Recently OPM clarified a number of issues around interim annuity payments and what retirees can expect when they first leave federal service. It is essential that federal employees have sufficient cash available and are financially prepared  when retiring to allow OPM to complete a final adjudication of their claim.
OPM is now processing applicants in an average of 133 days however they can take up to a year to process a retirement application if information is missing or problems are encountered. Last year OPM processed over 100,000 retirements, a significant increase over the previous year. The Federal Times reported that “retirement applications saw an unexpected spike in October. That month’s 11,411 applications were 42 percent higher than October 2010, and 60 percent higher than October 2009.” With the possibility of many agencies offering VERAs and VSIPs  in 2012 the delays can only get worse.
Many are receiving interim payments for far less than they anticipated due to a number of issues. OPM indicates that annuitants will receive approximately 90% of their expected NET monthly payment, less federal income tax withholdings. NET payments equal what is remaining after deducting health care and life insurance premiums from the gross amount. I received an interim payment of 70% and my claim was processed in 90 days when I retired. Some have reported receiving as much as 50% less due to extenuating circumstances and the problems still not resolved a year after they retired.
FERS retirees need to be aware of the fact that OPM doesn’t include the FERS Supplement  in the interim payment because they don’t have the data available until the retirement is completely processed. OPM reported that a number of factors cause reduced interim payments or prevent OPM from initiating interim payments. These factors include:
- Court orders that are on file at OPM. Court orders can contribute to as much as a 50% reduction in interim payments. Check out our Divorce Forum  for clarifications and informative articles on this subject.
- Part time service 
- Unpaid military deposits 
- When a redeposit wasn’t paid for refunded service creditable towards disability retirement
- Employees entitled to special retirements  for LEO, FF, ATC or other special retirement programs
- CSRS offset applicants  with 90 days of or over the age of 62
- Non-deduction service performed after 10/1/1982 creditable under CSRS where the deposit has not paid in full
- Deposits have not been paid for FERS creditable non-deduction service
- VA part time Direct Medical Solutions (DMS) physicians, including doctors, scientists, and surgeons
- Refunded service creditable towards CSRS non-disability retirement ending on or after 3/1/1991 where the deposit has not been paid
- Excess LWOP
- Service that is unverified or missing
- Where an insurable interest survivor election is made
- When no survivor election is made
- Receipt of military retired pay
Don’t be left in a lurch when you leave. Check out my article titled “Can You Survive on Interim Retirement Checks”  to avoid OPM retirement processing delays when you leave and learn how to be prepared for the unexpected.
TSP Salary Deferral Amount Increased
A few months ago the IRS released the new deferral limits for the TSP . For 2012 you may defer up to $17,000 into your TSP. If you are 50 or older you may take advantage of the catch up provision and defer an additional $5,500. A common question that I’m asked is, if I’m turning 50 during 2012 when can I start deferring the additional amount. The answer is if you are turning 50 during 2012 and wish to take advantage of the catch up provision you may begin the extra deferrals with the first payroll of 2012.
To change you TSP contribution amount you will need to fill out form TSP 1 .
To take advantage of the catch up provision you will need form TSP-1-C .
The end of the year is also a great time to review your beneficiaries . A number of life changing events can happen throughout the year. If you’ve not reviewed your beneficiaries for a while I would recommend taking a few moments to review them. I had a client pass away a few months ago. He had changed his beneficiaries without his wife’s knowledge. When he had passed away unexpectedly I had to inform his wife that she wasn’t the sole beneficiary of his accounts. I can say first hand that visiting the spouse in this case was very difficult.
Paul Risser, our new Financial Planning Forum Host , submitted this timely update. Visit his forum  for additional guidance. You can add Paul’s articles to your email newsletter list by clicking here  and type in your email address. Instructions on how to update your newsletter profile will be emailed to you. Paul will be contributing insightful articles on economic trends and retirement planning targeted towards federal employees and retirees. We posted the following articles that you will find helpful:
- Why Financial Planning : What It Is and what can it do for you
- Next Article: What Beneficiaries Need To Know: What do you do when an account owner passes away?
Recent Forum Host Articles:
- Why Financial Planning  by Paul Risser, host of our new Financial Planning Forum 
- Stop #4 – Everything’s Replaceable, or Is It?  By Chuck JumpeterWe welcome Chuck back to the Health and Wellness Forum . Chuck lost all of his computer files last summer and has just now fully recovered. He also took time off to become a golf pro at his local club.
- Orlando Theme Park Resort Vacations  by Nancy Holston
Retiree Job Lists
We continue to post new job listings on our Jobs Board  from employers nationwide that are looking for retired federal employees. Many retirees supplement their retirement income with full or part time work. Here are several new job listings that you may find interesting:
- Comptroller / Accounting Manager for the Washington D.C. area. Maintain accounts of assets, liabilities, commitments, receipts, disbursements and other financial transactions of a federal agency.
- Coupon Merchandisers for Reston/Great Falls, VA, Collinsville, VA, Richmond/Chesterfield, VA, Tuscaloosa, AL, Greensboro/Centreville, AL, and Bangor, ME. Pay from $8.00 to $9.50 per hour and flexible hours.
- Ski Resort Jobs – Vail CO, UT, CA and other locations. (Multiple positions)
- Telesales Exec Trainee NE I, Orlando Florida
Learn more about your benefits , employment , travel , and financial planning issues  on our site and visit our Blog frequently at https://fedretire.net  to read all forum articles.
Request a FREE Retirement Benefits Summary Analysis  from a local adviser. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections. A sample analysis  is available for your review. This service is not affiliated with www.federalretirement.net
Visit our other informative sites
- Federal Government Jobs & Career Center 
- FREE Federal Employee’s Retirement Planning Guide 
- Federal Retiree Job Opportunities 
- Federal Employee & Retiree BLOG 
- Federal Employee’s Career Development & IDP Center 
- Post Office Jobs & Career Center 
- Job Search – All Sectors 
- Environmental Health & Safety Job Center 
- Nuclear Jobs and Careers 
- Stolen Car Plates & Recovery Guide 
- Educational Opportunities 
- Take Charge of Your Federal Career  (A Career Planning Workbook)
- The Book of U.S. Government Jobs  (How to Apply for Federal Jobs)
Distribute these FREE tools to others that are planning their retirement
- 2012 Excel Leave Chart  (target 2012 retirement dates and determine exact leave balances for each date)
- How to be Emotionally and Physically Prepared When You Retire 
- How to be Financially Prepared When You Retire 
- Master Retiree Contact List  (Important contact numbers and information)
- Survivor’s Guide 
- Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)
The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.
Last 5 posts by Dennis Damp
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