Posted on Friday, 8th March 2024 by Dennis Damp

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Much to my surprise, most banks and credit unions continue to offer paltry yields on their savings and money market accounts. It’s disappointing considering they are using our money to fund customer’s mortgages at 7 percent and higher or new car loans up to the high single digits.

Fixed income continues to hold its allure for retirees and those who want to earn 5 percent or higher returns on their cash and savings without risking a major loss. Yes, the stock market does offer the potential for higher gains, but it doesn’t come without considerable risks for those approaching retirement and retirees alike.

A Little Doesn’t Go a Long Way

Many banks continue to offer .04% to maybe 1% tops on savings and checking accounts. Higher rates are available if you look around or negotiate a better rate with your bank. These low rates would earn you a measly $4 to $100 per $10,000 of savings for the entire year!

Moving that $10,000 to a 5.2% four, eight or 13-week Treasury Bill would earn you $520 over the year! Quit a difference. You can select auto reinvestments with Treasuries for up to two years and auto reinvestments can be canceled at any time if you need the funds. The rates change for each new issue, over the past year the yields have averaged over 5 percent.

It appears that the Federal Reserve intends to hold rates at the current levels for longer than most financial pundits anticipated. With this country’s huge national debt, I’m not sure anyone can predict where inflation and the market will end up if government doesn’t stop their excessive spending and balance the national budget.

Treasury Bill Rates Holding Steady

My article titled “Ditch your Bank’s Low Savings Rates” describes the advantages of Treasury bills compared to bank and credit union rates.

Today you can earn just over 5% on a 4, 8 or to 13-week T-Bill, the 26-week T-Bills are currently paying 5.065%. My last 13-week T-Bill investment yielded 5.368% on February 2, 2024 and my 8-week Bills reinvested at 5.418% on January 1, 2024.

If you invested $25,000 in a 13-week T-Bill issued on 2/1/2024 that is earning 5.368%, the Treasury withdrew $24,665 from your account. On the maturity date of 5/2/2024 they will deposit $25,000 into your account resulting in a $335 profit.

Had you had this amount deposited in a bank savings account paying 1%, you would have earned $62.50!

Treasury Bill Investment Rates

Purchasing Treasury Bills, Notes, and Bonds

Visit TreasuryDirect.gov to register, explore the options, and start purchasing Treasury bills, notes, and bonds, TIPS, and savings bonds. You are buying direct from the government and eliminating the middle man; there aren’t any fees charged for purchases.

Most brokerage accounts offer clients access to Treasury auctions and will purchase them for your account; the longer-term notes and bonds can be sold on the secondary market if needed. Here is more information on the Treasury’s programs:

• Treasury Bills In-depth
• Treasury Notes In-depth
• Treasury rates (Yields)
• Auction schedule

CDs and Savings Bonds

According to the Federal Deposit Insurance Corporation (FDIC), the national average savings account is only paying 0.47% as of February 2024. A slight increase from my last update on this subject.

Many online banks, credit unions, and some regional banks are offering competitive rates for savings accounts and CDs from 3.5 percent and higher in many cases. Most higher rate CDs in my area are for terms from 6 to 15 months. A good deal compared to just a year ago when most rates were just moving above 1 percent and they are FDIC or NCAU insured.

I was able to lock in 15-month CDs at two local credit unions late last year for 5.75% and my primary credit union matched their offer!

The 30-year average gain of the S&P 500 is 7.1% after inflation. These CDs have no market risk if you stay under their insured limits. I moved some of the funds I was cycling through the Treasury to this attractive yielding investment. In hindsight, I could have moved more.

Currently short-term Treasury T-Bills rates have dropped a bit, but still above 5%. Rates may stay close to the current levels for some time before the Treasury changes course and begins lowering rates.

I-Savings Bond Rates 

I Bonds issued November 1, 2023, to April 30, 2024, earn 5.27%. This includes a 1.3% fixed rate. Still a great rate for one of the safest investments available. You can’t cash them in for one year. Plus, if you redeem them within the first five years you lose three months’ interest.

I-bonds issued in 1999 had a 3% fixed rate, they are earning just under 7% now, the 3 percent fixed rate and the 3.97% inflation rate for the new issue I-bonds.

If you purchase an I-Bond by no later than April 31, 2024, you’ll receive the 5.27% for six months from the date of purchase. The rate will change after that to the new inflation rate announced this coming May plus any fixed rate your previously purchased bonds may have.

Market Observations

The stock market is soaring and it reminds me of the dot-com bubble back in 2000. According to Wikipedia, “Historically, the dot-com boom can be seen as similar to a number of other technology-inspired booms of the past.” The previous booms and subsequent crashes were related to many of the new technologies of their time, railroads, TVs, computers.

During the dot-com crash, many online shopping companies failed and shut down. Today, the same over exuberance for tech and artificial intelligence (AI) in general appears to be on that same trajectory.

Actually, AI isn’t new, it started shortly after computers were first developed. Today, they are dressing it up, and repackaging it to gain an advantage and drive stock multiples through the roof, and it’s working, just my perspective.

All companies down the road will benefit from these innovations in one way or another. If that is true, why aren’t the 493 other stocks in the S&P benefiting from the AI revolution and the growth in the index isn’t more broadly distributed? Will it take a recession to force the issue?

I’m not a financial analyst, just an observer and there seems to be some correlation to prior booms and subsequent busts. Especially when you consider that the top 7 stocks of the S&P index accounted for 29% of the index’s market value last year!

According to Goldman Sachs’, the Magnificent Seven stocks gained 71% during 2023 while the other 493 stocks in the S&P added just 6%. Overall. This streak has extended into 2024 at a feverous pace. These seven stocks include: Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA).

Technology including AI and IT stocks growth has exploded and many believe this is only the beginning. I’m somewhat skeptical, time will tell if a major correction or recession is on the horizon.

Summary

As a retiree, I prefer to invest in the safety of Treasuries, CDs, and conservative stocks, mutual funds, and market leaders that have been around for many decades, pay dividends, and have sound fundamentals. Many retirees set aside a small portion of their investments for the more aggressive growth stocks, mutual funds and ETFs of the day.

Now that CD rates are improving; if you can lock up your discretionary savings and investments for 6 to 15 months or longer, they are a viable option. CDs can be cashed in before maturity, however the penalties can be significant. Treasury Bill rates are moderating down a bit, not much but you can see the trend on the above chart.

Short term T-Bills continue to provide impressive yields considering how many banks continue to low ball their savings rates for established accounts. These banks are betting on the reluctance of many to move funds from their savings and checking accounts elsewhere.

Helpful Retirement Planning Tools

• Financial Planning Guide for Federal Employees and Annuitants
• TSP Guide
• Budget Work Sheet
• 2024 Pay Tables
• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• 2024 Federal Employee’s Leave Chart
• Medicare Guide
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, 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 information contained herein should not be considered investment advice and may not be suitable for your situation. 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: CDs, Fixed Income Update, Higher CD Rates, I Bonds, Retirement Savings, T-Bills
Posted in ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 23rd February 2024 by Dennis Damp

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I’ve written hundreds of articles for our newsletters and blogs and updated our Federal Employee’s Retirement Planning Guide frequently over the past 20 years. Even though we update our sites as needed, our blogs, newsletters, and at times our websites are time sensitive.

Due to federal regulations, benefits, and financial planning guidance changes, over time, our earlier released articles become outdated. A good example of this is the recent article titled TSP RMDs & Withdrawals Plus Site Navigation Tip. I’ve written several articles about RMDs over the years; each article outlined major changes.

Our Updating Process

I link to the most recent article on a subject from our retirement planning site’s relevant section. At times I also update the older articles and note the date of revision at the beginning of the article. For example, I wrote an article titled, Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1) December 12, 2014.

This subject is a critical one for those approaching 65; instead of writing a new article on this subject, I updated the article 10/20/23 on our blog. I annotate that date at the top of the article as noted on the following screenshot. The article posting date remains 2014 with the revised date at the beginning of the article.

If you are reading older articles that haven’t been updated as noted below, be aware that things may have changed and proceed with caution.

Newsletters & Blog Differentiation

All of our newsletter articles are published concurrently on our blog at www.fedretire.net. I link our Retirement Planning Guide’s relevant sections to each blog article where appropriate. When newsletter subscribers send an email about a potential correction or I discover an error, I research the issue and if warranted make the change in the blog, and notify our newsletter subscribers of the correction in the next article I send out.

Currently I’m going through the older articles and either purge them from the article index if no longer relevant, update them, or write another article to cover the subject more thoroughly. All in all, an arduous task that I take on incrementally.

Newsletter Links & Article Listings

I occasionally receive an email from a newsletter subscriber reporting the article links are disabled. Contact your organization’s IT department if the links are inactive, they can remove the restriction after confirming the email is secure.

This happens more frequently with military organizations than others. If the links are not active in your email newsletter, go to our blog at www.fedretire.net, the links will be active there. The blog article has a print icon in the upper left corner of the page if you want a hard copy.

Master Article Listings

We post a master article Index on our site and also provide direct access to all of the articles on our blog from the most recent back to 2009. The master article index is alphabetized to the highlighted text in each article title. You can access all of my articles on our blog by author listing. Click on the title to view and read the entire article.

You will find articles posted for all 12 of the writers listed under the Author’s Listing sidebar on our blog that we worked with over the years.

Retirement Planning Guide 

I developed and launched www.federalretirement.net in 2004, the year I retired. During my last year of service, I attended two agency sponsored retirement planning seminars and came back with more questions than answers.

This site helps federal employees and retirees find the information they need to make informed decisions about their retirement and provides abundant resources targeted to your specific needs. We are constantly updating and adding features to assist federal employees and retirees alike.

A search box is located at the top of every page, use it to find specific information. The search results provided by Google often list advertisers (Sponsors) at the top of the results listings. All of the search results below the sponsor’s links are direct to our site and will provide the information you seek.

Observation

Over the past few years Google and other search engines are placing numerous paid sponsor ads, paid search, listings at the top of most search results. Recently, Artificial Intelligence (AI), basically Rich Snippets, completely block the native search results so fewer people can click through to our sites.

Until these changes, our site pages for federal employee’s retirement planning key words and phrases were listed towards the top of page one search results and many found our site for the information they were seeking.

Currently, due to these search engine algorithm changes, the best way for others to learn about our sites and services is through referrals from our site visitors and newsletter subscribers. If you know of others that would benefit from our services, please forward our newsletters or send them a link to our retirement planning website and blog.

Direct links from an organization’s websites or servers, possibly listed under Retirement Planning Resources, would also be much appreciated.

Conclusion

Federal laws and regulations are subject to change. The ultimate resource is your personnel or HR office and of course OPM regulations and federal laws. We often link to critical OPM and other government official guidance on our web site.

Active federal employees should talk with their HR retirement specialist before making critical decisions. Use our site and articles to research options and to better understand the ramifications of your choices

Your HR specialist is the only one who has access to your electronic Official Personnel Folder (eOPF) and can help you with your retirement application and initiate any desired changes.

Download your eOPF before you leave federal service and retain a copy in case you have issues down the road. I didn’t have that option when I retired. Retirees must contact OPM for benefit guidance.

If you are looking for retirement planning information, go direct to the sources: OPM, Social Security, Medicare, our website and blogs, and those of our competitors to name a few.

If you are planning to retire this year review the articles “CAUTION – Do This Before You Retire” to ensure continuity after you leave and follow our Ultimate Retirement Planning Guide to start you on your retirement journey.

Helpful Retirement Planning Tools

• Financial Planning Guide for Federal Employees and Annuitants
• TSP Guide
• Budget Work Sheet
• 2024 Pay Tables
• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• 2024 Federal Employee’s Leave Chart
• 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.

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

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Posted on Friday, 9th February 2024 by Dennis Damp

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Shanaz, one of newsletter subscribers, wrote, “I have been trying to read the ‘Estate Planning Guide’ from the link you have provided in your newsletter. Is it possible for you to email the document so I can read it without distraction from all the ads.”

The guide is only available online and I removed the majority of ads and reduced the frequency to improve our site visitor’s experience. Personally, ads that rotate and are imbedded in the content are distracting to say the least. I also updated the guide and checked the links to the resources we include.

My goal with our retirement planning site, blog and newsletter, is to provide federal employees and annuitants with the answers and clarifications they need to make informed benefit decisions.

Estate Basics

Your personal estate is simply all of the property you own, tangible and intangible, and valued at its current market value. The planning that is needed doesn’t require you to be a mathematical wiz or rocket scientist, anyone with average intelligence can plan their estate, even without an attorney for smaller and less complex plans. The vast majority of estates are much smaller than the 2024 federal estate tax limit of $13,610,000!

The key is to have the proper references and resources to help you through the process. I developed and used the 11-part guide to complete my first estate plan in 2004. The 11-sections take you through the entire process. At the time I used NOLO’s Will Maker Plus to complete all of the documents. NOLO’s interview process walks you through every step, removing all of the guesswork.

As my business grew, I eventually hired an attorney to complete our updated wills, trusts and other documents ten years later. I still had much to complete over and above the obvious documents the attorney provided.

More Info Please

Even after hiring an attorney there is considerably more information needed to complete your estate plan. Our guide will assist you with the additional data collection that is necessary for your heirs to know where everything is: contacts, insurance policies, investments, obligations, monthly bills, annuity information, detailed final arrangements, online login user names and passwords, etc.

None of the documents an attorney provides includes this personal information; if you don’t compile it, your heirs will have a difficult time managing the estate, no matter what the size.

Getting Started

Start by visiting our Estate Planning Guide, read the introduction and then click on the 11-Part Guide link under the page menu.

The guide reflects What I did to finalize my estate plan that is needed regardless of whether or not you hire an attorney to draft your wills, trusts, health directives and powers of attorney. These documents can be economically completed for smaller and less complicated estates using Quicken Will Maker Plus 2024.

Their Will Maker Plus version walks you through creating your wills, health care directive, final arrangements, durable power of attorney, letter to survivors, living trusts, and transfer on death deeds. All in one downloadable package for Just $139, a drop in the bucket compared to an attorney’s $300 or more hourly fee.

I suggest using Nolo’s Executor’s Bundle to help you through the process.

Conclusion

After receiving the request from Shanaz, I evaluated the ads rotating on our sites. I had auto ads activated. With this feature, Google ads are rotated to areas most frequented by our site visitors. I turned off this feature for the Estate Planning Section so site visitors will be able to use the guide to develop your plans with few distractions.

I also reduced auto ads for the entire Federal Employee’s Retirement Planning site. A limited number of fixed ads will still display; without them we couldn’t continue to offer this free service. We don’t require registration to use our site or collect any personal data.

Even if you have an estate plan, it’s best to review it on a regular basis. I update my information binder as needed, more frequently if major changes are needed.

To find information on our website, use the top menu bar, click on the item of interest and a dropdown menu appears. You can also use the search box in the upper right-hand corner of every page. Use our site to find the information you need to better understand your retirement benefits and so much more.

Helpful Retirement Planning Tools

• Financial Planning Guide for Federal Employees and Annuitants
• TSP Guide
• Budget Work Sheet
• 2024 Pay Tables
• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• 2024 Federal Employee’s Leave Chart
• 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: estate planning, Estate Planning Guide, Federal Benefits Blueprint, Power of Attorney, Trusts, Wills
Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 2nd February 2024 by Dennis Damp

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A Federal Employee’s Dilemma

Is the grass greener on the other side? Humm, maybe, depending on the circumstances, yes and no!  If you’re referring to Ireland, yes, their grass is literally greener than most. When it comes to a career change proceed with caution, especially when considering federal employment’s exceptional pay and benefits.

In my late forties, I needed a change after spending 10 years in the same position. Early outs were on the table, and I considered applying. Thankfully, I stayed the course and transferred to another position within the same agency that was a good fit for me and my fellow workers.

What Was I Thinking

At first glance it was a no brainer to take an early out, I had a profitable part time business up and running, and a place to hang my hat when I left. My wife reminded me of what we committed to when I was just 25 years old and at a crossroad in my career. An excerpt from my memoire The Early Years, A Road Less Traveled follows that succinctly represents why I stayed the course. At the time, I was working for the Department of Defense with the Air National Guard.

Where it All Started

“I found an announcement for a GS-856-7/11 electronics technician position with the FAA at Phillipsburg, Pennsylvania, 145 miles northeast of Pittsburgh.

The position offered a small pay increase initially. However, promotions were automatic to the GS-11 grade as long as the applicant passed their training program and obtained the required equipment certifications. The GS-11 pay was considerably higher than what I was making with the Air National Guard. It would take me two years to reach the GS-11 grade or longer, depending on school availability. There was a significant risk, if I failed the schools I would be terminated!

That same week, I visited the USAir hangar at the airport and talked with their personnel office. I was at a fork in the road. At the Pittsburgh airport, the road to the left led to the FAA’s air-traffic control tower, while a right took you to USAir’s maintenance hangar.

If I worked for USAir, we wouldn’t have to move, their equipment was similar, and I’d been doing the same type of work for the past five years. The job with the FAA required a move and a considerable amount of training for new ground-based systems, but it had significant promotion potential and much higher pay after two years.

We agreed that the FAA was the best path for us, and I applied for the position in mid-September 1975. I already had five years of combined military and federal service, and if I stayed with the federal government, I could retire at age fifty-five with thirty-five years of service.”

True to our early commitment, I retired at age 55 with a generous annuity. Had I taken an early-out or moved to the private sector just 7 years earlier my annuity and benefits would have been greatly reduced.

Contradiction

I’m not saying a move to the private sector isn’t best for you and your particular circumstances. Leaving federal service, especially after devoting the majority of your work years to federal service, requires considerable forethought before proceeding. I wrote an article for Clearance Jobs titled, “Should I Stay or Should I Go Now? Leaving the Federal Government for the Private Sector.”

I state in the article, “If you are thinking about a move to the private sector, explore the opportunities and evaluate your federal retirement options. You may be able to take advantage of an immediate or deferred retirement.”

Opportunities are abundant in the private sector for highly skilled federal workers and annuitants that have the experience many companies and contractors seek out today. Sometimes their offers are hard if not impossible to resist and you never know what lies ahead unless you follow that path. If you take that path, go with your eyes open and research the impact and implications thoroughly.

Conclusion

Even though I stayed in federal service to full retirement, I understand why others would choose to leave and pursue an alternate path. Government, due to arduous and often times conflicting rules and regulations, can stymie creativity.

Successful government employees that find ways to make things work in this environment are the ones who succeed. It may be difficult but certainly not an impossible task. Another consideration is time in general.

If you are in your late 40s or early 50s with 20 to 25 plus years of service, your full retirement date isn’t that far down the road! If you leave federal service under these circumstances, ten years later you may question why you didn’t wait to make a move when you were in your high earning years at the time, and socking money away in your 401K and retirement fund!

Fortunately, Federal Employees that leave federal service may be eligible for an immediate or deferred retirement and able to retain or transfer their TSP retirement plan to an IRA or new employer’s plan.

If you are considering leaving federal service, I highly recommend you read and print a copy of Tammy Flanagan’s article titled “Planning a career change in 2024?.”  This comprehensive article provides a summary of the things you MUST know about your benefits if you are contemplating leaving federal service.

Helpful Retirement Planning Tools

• Financial Planning Guide for Federal Employees and Annuitants
• TSP Guide
• Budget Work Sheet
• 2024 Pay Tables
• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• 2024 Federal Employee’s Leave Chart
• 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: Changing jobs, Deferred Annuities, Federal Civil Service, FERS, FERS Retirement, Leaving Federal Service
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 26th January 2024 by Dennis Damp

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The Social Security Administration was the first to send out forms again this year.  Our 1099 R Tax Forms typically aren’t available until the end of January to early February by regular mail. Registered users of OPM’s Retirement Services Website can download their Annuity Statement and 1099 R forms now.

1099 Forms

I received my SSA-1099 January 9 and downloaded my 1099-R from OPM January 16^th.  Many of our 1099-INT forms are now arriving from banks and credit unions. For those who purchased Treasury Bills, Notes, and Bonds online at www.TreasuryDirect.gov or cashed in savings bonds on their site, your 1099-INT and OID statements are now available for download.

If you cashed in paper savings bonds at your local back, the cashier gives you a receipt showing the amount of interest earned. This receipt isn’t your 1099, the bank or other financial institution will send you a 1099-INT for the bonds you cashed in.

I cashed in several thirty-year paper EE savings bonds last year and received a consolidated 1099-INT form this January from my bank listing the EE savings bond interest separately in box 3 of the 1099-INT form.

When selling a second home, the closing firm typically provides the seller and the IRS a copy of the 1099-S form. This form shows the gross proceeds and any real estate taxes paid the year of the sale. Any capital gains must be reported on your tax return.

Brokerage Forms

Brokerage firms typically send out their Tax Reporting Statements showing interest, dividends and capital gains or losses towards the end of January to mid-February, later for more complicated accounts. Their consolidated statements include 1099-INT, DIV, MISC and a 1099-B for proceeds from broker and barter exchange transactions.

Annuity Statements

Federal annuitants typically receive their updated Annuity Statement, with the COLA increase added, late December.

OPM sends out updated annuity statements anytime there is change that affects our annuity. Next month we will receive another statement showing FEHB healthcare and FEDVIP premium changes. 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.

This document 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.

Instructions are provided on how to make benefit elections such as how to apply for a survivor election for a spouse you marry after retirement, survivor annuity elections for a former spouse, and others.

Estate Planning

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 these forms from OPM’s site. This is an important document and should be readily available if you or your survivor need to contact OPM or require benefit clarifications.

You must be registered to use OPM’s Retirement Services Website. If you aren’t registered read the article titled “Connect to OPM’s Online Services” to understand the registration process and sign up.

Summary

Many banks and brokerage house’s 1099 and DIV reports are also available online for download early. Treasury Direct doesn’t send out print copies. You must download your Treasury’s OID and 1099 INT statements from your online account.

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 $79,000 or less. You will have to file your State taxes separately.

Turbo Tax offers a similar free tax filing service for those returns with limited credits and filed using IRS Form 1040 only. Roughly 37% of taxpayers are eligible for this free service.

Take advantage of OPM’s Online Services to download your 1099-R to file your taxes early, need to replace a lost 1099-R, or to obtain other important retirement forms and reports. The filing season for 2023 tax returns starts on January 29, 2024. The IRS will begin processing tax returns on that day.

Helpful Retirement Planning Tools

• Financial Planning Guide for Federal Employees and Annuitants
• TSP Guide
• Budget Work Sheet
• 2024 Pay Tables
• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• 2024 Federal Employee’s Leave Chart
• 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: 1099 R Forms, 1099-DIV, 1099-INT, 1099-S, Federal Employee's Annuity Statements, Free Tax Filing Services, SSA 1099
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 19th January 2024 by Dennis Damp

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I was required to take my first RMD at age 70 ½ several years ago before the laws were changed. Under the SECURE 2.0 Act in 2023 the required withdrawal age increased to 73. Several newsletter subscribers asked for an update on TSP annuities, RMDs, and withdrawals in general.

Rachel stated, “While the new TSP site is nice – I was very use to the old system and get lost in the new one, so many more options I get lost.” She wanted to know more about annuities. Jaynee wanted to know if it would be best to wait until late December to withdraw her first RMD and how to withdraw the funds.

RMDs, the Basics

The IRS Code requires that you receive a portion of your TSP account (your “required minimum distribution” or “RMD”) beginning when you reach a specific age as noted on the following chart and are separated from service.

If you are a beneficiary participant, your deadline for beginning to receive RMDs depends on whether your spouse died before or after your spouse’s required beginning date for RMD payments.

Find your applicable age and required beginning date:

  

If the total amount of your withdrawals and distributions doesn’t satisfy your RMD, the TSP will issue a supplemental payment for the remaining amount before the deadline each year.

Other financial institutions including brokerage houses typically notify you on their website and/or in writing of the amount to be withdrawn each year. You will have to initiate the withdrawals to avoid the IRS excise tax of 25% of every dollar not withdrawn. This penalty is reduced to 10% if you file a timely correction with payment within two years.

Required Withdrawal Amount

The TSP calculates the amount you’re required to receive using your age, your traditional balance at the end of the previous year and the IRS Uniform Lifetime Table. Your RMD calculation includes only your traditional balance, and only distributions from your traditional balance will count toward satisfying the RMD amount.

With traditional TSP, your contributions go into the TSP before tax withholding, which can potentially lower your current income tax rate. But when you take money from your traditional TSP, you’ll pay taxes on both your contributions and earnings at the income tax rate of the year you make the withdrawal.

To determine your RMD, log-in to your TSP account and click on “Withdrawals and Rollovers.”  You can initiate a withdrawal of any type, including an annuity, in this section. A “Minimum Distribution Notice,” providing the withdrawal amount for the current year, is sent out in early January to all particiants that are required to take a RMD, mine arrived January 11.

The Security and Exchange Commission provides an online RMD calculator if you want to run the numbers yourself.

Your First RMD

The first year you are separated from service and reached your applicable age or older is called your first distribution calendar year. If you don’t withdraw your RMD from your traditional balance during your first distribution calendar year, the TSP is required to disburse your first RMD to you by April 1 of the following year. That date is called your required beginning date.

If you receive TSP installments, your installments from your traditional balance will count toward satisfying your RMD. If your installments, combined with any subsequent distributions you might make, do not meet the required amount from your traditional balance, the TSP will send a supplemental payment from your traditional balance in March of the following year to satisfy your RMD before the April 1 deadline.

For those who wait until the following April to take their first RMD, you will be required to take a second RMD by December 31^st of that same year. Taking two RMDs in one year may increase your Part B and D Medicare premiums if your Modifed Adjusted Gross Income (MAGI) requires an Income Related Monthly Adjustment Amount (IRMAA).

Distributions

There are three basic methods of withdrawing money from your TSP account as a separated or beneficiary participant: installments, partial/total distributions, and annuity purchases.

The TSP suggests, “Before you decide to take money out of your TSP account, we recommend that you consider how your decision may affect your future needs. If you are retiring or retired, you should think about when you will actually need the money in your TSP account and whether the distribution choices you make will provide enough income throughout your retirement years.”

TSP Installments

You can choose to receive installments from your account monthly, quarterly (every three months), or annually. You may schedule a date up to six months in the future for these installments to begin. Your payments will continue, unless you stop them, until your total account balance equals zero. (The minimum duration is one year.)

This is true even if you choose to have the installments come from your traditional balance first or from your Roth balance first. When you run out of money in your chosen source (traditional or Roth), payments will continue from the source you didn’t choose.

There are two ways of setting the installment amount: installments of a fixed dollar amount and installments based on life expectancy.

Partial or Total Distribution

You can receive a distribution of all or part of your TSP account. Partial distributions must be at least $1,000. There is no limit on the number of partial distributions you can take, but we will not process more than one in any 30-day period. You are allowed to take a partial distribution of part of your account even if you’re currently receiving installments. (Taking a total distribution will stop your installments.)

Purchase an Annuity

You can use all or part of your TSP account to purchase a life annuity through their outside vendor. Purchasing an annuity means that you pay now to receive monthly payments that last for the rest of your life (or, if you choose a joint life annuity, the lives of you and your joint annuitant).

The money you use to purchase a life annuity is no longer managed by you. It’s not like your TSP account, an IRA, a CD, or a bank account. You give up your money and the control of it in exchange for guaranteed lifetime monthly payments.

If you choose this option, the TSP will purchase an annuity for you from their annuity provider. Once purchased, your annuity is not part of your TSP account, and you cannot change or cancel the purchase. The minimum for an annuity purchase is $3,500. The minimum applies to your traditional balance and your Roth balance separately.

• Review the TSP Annuity Fact Sheet for additional information.

Find the TSP Information You Need

The new TSP website offers considerable guidance. However, until you understand how their website is structured, it is difficult finding the information you need. Unfortunately, the only way to get to the general information about anything and everything to do with your retirement savings account is to search for that information on their site – BEFORE SIGINING IN!  It’s a two-tiered system with a comprehensive account section integrated into the main site.

Use the search box in the upper right corner, just to the left of the Log-in button, on www.tsp.gov to locate the specific information you need. The search box located on the site after signing in will only search your personal account information.

 

• There is also a “Chat with AVA” feature on every page in the lower right hand corner as presented below. It is a typcial chat bot where you enter a key word or term and it replies with canned answers.  It isn’t as comprehensive as the search box on the main site and provides snippits of information without many links to the detailed reports you need. You can experiment with it as well.

Chat with AVA Logo

Rachel wanted information on annuities, a search for that title on the main site presented the listing as noted below:

 

The above screen shot only shows three of the fifty plus entries for you to review.  The same search after log-in shows no results.

Helpful TSP Links

Here are links to helpful guidance that you can review for various situations that you may encounter. Bookmark or print them out for your retirement and estate plans.

• TSP Annuities Fact Sheet
• Taking Money from Your Account, Including RMDs
• Tax Rules About TSP Payments
• TSP Distributions

Helpful Retirement Planning Tools

• Financial Planning Guide for Federal Employees and Annuitants
• TSP Guide
• Budget Work Sheet
• 2024 Pay Tables
• 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
• 2024 Federal Employee’s Leave Chart
• 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: TSP Annuities, TSP RMDs, TSP Site Search Tip, TSP Withdrawals
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 5th January 2024 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.  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.

This booklet is a wealth of information and includes your personal retirement information: CSA number, annuity breakdown, survivor elections, benefit elections, etc.

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 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.

You can also request a copy by calling OPM at 1-888-767-6738 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: 2024 COLA, Annuity, Medicare Premiums, Retirement Account Limits, TSP 1099-Rs
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 15th December 2023 by Dennis Damp

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I like to close out each year with a few last-minute updates and observations. My next article won’t be published until early January. Time to celebrate the holidays and just sit back and relax awhile.

The Clock Keeps Ticking – Thankfully

The older I get, the faster time flies by. In our youth most couldn’t wait until we were 16, graduated high school, and finally reached 21!  What was the rush? During those early years we lamented why others were at those milestones and not us.

From my mid-teens on, life was and still remains a blur, too much to do and too little time to do it. Even in retirement, retirees often ponder how they ever found time to work.

Rarely a day goes by where I’m not occupied with family activities, writing columns, running the business, working on projects, managing finances, workout routines, and unfortunately numerous doctor’s appointments.

Maybe, it’s time to take the lyrics seriously from “Feelin’ Groovy,” one of Simmon & Garfunkel’s songs: “Slow down you move to fast, you got to make the morning last, just kicking down the cobblestones, looking for fun and feeling groovy.”

Not sure about feeling groovy at my age but it’s certainly time to slow down and take life easy for a change. Actually, that’s my 2024 News Year’s resolution.

Fortunately, early this year, I got a head start on next year’s resolution. I stop for coffee several days a week with new-found friends to discuss this, that, and everything in between. An interesting interlude with an eclectic group consisting of Bob, Gary, Dave, and Craig. A welcomed break to decompress and put things into perspective.

Thrift Savings Plan (TSP) Connectivity Issue

When I recently tried to connect to TSP.gov, and to log on to one of my healthcare provider’s sites, they appeared to be down. The Thrift Savings Plan (TSP) support line confirmed the site was up and running. I reviewed my computer’s security and virus protection software and didn’t find any problems. This was occurring on all three of my computers.

I called McAfee. They suggested I turn off their Virtual Private Server (VPS); low and behold I was able to connect. If this is happening to you. Verify that a firewall app or other VPN app is not conflicting with your McAfee or other virus protection software’s VPN. 

VPNs are full-featured Virtual Private Networks that protect you as you surf the internet.

According to McAfee, “A VPN replaces the IP address of your device with a different IP address, effectively hiding your location. It uses advanced AES (Advanced Encryption Standard) 256-bit encryption by default. This encryption protects your data by preventing others from reading it as it passes over the internet.”

It also provides anonymous browsing; advertisers trying to serve ads targeted or based on customer behavior aren’t able to obtain your browsing or search habits through conventional means.

2024 Annuity Statements Available Now

OPM posted our January 2, 2024, annuity statements on servicesonline.opm.gov December 11, 2023. The statement provides your monthly annuity amount based on the 2024 COLA of 3.2% for CSRS and 2.2% for FERS annuitants.

The health benefits and Federal tax withholdings annotated on this statement are based on 2023 withholdings. A Notice of Annuity Adjustment will be sent out later in January that reflects health benefit rate changes. These changes will also be reflected on the February 2024 online annuity statement. 

The 2023 1099-Rs are typically posted on this site by mid-January, mailed copies should be received by no later than January 31. 

New Computer Purchase

I was putting off purchasing a new office desktop for some time, my main system was 6 years old and slowing to a crawl. Each time I update to a new system it takes a considerable amount of time and effort to set everything up and transfer software and data.

New Dell Computer up and Runing

The transfer wasn’t as cumbersome as anticipated and I was up and running in 3 days. My new All-in-One Dell Inspiration 7000 Series is blazing fast. It comes with a 27″ Touchscreen Infinity Edge FHD (1920 x 1080) Display, NVIDIA® GeForce MX550, camera, 32GB memory, 1TB Solid State Drive (SSD), and Intel Wi-Fi 6E (2×2/160) Gig+, Windows 11 Home, and Bluetooth 5.2! That’s a mouth full.

With my old system it would take 5 minutes or more to bring up my Quickbooks accounting software, the new system loads it in 20 seconds!

Costco had it listed for $1,499 online. When I went to the store it was marked down to $1,099. I asked the store manager why the online price was considerably higher; he stated it was the shipping and the units in the stores were marked down for clearance. Clearance items at Costco are marked down to the dollar amount followed by 97 cents. I couldn’t pass up the deal.

All-in-Ones are compact and easier to set up. When you purchase a desk top tower you often have to purchase the display, camera, microphone, keyboard, and mouse separately. Plus, I didn’t want to craw around on the floor hooking up the tower to all of the ancillary equipment.  Most computers today, including desktops with towers, don’t come with a DVD drive much to my displeasure.

If you are contemplating the purchase of a new computer, ensure the new SSD drive is of sufficient size to accommodate all of your data, future updates, and software. The laptop, that I purchased December of 2020, had a meager 128 GB SSD drive with a one tetri bite (TB) of traditional hard drive storage.

All of the operating system goes on the main SSD drive and before you know it, the drive is full. I worked with Dell to move as much of my laptop data as possible to the hard drive but it is still a problem. If you purchase a minimum of 512 GB for your SSD drive or larger it will work more efficiently, and the SSDs load superfast. You won’t be disappointed.

Correction

In my previous article, the date of maturity for the 13-week T-Bill I mentioned was incorrect. The maturity date is 2/1/2024. Here is the corrected paragraph:

“If you invested $50,000 in a 13-week T-Bill issued on 11/2/2023 that is earning 5.488%, the Treasury withdrew $49,319 from your account. On the maturity date of 2/1/2024 they will deposit $50,000 into your account resulting in a $681 profit.”

My newsletter posts are published concurrently on our blog at www.fedretire.net. The corrections can be viewed there.

My newsletter subscribers and blog visitors are my de facto editors; your input is much appreciated. Please don’t hesitate to let me know if you find an error that needs corrected or that I missed something. I appreciate any and all feedback that I receive.

Wrap Up

Another year gone by at lightning speed, a year older, and hopefully wiser, not sure about that last one yet. I believe I wrote more articles this year than in any year previously, so many changes and so much to talk about.

This was especially true during open season where 17 FEHB providers set up Medicare Prescription Drug Plans (MPDP), and many new Medicare Advantage (MA) plans were established by others. Then you add in the substantial changes and cost increases for Long Term Care and so much more.

I revised and sent out our updated 2024 Federal Employees Leave and Schedule spreadsheet for those still working and planning their exit. Another year-long feature explored fixed income investing and the benefits of Treasury Bills, Savings Bonds, and CDs.

Several articles received a lot of attention this year including Pandemonium and Insecurity – The Jackels at Our Gate, and This, That, and Other Things – Nothing but the Truth. Sometimes I feel compelled to speak out about controversial subjects.

All this while tax season is fast approaching with even more changes coming our way. Change is a fact of life and happening at warp speed these days.

I wish all of my newsletter subscribers and site visitors a joyous holiday and a happy, healthy, and prosperous NEW YEAR.  My best to you and yours always.

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.

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

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