CSRS ATC Benefits. CSRS ATC Agenda. CSRS ATC Annuity Benefit Voluntary Contribution Program Thrift Savings Plan Social Security

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1 CSRS ATC Benefits All Right Reserved All the materials received from Snow Federal Seminars & ChFEBC, Inc. are the property of Snow Federal Seminars & ChFEBC, Inc. Copyright and other intellectual property laws protect these materials. Reproduction or altering, distributing, copying or reproducing these materials is prohibited, without the express written consent of Snow Federal Seminars & ChFEBC, Inc. Reproduction of the materials, in whole or in part, in any manner, without the prior written consent of the copyright holder, is a violation of copyright law. Copyright laws of the United States (17 U.S.C. 101 et seq.) Disclaimer This presentation uses a generic approach Not individualized Please accept this information in a general context and apply what you believe fits your situation The Federal Seminars, Inc. does not favor, endorse, or recommend any commercial company, or product. The Federal Government does not favor, endorse, or recommend any commercial company, supplier, product, or the views of the Federal Seminars, Inc. CSRS ATC Annuity Benefit Voluntary Contribution Program Thrift Savings Plan Social Security Insurance CSRS ATC Agenda Life Insurance Long-Term Care Health Insurance Medicare Federal Taxes SFS&CHI

2 2010 Lifetime Annuity Benefit Retirement Systems Civil Service Retirement System (CSRS) Federal Employees Retirement System (FERS) Present ATC Bill Eligibility Age 50 with 20 years of good time Any age with 25 years of good time CSRS ATC Deductions Civil Service Retirement System 7% of base pay per pay period and pays no Social Security CSRS Offset 7% of base pay split between Social Security (6.2%) and CSRS (0.8%) Good Time Definition Good Time (known also as Covered Time ) Service performed by a DOT or DOD civilian employee who is actively engaged in the separation and control of air traffic, or providing pre-flight, in-flight, or airport advisory service to aircraft operators, or the first or second line supervisor to this employee. SFS&CHI

3 Mandatory Separation An ATCS, TMC, OS & TMS who occupies a covered position is subject to mandatory separation upon reaching age 56 (if eligible for an immediate annuity) Separation is effective on the last day of the month in which the employee becomes age Can avoid separation by moving into non-covered position Waiver to Mandatory Separation Applies to ATCS in Terminal, En Route, Flight Services or Systems Operations in the Air Traffic Organization - ATCS may request a waiver to separation - ATCS must document their eligibility by demonstrating exceptional skills and experience - Must apply approximately one year before 56th birthday. Box 30 identifies what retirement system an employee is assigned to at a particular time of service Determined by: Form SF 50 - Type of position assigned to - Permanent or temporary - Covered or Non-covered (ATC) Exceptions to Mandatory Separation ATCs who were first appointed by DOT before May 16, 1972 ATCs who were first appointed by DOD before September 12, 1980 Flight Service Station specialists who were first appointed before January 1, 1987 If an agency initiates: - Reduction in force - Discontinued service - Downsizing - Reorganization - Transfer of function Early Out and the employee does not meet the voluntary rules for retirement, then he/she retires under the regular CSRS early out rules. SF 50 Retirement Codes Most Common Retirement Codes CSRS 1 CSRS Offset C FERS & FICA K FERS & FICA (ATC) L FICA ONLY 2 May not be totally creditable Intermittent I SFS&CHI

4 From SF-50 (Front) SF 50 This is your official notice of personnel action. Keep it with your records it could be used to make employment, pay and qualifications decisions about you in the future. SFS&CHI

5 Creditable Civilian Service Time between appointment and separation AND deductions were paid into a retirement system Break in Service - up to 3 days Leave without pay (creditable up to 6 months per CY) Worker s Compensation Until return to work or approved for retirement by OPM CSRS Credit for for Part-Time Service Part-time service before 4/7/86 Full credit for eligibility and annuity calculation Part-time service after 4/7/86 Full credit for eligibility but prorated for annuity calculation Part-time service on or after 10/28/09 5 Step calculation for annuity For detailed information on how part-time service was credited for retirements on or after 10/28/09, go to: Intermittent Service Intermittent days worked While Actively Employed (WAE) (260-day year) Breaks in service (up to 3 days) CSRS CSRS Credit Non-Deduction for Civilian Service Non-deduction service before 10/1/82 If Deposits are made Receive full credit for eligibility and annuity calculation If Deposits not made Credit for eligibility Annuity calculation reduced by 10% of deposit due Non-deduction service on or after 10/1/82 If Deposits are made Full credit for eligibility and annuity calculation Deposits not made Credit for eligibility No credit for annuity calculation SFS&CHI

6 CSRS Deposit Service DEPOSIT: Deposit Made Credit for Eligibility and Annuity Computation Non-deduction Service Before Deposit Not Made Credit for Eligibility and Computation. Annuity Reduced by 10% of Deposit Due 7% of basic pay plus interest 7.5% Special Provision Deposit Made Credit for Eligibility and Annuity Computation CSRS Leave Service and Return Contributions not refunded Credit for eligibility Credit for annuity computation Contributions refunded Redeposit made Credit for eligibility Credit for annuity computation No Redeposit made before 3/1/91 Credit for eligibility and Credit for annuity computation. Annuity actuarially reduced No Redeposit made on or after 3/1/91 Credit for eligibility and No credit for annuity computation Non-deduction Service On or After Deposit Not Made Credit for Eligibility. No Credit for Annuity Computation SFS&CHI

7 CSRS Re-Deposits Contributions Not Refunded Credit for Eligibility and Annuity Computation Re-deposit: Amount of refund plus interest Military Service Credit Receiving Military Retirement Pay Military retirement pay must be waived to make deposit Military service before No deposit required Credit for eligibility and annuity computation Military service after (Employee Under CSRS Before ) If Deposit is made Credit for eligibility and annuity computation Re-deposit Made Credit for Eligibility and Annuity Computation Refunded Service Ended Before and Not Disability Credit for Eligibility and Annuity Computation. Annuity Actuarially Reduced. Contributions Refunded Re-deposit Not Made Refunded Service On or After and Not Disability Credit for Eligibility. No Credit for Annuity Computation Military Service Credit Employee Under CSRS Before No deposit made and not eligible for Social Security at 62 Credit for eligibility and annuity computation No deposit made and eligible for Social Security at age 62 Credit for eligibility and no credit for annuity computation after age 62 Employee Under CSRS After Deposit required No deposit made No credit for eligibility or annuity computation Crediting CSRS ATC Military Service Military service may not be counted as Good Time However: - After minimum period established, military service may be used in computing annuity - Military furlough from civilian position may be counted (CSRS) - Excluded from above if receiving military retired pay or discharged under certain conditions SFS&CHI

8 CSRS - Military Service Flowchart DEPOSIT: NOTE: Receiving Active Military Retirement Pay: Must waive Based on Combat Disability Or Chapter 67, Title 10 Treatment as if not in Receipt of Military Retired Pay Before Full Credit Without Deposit Deposit Made Credit for Eligibility and Annuity Computation 7% of basic pay plus variable market rate interest. Military deposit must be made BEFORE retirement. Employee Under CSRS Before Not Eligible for Social Security At Age 62 Credit for Eligibility and Annuity Computation Deposit Not Made Annuity Calculation Components Based on: Length of service Hi-3 average pay Creditable Civilian Service: Civilian service Military service Unused sick leave* * Eligible amount subject to actual retirement date Military Service After Eligible for Social Security at Age 62 Credit for Eligibility No Credit for Annuity Computation After Age 62 Employee Under CSRS on or After Deposit Required No Deposit No Credit At All SFS&CHI

9 Fe d er al Se m in ar s Sick Leave 2087 Hour Chart Sn ow Calculating Creditable Service Years Months 28 1 Military Service 4 Total Service Over any period of 3 consecutive years (36 months) of creditable service 32 9 Includes locality pay 27 ig ht 0 2 ed Unused Sick Leave 3 Average of adjusted basic pay by Civilian Service Days Hi-3 Average Salary Definition yr Hi-3 Wage Grade The high-3 average salary determined for wage-grade employees (Federal Workers System) includes: Night differential pay Environmental differential pay Basic pay does not include: C op Hi-3 Exclusions Bonuses Overtime Pay Military Pay Cash Awards Holiday Pay as a worked holiday (Annual salary is determined by a 2087 hour work year) Travel Pay outside regular tour of duty SFS&CHI

10 Calculating Hi-3 Average Pay I II III IV V VI From To Annual Pay Earned Time Basic Pay Total Time Factor* (III x V) 9/1/2006 6/23/2007 $47, $34, /24/2007 5/10/2008 $47, $41, /11/ /31/2008 $47, $30, /1/2009 8/31/2009 $48, $36, Total $142, Total Pay Earned: $142, Divided by 3 Years = Hi-3 Average Pay of $47, Hi-3 Time Factor Table Total amount for any period of time at given annual rate. (30 - day month. To complete factor place numer of full years ahead of decimal point.) 1 month and 2 months and 3 months and 4 months and 5 months and 6 months and 7 months and 8 months and 9 months and 10 months 11 months # Days 1 day and up up up up up up up up up up and up and up SFS&CHI

11 CSRS ATC Annuity Formula 1.5% x hi-3 x first 5 years PLUS 1.75% x hi-3 x next 5 years PLUS 2% x hi-3 x years over 10 Not less than 50% of Hi-3 (If not switched to FERS) (Exceeds 50% at 26 years 11 months) Computation of CSRS ATC Annuity Example: Hi-3 average pay: $114, Years of service: 32 yrs. 9 months Regular formula: 1.50% x $114, x 5 years = $8, % x $114, x 5 years = $9, % x $114, x 22.75years = $51, Basic Annuity: $70, Monthly: $5,880(divide by 12 and round down) CSRS ATC Annuity Chart Years of Service 0 Months 1 Month 2 Months 3 Months 4 Months 5 Months 6 Months 7 Months 8 Months 9 Months 10 Months 11 Months SFS&CHI

12 CSRS Offset Annuity Benefit CSRS Offset Annuity Calculation Social Security Amendments of 1983 All government employees hired after 12/31/83 will be covered by Social Security Includes CSRS employees with a break in service of more than 365 days; and 5 years under CSRS before a break in service; and Rehired after 12/31/83 CSRS Offset Annuity Example CSRS Monthly Annuity $5,880 Age 62 SSA Benefit $1, Years CSRS Offset Time 10/40 x $1,200 -$300 CSRS reduced benefit $5,580 Plus SSA Benefit $1,200 Combined CSRS and SSA Benefit $6,780 Computation of Offset is the lower of: Social Security benefit credited after 12/31/83 or By dividing the total years of Offset service by 40 x total Social Security benefit at age 62 Phased Retirement Example: Provision of NDAA of 2009 Phased Retirement (COPM nt) Other benefits continue if fully retired (FEHB, FEGLI, Survivor) Voluntary requires consent of employee and Agency Terminates if employees returns to fulltime - Phased retirement will be treated as part time - Cannot go back to Phased retirement OPM will review to determine continuance Tool to ensure continuity of operations and to facilitate knowledge management Allows eligible retirees to work part-time while receiving prorated annuity Must have 3 fulltime years before retirement - CSRS..55/30 or 60/20 only - FERS..MRA+30 or 60/20 only Phased Retirement Individuals subject to mandatory retirement may not participate: LEO, FF, Nuclear Materials Couriers, ATC, CBPO*. Members of Capitol Police or Supreme Court may not participate. * Grandfathered CBPO not eligible for mandatory retirement may participate. SFS&CHI

13 Furloughs Furloughs (cont) Two Types 1. Administrative Furlough (discontinuous) - Planned event by an agency designed to absorb reductions necessitated by downsizing, reduced funding, lack of work, OR any budget situation other than lapse in appropriations (i.e. sequestration) - Employees placed in LWOP status. - Usually 22 days 1 or 2 days a pay period Retirement coverage - Continues w/o cost to employee if shutdown - Continues but must be paid in administrative furlough FEGLI continues during both - No cost during shutdown; premiums continue during administrative FEHB continues during both - Employee and agency continue paying - Employee may pay upon return from shutdown Furloughs (cont) 2. Shutdown Furlough (emergency) - Lapse in appropriations, usually beginning of FY - Employees placed in continuous LWOP - Usually lasts 30 days or less - May be paid after continuing resolution has been signed. - More than 30 days is handled under Agency RIF (reduction in force) procedures - Employees receive advance notice with exception of unforeseen circumstances. Annual Leave: Employee can protect annual leave in writing well in advance of furlough. Furloughs (cont..) Must be used before end of leave year. SFS&CHI

14 2010 Survivor Benefits Who Gets Survivor Benefits? Order at retirement: Former spouse with court order Current spouse Insurable interest Minor children CSRS Survivor Benefits The current application used by CSRS for an Immediate Retirement follows: SFS&CHI

15 I choose a reduced annuity with maximum survivor annuity (equal to 55% of my basic annuity) for my spouse named in Section E. 1a. If you are married at retirement, you will receive this type of annuity unless your spouse consents to your election not to provide maximum survivor benefits. If your marriage ends by death, divorce, or annulment, this election terminates and you must notify the Office of Personnel Management. SFS&CHI

16 I choose a reduced annuity with a partial survivor annuity (equal to 55% of $ a year) for my spouse named in Section E. la. If you choose this option, the amount you enter must be less than your annual annuity. You must have your spouse's consent. Complete SF , Spouse's Consent to Survivor Election, and attach it to your application. If your marriage ends by death, divorce, or annulment, this election terminates and you must notify the Office of Personnel Management. I choose an annuity payable only during my lifetime. If you are married at retirement, you cannot choose this type of annuity without your spouse's consent. No survivor annuity will be paid to your spouse after your death if he or she consents to this election and any health benefits will cease. In addition, your spouse will not be eligible to enroll in the Federal Long Term Care Insurance Program, if he/she is not enrolled at the time of your death. If you are married and elect this type of annuity, complete SF , Spouse's Consent to Survivor Election, and attach it to your application. SFS&CHI

17 s in ar m Se ig ht ed by Sn ow Fe d er al I choose a reduced annuity with survivor annuity for the person named below who has an insurable interest in me. You must be healthy and willing to provide medical evidence if you choose this type of annuity. (Disability annuitants are not eligible to choose this type of annuity.) If you are married and elect this type of annuity, complete SF , Spouse's Consent to Survivor Election, and attach it to your application. C op yr I choose a reduced annuity with survivor annuity for my former spouse (s) or for my spouse and former spouse s) shown below. You must attach: (1) Copies of divorce decrees for all former spouses for whom you elect to provide a survivor annuity. (2) If you are married, attach a completed SF , Spouse's Consent to Survivor Election. You cannot choose this option and provide a maximum survivor annuity for your spouse (Box 1). An election for a former spouse ends if your former spouse dies or remarries before age 55, unless you were married for 30 years or longer. If one of these events occurs, this election terminates and you must notify the Office of Personnel Management. SFS&CHI

18 CSRS Survivor Benefits - Maximum Basic Annuity $70, % x $3,600 $90 $70,560 - $3,600 = $66,960 x 10% $6,696 Total Survivor Cost $6,786 Net annual annuity $63,774 Survivor annuity 55% x $70,560 $38,806 To have survivor benefit FEHB, survivor must receive some annuity benefit Insurable Interest Older, same, or 5 years younger 10% 15 but less than 20 years 25% 5 but less than 10 years 15% 20 but less than 25 years 30% 10 but less than 15 years 20% 25 but less than 30 years 35% 30 or more years younger 40% Someone who is, the day you retire, closer than a first cousin, other than minor children, including fiancé or common-law spouse (in states that recognize common-law marriage and domestic partners). Annuity reduction (age difference between you & designee) Must be healthy While Employed Survivor Benefits Death of current employee (18+ months service) Spouse: Married 9 months Parent of employee s child Former spouse: Married 9 months with court order CSRS Survivor Benefits - Partial Base (30% of $70,560) $21, % x $3,600 $90 $21,168 - $3,600 = $17,568 x10% $1,756 Total Survivor Cost $1,846 Net annual annuity $70,560 - $1,846 $68,714 Survivor annuity 55% x $21,168 $11,642 To have survivor benefit FEHB, survivor must receive some annuity benefit CSRS Shared Survivor Annuity Insurable Interest Survivor Annuity if shared with spouse and former spouse Two reductions Basic annuity $70,560 Reduction for former spouse - 6,796 Reduction for current spouse using Insurable Interest benefit -10,586 Retiree s annuity $53,180 CSRS While Employed Survivor Benefits Annuity computed as though employee retired on date of death Guaranteed Minimum Benefit: uses same formula as Guaranteed Disability Benefit Spouse entitled to 55% of earned annuity or 40%, whichever is greater SFS&CHI

19 Survivor Annuity after Remarriage Minor Children - Definition Survivor Benefits Stop: If spouse* or former spouse dies or remarries before age 55 Exception: if married to federal employee 30 years or more, may marry before age 55 with no loss of survivor benefit * If subsequent marriage terminates, benefits may be restored to surviving spouse only, not former spouse Survivor Benefits for Minor Children Annuity amount depends upon family situation With one parent remaining, lesser of: $510 (2015) per month per child or $1,531 (2015) per month divided by number of children No living parent, lesser of: $612 (2015) per month per child or $1,838 (2015) per month divided by number of children Adjusted by CSRS COLA Reduced by Social Security benefits received Due to employee death in service or retirement No reduction in employee s annuity Unmarried children: Up to age 18 if out of school Full-time student under age 22 Any age, but disabled before 22 and still disabled Designation of Beneficiaries If There s No Survivor Entitled to Benefits? Retirement contributions paid in lump sum Normal order of precedence: Designated beneficiary Spouse Child/children in equal shares Parents Executor or Administrator Next of kin SFS&CHI

20 2010 Disability Retirement OPM Disability Definition No longer able to perform in ones position and not qualified for any other position in locale at same grade and pay Disability Retirement Benefit May be able to hold some other job in private sector (but at no more than 80% of federal pay). Covered under Life and Health insurance, if insured: Under group insurance for past 5 years, or During all service prior to retirement if less than 5 years Social Security Definition Due to severe physical or mental condition that prevents a person from engaging in any substantial, gainful activity. CSRS Disability Retirement Disability Retirement Benefits Minimum guarantee Most employees under age 60 Entitled to higher of: Earned annuity based on Hi-3 average salary and years/months of service as of separation date 40% of average salary SFS&CHI

21 CSRS ATC Disability and Death in Service Cost of Living Adjustments Must meet requirements for minimum age and number of years to retire under Special Provisions Otherwise retire as regular disability CSRS CSRS Voluntary Retirement Can retire on last day of the month or first 3 days of the next month for annuity to begin the next day If retiring on any other day, annuity begins 1 st day of following month Based on Consumer Price Index (CPI) change Uses CPI for urban wage earners Effective Dec 1 each year Retirees receive 1/12 of the COLA for each month OPM Help Contacts Retirement Considerations Within days of retirement Unused annual leave paid Lump sum by direct deposit Interim check 1-3 months of retirement 60-80% of final check Can last 1-9 months General telephone inquiries: Within DC area Outside DC area TDD US Office of Personnel Management Retirement Operations Center (Boyers, PA) SFS&CHI

22 2010 CSRS Voluntary Contribution Program VCP Overview Did you know you can increase your annuity by making additional contributions to your retirement plan? Considered a defined contribution plan by IRS Contributions made with after tax dollars VCP Returns Earnings while employed: 3% through 1984 After 1/1/85, yield determined by Secretary of Treasury Rate for 2014: 1.625% VCP Features Affects CSRS and CSRS Offset Additional voluntary contributions 10% of basic salary max over entire career Must pay any deposit or re-deposit owed Must not have taken refund of previous voluntary contributions unless re-employed under CSRS after break of more than 3 days SFS&CHI

23 2010 Thrift Saving Plan CSRS TSP Features Before-tax savings Tax-deferred investment earnings Choice of investments Inter-fund transfers Loan program Spouse protection (No Matching for CSRS) TSP Funds G Fund (Government Securities) F Fund (Fixed-Income Index) C Fund (Common Stock Index) I Fund (International Index) S Fund (Small-Cap Index) Contributions to TSP Up to $18,000 (2015) Catch-Up Provisions Age 50 and older (calendar year) Pre-tax basis Up to $6,000 (2015) By payroll deduction only In whole dollars only No look back L Income TSP L Funds * *Sample allocations not actual current percentages SFS&CHI

24 In-Service Age-Based Withdrawal Employees may withdraw one time, all or part of their TSP while working for the government at age 59 ½ or older with no interruption while continuing to contribute If you make an in-service age based withdrawal then you cannot make a partial withdrawal at retirement TSP Retirement Options Withdrawing vested funds: Single payment Transfer to another retirement plan: Traditional IRA rollover (transfer) Roth IRA (taxed as ordinary income) Qualified retirement plan Company or Individual Monthly payments: May change once annually in December TSP Retirement Options Keep funds in TSP (until Apr 1 after turning 70½ ) Amounts to be withdrawn calculated by IRS 50% penalty if not withdrawn Choose a Life Annuity: Minimum $3, Annuity options Penalty-free withdrawals if you retire or separate from service the year you turn 55 or older SFS&CHI

25 SFS&CHI

26 Roth TSP Roth TSP Continued Contributions are made on an after tax basis. Earnings are tax free if left in for 5 years or to age 59 1/2 which ever is longer. Combined total of Roth TSP and tax-deferred traditional contributions cannot exceed $18,000, or the catch-up contribution limit of ***$6,000. **2015 limit ***2015 Limit Roth TSP Workings Cannot convert traditional TSP to Roth TSP. No agency contributions for Roth TSP. Contribution allocations or interfund transfers will apply to the investment of both Roth and traditional contributions or balances. Roth contributions are set up the same Electronic system TSP-1 Roth TSP Considerations~ Age and health Low tax bracket now, think tax rate may be higher in retirement. Not in a low tax bracket now, anticipate your tax rate will increase in the future. Want tax diversification to have tax-free withdrawals in retirement. ~ Information from TSP publication TSPLF30 (1/2012) TSP Forms Roth TSP is similar to a Roth 401(k), not a Roth IRA. There are no income limits for Roth TSP contributions. Can transfer other Roth account 401(k), 403(b), 457(b) money into the Roth TSP account. Not Roth IRA More Roth TSP Workings Loans, in-service withdrawals, and partial withdrawals are available. Will come out of your account on a pro rata basis proportional amount from your Traditional TSP and Roth balances. Will be able to separately transfer any portion of your Roth and traditional TSP balances to IRA eligible plans. Thrift Savings Plan Help Thrift Savings Plan Service Office National Finance Center P.O. Box Birmingham, AL Telephone: (877) TDD: (877) You can see a list of all TSP Forms at this link! SFS&CHI

27 2010 Social Security SFS&CHI

28 SFS&CHI

29 Eligibility for Social Security Benefit Social Security Credits & Earnings Must be fully insured Year of Birth and after 40 Meet age requirement Credits of Coverage Needed Social Security Eligibility Ages Birth Year Full Benefits at Birth Year Full Benefits at 1937/earlier mos mos mos mos mos mos mos mos mos mos 1960 & after 67 Primary Insurance Amount Regular formula: + 90% of first $826 AIME + 32% of AIME from $826 $4, % of AIME over $4,980 Formula adjusted each year as average wages change in the economy Through $50 per quarter 1978 and later: $ Qtly $ Yearly 2011 $1,120 Qtly $4,480 Yearly 2012 $1,130 Qtly $4,520 Yearly 2013 $1,160 Qtly $4,640 Yearly 2014 $1,200 Qtly $4,800 Yearly 2015 $1,220 Qtly $4,880 Yearly Average Indexed Monthly Earnings Social Security updates indexes since 1951 Not indexed year before benefit begins. Counts number of years starting: Age 22 or 1951 Ends with year before age 62 Subtracts lowest 5 years from total Highest years earnings indexed Computes AIME: (Hi-35 Earnings) 420 Months Windfall Elimination Provision Began in 1986 Applies to persons eligible to receive both: - A pension based on non-covered employment and - Either a retirement or disability Social Security benefit A different benefit computation formula is used SFS&CHI

30 Excluded from WEP Age 62 or became disabled before 1986 or first eligible to receive pension before 1986 Federal workers first covered under Soc Sec on 1/1/84 Worker who has 30 or more years of substantial earnings under Social Security Only pension is from Railroad employment Only employment not covered by Social Security resulted in a pension before 1957 (military service) WEP Replacement Factors If You Have: 30 yrs 90% 29 yrs 85% 28 yrs 80% 27 yrs 75% 26 yrs 70% 25 yrs 65% 24 yrs 60% 23 yrs 55% 22 yrs 50% 21 yrs 45% 20 yrs 40% Replacement Factor: Government Pension Offset Transferee less than 5 yrs. before retirement: Federal employee earned Civil Service Annuity Also eligible for unearned Social Security benefit as spouse 2/3 of government pension subtracted from that unearned Social Security benefit Substantial Earnings Chart $ $ 5, $ 10, $ 17, $ 1, $ 5, $ 11, $ 18, $ 1, $ 6, $ 11, $ 18, $ 1, $ 6, $ 11, $ 19, $ 1, $ 7, $ 12, $ 19, $ 2, $ 7, $ 12, $ 19, $ 2, $ 7, $ 13, $ 20, $ 3, $ 8, $ 14, $ 21, $ 3, $ 8, $ 14, $ 21, $ 3, $ 8, $ 15, $ 22, $ 4, $ 9, $ 16, $ 4, $ 9, $ 16, $ 4, $ 10, $ 16,725 Windfall Elimination Provision Assuming less than 20 year of Substantial Earnings: + 40% of first $826 AIME + 32% of AIME from $826 $4, % of AIME over $4,917 CSRS GPO Example Example: CSRS Monthly Annuity $2,452 Social Security Benefit $ 940 Reduced by 2/3 of CSRS Monthly -1,635 Annuity Adjusted Social Security Benefit $0 SFS&CHI

31 Delaying Receipt of Social Security Apply for your social security benefit at age 70 The benefit is higher than at age 62 or at your full retirement age. Social Security COLA After you begin collecting Social Security, you are eligible to receive COLAs Any earnings may increase your PIA Not guaranteed subject to Congressional approval Social Security Earnings Limitation Before year of full retirement age $15,720 per year (For each $2 earned above limit lose $1) Year of full retirement age* $41,880 per year (For each $3 earned above limit lose $1) Full retirement age and older No limit * Income earned before the month of retirement age Social Security Help Social Security Information Telephone: TDD: Year 2015 SFS&CHI

32 2010 Life Insurance Federal Employee Group Life Insurance FEGLI Basic Extra Benefit Option A Option B Option C Basic Benefit Annual salary rounded up to next $1,000 plus add $2,000 Cost is flat rate 15 per $1,000 per pay period for workers 32.5 per $1,000 per month for retirees SFS&CHI

33 Extra Benefit Basic Plan After Retirement Benefit is identical to basic benefit Attached to basic salary rounded up to next $1,000 plus add $2,000 No cost At age 35 Extra Benefit reduces 10% per year At age 45, Extra Benefit ends Option A Life Insurance Flat $10,000 Pre-retirement cost is $.03 and $.60 per $1,000 per pay period - Increases every 5 years After Retirement May continue if Basic Coverage is continued, and Meet same requirements as Basic Premiums until age 65 No cost after age 65 Reduces by 2% per month until $2,500 remains Option C Life Insurance Family Insurance $2,500 up to $12,500 on each child $5,000 up to $25,000 on spouse Must have Basic Coverage Options: Reduces at age 65 by 2% per month Unreduced coverage option for extra premium: Age 65 69: $6.80 per multiple monthly Age 70 74: $7.80 per multiple monthly Age 75 79: $10.40 per multiple monthly Age 80 and above: $14.30 per multiple monthly Before 65, cost of $.325 per $1,000 per month Options: Basic reduced by 75% 2% per month down to 25% No premiums after age 65 Reduced by 50% 1% per month down to 50% Monthly premium: $.64 per $1,000 after retirement Plus monthly premium: $.965 per $1,000 until age 65 No reduction Monthly premium: $1.94 per $1,000 after retirement Plus monthly premium: $2.265 per $1,000 until age 65 Option B Life Insurance 1-5 times salary rounded up to next $1,000 biweekly Under age 35: $0.02 per $1,000 Age 35-39: $0.03 per $1,000 Age 40-44: $0.05 per $1,000 Age 45-49: $0.08 per $1,000 Age 50-54: $0.13 per $1,000 Age 55-59: $0.23 per $1,000 Age 60-64: $0.52 per $1,000 Age 64-69: $0.62 per $1,000 Age 70-74: $1.14 per $1,000 Age 75-79: $1.80 per $1,000 Age 80 + older $2.40 per $1,000 New FEGLI Provisions Coverage for 24 months when called to active duty Enter active duty for more than 30 days Coverage is free for first 12 months Must pay entire cost for next 12 months Emergency Essential DOD employees Civilian employees deployed in support of contingency operations Election must be made within 60 days of notice of deployment Can enroll in FEGLI Basic, Options A & B Evidence of insurability NOT required FEGLI Elections at Retirement Option B and C elections at retirement One election opportunity to choose how an enrollee s Option B and Option C coverage may reduce beginning at age 65 Election will be made at the time of retirement Mixed elections Choose no reduction for some multiples and full reduction for other multiples SFS&CHI

34 2010 Long Term Care Insurance Long-Term Care Coverage Nursing Home Adult Day Care Hospice Care Home Care Assisted Living Bed Reservation Respite Care Home Hospice Care Care Coordination LTC Inflation Protection Additional option - Inflation protection Automatic 4% or 5% annual compounding Future Purchase Option Additional optional coverage increases every 2 years based on CPI for medical care (premiums increase) Must fill out application and qualify by health LTC Plan Options Daily benefit amount: $100-$450 in $50 increments Length: 2 years (730 Days) 3 years (1,095 Days) 5 years (1,825 Days) Lifetime (Unlimited) Long-Term Care Requirements Benefit Levels 100% facility coverage (nursing home/assisted living) 100% coverage in non-facility (home, community care) Payments start when insured can t perform 2 of 6 activities of daily living (ADLs) - Toileting, Incontinence, Transfer, Dressing, Eating and Bathing Performance of ADLs determined by physician Have significant cognitive impairment SFS&CHI

35 Long-Term Care Benefits Long-Term Care Insurance Help Elimination period: 90 days Premiums waived while under care Not taxable when paid to you Contingent non-forfeiture feature Portability 2010 Premium Conversion FEHB premiums paid with pre-tax dollars Not available to retirees Office of Personnel Management Toll free # LTC-FEDS or Health Insurance (FEHB) Flexible Spending Accounts Paid with pre-tax contributions Medical costs: up to $2,500 per year Includes co-payments and deductibles Over-the-Counter medicines or drugs are not covered without a prescription Dependent care: up to $5,000 per year Includes: child care and elder care As of March 15, 2016 may carry over $ for self Enroll in open season FEHB Retirees are not eligible SFS&CHI

36 FEHB Insurance in Retirement Expanded Child Coverage Insured on retirement date Retired on immediate annuity Have been enrolled (or covered as family member) for: 5 years immediately preceding retirement, or Since first opportunity to enroll For spouse coverage, provided survivor benefit at time of retirement, if annuitant dies first If all conditions above are met, premiums will cost same as for non-retirees Extends coverage for children up to age 26 Married children are covered, but not spouses Can be covered even if they have their own coverage Step and foster children are covered Disabled children can be covered if disability occurred before 26 FEDVIP Dental and Vision Insurance Program For Active and Retired Federal employees Enrollment during Open Season each year Can enroll in either plan or both Do not have to be enrolled in FEHB but must be eligible to enroll Annuitants are eligible to enroll no matter what their FEHB status SFS&CHI

37 2010 Part A Hospital Deductible (2015) $1, % of pay per year Medicare Medicare Programs Part B Medical Insurance Deductible (2015) $147 Cost (2015) for new enrollees $ per person with AGI under $170,000 AGI over $170,000, premiums rise on a phased in scale up to $ for new enrollees Part C Medicare Advantage Part D Prescription Drug Plan Medicare Part C Also known as Medicare Advantage Plans Offers health plan options run by Medicareapproved private insurance companies. Medicare Advantage Plans are a way to get the benefits and services covered under Part A and Part B. Most Medicare Advantage Plans cover Medicare prescription drug coverage (Part D). Some Medicare Advantage Plans may include extra benefits for an extra cost. Medicare Enrollment If retired: Part B 7-month window 3 months before / after 65 th birthday Retire after age 65: 8-month window Late enrollment penalty: 10% for each 12 months SFS&CHI

38 2010 Federal Taxes Tax Treatment of Annuities Federal Income and State Taxes CSA 1099R (your W-2 form) Choose whether you want OPM to withhold Federal or State for you Tax Treatment of Social Security If you file single: MAGI $25,000-$34,000 income - 50% of Social Security benefit taxed MAGI $34,000+ income - 85% of Social Security benefit taxed If you file joint: MAGI $32,000-$44,000 income - 50% of Social Security benefit taxed MAGI $44,000+ income - 85% of Social Security benefit taxed Note: Amounts are included in your taxable income Tax Treatment of TSP Penalty Free Withdrawal If: Monthly payments based on your life expectancy - 72-t Retirement on total disability Separation/retirement during or after calendar year you reach age 55 Withdrawals taxed as ordinary income TSP-536 IRS Publication 721 Tax Help Tax Guide to US Civil Service Retirement Benefits Publication 554: Tax Information for Older Americans SFS&CHI

39 2010 Questions and Answers Estimating Your Annuity Some calculators on the internet: Find the Gap Calculator AND links to SF, OPM, and TSP Forms and Publications on our web site! SFS&CHI