from federal employee to annuitant master the process! · ready, set, retire! step one: retirement...

From Federal Employee to Annuitant –

Master the Process!

A NARFE Federal Benefits Institute Webinar

Presented by Tammy Flanagan

Sponsored by National Active and Retired Federal Employees Association

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Ready, Set, Retire!

Step One: Retirement Readiness

Step Two: Pre-retirement Process

Step Three: Post-retirement Process

Step Four: Re-evaluate the Process


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Financial, Tax, Mental


Step One: Retirement Readiness

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Three (at least) Sources of Income:


1. Government Pension: CSRS or FERS – Human Resources Office / Retirement Specialist

– DIY Estimate

2. Social Security Retirement – Open a mySocialSecurity account: https://www.ssa.gov/myaccount/

3. Thrift Savings Plan – Use the Retirement Income Estimator:

https://www.tsp.gov/PlanningTools/Calculators/retirementCalculator.html

https://www.ssa.gov/myaccount/

https://www.tsp.gov/PlanningTools/Calculators/retirementCalculator.html

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Financial Planning


Current Income

Retirement Income

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Tax Planning


Federal Income Tax

CSRS and FERS retirement benefit • Contributions returned tax-free

Social Security • Tax-free • 50% taxable • 85% taxable

Thrift Savings Plan withdrawals • Traditional: fully taxable • Roth: tax-free

Don’t forget state tax

Will you lose tax deductions? • Mortgage • Flexible Spending

Account • Health insurance

premiums

• TSP contributions

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Mental Preparation


• Your identity

• Purpose / mission

• Relationships

• Health

Three Potential Problems:

– Stress on your marriage – Find something to do – Create a new identity

Retirement Lifestyle – Continue skills and interests – Adventurer – Searchers – Easy Gliders – Involved Spectators – Retreaters

Preparing Yourself Mentally for Retirement / USA Today

http://www.usatoday.com/story/money/personalfinance/2013/10/22/preparing-mentally-retirement/2885187/

http://www.usatoday.com/story/money/personalfinance/2013/10/22/preparing-mentally-retirement/2885187/

8 Sponsored by National Active and Retired Federal Employees Association

Apply for CSRS/ FERS Benefit

Step Two: Pre-retirement Process

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Select the “Best” Date


Annuity Commencement – 1st of the month following your

retirement – 1st, 2nd, 3rd or 4th of the month for

CSRS (and CSRS Offset)

Season – End of the leave year – Spring – Mid-year – Special Occasion

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Application for Immediate Retirement


● SF 2801: CSRS

● SF 3107: FERS

● www.opm.gov/forms

● Date of Final Separation

● Processed manually

● Fillable online

● 30 - 90 days prior to your date

of separation

● Make copies of everything

www.opm.gov/forms

www.opm.gov/forms

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Marital Information


Marriage certificate

Maximum spousal survivor benefit

– 10% reduction-FERS / little less than 10% reduction-CSRS – FERS: 50% of unreduced FERS benefit – CSRS: 55% of unreduced CSRS benefit

Partial spousal survivor benefit (lesser reduction to your retirement)

– FERS: 25% of unreduced FERS benefit – CSRS: 55% of $________

Married

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Marital Information


Former spouse is entitled to CSRS or FERS survivor benefits or a portion of your CSRS or FERS annuity (court order or divorce decree):

• If yes, is there a copy of the divorce decree on file with OPM? • Include a copy with your retirement application as well • If yes, has it been declared acceptable for processing?

Former spouse does not have entitlement to survivor or retirement benefits under CSRS or FERS, then

• No need to include a copy of your divorce decree • Voluntarily elect a survivor annuity

Divorced

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Marital Information


Options for your CSRS or FERS retirement:

• No survivor annuity

• Elect an “insurable interest” survivor annuity

• Elect a survivor annuity for a former spouse

Single

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Continue Insurance

FEHBP and FEGLI 5-year Test • You have been continuously enrolled (or covered as a family member)

in any FEHBP plan(s) for the 5 years of service immediately before the date your annuity starts, or for the full period(s) of service since your first opportunity to enroll (if less than 5 years).

Immediate Retirement • You are entitled to retire on an immediate annuity under a retirement

system for civilian employees (including FERS MRA + 10 retirements)


https://www.opm.gov/healthcare-insurance/healthcare/reference-materials/reference/annuitants-and-compensationers/#Service

https://www.opm.gov/healthcare-insurance/healthcare/reference-materials/reference/annuitants-and-compensationers/#qualifyrs

https://www.opm.gov/healthcare-insurance/healthcare/reference-materials/reference/annuitants-and-compensationers/#qualifyrs

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FEGLI Options: Basic FEGLI


Rate is per $1,000 of coverage

Reduction at age 65 (and retired)

Cost before age 65

Cost on and after age 65 (and retired)

75% Reduction $0.3250 No Cost

50% Reduction $1.0350 $0.71

No Reduction $2.4550 $2.13

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FEGLI Options: Basic FEGLI


Example: Retire age 60 / Live 30 years to age 90 Basic FEGLI = $75,000

75% reduction: $1,462.20 50% reduction: $20,632.50 No reduction: $58,972.50

$18,750 remains $37,500 remains $75,000 continues

Total Premium Paid over 30 years:

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FEGLI Options A, B and C


Option A:

$10,000 death benefit, reduces to $2,500 after

retired and age 65 at the rate of 2% / month

• Age 50 - 54: $2.38 / month

• Age 55 - 59: $4.33 / month

• Age 60+: $13.00 / month (free when

reduction begins)


FEGLI Options B and C Monthly premium per $1,000 of Option B and per multiple of Option C

No Reduction:

Continue paying

premiums

Age Band

Option B Up to 5 multiples of salary

(Example: $75,000)

Option C Spouse: up to 5 multiples of $5,000 Children: up to 5 multiples of $2,500

50 - 54 $0.238 ($17.85) $1.99 ($9.95 for five multiples)




70 - 74 $2.080 ($156) $8.30 ($41.50 for five multiples)


80+ $5.720 ($429) $15.60 ($78.00 for five multiples)

Full Reduction: Pay premiums to age 65 and retired, then $0 premiums and coverage reduces 2% / month to $0

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Continue Insurance

Federal Employees Dental and Vision Insurance Program (FEDVIP)

Federal Long Term Care Insurance Program (FLTCIP)

• No 5-year test

• Pay premiums while in interim status

• Can add or change during retirement


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One last thing… or two

Pay insurance with after-tax dollars

Flexible Spending Account ends

Continue contributions to health savings accounts if:

• Enrolled in a high deductible health plan, and

• Not covered by other health insurance



Interim Retirement

Step Three: Post-Retirement Process

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While You Wait ...

Last pay check

Notice of Separation / Final SF-50

Lump sum annual leave


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Apply for Social Security


Are you old enough?

Are you going to continue to earn wages?

Do you need the money?

How long are you going to live?

Is anyone else depending on your income?

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Online, by phone, in person?


www.ssa.gov ● As little as 15 minutes

● It's so easy

● Apply from the comfort of your

home

● At a time most convenient for you

● There's no need to drive

● No need to wait for an appointment

otherwise, call 1-800-772-1213

http://www.ssa.gov

http://www.ssa.gov

https://www.youtube.com/watch?v=MwjjsJEmfB8

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Interim Retirement Payments



http://www.washingtonpost.com/sf/national/2014/03/22/sinkhole-of-bureaucracy/


Month Claims Received Inventory %Processed in 60 days or less (YTD)

Average # of days to process Case in more than 60 days

January 2015 18,629 22,636 80% 91

February 2015 9,219 24,014 81% 103

March 2015 5,478 20,594 82% 99

April 2015 6,292 18,226 73% 74

May 2015 7,845 15,374 68% 79

June 2015 6,920 14,511 69% 99

July 2015 9,862 16,455 69% 97

August 2015 7,341 16,350 70% 98

September 2015 6,300 14,706 70% 94

October 2015 8,374 12,642 74% 86

November 2015 6,019 12,562 76% 98

December 2015 4,753 11,399 78% 104

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What is going on?


Obtain missing information

Determine your eligibility (annuity and health and life insurance)

Compute the amount of your annuity

Send you materials concerning: – Your survivor benefit election; – The alternative form of annuity; – Voluntary contributions / excess contributions; – Unpaid civilian deposit or redeposit – If you are a FERS MRA+10 retiree, your annuity commencing date

Authorize your annuity payment paid by the Department of the Treasury

Send you an annuity statement


OPM Communications

Unpaid deposits/redeposits – Last chance to pay money owed to CSRS or FERS – 30 days to decide

Excess CSRS contributions or Voluntary Contributions – Tax-free refund of contributions

• transfer to Roth IRA • taxable interest, may be transferred to TSP or IRA

COAP: Court Order Acceptable for Processing

CSRS Offset: Age 62 or when eligible for SSA

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TSP Withdrawal

1. Read: Withdrawing Your TSP Account After Leaving Federal Service

2. Read: TSP tax notice

3. Form TSP-70, Request for Full Withdrawal

4. Form TSP-77, Request for Partial Withdrawal When Separated

● Available on www.tsp.gov or through the ThriftLine (1-TSP-YOU-FRST or 1-877-

968-3778)

● Your withdrawal request cannot be processed unless your agency or service has

notified the TSP

● Usually takes up to 30 days for this information to be submitted to the TSP

National Active and Retired Federal Employees Association Sponsored by

https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/withdrawals/requestingWithdrawal.html#tsp70






www.tsp.gov

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Thrift Savings plan: Partial Withdrawal

You can make a partial withdrawal if you:

• Have not made prior partial withdrawal, and

• Did not make an age-based in-service withdrawal while

you were still employed by the federal government or

the uniformed services, and

• Request $1,000 or more from your account


https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/inservicewithdrawals/index.html





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Thrift Savings plan: Full Withdrawal

Three options:

● Single Payment

● Series of Monthly Payments

○ Specific dollar amount

○ Based on life expectancy

● Life Annuity


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Thrift Savings Plan


https://www.youtube.com/watch?v=2L4JbuNzofs

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Account Withdrawal Deadline

Required to start withdrawing your money by April 1 of the year following either: ● The year you turn age 70½, if you are separated, OR

● The year you separate from federal service, if you have reached age 70½.


35 National Active and Retired Federal Employees Association Sponsored by

Post-Retirement Options

Step Four: Re-evaluate the Process

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Changing Your Annuity Election

30 days to change survivor benefit election / no penalty

18 months to increase survivor benefit election / 24.5% penalty

End of marriage: death or divorce

– Election made at retirement void – Divorce decree – Contact OPM

2-year election period for post-retirement marriage

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Post-Retirement Employment

Federal

Re-Employed Annuitant

– With salary offset

– Without salary offset

Phased Retirement

Additional CSRS or FERS

Retirement

– Supplemental

– Recomputed

Other options

Use your skills and clearance

Post-retirement restrictions

Reinvent yourself

Earnings limit

– Social Security

– FERS supplement

– Disability

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Things You Can Change After Retirement:

• Address

• Marital Status

• Insurance

• TSP Withdrawal

• Tax Withholding


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from federal employee to annuitant master the process! · ready, set, retire! step one: retirement...

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