The FERS retirement plan provides federal employees with savings through basic benefits, the Thrift Savings Plan, and Social Security, along with additional benefits like FEHB and FEGLI for health and life insurance coverage.

The Federal Employees Retirement System (FERS) is a retirement plan designed for civilian employees of the federal government. It replaced the Civil Service Retirement System and became effective on January 1, 1987. Let’s explore the key components of FERS:

1. Basic Benefit Plan:
   • The Basic Benefit Plan provides a defined-benefit pension.
   • To qualify, you need to have completed at least 18 months of federal service.
   • Your agency withholds your share of the cost from your pay, and they also contribute their part.
   • After retirement, you receive monthly annuity payments for the rest of your life.
2. Social Security:
   • FERS includes Social Security benefits.
   • Like any other worker, federal employees contribute to Social Security through payroll deductions.
   • Social Security benefits are based on your work history and contributions.
   • If you leave the federal government before retirement, both Social Security and the Thrift Savings Plan (TSP) can go with you to your next job.
3. Thrift Savings Plan (TSP):
   • The TSP is an individual retirement account set up by your agency.
   • Each pay period, your agency deposits an amount equal to 1% of your basic pay into your TSP account.
   • You can also make your own contributions, which are tax-deferred.
   • Your agency may provide a matching contribution.
   • The TSP is administered by the Federal Retirement Thrift Investment Board.
4. Eligibility:
   • You’re eligible for FERS if you’re a new federal civilian employee.
   • The main eligibility requirements include completing the required service period and having retirement coverage.
5. Creditable Service:
   • Creditable service includes both civilian and military service that can be used to compute your FERS retirement benefits. See our article on Military Buy Back to learn more about applying your military service
   • Certain rules apply, such as the treatment of refunded CSRS retirement deductions or military service after 1956.
6. Planning and Applying:
   • Start planning for retirement early to ensure a smooth transition.
   • Understand the process, calculate your pension, and consider reductions.
7. Types of Retirement:
   • Learn about different types of retirement, including regular retirement, early retirement, and deferred annuity.
   • Factors like age, service requirements, and specific circumstances affect the type of retirement you qualify for.
   • Want to know what your estimate retirement income would be?  Contact us here, or schedule an appointment here.
8. Survivor Benefits:
   • When a federal employee dies, monthly or lump-sum survivor benefits may be payable.
   • These benefits provide financial support to surviving family members.

Remember to consult your agency’s human resources department or a benefits specialist for personalized guidance.

Yes, federal employees can collect Social Security benefits, provided they have paid into the Social Security system during their employment. Most federal employees hired since January 1, 1984, are covered by the Federal Employees Retirement System (FERS), which includes Social
Security coverage.

Under FERS, federal employees contribute to Social Security through payroll taxes, just like employees in the private sector. These contributions go towards earning Social Security credits, which determine eligibility for Social Security benefits.

When federal employees retire, they may be eligible to receive Social Security benefits in addition to their FERS pension and any savings they have accumulated in the Thrift Savings Plan (TSP). The amount of Social Security benefits received is based on factors such as the individual’s earnings history, the age at which they begin receiving benefits, and other eligibility criteria established by the Social Security Administration.

It’s important to note that some federal employees may not be covered by Social Security, such as certain temporary or part-time employees, and employees who are covered by the Civil Service Retirement System (CSRS) and not subject to Social Security taxes. For CSRS employees who have worked 40 quarters in the private sector, they will be able to collect Social Security but it will be subject to the Windfall Elimination Provision (WEP), which will likely reduce your Social Security income.

Want to learn more? Schedule an appointment with one of our specialists, click here.

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services, including the Army, Navy, Air Force, Marine Corps, Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration. Here’s how it works: 

1. Employee Contributions: Employees contribute to their TSP account through payroll deductions. They can choose to contribute a percentage of their salary or a specific dollar amount. 

2. Employer Matching Contributions: For employees covered by the Federal Employees Retirement System (FERS) or the Blended Retirement System (BRS), the government may provide matching contributions to the TSP. Under FERS, the government matches employee contributions up to a certain percentage of their salary. Under the BRS, the government provides automatic and matching contributions.   

Most FERS employees can receive up to 5 percent matching of their contributions.  It is highly recommended that you contribute a minimum of 5% in order for you to take full advantage of your benefits.  Should you contribute more than 5% to your TSP?  Maybe.  You should try to contribute 10% or more of your income towards your retirement, but that does not necessarily mean that you should contribute all of it to the TSP.  The TSP does have low fees, and it’s very possible that they just use low-cost index funds.  However, based on your retirement goals, projected retirement income, and other factors would determine whether it is best to put all of your contributions toward your TSP, or to put anything above your matching into alternative investments.   

3. Investment Options: The TSP offers several investment options, including various Lifecycle (L) Funds and individual funds. The L Funds are target-date retirement funds that automatically adjust their asset allocation based on the investor’s projected retirement date. The individual funds include the Government Securities Investment (G) Fund, Fixed Income Index (F) Fund, Common Stock Index (C) Fund, Small Cap Stock Index (S) Fund, and International Stock Index (I) Fund. 

4. Tax Advantages: Contributions to the TSP are made on a pre-tax basis, meaning they are deducted from the employee’s salary before taxes are withheld. This can lower the employee’s taxable income in the current year. Additionally, investment earnings in the TSP grow tax-deferred, meaning participants do not pay taxes on the earnings until they make withdrawals in retirement. TSP also has a Roth option which can help to diversify tax strategies by allowing after-tax contributions to grow tax-free.  Roth contributions also pass on to beneficiaries tax-free.  For your contributions to be qualified as Roth Contributions,  5 years must have passed since January 1 of the calendar year when you made your first Roth TSP contribution and you are at least age 59½, permanently disabled, or deceased. 

5. Portability: TSP accounts are portable, meaning participants can take their accounts with them if they leave federal service. They can choose to leave the funds in the TSP, transfer them to an Individual Retirement Account (IRA), or roll them over into a new employer’s retirement plan. 

6. Withdrawals and Roll-Overs: Participants can start making penalty-free withdrawals from their TSP account after reaching age 59½. Withdrawals are subject to income tax, except for withdrawals from the Roth TSP option, which are tax-free if certain conditions are met. There are also provisions for hardship withdrawals and loans in certain circumstances.  Most Federal Employees after 59 ½ do begin moving their TSPs into an IRA through a qualified roll-over.  This allows them to have more control over their investments and gives them more options when designing a balanced portfolio to meet their goals of making their money last them the rest of their lives and use tax planning strategies to minimize their taxes in retirement.  Our Retirement specialists can teach you some of the best practices to do this.  

7. TSP Annuity: There is another option after retirement to convert your TSP into an annuity.  Now while there are some advantages to having an annuity for the right reasons, most employees opt not to take this option because it limits your options for leaving any remaining funds to your beneficiaries. Also, there is no longer any access to the funds they have saved throughout their career other than through monthly income.  Since this limits their liquidity, beneficiaries, and overall investment options, most people simply stay away. 

Overall, the TSP provides federal employees and uniformed service members with a convenient, low-cost way to save for retirement, with a range of investment options and tax advantages.   

To schedule an appointment with one of our specialists, click here! 

Navigating Retirement: Eligibility

Federal workers have an important yet underappreciated job, and thankfully they have many benefits when it comes to their retirement. Before reaching this big moment, it’s crucial to understand some important things about retiring. There are two big questions that many federal workers have when they think about retiring.

Q1: When Can I Retire from My Federal Job?

Deciding when to retire is a big choice, and it depends on a few things. The rules for retiring from a federal job are a bit different depending on the retirement system you’re in.

If you’re in the Federal Employees Retirement System (FERS), here are three situations when you can retire:

1. Immediate Retirement: If you’re 62 years old and worked for at least five years.
2. Minimum Retirement Age Retirement: If you’re at least 55 (or older, depending on when you were born) and worked for 30 years.
3. Early Retirement: Sometimes, if you’re at least 50 and worked for 20 years or any age with at least 25 years of work.

If you leave your federal job before meeting these rules, you can still retire later when you reach an age to qualify, but you won’t get retirement benefits until you officially retire.

You also want to consider how leaving before you qualify for Federal Retirement could impact your Federal Employee Health Benefits.

For people in the Civil Service Retirement System (CSRS), retirement is generally decided by age and years of service.  Please see our page specifically about CSRS here. 

Q2: How does the Federal Government decide when I can retire?

Deciding when you can retire depends on your age, how many years you worked, and the retirement system you’re in.

• Age and Years of Service Rules: Most retirement systems have rules about how old you have to be and how long you need to work to retire. Understanding these rules is important for federal workers thinking about retiring. See the charts below.
• Special Cases: Some federal workers have special situations that affect when they can retire. For example, if you were in the military, you might be able to count that time to retire earlier. If you would like to know how buying back your military time will impact your retirement, click here to schedule a free review with one of our specialists.
• Minimum Retirement Age: This is the youngest age you can retire, and it changes depending on when you were born. Knowing your Minimum Retirement Age is important when planning when to retire. See the charts below.
• Social Security: Social Security: There are many things that will determine the best time to take your social security.  Could the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) affect your income?  Should you take it sooner or later?  How do survivor benefits or disability affect your income? Most importantly, what is the best strategy to pay the least amount in taxes while getting the most from your Social Security?  Many find it overwhelming and frustrating.  If you would like a personalized Social Security Report that helps you find the best solution for you, click here to request our Free Social Security Planning Report.

Immediate Retirement

Early Retirement

Deferred Retirement

Source: https://www.opm.gov/retirement-center/fers-information/eligibility/

Want to better understand how your retirement date can impact your retirement income and other benefits?  Schedule a meeting with one of our trained specialists by clicking this link.  Choosing your retirement date is a big deal, and it is important to make sure you have all the information you need for your personal situation.  There is no charge for a retirement review.  Contact us or Schedule a time to meet with one of our Retirement Specialists. Thank you for your service!!

Military service can have an impact on federal retirement benefits for individuals who have served in the military and later become federal civilian employees. Here are some key points to consider:

1. Military Service Credit: Federal civilian employees who have performed military service may be eligible to receive credit for their military service towards their civilian federal retirement benefits. This credit can increase the total years of service used to calculate retirement benefits under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). The rules for crediting military service towards federal retirement vary depending on factors such as when the military service was performed and whether the employee is covered by FERS or CSRS.
2. Dual Compensation Offset: Individuals who receive military retired pay and federal civilian retirement benefits may be subject to a dual compensation offset, also known as the “two hats” rule. This rule limits the total amount of combined military retired pay and federal civilian retirement benefits that a retiree can receive, to ensure that the total does
   not exceed certain thresholds set by law. The offset may reduce the federal civilian retirement benefit by an amount equal to the military retired pay received.
3. Redeposit of Military Service: Federal civilian employees who performed military service and later became federal employees may have the option to make a deposit to the civilian retirement system to credit their military service towards their civilian retirement benefits. This is known as a military service redeposit. Making a redeposit allows the employee to count the military service as civilian service for purposes of calculating retirement benefits, potentially increasing the amount of the benefit.
4. Social Security and Military Service: Military service does not directly affect Social Security benefits for federal employees. However, individuals who have served in the military may also be eligible for Social Security benefits based on their earnings history from civilian employment, just like other workers.
   Overall, military service can have various implications for federal retirement benefits, including the potential to increase retirement benefits through crediting military service towards federal civilian retirement, but also subjecting retirees to certain limitations and rules regarding dual compensation. It’s important for individuals with military service and federal civilian employment to understand how their military service may affect their retirement benefits and to seek guidance from their human resources office or a retirement specialist.
   To schedule an appointment with one of our specialists, click here.

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services, including the Army, Navy, Air Force, Marine Corps, Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration. Here’s how it works:

1. Employee Contributions: Employees contribute to their TSP account through payroll deductions. They can choose to contribute a percentage of their salary or a specific dollar amount.
2. Employer Matching Contributions: For employees covered by the Federal Employees Retirement System (FERS) or the Blended Retirement System (BRS), the government may provide matching contributions to the TSP. Under FERS, the government matches employee contributions up to a certain percentage of their salary. Under the BRS, the government provides automatic and matching contributions. 

FEGLI (Federal Employee Group Life Insurance) can indeed be expensive, and there are several reasons for this:

1. Unique Coverage:
   • FEGLI is a unique blend of term insurance and permanent coverage, somewhat similar to whole life insurance.
   • It combines features of both, which contributes to its cost.
2. No Medical Exam:
   • Unlike private insurance, FEGLI doesn’t require a medical examination.
   • This convenience comes at a price.
3. Pricing Over Time:
   • FEGLI has different parts: Basic, A, B, and C.
   • Part B, in particular, tends to be the most expensive.
   • While it’s competitively priced in your 20s, 30s, and early 40s, the cost skyrockets as you age.
   • For instance, the price nearly doubles every 5 years beyond age 45.
   • Here’s a glimpse of the biweekly and monthly rates for FEGLI B:

3. As you approach 45 and beyond, consider shopping around for private term insurance. Private insurers may offer better rates, especially if you’re in good health.
4. Group Life Insurance:
   • FEGLI is group life insurance.
   • All federal employees enrolled in FEGLI are assumed to have the same health status, height, and weight.
   • Everyone pays the same rate regardless of individual health or habits.
5. Benefit Reduction Over Time:
   • FEGLI benefits drop over time.
   • You can elect to stop paying premiums at the later of age 65 or retirement.
   • The benefit decreases from 100% of ending base pay to 25% of ending base pay.

While FEGLI offers convenience and coverage, it’s essential to evaluate whether it aligns with your financial goals. As you become financially secure, consider exploring private insurance options to potentially save costs. To better help you understand how your life insurance works, we offer a full benefits review at no cost. You can click here to get a full explanation on how your benefits work now and how they will change before and after retirement.

A Disability can unexpectedly disrupt one’s career path, posing financial challenges and uncertainty. For federal employees facing such circumstances, understanding the disability options available is crucial for securing support and maintaining financial stability. In this article, we’ll delve into the various avenues and resources accessible to federal employees seeking disability benefits. 

Understanding Disability Programs for Federal Employees: Federal employees have access to several disability programs designed to provide financial assistance and support during periods of incapacity. These programs include: 

1. Federal Employees Retirement System (FERS) Disability Benefit: 

• FERS provides disability retirement benefits for federal employees who become disabled and are unable to perform their job duties. 
• To qualify, you must have completed at least 18 months of federal service. 
• The disability must be expected to last for at least one year. 
• If approved, you’ll receive a monthly annuity based on your years of service and average salary. 
• The process involves medical evaluations and documentation. 
• Note that FERS disability benefits may be subject to offsets if you’re also receiving Social Security Disability Insurance (SSDI) or workers’ compensation benefits. 

2. Social Security Disability Insurance (SSDI): 

• Federal employees are eligible for SSDI like any other worker. 
• To qualify, you must have a disabling condition that prevents substantial gainful activity. 
• The Social Security Administration (SSA) evaluates your medical condition and work history. 
• If approved, you’ll receive monthly SSDI payments. 
• SSDI benefits may be reduced if you’re also receiving FERS disability benefits. 

3. Workers’ Compensation Programs (OWCP): 

• OWCP provides benefits to federal employees injured or disabled on the job. 

• It covers both traumatic injuries and occupational diseases. 
• Benefits include medical treatment, wage replacement, and vocational rehabilitation. 
• OWCP benefits are separate from FERS disability benefits. 

4. Americans with Disabilities Act (ADA): 

• ADA requires federal agencies to provide reasonable accommodations to employees with disabilities. 
• Accommodations may include modified work schedules, assistive technology, or workplace modifications. 
• ADA doesn’t provide direct financial benefits but ensures equal opportunities. 

5. Family and Medical Leave Act (FMLA): 

• FMLA allows eligible federal employees to take up to 12 weeks of unpaid leave for medical reasons. 
• This includes your own serious health condition or to care for a family member. 
• FMLA protects your job during the leave period. 

6. State Workers’ Compensation Laws: 

• State-specific laws may provide additional leave or benefits for federal employees. 
• Consult your state’s regulations to understand your rights. 

Remember that each case is unique, and it’s essential to consult with your agency’s human resources department or a benefits specialist to explore your specific options. Additionally, consider seeking legal advice if you encounter challenges during the process. Our Benefits Specialists can help you understand your options.  For some employees they would benefit more from a FERS Disability Retirement.  For others, they would benefit more from applying for a regular retirement through FERS and applying for Social Security Disability.  Give us a call at (903) 218-0228, or click here to schedule a time to meet with one of our specialists. 

For more detailed information, you can visit the Office of Personnel Management (OPM) FAQ on Disability Benefits¹.