Thread: FERs Retirees, anyone?

https://robinhood.com/referral/maril...73502597376536

If you like trading, try the link above in order to avoid commission, broker fees, and trading costs. There is no minimum $requirement. You can start with any amount.

Originally Posted by Maricar19

I just received my pw yesterday. The first interim check that I received in my bank account was not showing, but the next interim check for July is listed and only shows federal taxes as my deduction. I guess there will be alot of deductions for the adjudicated check:2-3 months of medical insurance, dental and vision insurance, life insurance and of course witholding taxes.

OPM is a little bit backwards--they sent me my password a week or two before they sent my CS number. I think a lot depends on how your agency HR office is in putting together your package and forwarding to OPM. I retired early with VERA/VSIP--last day of work was 29 Feb 2016. My last LES included pay for 6 days plus all my annual leave. OPM partial payments started 4/1 for 1st three months, got adjustment mid-June and regular payments started 7/1.

Interesting TSP Withdrawal Info: If you start TSP withdrawals mid year based on life expectancy factor, they will calculate amount by dividing your December 31 2015 TSP account balance by your age factor. The resulting amount will be divided by the remaining months in the year. If you submitted form now, allowing a month for processing. Assuming 1st payment would start sometime in September, the calculated amount would be divided by 4 resulting in larger payments initially (This could impact your marginal tax rate).


A few notes from reading through this thread:
TSP proportional withdrawal day of month. If you use life expectancy withdrawals—between age 50 to 60, annual withdrawals are 3-4% of account balance. Dividing annual amount by 12 = one quarter to one third of 1% per month; therefore impact of when they withdraw payment should be minimal.


Proportionate distributions for Roth TSP. There is only penalty on the Roth if you withdraw the earnings, since taxes have already been paid on the contributions, most people should be ok if the Roth contributions are sufficient (check with Tax Advisor/Accountant).

TSP Rollover to IRA: Once DOL’s ERISA Conflict of Interest final rule https://www.dol.gov/ebsa/regs/conflictsofinterest.html is implemented, advisors for IRAs are fiduciaries, which will probably cost you a small percentage of you account each year. Note: Based on IRS 72t rules, you can also do the withdrawals from an IRA based on life expectancy or substantially equal payments without penalty prior to 59.5; however, you are subject to 10% penalty if not done properly—so I wouldn’t recommend it.


IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits https://www.irs.gov/pub/irs-pdf/p721.pdf does not address the FERS Supplement. IRS Publication 575 Pension and Annuity Income https://www.irs.gov/pub/irs-pdf/p575.pdf states “Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable.” Top of Page 7

Originally Posted by Maricar19

Spoke to hubby again and explained that if I die, he will not receive half of my annuity. He still thinks the waiver is the way to go.
He believes the survivor annuity is geared for spouses who will not receive any form of pension or annuity at all.
And if I die within 5 years, he will be happy to get my TSP and life insurance (LOL).

This is partially correct. The other half of the equation relates to health insurance. My husband doesn't need any part of my annuity if I die first since he has his own annuity from his non-federal career. However, he is on my FEHB plan. If I were to die first and he didn't have even a minimal FERS survivor annuity he would not be able to keep his FEHB benefits. That made the decision for us.

Originally Posted by eerickso

This is partially correct. The other half of the equation relates to health insurance. My husband doesn't need any part of my annuity if I die first since he has his own annuity from his non-federal career. However, he is on my FEHB plan. If I were to die first and he didn't have even a minimal FERS survivor annuity he would not be able to keep his FEHB benefits. That made the decision for us.

Same here. My wife won't really need the survivor annuity. But, being able to maintain her Heath coverage through FEHB is important. Trying to pick up a new source of health coverage from 55 and beyond would a huge financial burden.

Hello TSP Talkers:

I wonder if somebody can help me find a thread. Awhile back (maybe a year or 2) somebody posted about his/her retirement and he/she was advised by her financial advisor to get some sort of "life insurance" and I am wondering if the insurance being referred to is Indexed Universal Life.

Or maybe somebody has a wealth of information/ idea about Indexed Universal Life Insurance.
I have been reading about it and there's a lot to ponder; a lot of pros and cons.

Thank,
Maricar19

You might try this thread.

http://www.tsptalk.com/mb/taxes-and-insurance/

I think you can do better in the long run through investments than you can with ULI. For me I don't see any point to outside Life Insurance since son is an adult and will get plenty from TSP & other assets if something happens to me. I kept the FEGLI basic with 75% reduction option which doesn't cost anything once you reach 65 when it starts reducing...cost input is less than fully reduced payout & will cover funeral cost.

Thanks, but his/her thread wasn't there. I have searched every thread and still can't find it.

Originally Posted by nnuut

You might try this thread.

http://www.tsptalk.com/mb/taxes-and-insurance/

Originally Posted by evilanne

I think you can do better in the long run through investments than you can with ULI. For me I don't see any point to outside Life Insurance since son is an adult and will get plenty from TSP & other assets if something happens to me. I kept the FEGLI basic with 75% reduction option which doesn't cost anything once you reach 65 when it starts reducing...cost input is less than fully reduced payout & will cover funeral cost.

Thanks Evilanne. I kept my FEGLI, too with 75% reduction. I figure I I pass away after 65, it is more than enough for my funeral/burial expense and less worry for my family. My term (outside of the federal) won't expire until after age 75.
Anyway, back to IUL, I am interested in it because it provides income stream while alive and when dead, a little life insurance. I have read a lot of Pros and Cons about it and by watching you Tube (Dan Thompson, ED Slott and others). I wanted to speak firsthand to this retiree or others and see if they are happy with it.

Maricar19,

Since you are already retired, wouldn't the insurance aspect of IUL be cost prohibitive? I reduced my FEGLI insurance to basic when I hit 50 as the rate increases were outrageous. I think you may have hard time finding anyone with good outlook as the general reaction is to avoid except in certain situations e.g.. really wealthy individuals with estates subject to inheritance taxes. I think IULs are risky and you really need to read and understand the fine print in any policy.
Here are couple of threads from another forum that may be helpful: Indexed Universal life - Early Retirement & Financial Independence Community & Questions about overfunding a universal life insurance policy - Early Retirement & Financial Independence Community

How does the TSP compare to indexed universal life insurance? As TSP funds have beaten benchmarks in recent years, the TSP compares favorably to IUL policies (which are sometimes strongly marketed to service members). In the TSP, your money isn’t tied up in an insurance product. While the cash value of IUL policies may grow over time as a byproduct of the insurance company investing the pooled money of policyholders, their cash value may also decrease if the broad stock market declines. While offering some downside protection, IUL policies also commonly put a ceiling on annual growth of cash value. You will find no such ceiling on TSP index funds.6 https://www.fergusonfinancialinc.com/node/78821