How do you achieve retirement dreams and get an income that you can’t outlive in retirement? Micah is flying solo in today’s podcast to answer...
Read MoreHow do you achieve retirement dreams and get an income that you can’t outlive in retirement? Micah is flying solo in today’s podcast to answer...
Read MoreWhen we talk about your FERS Retirement, we’re really talking about several different benefits. FERS (Federal Employees Retirement System) has three main components: Basic FERS...
Read MoreSpecial Benefit for Some FERS Who Retire Before Age 62 Have you heard about the FERS Supplement? It’s an important benefit for FERS planning to...
Read MoreFERS retirement benefits are complex. It’s easy to get overwhelmed by all of the details. But it’s important to remember that federal benefits are just...
Read MoreDepending on your start date, your contribution will be either be 0.8%, 3.1%, or 4.4% to FERS. The chart below breaks this down based on your start date, to show how much is going to the FERS Basic Benefit Plan and how much is going to Social Security:
FERS (01/01/1987 - 12/31/2012) | 7% of Base Pay is deducted:
|
FERS-RAE (01/01/2013 - 12/31/2013) | 9.3% of Base Pay is deducted:
|
FERS-FRAE (01/01/2014 - Current) | 10.6% of Base Pay is deducted:
|
The rate that your agency will contribute to your FERS has historically gone up over the years as the actuarial analysis of the pension costs has increased. As of October 1st, 2020, the rate at which your agency is responsible for contributing to your FERS is 17.3% if you were a Regular employee hired before January 1st, 2013, and 15.5% if you were hired on or after this date. If you are part of a special category of employee – including but not limited to a LEO, firefighter, Air Traffic Controller, or Congressional employee – your agency will contribute a higher percentage to your FERS. If you are a regular employee of the USPS, your agency will actually contribute slightly less to your FERS.
Yes, you can have your contributions to FERS refunded to you in the form of a lump sum payment if you leave your Government job before becoming eligible for retirement. You can choose to roll the money into another retirement account, such as an IRA or a 401(k), and not pay Federal income tax. If you choose to not roll it into another retirement account, then you would be paying income tax on the amount above $200. If you have at least 5 years of creditable service, you could also choose to just keep it in FERS by deferring retirement until age 60 or 62, depending on your years of service.
When our clients decide to leave their Government job, we typically don’t recommend they ask for a refund of their FERS contributions. The main reason would be because if they ever return to a Government job, whether it’s with the same agency or not, they are “locked-in” to their FERS plan that they first started in. Once a refund has been made, you cannot redeposit these funds back into FERS. Referring to the table above, your start date would show you how much your contribution rate would be into FERS. If historically the rate that federal employees contribute to their FERS has increased, it wouldn’t be out of the question to speculate that this could happen again in the future. By not taking the refund, the way the rule is written today, you would be in the same FERS program that you started with and contribute less if you returned to government service.
Sometimes we run across scenarios where a federal employee does decide to have their FERS contributions refunded. This usually happens when they truly don’t think they will ever return to work for the federal government again, whether due to age or some other reason. Instead, they would rather take that money and invest it themselves since they have no intention of ever returning back their FERS plan. This is more common when they don’t have 5 years of service yet and are not vested.
Sources:
https://www.opm.gov/retirement-services/fers-information/former-employees/
What is a Disability Retirement under FERS? Unlike the Immediate, Deferred, or Postponed Retirements, the Disability Retirement is a unique type of retirement only offered to federal employees who become
As a Federal Employee, your High-3 average salary refers to the average of the highest three consecutive years of base pay earned. This is calculated based on your “deemed” rate,
I am aware that after I put in ten years’ federal civilian creditable service and then retire, my FERS annuity will be reduced monthly by 10% for the surviving spouse
What is an Immediate Retirement under FERS? The Immediate Retirement under FERS is the main way of qualifying for the pension. Sometimes it’s referred to as the full, normal, or
Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.
Year after year I see Federal Employees missing the same critical concepts in their federal retirement planning. That’s why I’ve created an online workshop to help educate Federal Employees on these critical concepts.
If you are a Financial Advisor looking to work with Federal Employees,
we are always looking for Advisors that want to deliver massive value to clients.
Advisory services offered through Shilanski & Associates, Inc., an Investment Adviser doing business as “Plan Your Federal Retirement”. Plan Your Federal Retirement is not employed by the United States Federal Government and does not represent the United States Federal Government. All content on this site if for information purposes only. This website is not personalized investment advice. Securities investing involves risks, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful. Please review our Customer Relationship Summary (Form ADV Part 3) for important information about our services and fees.
Opinions expressed herein are solely those of Shilanski & Associates, Incorporated, unless otherwise specifically cited. Material presented is believed to be from reliable sources, and no representations are made by our firm as to other parties, informational accuracy, or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation.
Content provided herein is for informational purposes only and should not be used or construed as investment advice or recommendation regarding the purchase or sale of any security. There is no guarantee that any forward-looking statements or opinions provided will prove to be correct. Securities investing involves risk, including the potential loss of principle. There is no assurance that any investment plan or strategy will be successful.
7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.
7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.