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TSP Changes & Required Minimum Distributions (RMDs)

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.

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

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The 2019 Pay Raise – Ways to Save

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.

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

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Is a Vacation Home in Your Future? (A Personal Perspective)

Posted on Sunday, 17th February 2019 by

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Many retirees dream of a home away from home. The thought of having a place to escape to in the winter months, or during the summer for sun lovers, is enticing on many levels. Others consider a mobile home to explore this vast county in style and to visit the many attractions they heard so much about growing up.

Northern cold climate retirees, snow birds, are either relocating to or buying second homes in the south in large numbers, some going as far as Central America to escape their frozen environs. If you are thinking about a second home there are many factors to consider, both pro and con, before signing on the dotted line.

Things to Consider When Buying A Vacation Home

1) Does your Home Owners Association (HOA) allow short term rentals?

Before buying a vacation property determine if the complex allows short term rentals. Short term rentals can create issues for fulltime and vacation home owners that don’t rent their property.

There can be a constant flow of new people coming and going from rental units.  Some plans restrict rentals to 6 month or longer, which is ideal for those not wanting to deal with short term rental turnover. If you are considering a vacation condo, townhome or patio home, and don’t want to rent your property when you aren’t there, find a complex that restricts short term rentals.

2) What are the costs of ownership?

Another consideration is the expense, can you afford the upkeep, utilities, taxes, and common charges. When a new plan opens the builders may have kept the common charges (HOA fees) low to attract buyers. Once the complex sells out, the common charges can increase.  Typically, you must pay common charges of several hundred dollars monthly to cover everything but your electric, insurance, Internet, and taxes. When you add all costs, even without a mortgage, your monthly expenses can easily reach $500 or more monthly. Discuss all of your costs with the realtor and talk with the tax office to verify their estimates.

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

3)What is your real estate tax liability for non-resident property owners?

Taxes for those residing out of state are often considerably higher than permanent residents. In some states a non-resident owner can pay up to three times more than what a permanent resident pays for real estate taxes. The taxes are often far less than what many would have to pay up north, yet it seems unfair to penalize vacation home owners when they are only using the services at that location part time. If you rent your vacation property the state and city may add additional taxes including a personal property tax and a higher rate depending on the property classification.  

4) Consider noise in condo and attached properties.

Noise can be a problem, especially when you have short term rentals in your development. Many large complexes have a security service that you call to address inappropriate behavior and excessive noise.  The owner of the unit above could install hardwood floors that often magnify foot traffic. If you are concerned about noise it may be best to purchase a top floor unit to reduce your exposure from the noise above. That being said, noise from adjacent units and those below can also be a problem.

5) Are you considering renting your unit?

Many buy vacation homes with the thought of paying part of the mortgage and expenses by renting their property through a property management firm. This can make it more affordable for the buyer. However, the buyer must be aware of rental pitfalls. Rental units often get abused by renters and the owner must pay for the repairs and upkeep even though some costs can be recovered from the negligent party.  Also, the property management fees can be excessive and your share shrinks as expenses rise.

Another consideration is that once you rent a property, often the city and state taxes increase because it is now an income property. With a rental property, you may have to pay personal property taxes and your Assessment Ration (RTO) can more than double your assessed value. In South Carolina your RTO ranges from 4 to 10.5% which means your property value is multiplied by these percentages to determine your assessed value for tax purposes.   

6) Is the trip to your home away from home sustainable?

Travel to and from your vacation home takes planning, coordination, and time. Ideally, its beneficial if it is close enough to just get up and go anytime you feel the urge to get away. If the property is over 5 or 6 hours away the trip can become tedious and dangerous, especially in winter weather. Ideally, the shorter the drive time the better and less stressful the journey.

If you fly that is another story and flying adds other factors to consider such as car rentals, etc.  Consider the trip length before buying. Even though you may be able and willing to do it now, as we age travel becomes more of a problem. Can you sit for extended periods, do you like or can you at least tolerate the trip several times or more each and every year?  The further away the more hesitant you are to make the trip.

7) Environmental concerns.

Those living up north are often unaware of the heat, humidity, and pest control issues when owning a southern property. Many first-time vacation home buyers turn up the AC to 80 in the summer and leave it at 50 degrees in the winter when returning home to reduce their vacation property utility costs. This leads to other problems. Keeping it at those extremes can cause mold and mildew problems.

You can install a NEST thermostat in your vacation home and adjust the HVAC system temperature remotely from your cell phone.  If you can’t adjust your HVAC remotely you have to have someone in the area to do it for you, either a neighbor or handyman. You can also install a video monitor at your condo if you are concerned about security issues and access. Many condos and townhome complexes include internet, cable, and Wi-Fi in the monthly common charges.

Most condo common charges include pest control and they treat the units on a set schedule that varies per location. If you leave a home for extended periods down south bugs become an issue, even with treatments expect the unexpected at times.

8) Are you comfortable with vacationing at the same place every year?

Once you buy a vacation home you’re obligated to visit often. There are maintenance issues such as regularly changing the HVAC air filters, pest control, general cleanup and maintenance that you have with all properties you own. In many cases, a second home is just that, a home away from home, not a vacation destination. A lot of vacation home owners maintain a daily routine just like at their primary residence. It is an escape from the winter doldrums for snow birds and just a comfortable place that they enjoy getting away to.  

There are many things to consider before buying a vacation home. I suggest making a list of pros and cons and perform a detailed budget analysis to determine if it’s affordable and makes sense for you and your family. Yes, it is nice to have a place to escape to, however without a complete evaluation and review you may regret your decision.

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.

Posted in BENEFITS / INSURANCE, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, Travel

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TSP Investors – Changes Coming Your Way

Posted on Friday, 8th February 2019 by

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I received my TSP 2018 Annual Statement this week and there was a short announcement about the Lifecycle (L) Fund changes on the backside of the Highlights sheet. The statement includes your total contributions, projected lifetime monthly annuity amount, fund and account performance statistics and more.

The TSP has begun adjusting the L Fund allocations differently with the intention of improving investment outcomes. Effective in January 2019 the L Funds will increase exposure to international stocks (the I Fund) from 30% to 35% of the overall stock allocation. Vanguard suggests, “To get the full diversification benefits, we recommend that you consider investing about 40% of your stock allocation in international stocks and about 30% of your bond allocation in international bonds.” 

Furthermore, the L 2030, L 2040, and L 2050 overall stock allocations will hold steady for a period of years before resuming their transitions from stocks to bonds. In addition to improving investment outcomes, this pause is intended to align the L 2030, L 2040, and L 2050 Funds with the L 2060 Fund, which will be introduced in 2020 with an initial stock allocation of 99%. You can track the quarterly allocation changes on the TSP site. 

Many retirees move to the L Income Fund to keep up with inflation with less risk. The L Income Fund stock allocation (C, S, and I Funds combined) will increase from 20% to 30% over a period of up to 10 years with a greater emphasis on international stock exposure. A financial adviser can recommend fund allocations that would best suit your personal situation.

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

The L Income Fund’s allocations prior to this change were 74% G, 6% F, 11.20% C, 2.8% S, and 6% I. This mix provided an 80% bond to 20% stock ratio. The L Income Fund allocations were fixed at these levels until the January 2019 change.

The shift started in January of 2019, the total bonds from the G and F fund decreasing below 80% and gradually move to 70% by 2028 as shown in the above chart. This move increased the stock funds to a total of 30% of fund assets.

Fund performance figures for the previous 12 months are listed in the TSP chart presented below. The only funds that increased in value were the L Income, L 2020, G and F funds. The G fund was the best performer during this period with a 2.94% gain followed by the F Fund with 2.39%. The L Income had a 1.44% gain followed by a .32% gain in the L 2020 fund. All others lost from 1.89% for the L 2030 Fund to a high of 12.11% for the International I Fund.

There are more TSP changes coming, including new withdrawal options and a major website makeover later this year.  Many new employees along with uniformed service members that elected the new Blended Retirement System (BRS) are participating in the program this year. We will keep you informed of these changes as they are implemented. This is a good time to assess your TSP allocations and contributions. If you are invested in the L Life Cycle Funds review how the new allocations will impact your investments.

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.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP

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Don’t Let This Happen to You!

Posted on Tuesday, 5th February 2019 by

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I received several emails from federal workers that quit because of the shutdown! They asked how to cash in their FERS retirement. Recently, the Washington Post published an article about federal employee’s facing the decision to “Stay or Quit.“

Certainly, new hires and those with only a few years federal employment were struggling, and I understand that. Many others are living paycheck to paycheck. However, I recommend thinking twice before taking an action you may regret down the road, the grass isn’t always greener on the other side. Most federal credit unions offered no or low-cost bridge loans, waived monthly payments, and many financial institutions and companies offered some form of assistance. You just had to ask.

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

Federal employees have the best of both worlds. We’re furloughed and still eventually get paid. Laid off workers in the private sector apply for unemployment compensation and receive a fraction of what they were earning while employed. Federal benefits are among the best available anywhere. We have generous vacation and sick leave options, excellent pensions and TSP (401K) retirement plans, low cost insurance policies, and many health care plans to choose from. Federal employment is secure, for the most part, and employees often have careers that last a lifetime. Mine did.

My brother worked in the private sector for 45 years, was laid off and had to start over a half dozen times or more. He worked for major corporation; US Steel, H. J. Heinz, the Horne’s Department Store, Murphy’s, the Burlington Coat Factory, and many others that simply downsized or shut down. They left him high and dry, and in most cases without a pension. He had to relocate twice and both times those companies downsized. This is not unusual in the private sector. When he was laid off, he subsisted on unemployment compensation until he found a new job. That’s reality on the other side. Sure, there are great private sector jobs too, finding one may not be so easy

Because federal employment is considered secure, many don’t take the precautions they should to prepare for emergencies, such as a shutdown. I often discuss ways to economize and save not only for retirement but for life’s uncertainties. Everyone should have a safety net, 3 months of expenses for times like this stashed in a savings account plus other reserves the closer you get to retirement. When I talk to groups and mention this, many say they simply can’t save, they live pay check to paycheck. I tell them it’s possible and you have options to make it painless.  You just have to do it, start small and grow your savings over time.

Here is a list of articles and other resources that you may find helpful to save for a rainy day:

Another shutdown may be coming soon, if the parties can’t agree on border security.  Don’t get frustrated, call your representative and tell them to negotiate in good faith. Unfortunately, our representatives spend more time raising money for their next campaign than they do representing their constituents.

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.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, ESTATE PLANNING, FINANCE / TIP

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1099Rs Available Online Now!

Posted on Saturday, 19th January 2019 by

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Normally, federal annuitants don’t received their 1099R Tax Forms by regular mail until the end of January or the beginning of February. If you are registered to use OPM’s Retirement Services Website your 1099R is now available for download. I visited the site on January 16, 2019 and was able to download my copy that I will use for my 2018 tax return.

Complete Your 2018 Taxes Early

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

To get a head start on your taxes visit OPM’s web site and download a copy. You must be registered to use the site. If you aren’t registered read the article titled “Connect to OPM’s Online Services” to understand the registration process and sign up. 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.

Many bank and brokerage 1099 and DIV reports are also available online and can be downloaded from your accounts. This can expedite the completion of your tax return. The government shutdown may slow things down this year since the IRS will not process paper tax returns until after the shut down is over. However, the postal service will still post mark your paper filed return. Any tax return postmarked by the due date will be considered filed on time by the IRS. Even if the shutdown is ended soon processing delays can be expected. 

I’ve personally used Turbotax software since they first issued this helpful software package. 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 you much time.

Take advantage of OPM’s early 1099R online availability if you wish to file early or simply need to replace a lost 1099R.

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.

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

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Furloughed Government Employee Assistance

Posted on Tuesday, 15th January 2019 by

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This shutdown is the longest in history and if the parties can’t agree on funding border security this shutdown could go on for some time. The Washington Examiner reported, “Some 30 Democratic lawmakers left the government shutdown behind Friday on a chartered flight to Puerto Rico for a winter retreat with 109 lobbyists and corporate executives during which they planned to see the hit Broadway show “Hamilton” and attend three parties including one with the show’s cast.”

Making Ends Meet

Our representatives should stay in Washington until government is funded. We the people should insist that anytime Congress refuses to come to the table and forces a shutdown, our representatives must not be paid for the duration. They should also NOT receive back pay like all other feds will receive, make them pay for their inaction and inability to do their job.

Fortunately, there are ways for furloughed employees that don’t have sufficient resources and savings to bridge the gap until their back pay is restored.  

Credit unions and other financial organizations are coming together to help furloughed federal workers make it through the government shutdown. The Allegent Federal Credit Union in Pittsburgh is offering low-cost short-term loans plus they initiated a NO COST “Skip A Pay” service for all federal employees affected by the shutdown. Furloughed employees should contact their local credit union for similar low and no cost assistance.

Here is a short list of things furloughed employees can do if they are having a difficult time financially during the shutdown:

  • Furloughed employees may be able to file for unemployment compensation, those who are not working. However, be aware that once your backpay is restored you must pay back the unemployment compensation that you received.
  • The Credit Union National Association announced that credit unions across the U.S. are providing assistance to the affected employees. Some of the programs included:
    • Zero percent APR interest signature relief loan for 12 months signature relief loan
    • Pay Disruption Assistance Program with mortgage loan forbearances, loan and credit card payment deferments, and short-term low rate loans
    • Online member portals with special furlough loans
    • Preexisting loan deferred payment opportunities for up to 60 days
    • Cash advances of up to 90% of federal employee’s regular monthly pay. Contact your local utilities and ask them what programs they have for situations like this. I called several utilities in my area and they have a budget option plus offer other ways to assist such as their Customer Assistance Program (CAP).
  • If you aren’t able to make your mortgage or car payment contact the lender immediately to let them know before the payment is due. They may have programs available that will help you avoid a late payment or they could offer a short-term loan to help.
  • The National Active and Retired Federal Employees Association (NARFE) partnered with the Federal Employee Education & Assistance Fund to offer $100 grants to active federal employee NARFE members who are not receiving a paycheck during the current shutdown as a result of being furloughed or working in excepted status. Members can APPLY online.  You will need to provide documentation of your furlough or excepted status. FEEA will contact you with any questions, and will let you know if your request is approved or denied. You must be a NARFE member in good standing and your membership status will be confirmed with NARFE. For questions, please contact me at execdir@narfe.org. 
  • Articles concerning assistance for furloughed federal employees.

I suggest calling your representatives and let them know it’s time to get back to the table and pass a budget. They need to do what’s good for the country and do their jobs. This has gone on far too long. 

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

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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.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, FINANCE / TIP

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Government Shutdown FACT SHEET

Posted on Saturday, 12th January 2019 by

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OPM issued a FACT SHEET covering the impact on federal employee benefits and pay as a result of the government shutdown. The following excerpt explains the impact on employee’s pay and benefits.

FACT SHEET:  Pay and Benefits Information for Employees Affected by the Lapse in Appropriations

Government Shutdown Briefing

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

This information covers pay and benefits matters that may be important to employees if the lapse in appropriations continues past payroll processing deadlines.  Payroll deadlines vary from agency to agency, so the actual timing of when an employee’s pay and benefits may be impacted will vary. 

This information is only for employees who are:

  • Furloughed (a type of nonpay status), or
  • “Excepted” from furlough (i.e., continuing to work and earn pay, but their pay is delayed until appropriations are authorized). 

Employees who are “exempt” from the lapse in appropriations (e.g., because they are not paid from annually appropriated funds) are not impacted.

What you should know

PAY

Furloughed employees: You cannot receive pay during a lapse in appropriations if you are furloughed, and Congress will determine whether you will receive retroactive pay for furlough hours.

Excepted employees: You are entitled to be paid for hours worked, but you cannot receive pay until funding is provided.

ANNUAL AND SICK LEAVE ACCRUAL

Any leave you had previously scheduled during the lapse period is cancelled, so you won’t be charged leave.  In addition, per OPM guidance, if you had properly scheduled “use-or-lose” annual leave that you weren’t able to use because of the lapse in appropriations, that leave must be restored to you.  Your agency will provide instructions on any action you may need to take.

Furloughed employees: You won’t accrue annual and sick leave during the furlough once you’ve been in a nonpay status for 80 hours (for full-time employees with a regular 80-hour biweekly tour of duty).  Congress may, however, authorize retroactive accrual of leave.

Excepted employees: You will continue to accrue leave, but accrued leave will not be available for use until funding is provided.

RETIREMENT

No retirement deductions will be made if you aren’t receiving pay.  Generally, a period of nonpay status will have no effect on an employee’s retirement-creditable service or high-3 average pay unless the nonpay status is for more than 6 months during the calendar year.

ALLOTMENTS FROM PAY

Since no allotments can be made if you’re not receiving pay, you may want to review your allotments to determine whether you’ll need to make alternative arrangements (e.g., if you are using allotments to pay loans, alimony, etc.).

UNEMPLOYMENT COMPENSATION

Furloughed employees are eligible to apply for unemployment benefits, but excepted employees working on a full-time basis are generally not eligible. Employees who wish to file should do so with the Unemployment Office for the state where the employee worked (i.e., last official duty station prior to furlough).

Please be advised, however, if Congress authorizes retroactive pay for furloughed employees, you would be required to pay back any unemployment benefits you received, in accordance with State law.  For more information see OPM’s Pay-Leave Guidance and the U.S. Department of Labor’s Unemployment Compensation for Federal Employees website, https://oui.doleta.gov/unemploy/unemcomp.asp.

FEDERAL EMPLOYEES HEALTH BENEFITS (FEHB)

FEHB coverage continues even if you don’t receive a paycheck.  Your share of premiums will accumulate and be withheld later when the lapse ends and employees can be paid.

FLEXIBLE SPENDING ACCOUNT (FSAFEDS)

Your FSAFEDS payroll deductions stop when you don’t receive pay.  You remain enrolled in FSAFEDS, but you can’t be reimbursed for eligible health care claims until you return to pay status and your payroll deductions can be made.  Payroll deductions will be subsequently collected to match your annual election amount.

Eligible dependent care expenses incurred during the lapse in appropriations may be reimbursed up to whatever balance is in your dependent care account—as long as the expense incurred allows you (or your spouse, if married) to work, look for work, or attend school full-time.

FEDERAL LONG TERM CARE INSURANCE PROGRAM (FLTCIP)

Your coverage will continue.  However, if you usually pay your premiums through payroll deduction, and the lapse period is less than three consecutive pay periods, your accumulated premiums will be withheld when the lapse ends and employees can be paid.  Otherwise, Long Term Care Partners will begin to bill you directly for premium payments.  You must pay those bills on a timely basis in order to continue your coverage.

FEDERAL EMPLOYEES’ GROUP LIFE INSURANCE (FEGLI)

Coverage continues for up to 12 consecutive months of nonpay status, but premiums are collected only for pay periods for which you receive pay.

FEDERAL EMPLOYEES DENTAL AND VISION INSURANCE PROGRAM (FEDVIP)

Your coverage will continue.  However, if the lapse period is less than two consecutive pay periods, your premiums will accumulate and be withheld later when the lapse ends.  If you do not receive pay for two consecutive pay periods, BENEFEDS will begin to bill you directly for premium payments.  You must pay those bills on a timely basis in order to continue your coverage. 

THRIFT SAVINGS PLAN (TSP)

For information on the effect of a furlough on your Thrift Savings Plan contributions, loans, and investments, please refer to https://www.tsp.gov/index.html. 

CHILDCARE SUBSIDY PROGRAM

Employees enrolled in their agency child care subsidy program should contact their agency HR office for information about payments.

EMPLOYEE ASSISTANCE PROGRAMS

Employee Assistance Program (EAP) services can be helpful in providing confidential counseling with experienced, licensed counselors, and many EAPs can provide access to legal and financial consultation services.  Contact your agency’s EAP office to determine what services might be available to you.

OTHER CONSIDERATIONS

Some mortgage, loan, credit and utility providers have indicated that customers may qualify for alternative arrangements.  Please contact your providers for more information.

Note:  This guidance should not be considered time and attendance instructions.  Guidance on documenting time and attendance will be provided by each agency and payroll provider.’

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.

Posted in UNCATEGORIZED

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