April 2015 NARFE Magazine

APR

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P.8

budget battles begin in Congress

P.34

Annual state tax roundup

COVER STORY

relocation

Volume 91 • Number 4

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apr

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WashingTon Watch

8

NARFE Urges Congress: No Cuts to Federal Pay, Benefits in FY 16 Budget

9

Bill Introduced to Repeal Increases in Retirement Contributions

9

Wage Grade Employee Pay Legislation Filed

10 NARFE Joins “A Grand Alliance” to Save the U.S. Postal Service

10

Features, Information Added to Legislative Action Center

12 NARFE Bill Tracker Cover Story relocation. Thinking of making a move after retiring? NARFE members and retirement experts provide insights into how to make the correct go/don’t go decision.

24

Columns

4 From the President 40 Managing Money 42 The Informed Citizen DEPARTMENTS

Budget Battles Begin. The FY 2016 budget process has begun on Capitol Hill. Here is what is at stake for federal employees and retirees.

8

16 Questions & Answers 44 For the Record: TSP

Investments, COLA Chart

46 NARFE News 52 The Way We Worked special section

On the Web

34 Annual State Tax Roundup

visit us online at:

www.narfe.org like us on facebook:

NARFE National Headquarters follow us on twitter:

@narfehq

ON THE COVER

Illustration by Bill Pragluski, Critical Stages, LLC

w w w. n a r f e . o r g

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APRIL 2015 | Volume 91 | Number 4

Editor Margaret M. Carter Assistant Editor Ken Fanelli Editorial Administrator Toni Vallario

National Active and Retired Federal Employees Association NATIONAL OFFICERS RICHARD G. THISSEN, President; natpres@narfe.org JON DOWIE, Secretary/Treasurer; natsectreas@narfe.org

Graphic Design Charlene Gridley Editorial Board Richard G. Thissen, Jon Dowie

Editorial Office: narfe magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Email: communications@narfe.org Advertising Sales: Warren Berger Media People Inc. 122 East 42nd St., Suite 1622 New York, NY 10168 Phone: 212-779-7172, ext. 223 Email: wberger@mediapeople.com NARFE for the Visually Impaired On the Telephone: This publication can be heard on the telephone by persons who have trouble seeing or reading the print edition. For more information, contact the National Federation of the Blind NFB-NEWSLINE® service at 866-5047300 or go to www.nfbnewsline.org.

On digital audio: Issues of narfe magazine are also available in audio format through the National Library Service for the Blind and Physically Handicapped (NLS). For availability, call 202-727-2142 or your local NLS service provider.

The Association, since July 1970, has been classified by the IRS as a tax-exempt labor organization [not a union]; however, dues and gifts or contributions to the Association are not deductible as charitable contributions for income tax purposes.

REGIONAL VICE PRESIDENTS

REGION I James P. Crawford (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) Tel: 603-630-5191 Email: seacaptains@metrocast.net REGION II Evelyn Kirby (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) Tel: 410-604-1141 Email: ekirby@atlanticbb.net REGION III Jerry Janci (Alabama, Florida, Georgia, Mississippi, Puerto Rico, South Carolina and Virgin Islands) Tel: 662-412-2029 Email: lettermanj@aol.com REGION IV Edward J. Konys (Illinois, Indiana, Michigan, Ohio and Wisconsin) Tel: 937-470-0566 Email: region4vp@gmail.com REGION V Carol R. Ek (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) Tel: 620-241-1131, CELL: 620-504-2202 Email: ek617@att.net

Here’s How to Contact Us… If you want to:

Join NARFE Call (toll-free): 800-627-3394 or go to: www.narfe.org Change your address, phone number or email Call (toll-free): 800-456-8410 Email: memberrecords@narfe.org

REGION VI Marshall L. Richards (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) Tel: 903-660-2784 Email: pappysdad@cobridge.tv REGION VII Rodney L. Adelman (Arizona, Colorado, New Mexico, Utah and Wyoming) Tel: 623-505-4719 Email: narfe7vp@cox.net REGION VIII Helen L. Zajac (California, Guam, Hawaii, Nevada and Republic of Philippines) Tel: 707-644-7565 Email: hlz17@aol.com REGION IX Lanny G. Ross (Alaska, Idaho, Montana, Oregon and Washington) Tel: 360-692-9741 Email: lannyjean@comcast.net REGION X William Shackelford (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) Tel: 703-830-6590, CELL: 703-201-6304 Email: wshack1951@aol.com

For any other NARFE matter:

Call NARFE Headquarters: 703-838-7760 Email: hq@narfe.org Fax: 703-838-7785 Write: NARFE 606 N. Washington St. Alexandria, VA 22314

www.narfe.org

narfe (ISSN 1948-4453) is published monthly by the National Active and Retired Federal Employees Association (NARFE), 606 N. Washington St., Alexandria, VA 22314. Periodicals postage paid at Alexandria, VA, and additional mailing offices. Members: Annual dues includes subscription. Nonmember subscription rate $45. Postmaster: Send address change to: NARFE Attn: Member Records, 606 N. Washington St., Alexandria, VA 22314. To ensure prompt delivery, members should also forward changes of address without delay. Because of the volume involved, NARFE cannot acknowledge nor be responsible for unsolicited pictures and manuscripts, although every reasonable precaution is taken. All submissions become the property of NARFE. Copyright © 2015, NARFE. Advertisements in the magazine are not endorsements of products and/or services by NARFE, unless officially stated in the ad. We shall accept advertising on the same basis as other reputable publications: that is, we shall not knowingly permit a dishonest advertisement to appear in narfe, but at the same time we will not undertake to guarantee the reliability of our advertisers.

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From the President

Act today, plan for tomorrow

T

his year is moving very quickly. We recently completed a very successful Legislative Training Conference and

our first National Executive Board meeting of the year. I want to thank everyone on NARFE’s staff who contributed to the success of these and other initiatives.

Here at Headquarters, the Legislative Department staff continues to monitor activities in Congress to ensure we are aware of all possible impacts of happenings on the Hill. The Marketing Department is now fully staffed, and the team is using the latest best practices to recruit and retain members and develop nondues revenue to support the Association’s operations.

Staff in our Federal Benefits Service Department have been busy answering your benefits questions. In addition, they are working to keep all of

us informed of issues that the Office of Personnel Management is addressing, including the recent hacking incident at Anthem insurance. Chapter and federation officers who use the Association’s online membership reporting tools are aware of the great job the Information Technology Department staff does to support their efforts. The Communications Department continues to excel with every publication it releases. Our support staff – Human Resources, the Print Shop, the Mail Center, and Building Management and Maintenance − make day-to-day life and the fulfillment of our mission possible at Headquarters.

While Headquarters staff is hard at work, we are also in the midst of strategic planning to make sure that NARFE’s future operations and organization meet the needs of our constituents.

You can read about this initiative in the “News From NARFE” section of this issue. We have created a special email address for your input, stratplan@narfe.org. We also have developed a communication plan to keep you informed of ongoing strategic planning activities. The Strategic Planning Team and Strategic Planning Committee members are determined to define a future NARFE that is attractive to potential members while continuing to meet the needs and recognize the desires of current members.

Richard G. Thissen NARFE national President natpres@narfe.org

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Washington Watch

NARFE Urges Congress: no cuts to Federal pay, benefits in FY 16 Budget

F

ederal employees would get a 1.3 percent raise in 2016 under President Obama’s proposed fiscal year (FY) 2016 budget. Although it is greater than the 1 percent raise

feds got this year, it is less than the 2.3 percent increase in the Employment Cost Index (ECI) from 2013 to 2014. The ECI measures private-sector pay increases and is supposed to serve as a baseline for federal pay raises.

NARFE President Richard G. Thissen responded by pointing out that this is the third straight year the president’s budget has proposed a “reduced” pay raise, following a three-year federal pay freeze.

“Over the past five years, federal employees’ wages increased 2 percent, while private-sector wages rose 8.3 percent and the cost of living increased 11 percent,” Thissen said. “This sends a powerful message to job seekers questioning whether a career in the public sector would provide the necessary income to support a family, buy a house and save for the future.”

NARFE supports House and Senate legislation seeking a

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3.8 percent pay raise in 2016.

On the positive side, the FY 2016 budget did not include a plan to switch to the Chained CPI for calculating the cost-of-living adjustment in federal retirement programs or an increase in retirement contributions for current federal employees. While neither was included in the FY 2015 budget, they were included as recently as the FY 2014 budget. NARFE is pleased that these proposals were not included in this budget.

After President Obama sent his budget to Congress on February 2, NARFE’s Thissen sent a letter to the leaders of the House and Senate Budget Committees, urging support for an FY 2016 budget

Government Publishing Office employee prepares to print President Obama’s Fiscal Year 2016 Budget.

that would end sequestration (across-the-board cuts in discretionary spending) and adequately fund government operations without reducing the pay and benefits of federal employees and retirees.

“In the past five years, federal employees have endured a three-year pay freeze, two years of raises well below the level of increases in the cost of living, reduced take-home pay due to increased retirement contributions (without any added benefit), furloughs due to sequestration and a government shutdown that caused serious financial uncertainty,” Thissen wrote.

“Together, these reductions in the pay and benefits of federal employees have reduced the deficit by more than $120 billion.

Sequestration-related furloughs cost federal employees more than $1 billion in lost wages in 2013 alone. The federal workforce has done more than its fair share.”

At press time, the committees were crafting budget resolutions to send to the House and Senate. Sequestration-level funding,

BILL REPEALS INCREASES IN PENSION CONTRIBUTIONS which could lead to furloughs in 2016, is set to take effect unless Congress takes action through the budget and appropriations process. Budget reconciliation, a strong possibility this year, also could lead to cuts in federal employee and retiree pay and benefits.

NARFE members are urged to remain vigilant and to stay up to date through this magazine and other Association communications vehicles, including the NARFE website, www.narfe.org; the weekly emailed Legislative Hotline; and NARFE NewsWatch, the weekly electronic news brief.

—By Jessica Klement, Legislative Director

Legislative Resources • Legislative Hotline: A weekly update of legislative news, compiled by the NARFE Legislative Department staff, distributed via email and available by phone (toll-free) at 877-217-8234 and online at www.narfe.org.

• Legislative Action Center: A one-stop site to send a letter to Congress, and more, at www.narfe.org.

R

ep. Donna Edwards, D-MD, reintroduced a bill to repeal the increased retirement contribution requirement for new federal employees.

In budget negotiations, Congress required new federal employees hired beginning in 2013 to pay 2.3 percent more toward their retirement than employees hired before 2013, with no increase in benefits. In 2014, Congress mandated another 1.3 percent contribution increase for new hires, who pay a total of 3.6 percent more than those hired before 2013. Over 10 years, the two increases in contributions will cost federal employees $21 billion in take-home pay.

The Federal Employee Pension Fairness Act, H.R. 785, would repeal both contribution increases and return contributions to the

previous 0.8 percent.

“Enough is enough,” said Edwards. “It is our duty to ensure the fair treatment of the federal employees who have served our nation so well, especially during times of economic strain. We must stop saddling our federal workers with such disproportionate burden.”

NARFE supports the bill.

“These increases in retirement contributions came at a time when federal employees’ pay was frozen, sequestration budget cuts threatened their jobs and unpaid furloughs undermined their earnings,” said NARFE President Richard G. Thissen. “It’s time we compensate them commensurate with their service and sacrifice and repeal these arbitrary retirement contribution increases.”

—By Carolyn Dorf, legislative staff assistant

WAGE GRADE EMPLOYEE PARITY

R

ep. Matt Cartwright, D-PA, introduced a bill to provide Wage Grade, or hourly, federal employees the same increase in their rates of basic pay that is provided to General Schedule (GS), or salaried, federal employees. Cartwright was joined by Rep. Tom Cole, R-OK, in filing the Wage Grade Employee Parity Act, H.R. 485.

Cartwright introduced a similar bill in the 113th Congress (2013-14), which was incorporated into annual appropriations bills signed into law. That lan-

guage ensured federal employees paid hourly received a 1 percent hike in their hourly pay rate in 2015, the same raise afforded GS employees.

Currently, the president has the ability to provide a pay raise for GS employees. But he does not have the same authority for hourly employees; their raise must be specifically authorized

by Congress. H.R. 485 would give the president that authority.

NARFE supports the bill, which has 12 other cosponsors.

—By John Hatton, Deputy Legislative Director w w w. n a r f e . o r g

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Washington Watch

NARFE JOINS ‘A GRAND ALLIANCE’ TO SAVE U.S. POSTAL SERVICE

N

ARFE joined more than 60 national organizations to form “A Grand Alliance to Save Our Public Postal Service.”

“I don’t have to tell you that the United States Postal Service (USPS) is a wonderful national treasure, enshrined in the Constitution and supported by the American people,” NARFE President Richard G. Thissen said in a message to NARFE members about the Alliance. “Without any taxpayer funding, the USPS serves more than 150 million households and businesses each day, providing affordable, universal mail service to all – rich and poor, rural and urban, without regard to age, nationality, race or gender.”

Thissen urged NARFE members to aid the cause by signing

NARFE President Richard G. Thissen, left in second row, lends his support to the “Grand Alliance” to save the U.S. Postal Service.

a pledge to support the USPS at http://agrandalliance.org/. “The Postal Service and postal jobs are threatened by interests that seek to undermine postal services.

FEATURES, INFORMATION ADDED TO LEGISLATIVE ACTION CENTER

T

he NARFE Legislative Action Center has gotten a face-lift.

It can still be reached at www. narfe.org/legislation. And it still provides NARFE members a way to send messages to their members of Congress, learn about legislation of interest to NARFE and review votes taken by their representatives and senators.

The biggest change is the addition of issue pages. Currently, it has four: Federal Employee Pay and Benefits, the Federal Employees Health Benefits Program, the Chained CPI, and Postal Reform.

Each page includes background on the issue, including the impact it

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would have on the federal community. It can be forwarded to others, who can add their support.

As with the previous site, members can select “Contact Congress” to send one of NARFE’s Action Alert letters, or they can write their own message. Information available includes legislators’ office locations, committee assignments, biographical data and a link to their websites.

Additional features are coming, so be sure to check back regularly.

Any questions on the new Legislative Action Center should be sent to leg@narfe.org.

—By Sarah Weissmann, grass-roots program manager

We are fighting to protect and enhance vibrant public postal services now – and for many generations to come,” he said.

—By John Hatton, Deputy Legislative Director

MYTH vs.

REALITY Myth: Private-sector employees are better educated than federal workers.

Reality: On average, federal employees are better educated. More than 25 percent have a master’s degree or above, compared to about 10 percent in the private sector. More than half are in the nine highestpaying private-sector occupations, including lawyers, engineers and scientists, compared to about a third of the private sector. In fact, the federal government is the country’s largest employer of doctors.

NARFE’s

CONGRESSIONAL DIRECTORY for the

114th Congress (2015-2016)

Congressional Information:

• Listing of members of Congress by state delegation, with color photos, biographical data and congressional district maps.

• Members’ contact information, including addresses, phone and fax numbers, website addresses, social media contacts, district offices and key staffers.

• How Congress is organized and operates, with complete listings of committees, subcommittees and leadership.

• Contact information for the White House, Cabinet, Supreme Court and federal agencies. … And customized for NARFE members Special insert with NARFE-specific information and data to be used for grass-roots advocacy.

Order your copy of the new Congressional Directory today!

Clip and mail to: NARFE Congressional Directory, 606 N. Washington Street, Alexandria, VA 22314-1914 Name___________________________________________________________________ Address _________________________________________________________________ City __________________________________________State _______ZIP____________ Member ID# (As it appears on narfe magazine label)_____________________________

o Check or cash enclosed o Charge to my credit card

o MasterCard o VISA o Discover o AMEX

Card # __________________________________________________________________ Exp. Date

________ / _______ (mm)

(yy)

Quantity ________________ $20 each (includes shipping and handling) VA sales tax______________ VA residents add 6% tax ($1.20) per book Total cost________________

Name on card (print) ______________________________________________________ Signature _____________________________________________ Date _____________

Order form also available online at www.NARFE.org

Make checks payable to NARFE

*Please allow 2-3 weeks for delivery

Washington Watch

narfe bill tracker The NARFE bill TRACKER is your monthly guide to the congressional legislation that NARFE is following. Check back each issue for updates.

ISSUE

Bill Number / Name / Sponsor H.R. 138: Access to Insurance for All Americans Act / Rep. Darrell Issa, R-CA

HEALTH CARE

Cosponsors: 0

What Bill Would Do Repeals the Affordable Care Act and establishes a national health program administered by the Office of Personnel Management to offer Federal Employees Health Benefits Program plans to individuals who are not federal employees or retirees. It creates separate risk pools for federal and non-federal participants.

H.R. 313: Wounded Warriors Federal Leave Act / Rep. Stephen F. Lynch, D-MA SICK LEAVE FOR WOUNDED VETERANS

Latest Action(s) Referred to nine House committees

Entitles any federal employee who is a veteran with a serviceconnected disability rated at 30 percent or more, during the 12-month period beginning on Cosponsors: 16 (D), 5 (R) the first day of employment, up to 104 hours of leave, without loss or reduction in pay, for S. 242: Wounded Warpurposes of undergoing medical riors Federal Leave Act / treatment for the disability for Sen. Jon Tester, D-MT which sick leave could regularly be used. Requires the forfeiCosponsors: 1 (R) ture of any of the leave that is not used during the 12-month period.

Approved by the House Committee on Oversight and Government Reform on 1/27/15

H.R. 304: The Federal Adjustment of Income Rates (FAIR) Act / Rep. Gerald E. Connolly, D-VA

Referred to the House Committee on Oversight and Government Reform

Provides for a 3.8 percent pay raise for federal employees in 2016.

Referred to the Senate Committee on Homeland Security and Governmental Affairs

Cosponsors: 47 (D) S. 164: The Federal Adjustment of Income Rates (FAIR) Act / Sen. Brian Schatz, D-HI

Referred to the Senate Committee on Homeland Security and Governmental Affairs

Cosponsors: 3 (D) Federal Compensation

H.R. 485: Wage Grade Employee Parity Act / Rep. Matt Cartwright, D-PA Cosponsors: 9 (D), 3 (R)

H.R. 785: The Federal Employee Pension Fairness Act / Rep. Donna Edwards, D-MD Cosponsors: 12 (D)

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The president has the ability to provide a pay raise for federal employees on the General Schedule. He does not have the same authority for Wage Grade, or hourly, employees, whose raises must be authorized by Congress. H.R. 485 would give the president that authority.

Referred to the House Committee on Oversight and Government Reform

Repeals laws passed in 2012 and 2013 that increased the Federal Employees Retirement System contributions for newly hired federal employees.

Referred to three House committees.

NARFE’s Position:

Oppose

Support

See story, p. 9.

See story, p. 9.

No position

(Continued on p. 14)

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Washington Watch

narfe bill tracker

(Continued from p. 12)

Bill Number / Name / Sponsor

ISSUE

H.Res. 12: Expressing the sense of the House of Representatives that the United States Postal Service should take all appropriate measures ensure the continuation of Postal Reform to its six-day delivery services / Rep. Sam Graves, R-MO

What Bill Would Do

Latest action(s)

Expresses the sense of the House that the U.S. Postal Service should maintain sixday mail delivery. As a resolution, it will not be sent to the president and, therefore, cannot become law.

Referred to the House Committee on Oversight and Government Reform

Reforms campaign finance laws to put small donors to political campaigns on par with wealthier donors.

Provides a tax credit for campaign contributions and government matching contributions.

Referred to three House committees

Cosponsors: 107 (D), 21 (R) H.R. 20: The Government By the People Act / Rep. John Sarbanes, D-MD Campaign finance

Cosponsors: 141 (D), 1 (R)

2015-16_PAC_Coupon_2013 Coupon 12/1/14 10:11 AM Page 1

NARFE-PAC CONTRIBUTION FORM I would like to be a SUSTAINER and make a monthly credit card contribution to NARFE-PAC of:

q Please charge to my credit card (required for monthly contribution)

q $25/month

Credit Card Information

q $10/month

Monthly contributions of $10 or more qualify you to receive the NARFE-PAC Sustainer lapel pin, along with a NARFE duffle bag.

q Other: ______/month (minimum of $10) OR

Type:

q MasterCard q VISA q Discover q AMEX

Card #:__________________________________

I would like to make a one-time contribution of:

Expiration Date: ____ / ____

q $250 - Gold

Name on Card: ___________________________

(qualifies for Gold lapel pin and duffle bag)

q $100 - Silver (qualifies for Silver lapel pin) q $50 - Bronze (qualifies for Bronze lapel pin) q $25 - Basic (qualifies for Basic lapel pin)

Signature:_______________________________ Date: ___________________________________

q Other: ______

Mail to: National Active and Retired Federal Employees Association Attn: Budget & Finance

q I do not want to receive any gifts for my contribution marked above.

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NARFE Member #: ________________________________ Name: __________________________________________ Address: ______________________________________________________________________________________ City: ________________________________________________ State: ____________ ZIP: _________________ Only members of the National Active and Retired Federal Employees Association may contribute to NARFE-PAC. NARFE will neither favor nor disadvantage anyone based on the amount of a contribution or the failure to make a voluntary contribution to this political action fund. NARFE-PAC contributions are not deductible for federal income tax purposes.

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Questions & Answers

The following Questions & Answers were compiled by NARFE’s Federal Benefits Service Department staff.

NARFE does not provide advice or assistance on legal, financial planning or tax matters.

employees

Q

long-term care coverage for new spouse I am an active federal employee and will remarry in a few months. Will my new spouse be able to apply for coverage under the Federal Long Term Care Insurance Program (FLTCIP)? If so, can he use the abbreviated underwriting application?

A

Yes, he is eligible for longterm care insurance under the federal program, and if he applies within 60 days of the date of your marriage, he may apply using the abbreviated underwriting application.

Newly hired eligible employees, newly eligible employees and their spouses, and newly married spouses of eligible employees can apply for FLTCIP using the abbreviated underwriting application (which has fewer questions about health than the full underwriting application) within 60 days of becoming eligible. After that period, employees and their spouses can still apply, but must use the full

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underwriting application.

Retaining TSP after leaving government

Q

I am thinking about separating from the federal government and going into the private sector. I would like to leave my money in my Thrift Savings Plan (TSP) account. Is that an option I would have?

A

Yes. When you separate from federal government service, you can leave your entire account balance in the TSP if it is $200 or more and continue to enjoy tax-deferred earnings

and the plan’s low administrative expenses. After separating from federal service, you can no longer make contributions to your account. However, you may be able to transfer − or roll into your active TSP account − money from another IRA plan account.

See Form TSP 60 at www.tsp.gov/ PDF/formspubs/tsp-60.pdf.

FEHBP COVERAGE VS. ACA PLANS

Q

I am very confused about the Affordable Care Act (ACA). Can I cancel my Federal Employees Health Benefits Program (FEHBP) coverage and enroll in one of the ACA plans?

A

Yes. If you are a federal employee, you can cancel your FEHBP enrollment and at a later time re-enroll during Open Season.

However, federal annuitants who are enrolled in the FEHBP and cancel their FEHBP enrollment cannot re-enroll at a later date. In addition, the annuitant and other enrolled family members will not be eligible to enroll in temporary continuation of coverage or convert to a nongroup contract; in addition, the 31-day extension of coverage does not apply to cancelled enrollments.

Finally, if the annuitant dies, there will be no FEHBP family enrollment for his or her survivors to continue, even if they are eligible for a survivor annuity.

Can I increase survivor annuity?

Q

I am a re-employed annuitant and made the mistake of not electing a full survivor annuity for my spouse.

Is there any prospect for an open enrollment period to increase the survivor annuity? If there is, I am fully prepared to pay all past premiums in full to catch up.

A

There are no plans to institute such an open season.

There are very limited opportunities to change a survivor annuity election. Here they are: You may file a new election in writing to increase it within 30 days of receiving your first full annuity payment. After the 30-day period has passed, you can change your election only under the following circumstances: If it is more than 30 days from the date of your first regular monthly payment, but less

than 18 months from the beginning date of your annuity, you may change your decision not to provide a survivor annuity, or you can increase the survivor annuity amount. You also must pay a one-time payment representing the difference between the old and new election amounts. This one-time payment also includes a percentage of your annual benefit. The percentage is 24.5 percent of your annual benefit if you are changing from no survivor benefit to a full-survivor benefit, or 12.25 percent if you are changing from no survivor benefit to a partial one.

If you are in either of these situations, you should send the election to: U.S. Office of Personnel Management, Retirement Operations Center, P.O. Box 45, Boyers, PA 16017.

retirees DECIPHERING THE 1099-R FORM

Q

On my form 1099-R from the Office of Personnel Management (OPM), the taxable amount is listed as “unknown.” I need to file my taxes.

What does “unknown” mean?

A

If your 1099-R Statement Box 2.a for the Taxable Amount is marked “Unknown,” OPM did not calculate the tax-free portion of your annuity. Some of the most common reasons for not calculating the tax-free portion of an annuity include:

• Your case is a disability retirement; • You retired prior to November 19, 1996; • You have voluntary contributions; • Your former spouse is being paid a court-ordered apportionment; • Your case has not been finalized, and you have an interim pay status; • You have survivor benefits payable; and/or • Your case is or has been assigned to the Office of Workers’ Compensation.

CHANGING LIFE INSURANCE coverage

Q A

Can I change my Federal Employees’ Group Life Insurance (FEGLI) premiums after I have retired?

You can reduce your FEGLI premiums by reducing your coverage.

However, if you reduce coverage, you cannot increase it again later.

Are Two survivor annuities POSSIBLE?

Q

I was married to an active federal employee who died, and I started receiving a survivor benefit. After age 55, I married a federal retiree, so my survivor annuity continued. My second husband married me after he retired and elected a survivor annuity for me. If he predeceases me, may I receive two survivor benefits? w w w. n a r f e . o r g

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Questions & Answers

A

In your case, the answer is no.

Generally, a surviving spouse may receive more than one survivor benefit based on the service of more than one employee. However, a surviving spouse may not receive survivor annuities based on the service of more than one individual if any of the survivor annuities were based on a marriage that occurred after the employee retired or were reinstated after the surviving spouse remarried before age 55.

You would not be eligible to receive two survivor annuities because your spouse was retired when you married. If you had

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married your second husband prior to his retirement and he elected a survivor benefit for you, then you would be eligible to receive two survivor annuities.

Rehired ANNUITANTS AND SALARY OFFSET

Q A

Can I contact my former agency to determine if it will consider rehiring annuitants without salary offset?

Yes, but you should know that while the National Defense Authorization Act for fiscal year 2015 included a fiveyear extension of agency author-

ity to rehire annuitants without a salary offset, the restrictions on the type of appointments agencies can offer under the law remain in place. The authority may be used when the agency determines it is necessary to: • Fulfill functions critical to the agency mission; • Assist in the implementation or oversight of the American Recovery and Reinvestment Act of 2009; • Assist in agency procurement actions; • Assist the agency Inspector General in its mission; • Assist in the agency’s recruitment or retention of employees;

• Promote training or mentoring of employees; or • Respond to an emergency involving threats to life or property.

Appointments by the agency under this authority are limited to a year or less, and individuals cannot work more than 1,040 hours during a 12-month period. There are no additional annuity benefits that accrue to the annuitant while working under this authority.

FEHBP should offer MEDICARE ADVANTAGE

Q

I think the Office of Personnel Management (OPM) should begin

offering the option of Medicare Advantage programs in the Federal Employees Health Benefits Program (FEHBP). Blue Cross Blue Shield and other providers have Medicare Advantage plans, but they are not available in the FEHBP. Why not?

A

Thank you for sharing your thoughts with us.

Keep in mind that Medicare and the FEHBP are two separate government health programs with their own laws, rules and regulations.

The FEHBP, which is administered by OPM, is an employersponsored group health insurance

program. Under the FEHBP laws, the government, as employer, contributes a percentage of the premium costs for its employees.

Medicare is a program that provides health coverage for Americans age 65 and over and certain disabled people under 65.

In 1997, legislation was passed creating Medicare Part C, which allows private health insurers to contract with Medicare to offer plans that combine with traditional Medicare A and B to provide additional coverage. Under the law, the government helps subsidize the costs to health insurance plans that participate in Medicare Part C.

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Questions & Answers

We do not foresee OPM or Medicare seeking legislation to provide the coordinated benefits you describe.

Retirement and Disability Fund, funded by employee and government contributions, which are invested in government securities.

FUNDING Source for SURVIVOR ANNUITIES

CSRS Offset reduction

Q

Is the federal retiree survivor annuity subsidized by the government? Or is the survivor annuity fully funded by the 10 percent annuity reduction?

A

The reduction in a retiree’s annuity to provide a survivor annuity contributes only a fraction of the costs of the survivor benefit. Most costs are covered by the Civil Service

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Q

I’m confused about the amount my CSRS (Civil Service Retirement System) Offset annuity will be reduced when I reach age 62 and become eligible for Social Security. The answer provided in the February 2015 issue (p. 14) was different than what I had read.

A

Our answer was not very specific. Here is the explanation from the Office of

Personnel Management (OPM): The Social Security Administration takes the federal earnings in the period when you are covered by both Social Security and CSRS and computes a Social Security benefit with those earnings included, and then without those earnings included. With these, OPM computes the offset reduction, which is the lesser of: 1. The difference between the Social Security monthly benefit amount with and without CSRS Offset service; or 2. The product of the Social Security monthly benefit amount with federal earnings, multiplied by a fraction where the numerator is the employee’s total CSRS Off-

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Questions & Answers

NARFE at Your Service set service rounded to the nearest whole number of years and the denominator is 40.

Here is the example OPM gives in its pamphlet on the subject. In this example, the employee has three years and eight months of CSRS Offset service.

• Computation 1 Social Security monthly benefit with federal offset service: $600 Social Security monthly benefit without federal offset service: $550.

Difference: $50.

• Computation 2 Social Security monthly amount with federal earnings = $600 X 4 years (nearest whole year to 3 years and 8 months) = $2,400 Divided by 40 = $60.

• Result Since the offset is determined by taking the lesser amount of the two computations, the annuity reduction in this case would be based on Computation 1, or $50.

For more information, see “Retirement Facts 13 – CSRS Offset Retirement” at www.opm.gov/ retirement-services/publicationsforms/pamphlets/ri83-19.pdf.

To obtain an answer to a federal benefits question, NARFE members should call 703-838-7760 and ask for the Federal Benefits Service Department; send your question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

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NARFE service officers are available to answer questions and to assist in helping with a variety of benefit matters. Check your chapter newsletter for the name and phone number of your service officer. For the nearest service officer, call NARFE (toll-free) at:

800-456-8410.

NARFE Service Centers also are available in some areas. Use the Service Center listings on the NARFE website,

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New amplified phone lets you hear AND see the conversation.

The Captioning Telephone converts phone conversations to easy-to-read captions for individuals with hearing loss.

A simple idea… made possible with sophisticated technology. If you have trouble understanding a call, the Captioning Telephone can change your life. During a phone call the words spoken to you appear on the phone’s screen – similar to closed captioning on TV. So when you make or receive a call, the words spoken to you are not only amplified by the phone, but scroll across the phone so you can listen while reading everything that’s said to you.

Each call is routed through a call center, where computer technology – aided by a live representative – generates immediate voice-to-text translations. The captioning is real-time, accurate and readable.

Your conversation is private and the captioning service doesn’t cost you a penny. Captioned Telephone Service (CTS) is regulated and funded by the Federal Communications Commission (FCC) and is designed exclusively for individuals with hearing loss.

In order to use CTS in your home, you must have standard telephone service and high-speed Internet

connectivity where the phone will be used. Callers do not need special equipment or a captioning phone in order to speak with you.

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Illustration by Bill Pragluski, Critical Stages, LLC

Cover Story

LOOK ING FOR

How to make all the right moves

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By David Tobenkin

GREENER PASTURES Say hello to some NARFE members who happily report that the grass actually is greener in another state after relocating following their retirement from federal service.

Retired Department of Defense Systems Analyst Mary Day and her husband, Carl, who was employed by U.S. Army Security Assistance Command, moved from Woodbridge, VA, in 2004 and later relocated to Prescott, AZ. “We wanted a small urban area not too far from a major metropolitan area (Phoenix) with mild weather and low humidity,� says Day, who responded to a narfe magazine reader survey on

in the post-retirement relocation decision

w w w. n a r f e . o r g

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LOOKING FOR

GREENER PASTURES post-retirement relocations. “Prescott offers year-round mild weather, low utility costs, low state taxes, less-dense population, recreation opportunities and is nearer family (within an eight-hour drive). We are extremely satisfied with our choice.”

Erik Anderson retired in 1999 from a senior engineering technician job at the National Institute of Standards and Technology in Gaithersburg, MD, and relocated to Lewes, and later to nearby Bethany Beach, DE. “The coastal area of Delaware offers lower income and property taxes and access to the beach,” says Anderson. “We considered several states and areas within each state. Finally, we chose Delaware as the best fit for what we wanted in a retirement home.”

And Nancy Pearson, who moved to Las Cruces, NM, following her retirement in 2004 from information resource manager positions at the Department of Labor and the Office of Personnel Management in Washington, DC, says: “We were tired of the stressful ‘Code Orange’ nature of the nation’s capital and wanted a change to a better climate; a smaller, quieter city; and a less expensive place to live. Las Cruces has an interesting culture, is a university town, has a good library, is near the major city of El Paso (TX), has the availability of a local symphony, museums, an active art/artist community, has a nice mix of Hispanic and Anglo cultures, access to good medical care, little or no snow, little traffic, less noise and gorgeous weather. And your retirement dollars go much further here.”

Freed up from the responsibilities of a job, many federal employees upon retirement can finally move to a location that allows them to unite with their families, realize their dreams or, at the very least, live more comfortably on a fixed income. But deciding whether and where to relocate upon retirement may be one of the most difficult and creative choices retiring federal employees will make.

THE IMPORTANCE OF PREPARATION

The single leading determinant of whether inter-state relocations did or did not lead to happy outcomes in the narfe magazine survey,

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and in the opinion of experts participating in this story, is whether those who relocated did their homework. That includes determining their financial situation upon retirement and how a relocation could change that; weighing what is most important to them in retirement, what will be gained by moving to a retirement location versus what will be lost; and, perhaps most importantly, living for an extended period in potential retirement locations prior to making a decision to see if the reality of the move matches the dream.

“I think the people who relocate and are most satisfied are those who do the most planning,” says Fred Brock, a former retirement issues columnist for the The New York Times and author of the book Retire on Less Than You Think. Brock, himself, relocated in semiretirement to Tucson, AZ. “Most of us during our lives don’t have a choice where we live: We live where we were born or where we work.

But one of the times that we do have a choice is when we retire. People who plan carefully and test out retirement locations usually are happy. The ones who are unhappy are often those who relocate from a big city like New York, Minneapolis or San Francisco and move to somewhere very different and strange to them and then find out they are not happy, which is because they didn’t think about it carefully and do their homework.”

Driven by the baby boomer cohort retirements, the general and financial press, such as Forbes, Money, U.S. News & World Report and a host of other publications, are tracking best places to retire. Such lists can start people thinking about what they want in a retirement location. A caveat to such lists, however, is that they may offer a dangerous temptation to reduce a complicated decision to a simple one based on a cursory overview of a location.

GETTING THE SCOOP FROM INSIDERS

The good news is that there are more tools than ever to help retirees do the serious, in-depth research that a relocation decision merits.

Websites offer engines that compare various

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LOOKING FOR

GREENER PASTURES attributes of different locations. Many are free.

Sperling’s Best Places (www.bestplaces.net), for example, facilitates free and speedy comparisons between states and retirement locations with respect to a wide variety of attributes, including real estate costs, crime rates, climate, health care services and schools.

“Our website can open readers’ eyes to possibilities; but it is the beginning, rather than end, of the journey,” says Bert Sperling, website founder and chief executive. “I hope no one reads one of our lists and says, ‘Honey, we’re moving to Evansville, Indiana!’ or something like that. What might be right for someone else might not be right for you.” Sperling notes that further research is needed. Newspapers and local media that have placed their news and video content online often can be a goldmine for determining the challenges of a given community, he says. Such sources, unlike real estate firms, local chambers of commerce and civic organizations, provide warts-and-all descriptions of the communities.

But analyzing all that information and reaching a good decision still will take a lot of time and effort. Many survey respondents said that their retirement relocation decisions and preparations had taken years.

TRAVEL AS CATALYST

A large part of that reflects that the relocation journey often involves difficult decision-making.

The hardest questions may be internal ones, such as whether sunny weather and low taxes in one location, proximity to family in another, or returning to a place that still feels like home in a third should be the determining factor in choosing a retirement location. The earlier those deep questions are considered, the more focused search efforts likely will be.

After narrowing down the list of potential communities to a small number of contenders, extended visits to these destinations are essential. Only by living in a location for an extended period (at least a couple weeks as temporary residents, rather than as tourists) can retirees or future retirees weigh the pluses and minuses and see if it is a good fit for them. Once the likely

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winner is decided upon, a longer extended stay of weeks or months is usually appropriate. Visit potential locations in their worst weather, such as Vermont or upstate New York in winter, the Southeast during humidity peaks, or the Southwest in scorching temperatures, recommends Helen Dennis, a retirement issues columnist and a lecturer at the University of Southern California’s Davis School of Gerontology.

In visiting potential retirement locations, many survey respondents said the focus should be to live as normally as possible. Experience local traffic and take the transit system.

Buy groceries and cook rather than eat out in restaurants. Walk the neighborhood and talk to local residents.

THE BIG PICTURE

Taking a long view of retirement is helpful in the relocation and planning process. Sperling notes that there are different stages in retirement.

“The go-go years are when a couple is healthy, energy levels are high and travel is easy,” he says. “Next are the slow-go years, when energy levels and, perhaps, overall health decline somewhat. Interaction with family and friends and predictable routines generally take on a new importance. Then come the no-go years, when energy and health levels decline, travel is precarious, and access to nearby and diverse health care options and the support of loved ones is critical.” Much of the logic for whether and where to relocate depends upon where new retirees are along that continuum, he says.

Realistically, that may mean many former feds should consider the possibility of two post-retirement moves. Typically, such a scenario would include a move to an active adult retirement community during the go-go years, followed by relocation in proximity to adult children or close family members as the slow-go years transition to the no-go years.

Alternately, seniors may want to assure the availability of assisted-living/skilled nursing facilities that provide a continuum of care.

The importance of a good and diverse health system is often overlooked by healthy and active retiring seniors. “People many times

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LOOKING FOR

GREENER PASTURES get fixated on the Johns Hopkins, big academic medical center of the area,” says Ernie Moy, a medical officer at the Agency for Healthcare Research and Quality, which publishes comparative data on health care in different states.

“They don’t pay attention to all the types of interactions with other health care professionals they will need. You will probably go through lots and lots of other places before you get to Hopkins, and need care from other doctors, including primary care physicians, preventative services and assistance with the management of chronic conditions. The quality of those providers will not necessarily be driven by the Hopkins facility,” cautions Moy. “The other thing to keep in mind is that some states are deserts for certain types of care, so you can look up a particular condition on our website (www.ahrq.gov) and see which states are doing better or worse for that specific condition.”

EXPENSES, TAXES, HOUSING AND INCOME QUESTIONS

A critical question is that of cost. The cost of real estate ownership or rental housing, food, transportation and health care can strongly shape the relocation options of retirees with limited incomes, including many federal retirees. Accurately determining retirement benefits, preparing a budget and, perhaps, getting advice from a financial planner are key.

The basic model of reaping a large amount of cash by selling a paid-off house in a highcost-of-living metropolitan area and relocating to a place with inexpensive real estate costs and low taxes and cost-of-living expenses is still realized by many. For example, houses in Jacksonville, FL, have a median cost of $111,900, compared to $170,100 nationally and $434,300 in Washington, DC, according to Sperling’s Best Places. “Relocation is the most important thing you can do to cut expenses after retirement, given that the cost of living in the United States varies dramatically due to differences in the cost of real estate and taxes,” says retirement columnist Brock.

The tax treatment of different states is a crucial variable as well. Florida, unlike Wash-

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ington, DC, has no personal income taxes, which makes residing in the Sunshine State advantageous for those on a fixed income. Yet there are often other taxes that must be considered, such as sales taxes, county and city taxes, and other fees. (NARFE’s annual compilation of the tax situation in different states appears in this issue, starting on p. 34). Keep in mind that low taxes are often associated with more limited social services.

“We have saved thousands of dollars in our 23 years of retirement” by moving from North Dakota to South Dakota, says Gerald Cornelius, who retired from an Internal Revenue Service (IRS) management job in Fargo, ND, and then relocated to Waterford, SD. Cornelius says that his move also reflected a desire to be closer to relatives and friends. And opportunities for “outstanding hunting and fishing” also figured into the decision. Cornelius says his annual savings include $10,000 in reduced state income taxes; cheaper real estate, which has resulted in a savings of $35,000 for a house that is comparable to one valued at $105,000 in North Dakota; and real estate taxes that are $600 per year below those in North Dakota.

“We have more available funds for travel, entertainment, new cars, helping children and other priorities,” he says.

Many times, however, savings may be less significant than expected. “The only way to find out if you will save a significant amount of money is to run a retirement scenario comparing retirement costs of staying put versus costs in the other state, including figuring in all the taxes, the sale of the home here and the purchase there, moving costs and other factors,” says Mark Keen, a financial planner at Keen & Pocock in Fairfax, VA, and a columnist for narfe magazine. “A good financial adviser can do that.

Often when you run the numbers, you get a few grand in savings – maybe $5,000 per year. So is it worth uprooting yourself from friends and family to save a few bucks if you were not going to do so otherwise? Most times, if the savings are large, the retiree has a high income anyway and may not need those savings.”

Real estate often constitutes a large chunk of

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LOOKING FOR

GREENER PASTURES assets in retirement, and the disposition of the original home and the decision of whether to rent or buy in the destination state can be critically important. Selling high and buying low can make a large difference, but a wrong move can severely dent a retirement nest egg.

In particular, many survey respondents urged renting a property in the potential destination location before buying a residence to delay the substantial costs involved in selling the original home and purchasing a new one. Allowing yourself this real estate “breather” will help you avoid mistakes and better gauge the amount of space you need and amenities you desire in your destination house.

A related consideration is whether the local economy of the relocation community is healthy in the event the retiree desires a second career, household finances require additional income or if one spouse is continuing to work. Several survey respondents noted that smaller communities had offered them only limited work options or were less open to hiring outsiders.

Big and small SOCIAL CONSIDERATIONS

The social considerations of relocations sometimes get overshadowed by the financial. Spouses will want to have long discussions about where each wishes to live. And what if one spouse survives the other in the retirement setting? Would the surviving spouse feel comfortable remaining in place? There is also the question of where former colleagues and friends choose to retire.

In some cases, groups of friends decide jointly to make the trip to an active adult retirement community. Similarly, one will want to make sure that favorite retirement activities and hobbies are available in the destination community, USC lecturer Dennis notes.

For many retirees, the ultimate safety net will be family. Many move to be closer to family, as proximity to family members is likely to be a critical determinant of how much interaction, support and emergency assistance will be available. But they should keep in mind that family members may subsequently need to

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move and assess whether they will be willing to move with them.

General community practices and customs also can make for a good or bad fit. Sperling gives the example of some communities where religion is important to most members. While such communities may have generally tolerant and welcoming members, if most members of the community choose to spend a large portion of their social time in religious community events, an atheist likely would feel out of place.

It also is important to consider what is being given up by relocating. In many cases, this includes friends and colleagues, a good number of whom will stay put, as well as knowledge of the community and its services.

Another realization is just how demanding such a move is likely to be. Retiring is a major life event. Adding a relocation to it adds a second major transition. In some cases, retirees may want to space out the two events, which can allow them to assure that their retirement benefits are arriving as intended before incurring costs based on assumed income, and to reassess, as retired persons, exactly what their priorities in retirement are.

Finally, those considering relocation in retirement should be aware that there are some issues that moving will not address, Brock says. “Wherever you live, you will take many of your problems with you, because you will be the same person wherever you are. So you have to maximize the plusses and minimize the negatives.

But if you’re socially introverted and have trouble making friends, you won’t solve that problem by moving somewhere.”

—David Tobenkin is a freelance writer based in the greater Washington, DC, area.

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Special Section

State Tax Treatment

Federal

States With No Personal Income Taxes Alaska Florida Nevada

New Hampshire1 South Dakota Tennessee2

1 New Hampshire: Taxes interest/dividend income at 5% if it exceeds $2,400 (single) or $4,800 (couple). $1,200 exemption for residents age 65+.

Texas Washington Wyoming

2 Tennessee: Taxes certain interest/dividend income at 6% if it exceeds $1,250 (single) or $2,500 (joint filer).

States Exempting Total Amount of Civil Service Annuities Alabama Hawaii Illinois Kansas Kentucky1

Louisiana Massachusetts Michigan2 Mississippi New York

1 Kentucky: Amount attributable to service prior to January 1, 1998, is exempt. See below for taxation of annuities attributable to service on or after January 1, 1998.

2 Michigan: Full exemption only applicable to taxpayers born before 1946. See below for taxation of federal (and other) pension income for taxpayers born 1946 and later.

Other Exemptions NOTE:

AGI=Adjusted Gross Income CSRS=Civil Service Retirement System FERS=Federal Employees Retirement System HH=Head of Household IRA=Individual Retirement Account MFJ=Married Filing Jointly MFS=Married Filing Separately QW=Qualified Widow(er) RR=Railroad Retirement SS=Social Security

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North Carolina3 Oregon4 Pennsylvania Tennessee

3 North Carolina: Annuities not taxed if the individual had five years of government service as of August 12, 1989. If otherwise, see below.

4 Oregon: Annuities of those who retired before October 1, 1991, are not taxed. Those who retired after October 1, 1991, are taxed only on that portion of the annuity attributable to government service after October 1, 1991.

Alabama: Federal retirement, military retirement, state pension income, SS are exempt. Income from all defined-benefit pension plans is exempt.

ment and private pension income. IRA distributions can be included as part of the exemption if the taxpayer is age 59-1/2+. SS and Tier 1 and Tier 2 RR benefits are exempt.

Arizona: $2,500 exclusion for federal, military, and Arizona state and local pension income. SS and RR are exempt. Additional personal exemption for all residents age 65+. May subtract qualifying long-term care premiums if itemizing deductions. If itemizing, may claim all qualified medical and dental expenses without applying the federal requirement of exceeding 10 percent of AGI.

California: SS and RR are exempt. Additional $108 personal exemption for residents age 65+. Residents age 65+ with AGI below $69,005 who qualified as HH in 2012 or 2013 by providing a household for a qualifying individual who died during 2012 or 2013 may claim a tax credit of 2% of their income, up to a maximum of $1,300. All private and public pensions are taxed.

Arkansas: Exempts up to $6,000 in federal retirement, military, in-state and out-of-state state or local govern-

Colorado: $20,000 pension/ annuity exemption for all taxpayers between the ages of 55 and 64.

Tax Year

Annuities $24,000 pension/annuity exemption for all taxpayers age 65+. Exemption applies to SS, RR and other qualifying retirement income (including federal civil service annuities and military retirement).

Connecticut: SS is exempt if federal AGI is $50,000 or less (if single or MFS), or $60,000 or less (if MFJ, HH or QW with dependent child). Exempts 50% of federally taxable military retirement pay.

Delaware: Taxpayers age 60+ may exclude $12,500 of investment and qualified pension income (including out-of-state and federal government pensions), and qualify for an additional tax credit of $110. Taxpayers under age 60 may exclude $2,000. Taxpayers age 65+ (or blind) are entitled to an additional standard deduction of $2,500 (if not itemizing). Single or MFS taxpayers age 60+ as of December 31, 2014, or totally disabled, may exclude $2,000 if earned income is less than $2,500, and AGI is $10,000 or less. If MFJ and both spouses are age 60+ as of December 31, 2014, or totally disabled, may exclude $4,000 if earned income is less than $5,000, and AGI is $20,000 or less. SS and RR are exempt.

District of Columbia: Taxpayers age 62+ may exclude $3,000 of military, federal and DC government pensions. For taxpayers age 62+, DC or federal government survivor benefits are exempt from DC tax. SS and Tier 1 RR are exempt.

Georgia: Taxpayers who are age 62-64, or permanently and totally disabled regardless of age, may exclude $35,000 of retirement income. For taxpayers age 65+, the retirement income tax exclusion is $65,000. Retirement

This roundup of state tax treatment of federal annuities and other tax information was updated by NARFE Senior Analyst Christopher Farrell. It is presented for informational purposes only and does not constitute professional tax advice.

Please consult a tax professional for advice in preparing tax returns. The information also is available on the NARFE website, www.narfe.org.

income includes income from pensions and annuities, interest income, dividend income, net income from rental property, capital gains income and income from royalties. Up to $4,000 of the maximum allowable exclusion may be earned income. SS and RR are exempt.

Hawaii: Federal retirement, military retirement, state or county retirement system pension income, SS, Tier 1 RR benefits and qualifying distributions from employer-funded pensions are exempt. Additional personal exemption of $1,144 per person age 65+.

Idaho: SS and RR are exempt.

Retirement benefits deduction available for CSRS annuitants who established CSRS eligibility prior to 1984, who are age 65+, or 62+ and disabled, in the amount of $31,704 (if single) or $47,556 (MFJ) minus SS and RR received. Retirement benefits deduction also available for military retirees.

Persons using MFS status are not eligible for the retirement benefits deduction. May deduct health insurance and qualified long-term care premiums (within limits).

Illinois: SS, RR and income from any qualified employee benefit plan are exempt (including federal civil service annuities).

Indiana: SS and RR benefits are exempt. Taxpayers age 60+ may exclude $2,000 of military retirement income minus the amount of SS and RR benefits received. Taxpayers age 62+ may deduct up to $2,000 of a federal civil service annuity minus the total amount of any SS or RR benefits.

Additional personal exemption of $500 if federal AGI is less than $40,000 for residents age 65+. May deduct from income premiums paid for long-term

care insurance through the Indiana Partnership.

Iowa: Taxpayers age 55+ may exclude up to $6,000 (if single) or $12,000 (if MFJ) of pension or annuity income (including civil service annuities), self-employed retirement plan income, deferred compensation, IRA benefits or other retirement plan benefit income (not including SS).

89% of federally taxable SS benefits are excluded. RR benefits are exempt but used to calculate amount of federally taxable SS benefits. Additional $20 personal exemption credit for those age 65+.

Kansas: Federal, RR (both Tier I and II), military, in-state/local pensions are exempt. SS is exempt if federal AGI is $75,000 or less; otherwise, only federally taxable benefits taxed. Additional $850 deduction for those age 65+ ($700 each if MFJ or MFS).

Kentucky: Federal civilian and military retirement annuities attributable to service prior to January 1, 1998, are excluded. Annuities attributable to service after January 1, 1998, are included as pension income, of which taxpayers may exclude up to $41,110.

SS and RR benefits are exempt. May deduct amount of health, dental and long-term care premiums.

Louisiana: SS is exempt. Federal retirement annuities are exempt. In addition, persons age 65+ may exclude up to $6,000 of annual retirement income from their taxable income.

Maine: SS and RR are exempt. May deduct $10,000 of eligible pension income, including federal civil service annuity income, and include IRAtype income in the exception now from federal AGI. Except for military w w w. n ar f e . o r g

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income, the $10,000 deduction must be reduced for SS and RR benefits.

Additional standard deductions for age and blindness are: $1,200 per individual per qualifying condition for married persons and qualifying surviving spouses (e.g., if both spouses are 65+ and one is blind, they get $3,600. $1,550 for single filers and HH per qualifying condition (e.g., $3,100 for single person who is 65+ and blind.) Long-term care premiums are deductible.

January 1, 1946, through January 1, 1948, and who reached the age of 67 on or before December 31, 2014, are eligible for a deduction against all income and will no longer deduct pension and retirement benefits. Taxpayers filing MFJ also may take the deduction if the older spouse was born during the period January 1, 1946, through January 1, 1948, and reached the age of 67 on or before December 31, 2014. The deduction is $20,000 for a return filed as single or MFS, and $40,000 for MFJ.

Maryland: SS and RR are exempt.

If age 65+, may exclude up to $29,000 in pension income, reduced by SS or RR benefits. Additional $1,000 exemption for residents age 65+. Additional $5,000 exemption for military retirement income received by an individual of any age or the surviving spouse or ex-spouse of the individual if the individual was a member of an active or reserve component of the U.S. military, an active duty member of the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, the Coast and Geodetic Survey, or a member of the Maryland National Guard.

Taxpayers born after January 1, 1948, through December 31, 1952, may deduct up to $20,000 in qualifying pension and retirement benefits if single or MFS, or up to $40,000 if MFJ.

Massachusetts: SS, federal civil service annuities are exempt. Tax reciprocity with state and local governments that do not tax pension income from Massachusetts public employees.

Additional exemption of $700 for individuals age 65+.

Michigan: SS and RR are exempt.

Pension and retirement benefits are taxed differently depending on the age of the taxpayer. Married couples filing a joint return should complete form 4884 based on the year of the birth of the older spouse.

Taxpayers born before 1946 may claim a pension subtraction for all qualifying pension and retirement benefits received from public sources.

Taxpayers born during the period 36

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For taxpayers born after 1952, all pension benefits are taxable.

Minnesota: RR is exempt.

Mississippi: Qualified retirement income (including federal retirement annuities and SS) is exempt. Additional exemption of $1,500 for residents age 65+.

Missouri: Taxpayers with AGI under $85,000 (single, HH, MFS, QW) or $100,000 (MFJ) may exempt the greater of $6,000 or 100% of any federal, state or local pension income, up to a maximum of $36,442 per taxpayer. Taxpayers with AGI under $25,000 (single, HH, QW) or $32,000 (MFJ) or $16,000 (MFS) may exempt $6,000 of private pension income. Taxpayers with AGI over these limits must reduce their private pension exemption dollar for dollar as income exceeds the limit.

Taxpayers age 62+ or disabled with an AGI under $85,000 (single, HH, MFS, QW) or $100,000 (MFJ) may exempt 100% of the taxable amount of SS or SS disability benefits, but must reduce the exemption dollar for dollar as income exceeds the limit. Additional exemption (60%) for military pension income. May deduct qualified health and

long-term care insurance premiums.

Montana: Taxpayers with AGI under $33,200 may exclude $3,980 of pension income; for AGI above $33,200, the pension income exclusion is reduced $2 for every $1 of AGI above $33,200. RR benefits are exempt. Additional exemption of $2,330 if age 65+. Taxpayers age 65+ may exempt $800 of interest income reported as federal AGI or $1,600 if MFJ. Nebraska: Tier I and II RR benefits are exempt.

New Jersey: SS and RR benefits are exempt. Taxpayers age 62+ may exclude up to $10,000 (MFS), $15,000 (single) or $20,000 (MFJ) of pensions, annuities and IRA withdrawals, provided gross income is not more than $100,000. In addition, taxpayers age 62+ with earned income (from wages, net business profits, distributive share of partnership income and net prorata share of S corporation income) of $3,000 or less, and with gross income not more than $100,000, may exclude other nonpension retirement income up to the maximum exclusion amount.

If ineligible for SS or RR, entitled to deduct an additional $3,000 (single, MFS) or $6,000 (MFJ, HH, QW). Military pensions are exempt. Additional $1,000 personal exemption for residents age 65+. If taxpayers can recover all civil service retirement contributions in the first three years, can use the three-year rule, in which annuities are not taxed until total employee contributions have been recovered. If not, must use the general rule method, in which a portion of annuity is excluded from taxation.

New Mexico: Taxpayers age 65+ or blind may qualify for additional exemption of $8,000 if federal AGI is less than $15,000 (MFS), $18,000 (single) or $30,000 (MFJ, HH, QW).

The exemption reduces as income increases, with no exemption if income is over $25,500 (MFS), $28,500 (single)

Tax Year

or $51,000 (MFJ). RR is exempt. If age 100+, exempt from state income tax but only if centenarian is single. If MFJ, both must be 100+.

New York: State and federal pensions exempt completely. An additional pension and annuity income exclusion of up to $20,000 is available to persons age 59-1/2+. SS and RR are exempt.

North Carolina: Pursuant to the North Carolina Supreme Court’s decision in Bailey v. State of North Carolina, the state may not tax certain retirement benefits received by federal civil service and military retirees or retirees of the state of North Carolina and its local governments if the retiree has five or more years of creditable service as of August 12, 1989. As of 2014, North Carolina no longer has deductions available to taxpayers with less than five years of creditable service as of August 12, 1989, and/or service after August 12, 1989. Deductions previously available for up to $4,000 for federal, state or local government benefits, or up to $2,000 for private retirement benefits, are no longer available.

North Dakota: A total of $5,000 can be excluded from military, civil service, some state/local government and qualified pensions, minus amount of SS benefits received.

Ohio: SS and RR are exempt. General retirement income credit available in an amount starting at $25 if qualifying retirement income is at least $500, and maxing out at $200, if qualifying retirement income is $8,000 or more.

Residents age 65+ are entitled to a $50 tax credit per return. Military pension income is exempt. Taxpayers who served in the military and receive a federal civil service retirement pension are eligible for a limited deduction if any portion of their federal retirement pay is based on credit for their military service. These retirees can deduct the percentage (in terms of years of service) of the amount of their federal

retirement pay that is attributable to their military service. May deduct long-term care premiums.

Oklahoma: SS is exempt. Each individual may exclude 100% of retirement benefits received from federal CSRS, including survivor benefits, paid in lieu of Social Security to the extent that these benefits are included in the federal AGI. Note: Retirement benefits paid under FERS do not qualify for this exclusion. However, for retirement benefits containing both a FERS and a CSRS component, the CSRS component will qualify for the exclusion.

Individuals may exclude their FERS retirement benefits or Oklahoma state employment retirement benefits or other qualifying retirement income up to $10,000. Individuals may exclude the greater of 75% of their military retirement benefits or $10,000. Additional personal exemption of $1,000 if age 65+ and federal AGI is $15,000 or less (single), $25,000 or less (MFJ), $12,500 or less (MFS), or $19,000 or less (HH).

Oregon: Federal civil service annuities of those individuals who retired before October 1, 1991, are not taxed. Those who retired after October 1, 1991, are taxed only on that portion of the annuity attributable to government service after October 1, 1991.

Taxpayers age 62+ may qualify for retirement income credit if household income is below $22,500 (or $45,000 if MFJ) or elderly tax credit (40% of federal credit), but may not claim both.

SS and RR benefits are exempt. Additional standard deduction if age 65+ of $1,200 (single, HH), $1,000 each spouse age 65+ (MFJ, MFS and QW).

Pennsylvania: SS, RR, federal civil service, military retirement benefits and other employer-sponsored retirement plan benefits exempt.

Distributions from IRAs, if age 59-1/2, are exempt.

Rhode Island: RR is exempt.

South Carolina: If below age 65, may deduct $3,000 of qualified retirement income (including federal retirement annuities). All individuals age 65+ are entitled to a $15,000 deduction from income, reduced by any deduction claimed for qualified retirement income. SS and RR are exempt.

Tennessee: Tax applies only to certain interest and dividend income, not wages and salary or pension income. Any person age 65+ is tax-exempt if total annual income, from any and all sources, is $33,000 or less, or $59,000 or less for joint filers. An exemption of $1,250 ($2,500 if MFJ) is allowed against total taxable interest.

Utah: Taxpayers age 65+ may be entitled to a retirement credit of up to $450 ($900 MFJ). The credit will be phased out by a percentage of the excess of MGI over a certain amount based on filing status. See Phase-out Calculation instructions. Taxpayers under age 65, born before January 1, 1953, and with eligible retirement income may qualify for a credit up to 6% of eligible retirement income with a cap of $288.

Vermont: RR is exempt.

Virginia: Taxpayers age 65+ whose birthdate is on or before January 1, 1939, may claim an age deduction of $12,000 (available for each person or spouse if MFJ). If birthdate is on or between January 2, 1939, and January 1, 1948, the $12,000 age deduction is reduced by $1 for every $1 that adjusted federal AGI exceeds $50,000 (single) or $75,000 (MFJ, MFS). SS and Tier I RR benefits are exempt. Additional personal exemption of $800 if age 65+ or blind. Long-term care premiums are eligible for deduction if not claimed as an itemized deduction on federal return and if not used as the basis of w w w. n ar f e . o r g

|

37

Tax Year

the Virginia Long-Term Care Insurance Credit.

West Virginia: $2,000 of military, federal retirement and state pensions is exempt. Additional exemption for military pension income up to $20,000. RR is exempt. Taxpayers age 65+ or surviving spouses may exclude the first $8,000 each of any remaining non-exempt income.

Wisconsin: Federal civil service

retirement payments are exempt from state income tax if: 1) individual retired from the system before January 1, 1964; 2) individual was a member of the system as of December 31, 1963, retiring at a later date and the payments received are from an account established before 1964; or 3) individual is receiving payments from the system as a beneficiary (survivor) of an individual who met condition 1 or 2. If age 65+, may exempt up to $5,000 of retirement income if federal

AGI is less than $15,000 or $30,000 (MFJ). Additional personal exemption of $250 if age 65+. SS and RR benefits are exempt. Military retirement pay and retirement pay related to service with the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration or the commissioned corps of the Public Health Service are exempt. Long-term care insurance premiums may be subtracted up to the amount of taxable income.

State Sales Taxes

Sales Tax I With Average Combined City and County Rates I Maximum Sales Tax Alabama* Alaska Arizona*† Arkansas* 1 California*† Colorado*† Connecticut*† Delaware 2 Dist. of Col.*† Florida*†^ Georgia*† Hawaii* 3 Idaho* Illinois 4 Indiana*† Iowa*† Kansas*

4.0 I 8.85 I 12.0% 0.0 I 1.69 I 7.5 5.6 I 8.16 I 12.3 6.5 I 9.24 I 12.0 7.5 I 8.44 I 10.0 2.9 I 7.41 I 9.9 6.35 I 6.35 I 6.35 0.0 I 0.0 I 0.0 5.75 I 5.75 I 5.75 6.0 I 6.63 I 9.5 4.0 I 6.99 I 7.0 4.0 I 4.35 I 4.5 6.0 I 6.03 I 9.0 6.25 I 8.18 I 10.5 7.0 I 7.0 I 7.0 6.0 I 6.78 I 8.0 6.15 I 8.19 I 10.3

Kentucky*† 6.0 I 6.0 I 6.0% Louisiana*† 4.0 I 8.91 I 10.75 Maine*† 5.5 I 5.5 I 5.5 Maryland*†^ 6.0 I 6.0 I 6.0 Massachusetts*† 6.25 I 6.25 I 6.25 Michigan*† 6.0 I 6.0 I 6.0 Minnesota*†^ 6.875 I 7.19 I 9.0 Mississippi* 7.0 I 7.0 I 7.0 Missouri* 5 4.225 I 7.785 I 9.6 Montana 0.0 I 0.0 I 0.0 Nebraska*† 5.5 I 6.79 I 7.5 Nevada*† 6.85 I 7.93 I 8.1 New Hampshire 0.0 I 0.0 I 0.0 New Jersey*†^ 7.0 I 6.97 I 7.0 New Mexico*† 6 5.125 I 7.31 I 8.6875 New York*†^ 4.0 I 8.48 I 9.0 N. Carolina*† 4.75 i 6.9 I 7.75

KEY: * Prescription drugs are exempt † Food is exempt ^ Nonprescription drugs are exempt Additional exemptions and varied rates for particular sales may apply.

1 Arkansas: Taxes food at 1.5%.

2 Delaware: Imposes a gross receipts tax on the seller of goods (tangible or otherwise) ranging from 0.1037% to 2.0736%.

3 Hawaii: Does not technically have a sales tax but imposes a general excise tax of 4% of the gross receipts of most businesses.

4 Illinois: Taxes qualifying food, prescription and nonprescription drugs at 1%.

5 Missouri: Taxes food at 1.225%.

6 New Mexico: Does not have a sales tax but imposes a gross

38

| A P R

2 015

N. Dakota*† 5.0 I 6.62 I 8.0% Ohio*† 5.75 I 7.11 I 7.75 Oklahoma* 4.5 I 8.76 I 10.85 Oregon 0.0 I 0.0 I 0.0 Pennsylvania*†^ 6.0 I 6.34 I 8.0 Rhode Island*†^ 7.0 I 7.0 I 7.0 S. Carolina*† 6.0 I 7.13 I 9.0 S. Dakota* 4.0 I 5.83 I 6.75 Tennessee* 7 7.0 I 9.45 I 9.75 Texas*†^ 6.25 I 8.16 I 8.25 Utah* 8 5.95 I 6.68 I 9.95 Vermont*† 6.0 I 6.14 I 7.0 Virginia*^ 9 5.3 I 5.63 I 6.0 Washington*† 6.5 I 8.88 I 9.5 West Virginia* 10 6.0 I 6.07 I 7.0 Wisconsin*† 5.0 I 5.43 I 6.5 Wyoming*† 4.0 I 5.49 I 8.0

receipts tax instead, which has a similar effect, on persons engaged in business in New Mexico. In almost every case, the tax is passed to the consumer, either separately stated or as a part of the selling price. Rate varies within the state from 5.125%-8.8675%. Deductions are available, including for prescription drugs and qualifying food sales.

7 Tennessee: Taxes food at 6.0%.

8 Utah: Includes a 1.25% tax levied by local governments.

Taxes food at a state rate of 2.75% with local additions of up to 3%.

9 Virginia: Includes statewide local tax of 1%. Taxes food for home consumption at 2.5%, which includes statewide local tax of 1%. There is an additional 0.7% state tax imposed in the localities that make up Northern Virginia and Hampton Roads.

10 West Virginia: Taxes food at 1%.

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Managing Money

a new, low-entry retirement savings plan

I

n his 2014 State of the Union address, President Obama outlined his plans to create a new retirement program aimed at encouraging workers to save for

retirement. Obama’s goal was to have the retirement plan, called “myRA,” available by the end of 2014, which the Department of the Treasury just met by rolling out a small pilot program in mid-December 2014.

A myRA is really a Roth IRA with a catchy name (rhymes with IRA and stands for My Retirement Account) and shares the same main features as Roth IRAs, including contribution limits, income phase-out limits and tax-free growth (subject to qualified distribution rules). As with a Roth IRA, myRA participants are limited to an annual contribution of $5,500 for those under age 50 and $6,500 for those 50 and older. This limit is the combined maximum, and any contribution to a myRA will limit the amount you may contribute to a traditional IRA or Roth IRA, and vice versa.

Furthermore, the allowable contribution will be reduced when adjusted gross income (AGI) falls within the phase-out limits and is eliminated altogether once AGI exceeds the phase-out limits. For 2015, the phase-out limit for single tax filers is $116,000 to $131,000; and for married couples filing jointly, the phase-out is $183,000 to $193,000.

40

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Based on the myRA website (https://myra.treasury.gov/), it is the individual without access to an employer-sponsored plan who would benefit the most from having such a retirement savings account. This includes those federal workers who are not eligible to participate in a government-sponsored retirement plan. These may include temporary and intermittent employees. The Office of Personnel Management – a participant in the pilot program – is in the process of officially rolling out the program to such employees.

A broader pool of potential account holders are eligible to participate since myRAs are open to anyone who meets the income limits, regardless of whether or not they are enrolled in an employer-sponsored plan. Presently, the only limitation (other than the previously mentioned limits) is that contributions must be made via employer direct deposit, with which employers would need

By Mark A. Keen,

CFP®

to agree. The Treasury Department is planning to roll out additional ways to contribute later.

If myRA looks like a Roth IRA, smells like a Roth IRA, and acts like one, why muddy the retirement plan waters with yet another option? The way I see it, myRA provides the flexibility of two key features not readily available to those most likely to take advantage of the program. First, there are no fees whatsoever and, second, no account minimums. This allows participants to squirrel away a couple of dollars per paycheck, if that’s all they can afford.

Having the cash on hand to meet the account minimum makes opening a Roth IRA out of reach for many low-wage workers who may live paycheck to paycheck. Typically, you need $1,000 to invest in a mutual fund with a low-cost provider such as Vanguard; and the few funds Vanguard offers at this level have an annual expense ranging from 0.16 percent to 0.34 percent plus a $20 annual account fee if you don’t sign up for edelivery.

The myRA also allows account holders access to a special U.S. government security, which is similar to the G Fund in the Thrift Savings Plan. Though this is the only investment option available,

FINANCIAL TOOLS NARFE offers an online retirement calculator and other financial planning tools. Find out more at www.narfe.org/ federalbenefits.

it is described as risk-free and one that will never diminish in value − criteria that will please those with little-to-no investment experience.

Like the Roth IRA, you may withdraw your contributions at any time, without penalty and taxes. So, while the primary purpose is to serve as a retirement vehicle, the myRA also may play a secondary role as a reserve fund. Considering the prime target market for the myRA – those with

lower income and minimal savings to weather tight times – this feature may play a large role in the ultimate success or failure of the myRA as easy access to the money may prove too tempting.

For many, this savings vehicle may have a limited shelf life. There is a $15,000 cap, or 30-year limit, placed on myRAs. Once the account’s value reaches this threshold, or has been open for three decades, myRA account holders will be forced to transfer the account to a private Roth IRA. While the myRA breaks down barriers for many, its limited investment choices and small maximum account size will likely limit its appeal to more disciplined and savvy savers.

Mark A. Keen, CFP®, is partner, Keen & Pocock, 10300 Eaton place, Fairfax, VA, and an investment adviser representative and registered principal of The Strategic Financial Alliance, Inc. (SFA). Securities and advisory services are offered through SFA. Email: mkeen@keenpocock.com.

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The Informed Citizen

death and taxes

D

eath can be cheated, and taxes can be dodged or avoided, but sooner or later the grim reaper and the taxman will find you. Since states, counties and municipalities can change the mix and level of taxes – income, sales and real property – and retirees are mobile, there is a constant competition for the ideal tax mix for states and “perfect” tax haven for retirees. David Tobenkin’s cover story (pp. 24-32) and our annual roundup of state tax treatment of federal annuities (pp. 34-38) provide needed context and data, respectively. My objective is to caution potential relocators that this is such a moving target, with so many variables, that tax-driven relocation can be perilous.

42

New Governors, New Promises In 2014, voters in 11 states elected new governors. Their inaugural speeches and subsequent state of the state addresses repeated campaign promises to change both taxation and spending. State legislators and governors must balance state budgets, unlike the federal budget.

President Obama’s fiscal 2016 budget would be a boon to states and localities in several policy areas but also includes cuts to popular programs. State and local budget officers wonder about tradeoffs. For instance, would higher borrowing costs be offset by increases in infrastructure funds and policing grants?

recession peak, according to the National Association of State Budget Officers. Revenue totals have continued to rebound from their worst year but unevenly across states.

State Spending Scorekeeper Accounting for inflation, this fiscal year’s total state general fund spending of $748 billion is still 2 percent below the pre-

Sales and Motor Fuels Taxes This year, our annual tax report reprises updated statewide and average combined state and local sales tax rates and adds an

| a p r

2 015

Property Taxes Because it varies widely, not only between states but also within a single state, property tax is a category that we do not include in our annual roundup.

Compilations by relocation firms rely on networks of realtors to report on property tax and property assessment rates. Circuit breakers and homestead exemptions interlace property taxes and state income taxes.

By Christopher Farrell, senior analyst

important sales tax category: the maximum combined state and local sales tax. Motor fuel taxes are another area of uncertainty as federal gridlock, vehicle mileage efficiencies and deferred maintenance have combined in some states to persuade governors to propose and legislatures to consider raising the “gas” tax.

Know Before You Go Climate and proximity to children and grandchildren, even more than taxes, drive retiree relocation decision-making.

These factors, and others, help explain why the West and South have consistently grown faster than New England, the upper Middle Atlantic and the Midwest. This trend is expected to continue. While the grass may always appear greener elsewhere, Erma Bombeck wrote – and I know from personal experience – the grass grows greenest over the septic tank.

For Further Information The Retirement Living Information Center, www.retirement living.com, provides state comparative information. The National Association of State Budget Officers (www.nasbo.org) updates states’ fiscal situation twice a year. Governing.com offers free e-newsletters. Finally, state revenue departments make information and forms available on their websites.

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2014

’15

2014

For the Record

Thrift Savings Plan Monthly Returns

AUGUST

0.20%

1.12%

4.01%

4.98%

(0.14%)

SEPTEMBER

0.18%

(0.58%)

(1.40%)

(5.10%)

(3.82%)

The C, S and I Funds all posted positive returns in February, with U.S. markets showing their strongest returns since October 2011. International markets also did well, with several markets, including Germany and the United Kingdom, hitting all-time highs. International markets were driven by central bank stimulus and a tentative workout deal for Greece.

U.S. stock markets were driven by increasing evidence of the U.S. economy’s health. This strength also is increasing expectations of an interest rate hike this year, which caused the price of the F Fund to fall.

OCTOBER

0.20%

0.96%

2.45%

4.11%

(0.63%)

—BY Ravindra Deo, Chief Investment Officer, Thrift Savings Plan

NOVEMBER

0.17%

0.74%

2.70%

1.33%

0.51%

DECEMBER

0.18%

0.21%

(0.24%)

0.99%

(4.13%)

JANUARY

0.18%

2.13%

(2.99%)

(1.85%)

1.19%

FEBRUARY

0.13%

(0.91%)

5.75%

6.05%

5.97%

YTD

0.31%

1.20%

2.58%

4.09%

7.24%

LAST 12 MO

2.22%

5.68%

15.60%

8.50%

0.26%

10 yr

3.19%

4.89%

7.72%

9.44%

4.58%

L INCOME

L 2020

L 2030

L 2040

L 2050

MARCH

0.19%

0.17%

0.14%

0.12%

0.09%

APRIL

0.31%

0.39%

0.37%

0.32%

0.32%

MAY

0.64%

1.20%

1.46%

1.63%

1.78%

G FUND

F FUND

C FUND

S FUND

I FUND

March

0.19%

(0.15%)

0.85%

(0.69%)

(0.57%)

APRIL

0.20%

0.90%

0.75%

(2.47%)

1.51%

MAY

0.20%

1.21%

2.35%

1.52%

1.72%

June

0.19%

0.14%

2.07%

4.45%

0.99%

JULY

0.19%

(0.19%)

(1.37%)

(4.38%)

(1.95%)

JUNE

0.58%

1.19%

1.52%

1.77%

1.96%

JULY

(0.26%)

(0.97%)

(1.34%)

(1.63%)

(1.86%)

0.84%

1.64%

2.07%

2.40%

2.61%

(0.42%)

(1.36%)

(1.84%)

(2.18%)

(2.50%)

OCTOBER

0.61%

1.09%

1.36%

1.58%

1.70%

NOVEMBER

0.55%

1.04%

1.27%

1.42%

1.55%

DECEMBER

(0.04%)

(0.50%)

(0.67%)

(0.76%)

(0.94%)

JANUARY

(0.08%)

(0.58%)

(0.83%)

(1.02%)

(1.18%)

FEBRUARY

1.19%

2.95%

3.80%

4.39%

4.99%

YTD

1.11%

2.36%

2.94%

3.32%

3.75%

LAST 12 MO

4.16%

6.35%

7.42%

8.13%

8.60%

AUGUST SEPTEMBER

’15

Majority of funds rise in february

THIS CHART is provided as a service to NARFE members who enrolled in the Thrift Savings Plan while employed by the federal government. Retirees are not eligible for enrollment. These returns are net of the effect of accrued administrative expenses and investment expenses/costs. Percentages in () are negative. Source: TSP

Countdown to cola

T

he Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.70 percent in January 2015.

To calculate the 2016 cost-of-living adjustment (COLA), the indices of July, August and September 2015 will be averaged and compared with the 2014 third-quarter average of 234.242. The percentage increase, if any, determines the COLA. January’s index, 228.294, is down 2.54 percent from the base.

Benefits awarded under the Federal Employees’ Compensation Act (FECA) to individuals suffering work-related injuries or illnesses are adjusted according to each calendar year’s percentage change in the CPI-W. January’s index is 0.70 percent lower than the December 2014 base index of 229.909.

The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Included are various government fees, such as water charges, auto registration fees, and sales and excise taxes.

Month

44

| a p r

2 015

Monthly % Change

% Change from 234.242

October 2014

233.229

-0.40

-0.43

November

231.551

-0.72

-1.15

December

229.909

-0.71

-1.85

January 2015

228.294

-0.70

-2.54

February March April

G Fund: Government securities (specially issued to the TSP) F Fund: Government, corporate and mortgage-backed bonds C Fund: Stocks of large- and medium-size U.S. companies S Fund: Stocks of small- to medium-size U.S. companies (not included in the C Fund) I Fund: International stocks of 21 developed countries L Fund: Invested in the G, F, C, S and I Funds (The proportion of L Fund balance invested in each of the individual TSP funds depends on the L Fund chosen.)

CPI-W

May June July August September

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Write your chapter number on check; make it payable to: NARFE-Alzheimer’s Research

Enclosed is my NARFE-Alzheimer’s contribution: $ Every cent that is contributed is used for research.

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I would like to help with my contribution.

Please check appropriate box(es). To make credit card contributions, call 800-338-0755. Scholarships are available to children, grandchildren and great-grandchildren of federal civilian retirees and current federal employees who are NARFE members.

NARFE-FEEA Disaster Fund

Amount: $

NARFE-FEEA Scholarship Fund

Amount: $

Name: Address: City:

State:

ZIP:

NARFE News

college Funds

straTeGic plan process

A

t the 2014 National Convention, delegates voted to continue the strategic planning process using the Future of NARFE Committee report as its foundation. A Strategic Planning Team and a Standing Committee have been appointed, a process has been defined and work has begun to develop an evolutionary plan for NARFE’s future success.

The Planning Team consists of two members of the National Executive Board, one National Officer and a senior member of the NARFE staff. Additional staff will be called upon for support. The 11-member Committee includes thought leaders of varied backgrounds from the NARFE membership. Members of

the Configuration Advisory Board, a member group that works with the Association on IT matters, and eNARFE, our electronic chapter; those who have held officer positions in chapters and federations; longterm members; and those recently retired have been selected from across our 10 geographic regions.

The Future of NARFE Committee was tasked with casting a vision.

Using its recommendations as a foundation, we will prioritize the recommendations, determining those with the greatest return that can be implemented in the first two-year cycle of the Committee. Some Future of NARFE recommendations were implemented following the 2014

Convention. Others will be deferred for later years’ consideration.

Two-way communication with NARFE members is an essential element of the process. We have set up a dedicated email address, stratplan@ narfe.org, for comments. While we cannot answer every email, all comments are important and will be given full consideration. Ongoing communication on the plan’s progress will be scheduled throughout.

We hope you will embrace the planning process and the opportunities to strengthen NARFE, increase its effectiveness and support its growth for decades to come.

New marketing staff members

Monica Williams will oversee the Recruitment and Retention staff and provide hands-on management of NARFE’s direct mail, electronic and onMonica Williams line promotions. She has been both a consultant and staff member with nonprofit associations.

Most recently, she served as NARFE’s account supervisor with its marketing consulting firm Marketing General, Inc. “Monica’s strength in analysis, database marketing, copy writing and creative problem solving have already served NARFE well,” Boel said.

Jennifer Bialek comes to NARFE

from Sixt Rent a Car, LLC, where she was the senior account manager, government & military. She also has association experience, having served as senior director, new business development with the Association of Corporate Travel Executives, where she drove the sales strategies for the organization and crafted new, unique sponsorship, exhibit and advertising offers. Boel noted that Bialek’s success was based on her “keen ability to Jennifer Bialek think outside the box to meet the needs of both partners and the association.”

NARFE has added two deputy directors in its Marketing Department.

Monica Williams has been named deputy director, membership marketing; Jennifer Bialek has been named deputy director, business development.

They will work with Marketing Director Bridget Boel.

The new positions were added to provided additional membership resources, enhance NARFE’s efforts to recruit and retain members, add additional expertise to the Association’s fundraising campaigns, and expand nondues funding opportunities.

46

The deadline to apply for NARFE’s 2015 College Scholarship Program is April 24. The program offers six $1,000 scholarships in each of the Association’s 10 regions. The application is available online at www.narfe.org (click on the Scholarship graphic or choose “Scholarship Program” from the “About NARFE” pull-down menu at the top of the page).

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—By Jon Dowie, National Secretary/Treasurer and Chair, strategic planning Team and committee

Do you love your home... but hate your stairs?

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JOIN NARFE TODAY!

National Active and Retired Federal Employees Association The only organization dedicated solely to protecting and preserving the benefits of all federal workers and retirees, NARFE informs you of any developments and proposals that affect your compensation, retirement and health benefits, AND provides clear answers to your benefit questions.

Who Should Join?

Three Easy Ways To Join 1.

2.

3.

N A R F E M E M B E R S H I P A P P L I C AT I O N n YES. I want to join NARFE. n Mr. n Mrs. n Miss n Ms. Full Name ________________________________________ Street Address ____________________________________ Apt./Unit ________________________________________

I am a (check all that apply) n n n n n

Active Federal Employee Active Federal Employee Spouse Annuitant Annuitant Spouse Survivor Annuitant

n Please enroll my spouse

City _______________________ State _____ zIp ________

Spouse’s Full Name ________________________________

phone (__________) _______________________________

Spouse’s Email ____________________________________

Email____________________________________________

NARFE respects the privacy of our members. Personal information is used to provide content and relevant communications to our members, and will not be sold or rented to third parties without your express permission.

Choose Your Membership Type o Local Chapter Close-to-Home Membership – $40* Affiliation with the NARFE chapter closest to your home.

Receive narfe magazine each month; attend meetings, often with invited speakers; network; and get involved in grass-roots lobbying efforts.

Chapter Affiliation: Chapter # __ __ __ __(if known, otherwise enroll me in the chapter closest to my zIp code). *First-year dues. Subsequent years, $40 plus local chapter dues.

OR

o eNARFE Chapter Online Membership – $40 NARFE’s electronic chapter. Receive narfe magazine by mail each month, and all other communications by email and on eNARFE.org. Get important updates and legislative action alerts, and have access to the eNARFE blog.

Including email address strongly recommended.

Total Dues $40 First-Year Dues X __________ = __________ per person # Enrolling Total Dues

PAYMENT OPTIONS n Check, Money Order or Bill pay (payable to NARFE) n Bill me (NARFE membership will start when payment is received.) n Charge my: n MasterCard n VISA n American Express n Discover Card No. _____________________________________ Expiration Date _________ /_________ mm

yyyy

Name on Card _________________________________ Signature _____________________________________ Date _________________________________________ MAY WE THANK SOMEONE? If applicable, please provide the name, membership and chapter number of the member who introduced you to NARFE: Recruiter’s Name __________________________________ Recruiter’s Membership ID __________________________ Recruiter’s Chapter Number _________________________

MAIL THIS APPLICATION TO NARFE Member Records / 606 N. Washington St. / Alexandria, VA 22314-1914

NARFE’s Dues Withholding Program What is dues withholding?

It is a dues-payment method that gives NARFE members (retirees) the option of having their annual NARFE membership dues deducted from their annuities on a monthly basis.

How does it work?

One-twelfth of your total dues is automatically deducted from your monthly annuity. Your monthly deduction is determined by the following formula: (National dues ÷ 12) + (Chapter dues ÷ 12) = Total Monthly Deduction

Advantages • Save 15% off your annual membership dues!

• Sign up your spouse and double your savings!

• You’ll never get another dues reminder from us!

• Your monthly payment is affordable and convenient!

• You may cancel your dues withholding at any time!

Application process It takes 60-90 days to process your application. Once the process is complete, you will receive a special membership card distinguishing you as a NARFE dues-withholding member.

To learn more about dues withholding, call 800-627-3394.

Retirees, spouses of retirees and annuitant survivors are eligible for dues withholding.

NARFE Dues Withholding Application for Retirees n YES. I want to enroll in NARFE’s Dues Withholding Program (Annual dues of $34 plus Chapter dues of record to be withheld annually.)

Social Security Number (9-digit number)

–

Civil Service Annuity Number

–

C S

–

–

–

(Include prefix, CSA or CSF) (Include any applicable suffix)

n Mr. n Mrs. n Miss n Ms. Full Name _______________________________________

NARFE MEMBERSHIP INFORMATION

Street Address ___________________________________

NARFE Membership ID ____________________________________

Apt./Unit________________________________________

NARFE Chapter Number____________________________________

City _________________________ State _____ ZIP _____

n YES. I Also Authorize My (NARFE Member) Spouse’s Dues To Be

Phone (__________) ______________________________ Email ___________________________________________ Date of Birth _________ /_________ / ____________________ dd

mm

yyyy

Withheld From My Annuity. (Additional annual dues of $34 plus Chapter dues of record to be withheld annually.)

If YES, enter spouse’s information below.

Spouse’s Name ___________________________________________ Spouse’s Membership ID ___________________________________

AUTHORIZATION (Withholding will begin in 60-90 days). No payment should be forwarded with application.

I authorize the United States Office of Personnel Management to make appropriate deductions from my annuity payments, not to exceed the amount certified by the National Active and Retired Federal Employees Association as the amount of dues for which I am annually obligated, in accordance with elections I make below, and to pay the deducted sum to the National Active and Retired Federal Employees Association (NARFE). This authorization shall also apply to any and all dues changes certified by NARFE membership in accordance with elections I make below: Please allow 60-90 days for processing.

I understand that this authorization shall be valid until NARFE receives and processes my written notice of cancellation in accordance with its agreement with the Office of Personnel Management and that any disputes regarding this authorization shall be a matter between NARFE and myself. I hold the Office of Personnel Management harmless for any erroneous allotment deduction made pursuant to this authorization. ___________________________________________________________________________ _______________________________

Signature of Annuitant or Survivor-Annuitant

Date

Dues payments and gifts or contributions to NARFE are not deductible as charitable contributions for federal income tax purposes.

MAIL THIS FORM TO: NARFE, ATTN: Member Records, 606 N. Washington St., Alexandria, VA 22314-1914 www.narfe.org 800-627-3394 rr@narfe.org Do not send money with this form

DW-2 (08/12)

Member Perks

NARFE Member Perks

are designed to provide NARFE members with a quality option in their search for commonly used products and services.

NARFE makes no guarantee on any products and services listed, and encourages its members to shop and compare before making a decision on any financial matter.

Credit Union

NARFE Premier Federal Credit Union 800-328-1500 www.NARFEpremierfcu.org As a member of NARFE, you have the privilege of joining NARFE Premier Federal Credit Union, which has been serving members since 1935. We offer extensive services at competitive rates to members nationwide. Your savings are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. For more information, call the number above, email jparish@narfepremierfcu.org or visit the website.

insurance

NARFE Insurance Services 800-233-5764 www.narfeinsurance.com Designed and administered by Mercer Health & Benefits Insurance Services, LLC, exclusively for NARFE members: Senior Whole Life, Term Life, Medicare Supplements, Hospital Income Plan, Short Term Recovery Insurance, Pet Insurance, Accidental Death & Dismemberment, Cancer Care, Enhanced Dental Insurance and Long Term Care. Go to the website for more information on these programs.

GEICO 800-368-2734 NARFE members with good driving records may be eligible for quality au-

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tomobile insurance from GEICO. Ask about the NARFE discount available to members in many states. Call today for your free, no-obligation rate quote. Be sure to mention that you’re a NARFE member!

• Discount amount varies in some states • Discount not available in all states or in all GEICO companies • One group discount applicable per policy.

Federal Long Term Care Insurance Program 800-LTC FEDS www.LTCFEDS.com Make long-term care insurance part of your retirement plan. With benefits designed specifically for the federal family, the Federal Long Term Care Insurance Program offers a smart way to help protect savings and assets, and remain independent should you need long-term care services someday. Start planning for the future. Visit www.LTCFEDS.com today.

Vacation rentals

Government Employees Travel Opportunities® 877-867-3639 www.getravelop.com/narfe Offers government employees, retirees and their families 7-night stays for only $349 on accommodations at popular destinations worldwide.

Book online and save on your next vacation stay.

hotels

Choice Hotels International 800-258-2847 www.choicehotels.com With 6,000 hotels in the United States and throughout the world, Choice Hotels® offers something for everyone. Join the Choice Privileges® rewards program and earn points with every qualifying stay toward free nights, Airline Rewards, gift cards and more. As a NARFE member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967. This offer is subject to availability and cannot be combined with any other offer. Advance reservations required.

Wyndham Hotel Group 877-670-7088 As a member of NARFE, you will receive up to 20% off the “Best Available Rate” at participating locations.

Call and give the agent your special discount ID number, 8000002694, at time of booking to receive discount.

Whether you are looking for an upscale hotel, an all-inclusive resort or something more cost-effective, we have the right hotel for you... and at the right price. So start saving now.

Call our special member-benefits hotline 877-670-7088 and reserve your room today at one of these fine hotels: Wyndham Hotels and Resorts®, Days Inn®, Ramada Worldwide®, Super 8®, Wingate By Wyndham®, Baymont Inns and Suites®, Hawthorn Suites® By

Wyndham, Microtel Inns and Suites®, Howard Johnson®, Travelodge® and Knights Inn®.

car rentals

National You Drive A Hard Bargain. Receive up to 20% off rentals at National Car Rental. To make a reservation call National Car Rental at 1-800-CARRENT® and reference Contract ID 5282909.

Alamo

mention you are a NARFE member and ask for Todd.

Wheaton World Wide Moving 800-248-7960 www.narfe@wvlcorp.com At Wheaton, we know interstate relocating is much more than trucks and boxes. Moving is not simply an address change. It’s a life change.

With a network of top-quality agents throughout the United States, Wheaton provides peace of mind with every relocation. We offer you, as a NARFE member, benefits to help you have a positive interstate relocation experience. Call Angela and mention you are a NARFE member to start the moving process.

Drive Happy® with Alamo® where NARFE members receive year-round discounts. Call 1-800-462-5266 and reference Contract ID 262544.

The employees/owners of Avis offer guaranteed low rates and quality services to members of NARFE. Call 800-331-1441 and mention ID# A991900.

Moving services

Bekins Van Lines 800-248-4810 www.narfe@bekins.com All NARFE members will receive contracted pricing for all interstate shipments. This will apply to packing, transportation and full-value coverage against damages. In addition, Bekins Van Lines can assist with instate shipments, local moves and international moves with competitive pricing and quality service. Please

1. Stroke/Carotid Artery 2. Abdominal Aortic Aneurysm 3. Atrial Fibrillation 4. Peripheral Arterial Disease.

You will receive a confidential written report within 21 days. Life Line Screening and NARFE encourage you to share these test results with your doctor. All four screenings cost just $135. To schedule an appointment, please call the number above and give the operator code number BKHN075 or visit the website. Coverage may vary and may not be available in all states.

narfe merchandise emergency services

Avis

Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct the following screenings using state-of-the-art ultrasound technology in your neighborhood.

MASA 800-423-3226 Medical Air Services Association has been the industry leader in prepaid emergency assistance services for more than 30 years. NARFE members have experienced MASA’s “peace of mind” services since 2001. Now NARFE members are entitled to even more: air ambulance transportation, helicopter transportation, ground ambulance, vehicle return, mortal remains transport, and much more!

Call MASA Today. It Could Save Your Life!

health screening

Life Line Screening 800-324-9906 www.lifelinescreening.com/ NARFE

NARFE General Store 855-99NARFE (855-996-2733) www.narfegeneralstore.com As the official provider of NARFE merchandise, the NARFE General Store offers NARFE-approved name badges, business cards, customizable logo products and plaques. Check out our online catalog.

NOT A MEMBER? GO ONLINE: It’s easy to join online at www.narfe.org. Click “Join NARFE.” TURN TO PAGE 48: Fill out the Membership Application and mail it to NARFE to receive all the perks of being a NARFE member.

Call (Toll-Free) 800-627-3394.

w w w. n a r f e . o r g

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The Way We Worked

The Method for Making money In this circa 1935 photo, employees of the San Francisco Mint are rolling bullion into strips. The manual minting process required employees to heat and flatten metal into sheets by repeated passes through rollers, as seen here. Workers then punched out coin shapes and handfed them into machines that stamped on faces. The San Francisco Mint opened in 1854 to meet the demand for coins in the California gold rush. It no longer makes circulating coins but produces proof coins and coin sets.

Photo courtesy of Records of the U.S. Mint, National Archives at San Francisco; William Greene, Archivist, National Archives at San Francisco; in collaboration with the Society for History in the Federal Government (SHFG), bringing together government professionals, academics, consultants, students and citizens interested in understanding federal history work and the historical development of the federal government. Website: http://shfg.org/shfg/.

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Did you know?

The first U.S. Mint was authorized by Congress in 1792 and built in Philadelphia, PA. Seven branches subsequently were built around the country.

Today, only the Philadelphia; Denver, CO; San Francisco, CA; and West Point, NY, Mints remain. The Philadelphia and Denver Mints, which employ a highly automated version of the process described at left, produce as many as 28 billion coins a year.

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