Civil Service CSRS/FERS Benefits Presentation

Report
CIVIL SERVICE CSRS/FERS
BENEFITS PRESENTATION
Presented by:
Cherie L. Anderson, LUTCF, ChFEBC℠
Of
MetLife
L1011212126[exp1212][AL,FL]
WHAT IS A CHFEBC℠ PROFESSIONAL?
A ChFEBC℠ (Chartered Federal Employee Benefits
Consultants) is a prestigious designation for Financial
Advisors, CPAs, Attorneys, and certain employees of the
Federal Government, who have successfully completed
an intensive training course and passed a rigorous
examination covering all federal employee benefits. The
training consists of a 16 module assignment curriculum.
All types of federal employees are covered (such as
CSRS, FERS, CSRS Offset, FERS Transferees, Law
Enforcement, fire fighters, air traffic controllers, etc. )
The course is available by independent study or a twoday course on-site conducted by a qualified instructor.
FERS SYSTEM
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Basics
Retirement Requirements
Annuity
Survivor Benefits
Disability
Federal Group Life Insurance
TSP
Social Security
LTC
FEHB
FERS BASICS
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Program began 1/1/1987 and continues today
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Is a three-benefit system
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Participants contribute 6.2% to social security and
.8% to their retirement annuity
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Typically receive both a retirement annuity and a
social security payment
CREDITABLE SERVICE
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Hire date to retirement date if contributions are made.
Leave w/o pay up to 6 months in 1 calendar year
Workers Comp when returned to work
Part-time Service
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Intermittent when actually employed for days worked, 260 max
Break in service up to 3 days
Buy back time (deposit service)
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Before 1/1/89 = 1.3% deposit and full E + C
After 1/1/89 or no deposit = No E and No C
Redeposit of contributions withdrawn
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Before 4/7/86 = Full Eligibility and Computation
On or After 4/7/86 = Full eligibility, prorated annuity computation
Redeposit = Full E and C
No redeposit = No E and No C
Military Service
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For service before 1/1/1957 no deposit needed
For service after 1/1/57: deposit made = E + C
For service after 1/1/57: No deposit made = No E and No C
RETIREMENT REQUIREMENTS
(AGE)/(YEARS OF SERVICE)
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Non-Reduced: 62/5, 60/20, MRA+30
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Early Out: Any Age w/25- 2% permanent reduction for every year < 55*
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Reduction in Force (RIF): 50/20
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DCS Separation: 50/20, Any Age/25, 2% reduction for every year < 55*
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Disability: Any Age w/5
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Deferred: 62 w/5
* Reduction may be waived
FERS ANNUITY
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Under 62 with less than 20 yrs (1% x Hi- 3 x yrs of service )
Age 62 with more than 20 yrs
(1.1% x Hi- 3x yrs of service)
Special Retirement Supplement: MRA + 30yrs. or 60/20 FERS will receive
their age 62 S.S. benefit until they reach 62
Earnings test: 0-$14,160 @ no penalty, $1 reduction for every $2 over.
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Early out or involuntary also receive the supplement if they have reached
MRA
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No matter when FERS retires, the annuity begins on the first of the next
month
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COLAs begin at age 62
FERS SURVIVOR BENEFIT
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Cost 10% of annuity and provides a 50% survivor benefit
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Partial Survivor Benefit cost 5% and provides a 25% benefit
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At least some benefit must be kept to maintain FEHB
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Children’s benefit is reduced by any SS received
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Death < 10 yrs. of service, spouse gets $15,000 adjusted by
12/1/87 dollars ($29,722 in 2010) + 50% of salary or High-3,
whichever is greater.
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More than10yrs, Lump Sum same as above + 50% of basic annuity
without reduction and the special retirement supplement if spouse is
younger than 60.
FERS DISABILITY
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Must apply for SSI prior to applying for DI.
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1st year disability is 60% of High 3 reduced
by 100% SSI
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2nd year until Age 62 is 40% of High 3 reduced by
60% of SSI
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At age 62 the benefit is recomputed to include all yrs
worked plus all yrs on disability with COLAs
FEGLI
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Basic:
 Present salary rounded up to the next $1,000 + $2,000
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Extra benefit:
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Same as basic and is free, but reduces by 10% per year at 35.
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Option A: $10,000 (includes AD&D)
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Option B: 1-5 x Salary
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Option C: $2,500 child/$5,000 spouse x 1-5
BASIC LIFE INSURANCE IN RETIREMENT:
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Option A
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1% reduction per month at retirement or at 65,
whichever is later, until it reaches 50% of the Basic
amount.
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Has only one option in retirement
At 65 will decrease until there is only 25% remaining
There is no cost after age 65
$.60/$1000 cost per month after age 65
No reduction
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$1.83/$1000 per month after age 65
OPTION B AND C
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Option B: Reduces after age 65 until there is nothing left
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No premiums after age 65 or retirement, whichever is
later
Keep coverage for life, Premiums increase at age intervals
Option C:
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Employee must keep basic coverage
Coverage reduces at 2% per month at age 65
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Premiums stop at age 65 or retirement, whichever is later
If the retiree chooses to continue the coverage
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Premiums will increase at age intervals
TSP
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FERS can contribute $16,500 per year, $5,500 extra if
over 50
1% government contribution regardless of individual
participation
Up to 5%of the FERS contributions matched
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FERS must work for 3 years to be vested
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FERS are immediately vested in their own
contributions
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TSP FUND CHOICES
G – Government Securities
 F – Fixed Income
 C – Common Stock
 S – Small Cap
 I – International
There are 5 Lifecycle funds:
 Rebalanced daily and adjusted quarterly to maximize return
for given risk. They are managed by Mercer Investment
Consulting with a combination of the 5 TSP funds.
 L Income – For those taking current income or planning
retirement within 2 years.
 L 20XX – Investment mix that reflects a time horizon for
retirement near this date.
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TSP WITHDRAWAL OPTIONS
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While working, after age 59 ½ you may make a 1 time in
service withdraw.
At age 55 or older, there will not be a 10% penalty for any
withdrawals if retired or separate from service simultaneously.
TSP may be transferred to a Traditional IRA.
Lump sump distribution – taxes paid at time of withdrawal.
Purchase an annuity through TSP.
Take equal monthly payments.
Choose amount to be paid. May adjust annually.
Use the IRS’s calculation of payments, ie.RMD
IN-SERVICE WITHDRAWALS
If an employee makes an in-service withdrawal, they may
continue to contribute and FERS will match – but their
withdrawal options will be limited in retirement.
Additional Withdrawal Options:
 Less than $200 = automatic cash out.
 If withdrawn before age 55, there is a 10% penalty for early
withdrawal plus taxes unless a 72(t) (equal and substantial
or life annuity)
 If funds are withdrawn, other than a transfer, 20% is
withheld for taxes.
 FERS spouse has rights as to how contributions are
withdrawn.
 Spouse must sign a waiver.
 Former spouse, due to court order, may need a waiver also.
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SOCIAL SECURITY
Calculating S.S. is a 4-steps process:
If born between 1929 and 1978 – must earn $50 per quarter.
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After 1978 - $4,360 at any point = 4 credits for the year
Born before 1929 need less than 40 credits
After 1929 need 40 credits
Once someone has 40, they are eligible for some SS
You cannot buy credits, borrow, or inherit them.
Determine full SS:
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Year of birth determines eligibility for full retirement at 65, 66, or 67
All may take a reduced amount at 62 if they have 40 quarters
If deferred until age 70, SS will be higher
SS tax income limits:
Single AGI: $25K - $35K = 50% tax, $35K+ = 85% tax
Joint AGI: $32K – $44K = 50% tax, $44K+ = 85% tax.
PRIMARY INSURANCE AMOUNT
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A spouse at full retirement (65-67) may take 100% of
their SS or 50% of their spouse’s, whichever is
greatest
A spouse age 62 may take 80% of PIA or 37.5% of
their spouses, whichever is greater
A spouse, at any age, caring for children under 16yrs
may take 50% of spouse’s PIA
A child, unmarried, under age 19 if in high school, or
any age if disabled before age 22 may take 50% of
worker’s PIA
LONG TERM CARE INSURANCE
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John Hancock is the Federal LTC provider
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Benefit levels are $100-$450 daily in increments of $50 with
benefit periods of 2,3,5 and lifetime
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Elimination period is 90 days and inflation riders are 4%
compound, 5% compound, and GPO
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Tax qualified, so premiums are deductible if they exceed 7.5%
of AGI
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Available only during open enrollment
HEALTH CARE
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FEDVIP Dental and Vision is available to
employees, retirees, and family members
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FSA: $5,000 medical, $5,000 dependent, use it or
lose it March 15. Pre-tax dollars
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HSA: Must have HDHP. FEHB member owns the
account. Unused rolls over
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HRA: Must be enrolled in HDHP and not HSA
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No individual contributions allowed.
Credits carry over, but are forfeited if member leaves
MEDICARE TWO MAIN PARTS:
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Hospital: Part A
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Deductible of $1,100 and no premium
1.45% deducted out of each paycheck while working
Medical and Doctor:Part B
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Deductible of $135 and 20% copay
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The premium $110.50 for new enrollees and $96.40 for current
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If retired must enroll 3 months prior or 3 months after 65th
birthday(7mo. window)
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General Enrollment January1-March 31
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10% penalty for each 12-months late
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If retired after 65, you have 8 months to enroll with no
penalty

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