How to Avoid Taxes on Your Federal Retirement

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We’ve all heard it. There is nothing we can do to avoid death and taxes, but is that really true?

When it comes to death, I have nothing for you. I have not yet found the fountain of youth but I’ll keep you posted.

While avoiding 100% of taxes is probably not going to happen, there are certainly strategies you can use to decrease your tax burden throughout your retirement.

Here are some of the best strategies.

Roth Conversions

Getting money over to an after-tax bucket can be an incredible way to lower your tax bill over time.

Roth Conversions become even more attractive given the fact that tax rates are most likely going to be going up in the future. This article goes into more depth on when and how to do Roth Conversions.  Click HERE to read full article.

 

 

 

How Re-employment Affects Federal Retirement Benefits

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If you retired and are considering going back to work for the government, you could boost your annuity—perhaps substantially.

Unless you are one of the few who will be able to keep both your annuity and the full salary of your new position, what happens depends on whether your retirement was voluntary or involuntary and what retirement system you were in. If your retirement was voluntary, you’ll continue receiving your annuity; however, unless you are allowed to draw both fully, your salary for the new job will be offset by the amount of your annuity. If you work part time, the reduction will be proportional.

In general, the annuity of a retiree stops if he or she was involuntarily separated and the new position is permanent in nature, for example a career, career conditional or excepted service appointment. If that’s the case for you, when you go back to work you’ll have the same status as any other federal employee in an equivalent position and with a similar service history. In other words, you’ll pick up where you left off. When you leave government again, your annuity will be reinstated unless you are entitled to either an immediate or a deferred annuity based on the new separation. Click HERE to read full article

TSP Millionaire Count Falls Again

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Only about six-tenths of TSP account holders who had at least $1 million on investment at the start of the year now can say the same, with the number falling to 65,494 in the latest accounting, through September.

That’s down by some 7,000 from the count through June, by more than 47,000 from year-end 2021 and by about 33,000 over the 12 months since September 2021.

Compared to year-end 2021, the 81,557 with accounts between $750,000 and $1 million and the 187,615 between $500,000 and $750,000 are down by about 24,000 and 33,000, while the 513,037 with accounts between $250,000 and $500,000 are down by about 25,000.

The largest TSP account as of September was just under $6.5 million, while as of year-end 2021 the largest account — possibly, but not necessarily, the same one — was just under $11 million.

The TSP recently reported separately that through September the average account balance for those under FERS had fallen about $30,000 to about $150,000 at the start of the year, while the average CSRS investor account had fallen by nearly as much to about $169,000.

The TSP stock funds posted strong gains in October, however.

Citation: FedWeek
Published: November 8, 2022

Phased Retirement

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Phased Retirement is a human resources tool that allows full-time employees to work part-time schedules while beginning to draw retirement benefits. This new tool will allow managers to better provide unique mentoring opportunities for employees while increasing access to the decades of institutional knowledge and experience that retirees can provide.

This is yet another forward-thinking policy that allows the Administration to continue its efforts to deliver a Government that is effective, efficient, and supportive of economic growth.

The final regulations are available on the Federal Register website and will take effect 90 days from August 8, 2014. This means that agencies can send their Phased Retirement applications to OPM for processing as early as November 6, 2014.

Guidance and other material about Phased Retirement will be posted here as it becomes available. Click HERE to read more.

Federal Government Has So Far Escaped Attrition Crisis, But Retirement Wave Looms

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Despite concerns that the ranks of the civil service could shrink during the COVID-19 pandemic, the federal government is hanging on to its workers — at least for now.

There was modest change in attrition across the federal government in fiscal 2021 despite turbulence caused by the nationwide health crisis and increased resignations in 2020. In fact, the civil service increased by more than 20,000 people last year and the total workforce is up more than 130,000 positions since 2014, according to a study from the Partnership for Public Service. Of those who did leave government posts in 2021, nearly half did so because they retired.

“While some attrition is natural and can help infuse the federal workforce with new talent and ideas, turnover can also cause a loss of institutional knowledge and cost hiring managers both time and resources,” the nonprofit said in issuing the report on Aug. 2. “Moreover, the federal government continued to grow in fiscal 2021, demonstrating the stability of the career workforce. That said, certain critical elements of the federal workforce are in a state of stress.”

By agency, the Department of Veterans Affairs had the highest attrition rate at 7.1% last year, a full percentage point greater than the government-wide average and an increase from the agency’s 6.4% attrition rate in 2020. CLICK HERE TO READ MORE: