Sky Tower Counsel began training Federal Employees after Co-founder Dallas Richardson assisted his eldest brother with his FERS benefit package. Dallas's brother had served in the army for 15 years and later, he had found his way to the USPS. During this process, Dallas realized there was an immense shortage of high quality training and education for the Federal Government's workforce.

In response, Dallas has built an entire arm of the firm dedicated to the great privilege of assisting in the training and education of federal employees from many of the agencies and at all levels. This includes hiring a dozen retired federal employees and specialists that can provide valuable insight, and hard won knowledge that assist Federal Employees truly maximizing their time of service, and retiring with style.

FEDERAL EMPLOYEES

Understanding your federal benefits is the key to financial security and freedom in retirement. 

FERS and CSRS Retirement Benefits

Depending on when you first come into service as a Federal Employee, you may fall into one of two retirement systems: the Federal Employees Retirement System or the grandfathered Civil Service Retirement System.


Federal Employee Retirement System (FERS)

 

The FERS retirement system became effective in 1987, and almost all new Federal civilian employees hired after 1983 are automatically covered by this new system. The retirement system is a three-tiered retirement plan. The three components are:

  • Social Security Benefits

  • Basic Benefits Plan

  • Thrift Savings Plan Benefits

Contributions to the FERS Defined-Benefit Pension

Federal civilian employees under FERS are required to contribute a percentage of salary to receive future benefits from the system’s defined-benefit annuity. The amount of this contribution has changed several times recently, due to changes in Federal law. For Executive Branch employees, these laws only changed the amount of the contribution – the pension system itself is the same as originally implemented in 1987.

  • Employees Hired Before January 1, 2013: Generally, employees already appointed by January 1, 2013, or who completed 5 years of prior service before that date, contribute 0.8 percent of their salary to the pension system.

  • Employees Hired On or After January 1, 2014: Section 401 of the “Bipartisan Budget Act of 2013,” P.L. 113-67, increased further the retirement system contribution for employees hired on or after January 1, 2014. For new Federal employees covered under this requirement, the contribution rate is generally 4.4 percent (rather than the earlier 0.8 percent or 3.3 percent). Employees that fall under this requirement are called “FERS-Further Revised Annuity Employees,” or “FERS-FRAE.” The pension system is again generally the same, only the contribution rate is changed. As with FERS-RAE employees, human resources and payroll systems use unique identifiers to annotate this higher contribution rate. For additional information, refer to:

Visit https://www.ssa.gov and learn more about social security benefits
Visit https://www.opm.gov/retirement-services/fers-information/ for addition information of retirement benefits
Visit https://www.tsp.gov for additional information on TSP benefits

https://www.commerce.gov/hr/employees/benefits/retirement/federal-employee-system

Under FERS, members of the Federal Workforce have benefits from three sources:

  • The Thrift Savings Plan (TSP)

  • A basic FERS pension annuity

  • Social Security benefits

 

 

When May I Retire Within FERS?

Your eligibility for retirement will depend on a few factors:

  • Your age and your year of birth

  • Your total amount of years of creditable service (generally a minimum of 5 creditable years)

  • If you have attained the Minimum Retirement Age for your agency(MRA)

  • The type of retirement you will select (immediate, early, deferred, or disability)

There are other factors that may affect your creditable years of service. Used sick leave, unused sick leave, and distinctions between service as a civilian versus a member of the uniformed services are among those potential factors.

Each type of retirement comes with its years of service rules, minimum age benchmarks, and other eligibility requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Immediate Retirement

An immediate retirement benefit is one that starts within 30 days from the date you stop working.  If you meet one of the following sets of age and service requirements, you are entitled to an immediate retirement benefit:

 

 

If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later.

 

Early Retirement

The early retirement benefit is available in certain involuntary separation cases and in cases of voluntary separations during a major reorganization or reduction in force.  To be eligible, you must meet the following requirements:

 

Deferred Retirement

Refers to delayed payment of benefit until criteria are met, as follows:

If you leave Federal service before you meet the age and service requirements for an immediate retirement benefit, you may be eligible for deferred retirement benefits. To be eligible, you must have completed at least 5 years of creditable civilian service. You may receive benefits when you reach one of the following ages:

 

 

If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later.

 

 

Disability Retirement

Disability Federal Employees Retirement System (FERS) Annuity Requirements:

 

Special Requirements

You must have become disabled, while employed in a position subject to FERS, because of a disease or injury, for useful and efficient service in your current position. The disability must be expected to last at least one year. Your agency must certify that it is unable to accommodate your disabling medical condition in your present position and that it has considered you for any vacant position in the same agency at the same grade/pay level, within the same commuting area, for which you are qualified for reassignment.

 

How Much Will My FERS Benefits Be?

Payments from your FERS pension annuity and Social Security will be fixed dollar sums. In each pay period, the Federal government will take out part of your base pay and allocate it towards your FERS pension annuity. For most employees under FERS, this portion is 0.8% of your base pay.

As a defined-benefit vehicle, your pension annuity will give you a basic monthly check of a certain fixed amount for your remaining lifetime. This amount will depend on a number of factors.

  1. Your High-3 Salary

  2. Your Years of Creditable Service

  3. Your Pension Multiplier

 

 

 

 

 

 

Other Benefits Besides FERS Pension Annuity

Like your FERS pension annuity, payments you would receive from Social Security will depend on a few factors. Each pay period, the government takes 6.2% of your basic pay toward Social Security.

 

Your contributions are not the basis for your Social Security payments, but rather on your earnings record over time and how long you worked in a job that paid into Social Security.

With your TSP, you are able to put in pre-tax contributions as retirement savings. You choose how your money is invested according to investment fund choices within the TSP.

Many FERS employees also have a TSP match from the government and their agency of service. Your TSP contributions are completely separate from your FERS pension annuity.

For some FERS employees retiring before age 62, a special benefit called the Specialty Annuity Supplement, or also known as the FERS Supplement, may be available.

 

The Special Retirement Supplement
The SRS approximates the Social Security benefit you earned while a FERS employee. It’s added to your earned annuity if you retire at your minimum retirement age (MRA) with 30 years of service or age 60 with 20. The SRS will also be added to your annuity when you reach your MRA if your agency is undergoing a major reorganization, RIF or transfer-of-function and you retire, either voluntarily or involuntarily, at age 50 with 20 years of service or at any age with 25 years of service. Note: Special category employees receive the SRS regardless of when they retire.

While the dollar amount of your SRS can’t be precisely determined until you retire, there’s a simple formula that will allow you to estimate what it will be. And the closer you are to retirement, the better that estimate will be. 

Here is the three-step formula:

1. Take your latest Social Security benefit estimate at age 62, which you can get by setting up a personal account at www.ssa.gov/mystatement;
2. Multiply that figure by your total years of FERS service, rounded up to the next higher year;
3. Divide the product by 40.

Note: Total years of FERS service means actual years of FERS service. It doesn’t include any years of non-FERS civilian service or military service for which you’ve made a deposit to the retirement system.

The SRS ends at age 62, when you first become eligible for a regular Social Security benefit, even if you don’t apply for that benefit.

Also note that it’s generally subject to the Social Security annual earnings limit, which will reduce the SRS by $1 for every $2 you earn from wages or self-employment above an annual limit which this year is $18,960. There’s an exception for special category employees: if they retire before their MRA, they can earn as much as they want without it having any effect on their SRS. When they reach their MRA, they’re treated the same as everyone else.

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Eligibility Information

IF YOU WERE BORN

YOUR MRA IS

Before 1948

 

In 1948

In 1949

In 1950

In 1951

In 1952

In 1953-1964

In 1965

In 1966

In 1967

In 1968

In 1969

In 1970 & After

55

55 & 2 months 

55 & 4 months 

55 & 6 months 

55 & 8 months 

55 & 10 months 

56

56 & 2 months 

56 & 4 months 

56 & 6 months 

56 & 8 months 

56 & 10 months 

57

Eligibility Information

AGE 

YEARS OF SERVICE

62

62

MRA

MRA

5

20

30

10

fers-retirement-benefits.png

Eligibility Information

AGE 

YEARS OF SERVICE

50

Any Age 

20

25

Eligibility Information

AGE 

YEARS OF SERVICE

60​

MRA

MRA

5​

30

10

Eligibility Information

AGE 

YEARS OF SERVICE

Any Age 

18 months​

Thrift Savings Plan

 

 

 

The Thrift Savings Plan (TSP), is a retirement savings plan similar to 401(k) plans offered to private sector employees. Eligibility Your retirement system determines whether you can participate in the TSP. You’re eligible to participate if you’re in the following groups:

  •  a federal employee covered by the Federal Employees Retirement System (FERS)

  •  a federal employee covered by the Civil Service Retirement System (CSRS)

  •  a member of the uniformed services

  •  a civilian in certain other categories of federal service such as some congressional positions and some justices and judges.

 

You can check with your personnel or benefits office if you’re not sure which retirement system applies to you.

Your Retirement Savings

The purpose of the TSP is to give you a long-term retirement savings and investment plan. Saving for your retirement through the TSP provides many advantages, including the following:

  • automatic payroll deductions

  • a diversified choice of investment options, including professionally designed lifecycle funds

  • a choice of tax treatments for your contributions: - traditional (pre-tax) contributions and tax-deferred investment earnings - Roth (after-tax) contributions with tax-free earnings at retirement if you satisfy the IRS requirements (see pages 6–9)

  • low administrative and investment expenses

  • agency/service contributions, if you are an employee covered by the Federal Employees Retirement System (FERS) or a member of the uniformed services covered by the Blended Retirement System (BRS) 

  • under certain circumstances, access to your money while you are still employed by the federal government

  • a beneficiary participant account established for your spouse in the event of your death

  • a variety of withdrawal options

The TSP is one part of your retirement benefit package. Depending on your retirement system, your benefit may also include Social Security, a FERS basic annuity, a CSRS annuity, military retired pay, or a combination of these. TSP benefits differ depending on your retirement system (FERS, CSRS, BRS, or non-BRS uniformed services).

Regardless of your retirement system, participating in the TSP can significantly increase your retirement income, but starting early is important. Contributing early gives the money in your account more time to increase in value through the compounding of earnings.

Employee Contributions

In order to make contributions to your TSP account, you must be in pay status as a full-time or part-time employee of the federal government or member of the uniformed services. You can choose between two tax treatments for your contributions:

  • Traditional (pre-tax)

  • Roth (after-tax)  

 

Regular employee contributions are payroll deductions that come out of your basic pay before taxes are withheld (traditional contributions) or after taxes have been withheld (Roth contributions). Each pay period, your agency or service will deduct your contribution from your pay in the amount you choose (or the automatic enrollment amount of 5%) and send your contribution to the TSP.

only Roth contributions toward the catch-up limit are allowed. The TSP cannot accept traditional tax-exempt contributions toward the catch-up limit.

 

Summary OF TSP Handbook https://www.tsp.gov/publications/tspbk08.pdf

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The Thrift Savings Plan (TSP) is a defined-contribution plan for Federal civil service

employees and retirees. Members of the uniformed services also participate in it. It was established by federal law in 1986.

Federal Employees’ Group Life Insurance (FEGLI)

 

The U.S. government created the Federal Employees’ Group Life Insurance Program (FEGLI) in 1954. Since then, it has steadily grown in terms of numbers of policyholders. It is the largest group life insurance program across the globe, according to OPM.gov. Over 4 million Federal Employees and retirees, as well as family members, are part of this program. As a group insurance program, FEGLI provides group term life insurance to Federal Employees. It can help you solve for a variety of life insurance needs. Those needs may include income protection for dependents, death benefit protection for outstanding household financial obligations, or other important concerns.

Basics of FEGLI

Unless your agency excludes it, you will most likely be able to participate in FEGLI. In fact, most Federal Employees are eligible for it. Because it is term life insurance, FEGLI doesn’t offer any cash value or policy paid-up value. You have different kinds of coverage:

 

  • Basic life insurance coverage, which automatically covers eligible employees

  • Optional life insurance, which offers three choices

The cost of Basic insurance is shared between you and the U.S. government. You are responsible for 2/3 of the cost and the government pays for the other 1/3. Premium payments are taken from your paychecks unless you opt out of coverage. If you are a Postal Employee, the USPS will help pay for FEGLI. Whether you are a Postal or Federal Employee, your age won’t affect Basic insurance premiums. While Basic insurance is automatic, you must specifically choose Optional insurance coverage. The cost will be based on your age under Optional insurance. You are also responsible for 100% of the costs of Optional life insurance coverage.

Lower Threshold for Program Participation

A nice feature of FEGLI is it has a lower threshold for participation than many “routine” life insurance policies do. Federal Employees may be eligible without a medical examination or going through other eligibility limits.

If you determine that you need more than Basic insurance coverage, it’s prudent to be mindful of what different Optional insurance choices entail.

What are Coverage Options?

In a nutshell, FEGLI coverage options can be boiled down to:

  • Basic life insurance, which covers up to your annual pay, rounded to the nearest whole $1,000 plus $2,000

  • Option A-Standard insurance, which provides $10,000 more of life coverage on top of Basic coverage

  • Option B-Additional insurance, which gives 1-5 times of your salary more of life coverage

  • Option C-Family insurance, which comes out to 1-5 multiples on lives of eligible family members.

*Option C-Family insurance coverage is a bit more complex. Under it, each multiple equals $5,000 of coverage on a spouse and $2,500 of coverage on each eligible individual child.

What Do Premiums Involve?

Premiums with FEGLI rise when a Federal Employee enters a new age bracket. Age brackets consist of staggered 5-year periods. In other words, someone who is 30 will be in a lower age bracket. Then they will get “bumped up” into a new bracket upon reaching 35.

The timeline of when Federal Employees are 50-60 years old is when premiums may skyrocket. From ages 50-60, it’s been estimated that FEGLI premiums can increase by 200%, and that is to maintain the same level of protection.

Apart from that, FEGLI coverage is a pure death benefit play. You won’t have any cash value or an ability to use accelerated living benefit riders to potentially pay for long-term care or other care situations.

         

Other Considerations

Since the age 50-60 timeline is when many Federal Employees attain their Minimum Retirement Age, it’s good to consider how your life insurance options may be in conjunction with other parts of your Federal Benefits.

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ADDITIONAL RESOURCES

Federal Employees Retirement System

Office of Personnel Management – FERS Retirement Information

Designation of Beneficiary, Unpaid Compensation of Deceased Civilian – Form SF-1152

Designation of Beneficiary – FERS – Form SF-3102

Application for Immediate Retirement – FERS – Form SF-3107

Application to Make Service Credit Payment – FERS – Form SF-3108