long-term care insurance, etc.

The annual statement provides annuity and benefit information for you and your family. It includes the annuitant’s Claim number, the amount withheld for each item deducted from your annuity payment, and your gross and net payment. It specifies the monthly survivor annuity currently payable in the event of the annuitant’s death and includes an annual Notice of Survivor Annuity Election Rights. You will also find OPM contact information.

If you misplace your annual statement, download a copy from the website along with the instructions. They outline how to make benefit elections such as applying for a survivor election for a spouse you marry after retirement, survivor annuity elections for a former spouse, OPM contacts, and other information.

Retain Copies for Your Records

I keep the most current Notice of Annuity Adjustment in my retirement folder and include a copy in our estate binder along with OPM’s annuity and FEGLI insurance verification forms that OPM sends out upon request. You can also download them from OPM’s Services Online site. This is an important document and should be readily available if you or your survivor need to contact OPM or require benefit clarifications.

OPM’s Online Services

You must be registered to use OPM’s Retirement Services Website. If you aren’t registered review the latest changes to signing up for this service, they added an extra layer of security. It doesn’t take long; however, you may have to wait for your password to be sent via regular US mail and that can take several weeks.

Other Tax Forms

Many banks and brokerage house’s 1099 reports are also available online for download early. Treasury Direct doesn’t send copies. You must download your Treasury’s OID and 1099 INT statements from your online account. They are typically available mid-January. If you have complex investments, your brokerage 1099 statements could be delayed until mid-March or later.

Tax Preparation Software

I’ve used TurboTax software for decades. It’s intuitive and walks you through the entire process, double checks your work, and they allow you to file online. This software can also download and integrate your brokerage accounts into your tax return, saving considerable data entry time.

There are a number of free online filing services available through the IRS and several of the tax preparation services. The IRS allows you to file online at no cost if your annual income is less than $72,000. You will have to file your State taxes separately.

Take advantage of OPM’s Online Services to download your 1099R to file your taxes early, need to replace a lost 1099R, or to obtain other important retirement forms and reports.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Which Way is Up – A Retiree’s Conundrum
• Is the Stock Market Keeping You Up at Night?
• TSP Guide
• TSP Considerations
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: 1099 R Forms, Annuity Statements, OID Forms
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Saturday, 14th January 2023 by Dennis Damp

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The December 2022 Consumer Price Index (CPI) dropped .1%, the first drop in the CPI since December of 2020. A sign that inflation may be improving slightly. However, year over year inflation was 6.5%, still high by any standard. Wages, consumer goods, food, and housing remain high.

The Federal Reserve is expected to continue increasing rates this year in an attempt to achieve their 2 percent target core inflation rate. Many feel this target is unrealistic and it may end up much higher. There is still considerable uncertainty in the markets today.

Rates Are Rising

Finally, CD rates are rising enough to compete with Treasury Bills, they aren’t quite high enough to beat I-Bonds yet. Treasury Bills continue to offer a safe haven for our cash with decent yields. There are still challenging times ahead for investors with the country bordering on a recession and market volatility continues to be disconcerting for most.

There are other ways to economize and save for those planning their retirement and retirees alike.

CDs Are Catching Up

Locally, many credit unions and regional banks are offering between 4 to 5 percent for 9 month to 2 year CDs enticing account holders back to the fold. Not bad, considering only a short time ago they were offering less than 1%!  I’m staying with 8-week T- Bill ladders for now; they are yielding 4.523% presently. You can have the Treasury reinvest them for you for up to two years. I believe the Federal Reserve will continue to raise rates to tamp down inflation for some time yet.

When rates start to level off, it may be the time to move to longer term CDs or consider investing in 26 or 52-week T-Bills, or Treasury Notes that are issued in 2,3,5,7 and 10-year durations to lock in attractive yields.

I-Savings Bond Rates 

Now is the time to pick up more I-Bonds, you can purchase $10,000 in I-Bonds through Treasury Direct each year. If married, both can purchase up to that limit. Plus, you can buy up to $5,000 in paper I-Bonds with your tax return. I intentionally overpaid my quarterly estimated federal taxes the year before and was able to buy paper I-Bonds with my return. I’m not sure yet if I overpaid enough this year to purchase more.

The current I-Bond composite rate is 6.89%, still well above what you can get elsewhere. This new rate runs through April 30, 2023. As I mentioned in an earlier article on this subject, you can’t cash them in for one year. Plus, if cashed in within the first five years you will lose 3 months interest.

My I-bonds issued in 1999 have a 3% fixed rate, these are earning 9.4% now! They earned over 13% from May 1 to October 31 of last year! Can’t beat that.

If you purchased an I-Bond by no later than April 30^th of this year, you’ll receive the 6.48% for six months from the date of purchase, the rate will change after that to the new rate announced this coming May for the next six-month period.

Treasury Bill Rates Continue to Rise

My article titled “Ditch your Bank’s Low Savings Rates” describes the advantages of Treasury bills compared to bank and credit union rates. I wrote the first article on this subject last March when my bank’s savings rate was .04%; it is currently 1%, still well worth moving the majority of my savings to T-Bills.

Today you can earn around 5% on a 52-week T-Bill, the shorter-term 8-week Bills, as noted in the following chart, are earning 4.523%!

If you purchased $50,000 in the 26-week T-Bill issued on 1/5/2023 that’s earning 4.892%, the Treasury withdrew $48,7777 from your account. On the maturity date of 7/6/2023 they will deposit $50,000 back into your account for a $1,223 gain.

Had you had this amount deposited in a bank money market account paying 1%, like mine, you would have earned only $250!

Summary

With the new year beginning, it’s an ideal time to pick up more I-Bonds if you have the cash to do so. They grow tax deferred over time and I’ve held I-Bonds since they initially offered them in 1998.

Now that CD rates are improving, and if you can lock up your discretionary savings for 9 months to 2 years or longer, they are an option to consider. You can cash CDs in before maturity, however the penalties can be significant. I’m waiting until rates level off and maintaining my 8-week T-Bill ladders until that time.

The U.S Treasury updated their website and it is now more reliable. However, contacting them by phone is tedious with very long wait times. Plus, they aren’t accepting email questions now either unless you have an open ticket with them.

Print out your T-Bill transactions and retain a hard copy for your records. I print the screen for each new purchase and reinvestment.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Which Way is Up – A Retiree’s Conundrum
• Is the Stock Market Keeping You Up at Night?
• TSP Guide
• TSP Considerations
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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Posted on Friday, 6th January 2023 by Dennis Damp

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Forward this to others that may find this information helpful.
They can sign-up to receive my free Retirement Planning Newsletter.

According to Gallup, three-quarters of Americans, including majorities of all party groups, are dissatisfied with the nation’s direction.

The Current State of Affairs

Many reading my column are seniors or those fast approaching that milestone. Everyone, regardless of age, is impacted by today’s runaway inflation, out-of-control spending, random violence, crime, open borders, extremist agendas, and the general ineptitude of those governing us today.

Those on the left and right, from both parties, are to blame. Why can’t they govern, compromise, and do what is best for the country instead of steadfastly working against each other to support oft misguided party leadership?

Each party stokes the fires of discontent to gain the advantage while we all suffer the consequences of their inaction. Lobbyists and special interests drive the agenda; the ones that give the most get their way, regardless of the harm they inflict along the way.

Term limits would change our governance dramatically, our representatives wouldn’t have to kowtow to leadership, and special interests to retain a lifelong job. They would be more inclined to vote their conscious, and what would be in the best interest of their constituents, rather than the party line.

Our representatives will only effect desired changes when those they represent express their concerns openly and through peaceful protests. Ultimately, we must vote them out of office if they continue to ignore the sad state of our affairs today. Our children and grandchildren will suffer the consequences if common sense doesn’t prevail.

Reflections 2022

Soon after retiring, workers discover there is more to life than a 9 to 5 job: places to go, people to meet, challenges to surmount, and adventures to plan. When I was in my mid-twenties, my wife and I discussed the advantages of federal service and the ability to retire early, as I did at 55 with 36 years’ service. I chose a federal job, after leaving the military, rather than a private sector job with an airline that eventually went bankrupt.

Even though I retired at age 55 from federal service, the business I established two decades earlier keeps me fully employed to this day.

Retiring early allows us to travel and do other activities that often aren’t feasible in your later years, as I can attest to. One of my regrets in life was deferring travel to desired destinations and certain activities to my golden years, not realizing the limitations age places on all of us.

It’s wise and prudent to save for retirement, at the same time, it’s important to set aside time and funds to enjoy the activities you and yours appreciate while younger and able. Life has a way of hurling curve balls at us and there aren’t any guarantees for what lies ahead, at any age.

And now – the Rest of the Story…

I enjoyed listening to Paul Harvey’s commentary in my youth with his telling tales of the day. He would finish his story after the last station break with this refrain, “and now the rest of the story.”  His melodic voice still pervades my thoughts to this day.

As I reflect back on my 73 + years, I’m amazed how dramatically things have changed over this relatively short span of time. An excerpt from the Preface of my memoir, “The Early Years, A Road Less Traveled” says it best:

“Life in the mid-twentieth century was all one could imagine of that time, a Forrest Gump world running at a snail’s pace. The only cell phone we encountered was in the comic strips when Dick Tracy was all the rage. Computers were relegated to large research facilities, filling huge rooms with vacuum-tube equipment racks emanating ambient light; illuminating the room’s interior.

Airplanes were becoming popular after World War II, but most relied on trains and trolleys to get where they needed to go. The middle class bought cars and homes at a feverish pace, yet most could only dream about living the “life of Riley,” an expression coined from an early 1950s TV sitcom. We watched Father Knows Best, The Donna Reed Show, and others that represented the ideal traditional family, infusing our dreams with visions of a stable, satisfying life surrounded by family and friends.

The traditional family was on parade—a working father, a stay-at-home mom, and two adorable children—yet cracks were forming in that foundation by the 1960s. The younger generation, my generation, made waves as we grew up in a world filled with conflict: the Korean War, Vietnam, the civil rights movement, and so much more. From this discourse the hippy generation and Woodstock were born along with the antiwar movement fomenting riots throughout the country.”

Today’s youth would be hard pressed to imagine a life without cell phones, Facetime, Netflix, and the Internet.  We had six TV channels growing up, no remotes, and you could only watch a show on the day it aired. Cartoons were relagated to Saturday mornings or you would have to attend the Saturday matinee at your local movie theater!  You couldn’t tune in any desired show at will, like you do today.

Many families didn’t have cars and walked or took trollies to their destination.  A sea change from today’s world where everyone is glued to their cell phone or social media and many families have two or more cars parked in their driveway.

A baffaling Contradiction 

Much has changed for the better, especially technologically these past 73 years; you would think that as civilization progresses, society would improve and crime, world conflicts, and social unrest would abate. The contradiction is that it hasn’t! That is the dilemma we face today.

There are no easy answers; all we can do is work to hopefully make life a little better for those who come after us. We must rely on our children, and our children’s children to do the same for each succeeding generation.

There is hope

People, since the inception of time have lamented the problems with the youth of their day. Aristotle proclaimed, “The beardless youth… does not foresee what is useful, squandering his money.” Socrates complained, “The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households…”

We may find the youth of today beyond hope but history proves us wrong every time. They grow up, accept responsibilities, and take over the world as we did from our parents. Life goes on, and when the pendulum swings too far in one direction a correction is sure to come.

I wish you and yours a happy, prosperous, and most of all, healthy NEW YEAR! A special thanks to my newsletter subscribers and blog visitors that have following my column for these past two decades.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Considerations
• Medicare Guide
• Social Security Guide
• Budget Work Sheet
• Federal Retiree’s Master Contact List (PDF fill-in- form)

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: 2022 Reflections, Reasonable Expectations, Retire Early, The rest of the story
Posted in ESTATE PLANNING, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Thursday, 5th January 2023 by Dennis Damp

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It’s the beginning of a new year and a good time for those planning their retirement to assess where they are financially, long before filing their retirement paperwork. Federal employees received a significant pay increase this year, 5.2% on average after factoring in locality pay. The 2024 pay charts are available for your review.

COLA 2024

More than 71 million Americans will see a 3.2% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2024. Social Security retirement benefits will increase on average more than $50 per month starting in January.

Federal retiree’s annuities under the Civil Service Retirement System (CSRS) receive the full 3.2% COLA increase while those under the Federal Employees Retirement System (FERS) receive 2.2%.

Thrift Savings Plan Considerations

Contributions

The Thrift Savings Plan (TSP) elective deferred contribution limit increased to $23,000 for FERS employees with an additional $7,500 catch-up contribution for those age 50. The annual additions limit is $69,900.

These limits define the contributions that can be made to defined contribution accounts like the Thrift Savings Plan (TSP) for the calendar year. Please note, this is a personal limit that applies to an individual’s aggregated contributions across all such accounts in a calendar year.

If you aren’t currently contributing up to these limits, consider increasing your TSP contributions this year by at least one or two percent of your pay. Even with inflation continuing to soar, now is the time to invest prudently for your future. Your take home pay will still increase year to year with this modest contribution increase.

Your contributions are tax deferred until you withdraw them in retirement and they will reduce your annual income tax while still working.

1099-R Update – TSP and Annuity

Our TSP 1099-R tax forms are issued for all plan withdrawals and typically arrive by late January. If you don’t receive your 1099-R Form in the mail by mid-February, call the TSP to request a replacement.

According to their website, it should be available in your “Secure Mailbox” by end of January. To get to your secure mailbox click on the circled bell in the upper right corner of the website

Annuity & Social Security 1099-Rs

Federal annuitants typically receive their updated Annuity Statement, with the COLA increase added, in late December. OPM’s 1099 R Tax Forms aren’t available until the end of January by regular mail while Social Security’s SSA 1099 forms arrive early to mid-January!

Registered users of OPM’s Retirement Services Website can download their January Annual Annuity Statement mid-December while the 1099R forms are available as early as mid-January.

Social Security Tax Limit and Medicare Premiums

Higher earners will pay Social Security taxes in 2024 on earnings up to $168,600, an increase from last year’s maximum amount of $160,200.

The standard monthly premium for Medicare Part B enrollees will be $174.70 for 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries will be $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023.

BLUE Book (Benefits Summary Booklet)

Request an updated retirement benefits booklet through https://www.servicesonline.opm.gov late January to early February. This will ensure they include your 2024 FEHB and FEDVIP premiums. All retirees receive a comprehensive multi page booklet titled, “Your Federal Retirement Benefits” from OPM when they retire. My booklet is 28 pages long. Request your updated copy by selecting the Document Section, the last item listed on the Dashboard’s main menu and click on “Request Booklet.”

Many annuitants order a copy each year with their updated benefits information and place the booklet in their retirement or estate planning file. You can also request a copy of the original booklet you received when first retired if you lost your copy and compare it to the most current version.

If you haven’t signed up for OPM’s Online Services, follow the sign on guidance in my article titled, “OPM Services Online Access Changes.”

This booklet is a wealth of information and includes your personal retirement information: CSA number, annuity breakdown, survivor elections, benefit elections, etc. This website’s document section also provides quick access to your 1099-R forms for the past 5 years, and a downloadable annual and monthly annuity statements.

If you don’t have access to their services online call OPM at 1-888-767-6738. You can also email them at retire@opm.gov or send a written request to the U.S. Office of Personnel Management, 1900 E Street, NW, Washington, DC 20415-1000.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• TSP Guide
• Budget Work Sheet
• Medicare Guide
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: 1099R, Medicare Part B Premiums, Social Security 1099 Rs, TSP, TSP 1099s
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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