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Maximizing Your Federal FERS Benefits

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Maximizing Your Federal FERS Benefits

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  1. Maximizing Your Federal FERS Benefits Presented for: NOAA Boulder, CO Presenter: Ann Vanderslice Securities offered through Allied Beacon Partners, Inc. Member FINRA/SIPC. Home office 1201 S. Highland Avenue #2, Clearwater, FL 33756 727-441-1616

  2. What We Will Cover Today: Getting And Keeping Important Documents Together 2

  3. What We Will Cover Today: FERS Magic Numbers 3

  4. What We Will Cover Today: When Can You Retire? 4

  5. What We Will Cover Today: You’re Eligible to Retire – Now What? 5

  6. What We Will Cover Today: Retiring Under a VERA or VERA/VSIP 6

  7. What We Will Cover Today: How Much Will Your Pension Be? 7

  8. What We Will Cover Today: If You’re Married, Should You Take Survivor Benefits? 8

  9. What We Will Cover Today: When Should You Take Social Security? 9

  10. What We Will Cover Today: Do You Get Raises In Retirement? 10

  11. What We Will Cover Today: What Are Your Choices In TSP While You’re Working? 11

  12. What We Will Cover Today: Understanding The Impact Of Your TSP In Retirement 12

  13. What We Will Cover Today: How To Choose The Best Health Plan For You And Your Family 13

  14. What We Will Cover Today: Maximizing The Value Of The Flexible Spending Account 14

  15. What We Will Cover Today: How FEGLI Works For You 15

  16. What We Will Cover Today: FLTCIP 2.0 – The Longest Acronym In Federal Benefits 16

  17. What We Will Cover Today: Tax Implications While Working 17

  18. Important Documents • Certified Copy of Birth Certificate • DD214 – Certifies Military Service • SF-50’s – Official Personnel File • Social Security Statement • Marriage Certificate (if married) • Divorce Decree (if divorced) • Beneficiary Forms • Receipts for deposits/re-deposits Last Paycheck – SF 1152Thrift Savings Plan – TSP 3FEGLI – SF 2823Annuity (if single) - SF 3102 (FERS)

  19. 104,810 106,500 59,570 84,430 57,720 59,610 56,410 43,650 20

  20. Most Common Reasons for Retirement Processing Delays • Part-time service is involved. • Service has been refunded or a deposit for service is needed. • Receipt of workers' compensation is indicated. • Military retirement pay is involved. • Unpaid military deposits are present. • Excess leave without pay (defined as more than six months) is present on the record. • The application includes unverified or missing service. • The employees has elected an insurable interest (a survivor benefit option available under the Federal Employees Retirement System) • No survivor election is made. (Remember- even if you are unmarried at the time or retirement, don't leave this section of the retirement application blank.) • A court order for a divorce requires apportionment of the annuity. • The submission by the agency is incomplete and is missing key data needed for calculating interim payments. According to OPM, 23 percent of all claims received are missing one or more records and 11 percent are not received during the first 30 days.

  21. Magic Numbers Ages 35 = Free FEGLI begins to reduce from double benefit 45 = Free FEGLI double benefit ends 55 = Earliest age to retire on unreduced annuity FEGLI premiums for Options A and B increase significantly Access to TSP without 10% excise penalty if you separate or retire

  22. Magic Numbers Ages 59½ = Access to TSP Funds for one-time withdrawal if still working Penalty-free access to IRA’s, 401(k)’s, etc. 62 = Earliest eligibility for Social Security benefits 65 = Eligible for Medicare 70 = Latest eligibility for Social Security benefits 70½ = Must begin taking at least minimum withdrawals from tax-qualified accounts (TSP, IRA’s)

  23. Magic Numbers Years of Service 30 years – needed to qualify for unreduced annuity if younger than age 60 5 years – least amount of years you can work and qualify for an annuity

  24. Magic Numbers Savings Amount Needed At Retirement $1,000,000

  25. Amount you need to save each year to have a comfortable supplement to your federal pension at retirement Rule of Thumb – 10% 25

  26. Save Early - Save Often • In this study Investor (B) opens an IRA at age 19. For seven consecutive periods, he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years, he makes NO MORE contributions -- he's finished. • A second Investor (A) makes no contributions until age 26 (this is the age when Investor B is finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he's 65 (at the same theoretical 10% rate).

  27. Save Early - Save Often The incredible results show Investor B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Study courtesy of: Market Logic, of Ft. Lauderdale, FL 33306

  28. FERS and FERS Transferee FERS Employees hired after 1/1/84 who did not have at least 5 years of service at 1/1/87 Contribute 7% of pay to: 6.2% to Social Security .8% to FERS 30

  29. FERS - RAE FERS Employees hired after 1/1/13 who did not have at least 5 years of service when hired Contribute 9.3% of pay to: 6.2% to Social Security 3.1% to FERS 31

  30. FERS and FERS Transferees FERS Transferee –Employees hired before 1/1/84 Employees with at least 5 years of CSRS employment who opted to go to FERS in 1987, 1988, or 1998 Rehired with at least 5 years of service under CSRS or CSRS Offset and chose to go to FERS Social Security benefits may be reduced for portion of annuity based on CSRS years 32

  31. FERS - Retiring On an Immediate, Unreduced Annuity Age Years of Service MRA* 30 60 20 62 5 Voluntary Early Out With Reduction - Age Years of Service MRA at least 10 years If you retire at the MRA with at least 10 but less than 30 years of service, your benefit will be reduced at the rate of 5/12ths of 1% for each month you are under age 62 (5% for each year) unless you have 20 years of service and your annuity begins at age 60 or later. Involuntary Early Out Without Reduction - VERA Age Years of Service 50 20 Any age 25 MRA = Minimum Retirement Age 33

  32. Deferred Retirement IF you do not want to take the penalty associated with a Voluntary Early Out – you may defer your retirement to age 62 and then take the unreduced amount. IF you have at least 20 years of creditable service, you may defer your retirement to age 60 and take the unreduced amount. You must “suspend” your health benefits if you defer in order to pick them back up when you begin receiving retirement benefits. 34

  33. FERS - Minimum Retirement Age If you were born Your FERS MRA is: before 1948 55 in 1948 55 and 2 months in 1949 55 and 4 months in 1950 55 and 6 months in 1951 55 and 8 months in 1952 55 and 10 months in 1953 – 1964 56 in 1965 56 and 2 months in 1966 56 and 4 months in 1967 56 and 6 months in 1968 56 and 8 months in 1969 56 and 10 months 1970 or after 57 35

  34. Best Dates to Retire • The last day of the month • End of a pay period • - Accrue sick and annual leave for that pay period • Last day of the year • - Rollover maximum annual leave • - Receive COLA on payout of annual leave • - Pay taxes in new year 36

  35. Best Dates to Retire –2013 December31, 2013 – Best of the BestUNLESSYou have a considerable amount of sick leave you want to count in the calculation of your pension THENJanuary 10, 2014 37 38

  36. Components to Calculate Federal Annuity Years of Service Based on Retirement Service Computation Date High 3 Average Salary % Formula Based on Years of Service 38

  37. Retirement Service Computation Date Based on time between appointment and separation where deductions are withheld. It includes: • Leave without pay (up to six months/calendar year) • Part-time service prior to 4/7/1986 - Full credit for eligibility and annuity computation • Part-time service on or after 4/7/1986- Full credit for eligibility – prorated for annuity computation • Intermittent days worked (WAE 260-day year) • Military service/Deposits/Re-deposits (SF 2803)

  38. FERS - Buying Back Military Time To Add To Your Creditable Service Employee Must Waive Active Military Retirement Pay Make Deposit of 3% ofBasic Pay + Interest = Credit for eligibility and annuity Do Not Make Deposit = No credit for eligibility or annuity

  39. Deposits Prior to 1-1-1989: Deposit Made = 100% for eligibility and annuity computation Deposit Not Made = NO credit for eligibility or annuity computation After 1-1-1989: NO credit = Deposit is not allowed 41

  40. Re-deposits Contributions Not Refunded: 100% for eligibility and annuity computation Contributions Refunded: Re-deposit CAN be made to get 100% for eligibility and annuity computation No re-deposit = time does not count 42

  41. Part-time Service Any part-time service prior to April 7, 1986 counts 100% toward eligibility and annuity calculation Any part-time service after April 7, 1986 counts 100% toward eligibility but is prorated for annuity calculation

  42. Annual Leave • Can carryover up to 240 hours of unused leave per year • Paid out as lump sum for any unused hours at retirement

  43. Sick Leave Accrue 4 hour per pay period for sick leave. FERS can include 50% of their sick leave in their creditable service for annuity calculation purposes only if they retire prior to 1/1/2014. FERS can include 100% of their sick leave in their creditable service for annuity calculation purposes only if they retire after 1/1/2014.

  44. 1,194 Hours 46

  45. 2014 1 10 Creditable Service Calculation Year Month Day Planned Retirement Date ____ _______ ____ Retirement SCD ____ _______ ____ Creditable Service ____ _______ ____ Unused Sick Leave ____ _______ ____ Total Creditable Service ____ _______ ____ 1984 8 14 29 4 26 6 26 22 Days Left Over! 29 11 47

  46. 48

  47. High 3 Average Average of your base + locality pay over any 3 consecutive years of creditable service Does NOT include: BonusesOvertimeMilitary PayCash AwardsHoliday PayTravel Pay 49

  48. High-3 Calculation YearSalary 2010 _____________ 2011 _____________ 2012 _____________ 2013 _____________ 2014 _____________ 2015 _____________ 2016 _____________ 2017 _____________ 79,219 Add last three years together and divide by 3 $79,219 79,219 79,219 50