Questions & Answers

& ANSWERS were compiled by NARFE’s Federal Benefits Institute experts. NARFE does not provide legal, financial planning or tax advice or assistance.

QI plan to retire sometime in 2022. How much am I allowed to contribute to my Thrift Savings Plan (TSP)?

AA tax law limits the dollar amount of contributions to retirement plans and requires the limits to be adjusted annually for costof-living increases. In 2020 and 2021, the elective deferral limit was $19,500, and the catch-up contribution limit (available to those 50 and older) was $6,500. You can find the annual limitations at www.tsp. gov/making-contributions/ contribution-limits/. At press time, the 2022 limits had not been announced. You can determine how much you can contribute each pay period by using the “How Much Can I Contribute” calculator available at www.tsp.gov/calculators/. To use this calculator, you’ll need your most recent leave and earnings statement (LES) or pay slip and the number of salary payments you have left for the year. You can contribute up to the annual limit any time during the year. For example, if you want to retire in June, you can have the annual limitation amount spread out over 13 pay periods. Make sure that your paycheck will be sufficient to deduct the amount that you elect.

QWhat benefits can be changed during the annual federal health benefits Open Season?

AThis year’s Open Season started on November 8 and runs through December 13, 2021. During Open Season, you may: • Change or add a dental or vision plan under the Federal

Employees Dental and Vision

Insurance Program (FEDVIP) at www.benefeds.com. • Choose a 2022 Flexible

Spending Account (FSA) allotment (employees only). • Change health plans or enroll in the Federal Employees

Health Benefits (FEHB) program. Some agencies have their own system in which you can make an enrollment change online. Retirees should contact the Office of Personnel

Management (OPM) or use OPM’s online service to make any FEHB changes.

QWhen should I make a deposit for my military service? I heard I should do it towards the end of my career. What is the benefit of “buying my military time”?

AMaking a military service credit deposit into the Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS) will allow credit for military service to go towards your retirement eligibility and computation. While you are eligible to make this deposit at any time during your civilian career, interest will accumulate, so it is advantageous to pay this deposit before your third anniversary of civilian federal service to avoid any interest. The deposit must be completed before you retire. Instructions for completing a deposit can be found at www.dfas.mil/ CivilianEmployees/.

In 2016, the Office of Personnel Management (OPM) changed its policy on the interpretation of court orders resulting from a divorce, determining that the retirement annuity supplement (RAS) for those under the Federal Employees Retirement System (FERS) would receive the same treatment as the FERS annuity. Effectively, the same pro rata share, percentage, fraction or formula would apply to both if the court order was silent on the RAS. Prior to the new interpretation, OPM had not awarded any portion of the RAS to a former spouse unless the court order specifically addressed it. The Federal Law Enforcement Officers Association (FLEOA) took legal action against OPM over the division of the RAS. The case has been proceeding through the courts for years, and on September 28, a judge ruled in favor of OPM, meaning OPM will continue to apportion the RAS if the court order is silent. You can read the court ruling at https://ecf.dcd.uscourts.gov/cgi-bin/ show_public_doc?2019cv0735-47. To avoid having your RAS split in divorce, your court order should state clearly, “OPM is directed not to apportion the retiree annuity supplement.” Or, you can include a specific dollar amount that will avoid the RAS split. Need more information? Watch NARFE’s latest webinar on protecting your federal benefits in a divorce at https:// new.narfe.org/protecting-your-federal-benefits-in-divorce/.

QWhat happens to my benefits if I separate from federal service before I am eligible for an immediate retirement?

AUnder the Temporary Continuation of Coverage (TCC) option, you may continue your FEHB plan for up to 18 months. You must enroll within 60 days of your separation, and you’ll pay the full amount for the health plan, plus a 2 percent administrative fee. More information is available at www.opm.gov/healthcareinsurance/healthcare/temporarycontinuation-of-coverage/.

Federal Employees’ Group Life Insurance (FEGLI) coverage is eligible for conversion of all or part of your life insurance coverage with no medical exam required. Your premiums will change because you will no longer receive a government contribution toward your premium and because you will no longer be part of an insurance pool with other enrollees.

Coverage under the Federal Long Term Care Insurance Program (FLTCIP) may continue for separated employees entitled to a deferred annuity, even if they are not yet receiving their retirement benefit.

There is no option to continue FEDVIP nor the Health Care Flexible Spending Account (HCFSA) or Limited Expenses Health Care Flexible Spending Account (LEX HCFSA). The HCFSA or LEX HCFSA will terminate on the date of separation. Any eligible health care expenses incurred prior to the date of separation will still be reimbursed. Your Dependent Care Flexible Spending Account (DCFSA) remaining balance can continue to be used to pay for eligible dependent care expenses until your account balance is depleted or until the end of the calendar year, whichever comes first.

Separated employees are eligible to take a refund of their FERS or CSRS retirement contributions in lieu of waiting for a deferred retirement benefit, or if they are not eligible for a deferred retirement because they have completed less than five years of civilian federal service. The SF 3106 (FERS) or SF 2802 (CSRS) – “Application for a Refund of Retirement Contributions” can be found at www.opm.gov/forms. By taking a refund, you forfeit your entitlement for a deferred retirement benefit.

You will receive a lump sum payment for your unused annual leave. Your unused sick leave can be used for your retirement benefit computation only if you are eligible for an immediate annuity. Your unused sick leave will be recredited if you return to federal service in a position eligible for leave.

You are eligible to keep your funds in the TSP account, and you’re entitled to your contributions and the government’s matching contributions. You must be vested in TSP (generally after three years for most employees) to be entitled to the agency automatic 1 percent contribution. More details are available at www.tsp.gov/ changes-in-your-career/.

QWhy am I receiving less money in the retirement check that I received on November 1?

ASome rates for the FEGLI program increased on October 1 for both employees and retirees. For retirees who elected to continue their Basic FEGLI coverage, the rate depends on your age and post-retirement insurance election.

Post-retirement Basic insurance for annuitants (monthly rate per $1,000 of insurance):

• 75% reduction: $0.3467 before age 65 and $0.00 after age 65. • 50% reduction: $1.0967 before age 65 and $0.75 after age 65. • No reduction: $2.5967 before age 65 and $2.25 after age 65.

Post-retirement Basic insurance for compensationers (withholding every four weeks per $1,000 of insurance): • 75% reduction: $0.32 before age 65 and $0.00 after age 65. • 50% reduction: $1.01 before age 65 and $0.69 after age 65. • No reduction: $2.39 before age 65 and $2.07 after age 65. (For current employees, Basic FEGLI rates increased from $0.15/$1,000 biweekly to $0.16/$1,000 biweekly.)

Option A Standard coverage ($10,000) rates decreased slightly for participants ages 35 to 59, while all other rates stayed the same. Option B Additional coverage (up to five multiples of annual basic pay) rates decreased for participants ages 35 to 74 and increased for those age 80 and over. Other rates stayed the same. Option C Family (coverage for spouse and children) rates decreased for participants of all ages up to 69, and increased for those ages 75 and over. Rates for ages 70 to 74 stayed the same. The new rates can be found at www. opm.gov/healthcare-insurance/ life-insurance/.

QMy modified adjusted gross income went down significantly in 2020 after my retirement. How can I reduce my Medicare Part B premiums?

AMedicare Part B premiums are based on your modified adjusted gross income as reported on your IRS tax return from two years ago. If it is above a certain limit, you’ll pay the standard premium amount, plus an additional charge called the Income Related Monthly Adjustment Amount (IRMAA). You may call the Social Security Administration at 1-800772-1213 to request a change to your premiums. The number for those who are hearing repaired is 1-800325-0778 TTY. The SSA may request you complete Form SSA-44 – “Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event,” which is available at www. ssa.gov/forms/ssa-44-ext.pdf.

QHow is the COLA figured for Social Security? Do they use the gross amount one receives, or do they use the net amount after Medicare Part B is deducted from your total?

AThe COLA is always calculated on the gross amount of retirement income, such as Social Security (i.e., before any deductions for taxes or Medicare). For your CSRS or FERS retirement benefit, remember that reductions for survivor benefits will reduce the amount of your gross annuity that is subject to taxes and the COLA.

QIn 2014, I retired from federal service under FERS at age 56. I turn 62 in December 2021. Will I receive the COLA in my January 2022 retirement check?

AFERS COLAs do not apply to annuitants who are under age 62 as of December 1, except for the following categories: • Disability annuitants, including military reserve technicians who are medically disqualified for military service or the rank required to hold their positions.

However, disability annuitants who are receiving 60 percent of their high-3 average salary do not receive COLAs. • Military reserve technicians whose separation from technician service resulted from loss of military membership or rank on account of disability after reaching age 50 and completing 25 years of service. • Employees who retired under the special provisions for law enforcement officers, firefighters or air traffic controllers. • Spouse, former spouse and insurable interest survivor annuitants.

For FERS annuitants who are not eligible to receive a COLA during their first year (or more) on the annuity roll, the initial COLA they receive (after becoming eligible) is the full COLA without proration. Annuitants who fall in this category are those under age 62 whose annuity commences at least one year prior to reaching age 62 and disability annuitants whose annuity benefits are based on 60 percent of the high-3 average salary.

QI have three biological children and two stepchildren. If I designate my spouse as my primary beneficiary on form TSP-3 – “Thrift Savings Plan Designation of Beneficiary” but do not designate contingent beneficiaries, and my spouse dies at the same time as me, who will my TSP assets go to? Only to my three biological children, or to my biological children and my stepchildren? Will it make a difference if I have a will that says my stepchildren are considered my children?

AIt might be best for you to use the TSP-3 form to designate your spouse as beneficiary of 100 percent if living, otherwise 20 percent to each of your five children (both biological and stepchildren) to be sure that you aren’t accidentally disinheriting

anyone you don’t intend to. If you do not file form TSP-3, the standard order of precedence provides that your entire account will be distributed according to the following order: 1. To your spouse. 2. If none, to your child or children equally, with the share due any deceased child divided equally among that child’s descendants. 3. If none, to your parents equally or to your surviving parent. 4. If none, to the appointed executor or administrator of your estate. 5. If none, to your next of kin who is entitled to your estate under the laws of the state in which you resided at the time of your death.

The “child” as determined in the standard order of precedence means either a biological child or a child adopted by the participant. It does not include a stepchild unless you have adopted the child. Nor does it include your biological child if that child has been adopted by someone other than your spouse.

You can designate one or more individuals, a trust, a corporation, your estate or another legal entity (including a foundation or charity) as the beneficiary(ies) of your account.

You can also designate one or more contingent beneficiaries in case the primary beneficiary(ies) dies before you do. However, you cannot designate tertiary beneficiaries (i.e., “third-in-line” beneficiaries) for a TSP account.

To obtain an answer to a federal benefits question, NARFE members should call 800456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

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