Roth/Thrift Savings Plan Options Retirements

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1 Roth/Thrift Savings Plan Options Retirements Defense Finance and Accounting Service INDIANAPOLIS PAYROLL OFFICE October 27, 2014 Integrity - Service - Innovation

2 Table of Contents Roth/Thrift Savings Plan Agency Responsibilities Payroll Office Responsibilities Frequent Issues W2 Corrections due to TSP TSP Roth Contributions Retirements 4/13/2015 Integrity - Service - Innovation 2

3 Roth/Thrift Savings Plan 4/13/2015 Integrity - Service - Innovation 3

4 Agency Responsibilities Directly administers TSP program to participants Determines eligibility and TSP status Processes TSP elections in most cases Inputs most of personal information that is submitted by payroll to TSP Payroll does not have access to employee personnel files Information is maintained in Civilian participant's accounts POC for Employee Inquiries 4/13/2015 Integrity - Service - Innovation 4

5 PRO Responsibilities Submits TSP data for Civilian participants Submits TSP corrections Assists HR/CSR if data does not transfer correctly Work Payroll/Personnel Invalid Report Payroll/Personnel Recon must be provided Provides information via Remedy & Imaging regarding submission of data and corrections 4/13/2015 Integrity - Service - Innovation 5

6 Frequent Issues Automatically enrolled into TSP at 3% contribution rate Payroll office cannot issue refunds for any request for automatic enrollment refund [Form TSP-25 (5/2012)] HR/CSR flows change/stop contributions into DCPS Contact PRO only if an error occurs Provide Personnel Recon reflecting mismatch of DCPDS and DCPS End of Year Catch Up Contributions NOT retroactive 4/13/2015 Integrity - Service - Innovation 6

7 W2 Corrections (W2-C) due to TSP Elective deferral limit reached Extensive Audit Process for W2-Corrections W2- Corrections integrated with daily work Please do not request W2-Cs to be expedited 4/13/2015 Integrity - Service - Innovation 7

8 TSP Traditional & Roth Compared Traditional TSP Contributions are pre-tax Taxes are deferred no taxes are paid up front on contributions or earnings No Federal, State of Local Income Tax deducted from paycheck Account Includes Agency Automatic 1% for FERS employees Agency Matching for FERS employees Taxes are owed when payment is withdrawn from account 4/13/2015 Integrity - Service - Innovation 8

9 TSP Traditional & Roth Compared Roth TSP Contributions are after-tax Taxes are paid up front on contributions Federal, State and Local Income Tax deducted from paycheck Taxes are not owed on contributions when withdrawn from account Taxes may be owed on earnings withdrawn from account if determined by TSP to not be a Qualified Distribution Recommend employee consults a tax advisor Money currently in employee s account cannot be converted to Roth Qualified Distribution 5 years have passed since January 1 of the year employee made his first Roth contribution AND employee is age 59 ½ or older, permanently disabled or deceased. [Tax Notice TSP-536 (5/2012)] 4/13/2015 Integrity - Service - Innovation 9

10 TSP Traditional & Roth Compared Employee s Roth account balance includes Roth contributions Earnings on Roth contributions Employee s Traditional account balance includes Traditional TSP contributions (if any) Agency Automatic 1% for FERS employees All Agency Matching contributions for FERS employees Earnings on the above (in this listing) 4/13/2015 Integrity - Service - Innovation 10

11 FERS Employee Agency Contributions Agency Matching for FERS employees is applied to combined Roth contributions and Traditional contributions Will always be tax deferred & placed in Employee s Traditional Account Agency Matching for FERS employees applies even if employee only contributes to Roth Will always be tax deferred & placed in a Traditional Account 4/13/2015 Integrity - Service - Innovation 11

12 Roth Contributions May be made in addition to or in lieu of traditional contributions Subject to elective deferral limit Combined with traditional contributions to meet elective deferral limit of $17,500 Annual Traditional TSP + Roth TSP = $17,500 max Subject to Catch Up Contribution deferral limit of $5,500 Combined with Traditional Catch Up Contributions to meet Catch Up deferral limit Annual Traditional CUC + Roth CUC = $5,500 max Total 2014 TSP Deferral Limit = $23,000 Annual Combined TSP + CUC = $23,000 4/13/2015 Integrity - Service - Innovation 12

13 Catch Up Contributions (CUC) TSP CUC (JV) & Roth CUC (JW) Employee must be 50 during the calendar year Contributions can begin at anytime during the calendar year Catch Up Contributions do not continue year to year A new catch-up contribution election is required each calendar year FERS participants do not receive matching contributions on any catch-up contributions contributed to TSP 4/13/2015 Integrity - Service - Innovation 13

14 TSP (XV), TSP CUC (JV), Roth (JR), Roth CUC (JW) Receives Agency Matching UI 2014 Integrity Maximums - Service - Innovation same as 2013 W2 Block 12D: Deferred W2 Block 12AA: Not Deferred 4/13/2015 Integrity - Service - Innovation

15 TSP Forms Roth Regular Contributions New Form TSP-1 must be completed to elect Roth TSP New Form TSP-1 includes Regular pre-tax TSP and Roth TSP New Form TSP-1 (5/2012) will cancel all previous election forms Roth Catch Up Contributions (CUC) New Form TSP-1-C must be completed to elect Roth CUC New Form TSP-1-C includes Regular pre-tax CUC and Roth CUC New Form TSP-1-C (5/2012) will cancel all previous election forms TSP will not process obsolete forms New form is not needed if no changes 4/13/2015 Integrity - Service - Innovation 15

16 If Entering TSP via EBIS Select Transactions to Access TSP to View Current Coverage & Make Changes 4/13/2015 Integrity - Service - Innovation 16

17 If Entering TSP via EBIS TSP Elections New elections are for Future contributions only New contributions = Traditional TSP ($ or %) + Roth ($ or %) TSP Catch-Up Employee must be 50 during the calendar year Contributions do not continue year to year Use TSP Catch-Up button on Transaction screen Click Process Transaction to complete transaction TSP Stop actions are immediately effective at the end of the pay period 4/13/2015 Integrity - Service - Innovation 17

18 TSP Quick Tips FORMS Do not send TSP forms to PRO PRO does not process/retain TSP forms CHANGES Name/Address changes must be entered in DCPS before PRO sends to TSP Contribution changes/stops must be entered in DCPS before PRO sends to TSP Data transfers from DCPS to TSP the same pay period Contact PRO if an error occurs; provide Personnel Recon 2014 DEFERRAL LIMITS TSP - $17,500 TSP Catch Up - $5,500 Combined Deferral - $23,000 LOANS HR/CSR must notify PRO to transfer loan Ensures loan payments are reestablished Submit on TSP-19 via Remedy/Imaging Account has 7 numbers & 1 letter TSP CONTRIBUTIONS Applies to Traditional & Roth Combined to meet deferral limit of $17,500 TSP CATCH UP CONTRIBUTIONS Are not retroactive. Must be collected each pay period. Applies to Traditional & Roth Combined to meet deferral limit of $5,500 4/13/2015 Integrity - Service - Innovation 18

19 Information Thriftline 1-TSP-YOU-FIRST ( ) Bulletin Form TSP-1, Thrift Savings Plan Election Form, and Form TSP-1- C, Catch-up Contribution Election Form, Revised for Roth Implementation Tax Notice TSP pdf Bulletin Participation in the Thrift Savings Plan 4/13/2015 Integrity - Service - Innovation 19

20 Retirement Processing 4/13/2015 Integrity - Service - Innovation 20

21 Retirements Processing Retirement Package Processing Retirement Code Changes FERCCA Unpaid Compensation 4/13/2015 Integrity - Service - Innovation 21

22 Retirement Packages Mail Retirement packages to: Defense Finance and Accounting Service DFAS- JFVBBA Civilian Payroll 8899 East 56 th St Indianapolis IN /13/2015 Integrity - Service - Innovation 22 22

23 Retirement Package Processing Responsibilities DCPS requires two dates to be present in order for a retirement record to be generated: HR must flow the SF50 action with the separation date PRO must input the application receipt date Applications must be received for the following in order for an employee s Individual Retirement Record (IRR) to generate and be sent by PRO to Office of Personnel Management (OPM) Regular Retirements Preliminary Disability Retirements Final/approved Disability Retirements, and Deceased 4/13/2015 Integrity - Service - Innovation 23

24 Retirement Package Processing Responsibilities HR must submit a completed retirement application to PRO a minimum of one full pay period before the retirement date. PRO will accept the package 30 days before the retirement date and store it until the date of retirement Failure to submit a retirement package timely will result in the employee not receiving full retirement benefits from OPM. Goal is to have retirement package processed and forwarded to OPM with employee s IRR within 30 days after date of retirement 4/13/2015 Integrity - Service - Innovation 24

25 Retirement Code Changes/FERCCA Retirement Code Change (RCC) Same Retirement Plan and Different Code No time restriction OR Different Retirement Plan Less than three years Federal Erroneous Retirement Coverage Corrections Act (FERCCA) Different Retirement Plan Greater than three years 4/13/2015 Integrity - Service - Innovation 25

26 Retirement Code Changes/FERCCA Retirement Code Change Remedy ticket Requirements All SF-50 s that pertain to the timeframe that the retirement code change is to occur OR One SF-50 stating in block 45 the timeframe that needs to be updated FERCCA Remedy ticket Requirements All SF-50 s that pertain to the timeframe that the retirement code change is to occur OR One SF-50 stating in block 45 the timeframe that needs to be updated Block 45 must include statement that FERCCA rules apply to the case. 4/13/2015 Integrity - Service - Innovation 26

27 Retirement Code Changes/FERCCA PRO audits employee records for all years involved and determines any monies owed due to retirement change PRO issues Debt Letters for any monies owed due to a Retirement Code Change or FERCCA Once the retirement code has been changed in DCPS PRO cannot update the employee s IRR or the year to date record until the debt has been paid in full OPM guidelines Benefits Administration Letters (BAL) FERS and CSRS Handbook 4/13/2015 Integrity - Service - Innovation 27

28 Unpaid Compensation Unpaid compensation is any monies due deceased employees Suspense monies Net Amount shows on Pay History as AD HR flows SF50 with Death NOAC 350 Timekeeper Updates work schedule with Date of Death Places an X in T/A Status HR submits Remedy ticket titled Deceased Includes all required documentation PRO disburses Unpaid Compensation to beneficiaries on receipt of all documentation Applies Unpaid Compensation to liquidation of debts first 4/13/2015 Integrity - Service - Innovation 28

29 Questions Integrity - Service - Innovation