From Shutdown Prospects To Anti-Telework Bills: 5 Things To Watch When Congress Returns

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Pending legislation could affect federal employees’ work-life balance, civil service protections, TSP investment options and more.

The Senate returns from recess on Tuesday and the House the following week. Lawmakers will be racing the clock to tackle big issues, such as finalizing agency spending bills. Here are five areas to watch as Congress returns, that could have big implications for federal employees’ paychecks, benefits and job security.

  1. Shutdown prospects. One of the top items on lawmakers’ agenda when they return will be funding the government for next fiscal year, which begins Oct. 1. Senate Majority Leader Chuck Schumer, D-N.Y., and House Speaker Kevin McCarthy, R-Calif., have said they’ve agreed to work on a short-term continuing resolution to keep the lights on while negotiations on longer-term spending are completed. House Freedom Caucus members have threatened not to support the CR unless it meets a list of demands on conservative policy issues, but McCarthy plans to use the need to fund investigations of Hunter Biden as leverage to avoid a shutdown.

The Fiscal Responsibility Act, signed into law in June as part of a deal to avoid a debt default, has a provision intended to discourage a shutdown. Under the law, Congress has until Jan. 1, 2024 to pass all 12 annual appropriations bills or a process would be triggered that could result in cuts to all agency budgets of 1% below this year’s levels.

  1. Anti-telework bills. The White House earlier in August called on agencies to “aggressively” reduce telework this fall, but Republicans aren’t taking any changes. The Stopping Home Office Work’s Unproductive Problems Act (H.R. 139 and S. 1565) would require agencies to “reinstate and apply the telework policies, practices and levels . . . in effect on December 31, 2019” within 30 days of the bill’s enactment. If agencies want to expand telework beyond 2019 levels, they would have to submit an Office of Personnel Management-certified plan to Congress first.

The House narrowly passed the bill–dubbed the SHOW UP Act–in February, but the Senate version has not made it out of committee. House lawmakers are also attacking telework through appropriations legislation, attaching a rider to their version of the Financial Services and General Government spending bill that would direct agencies to return their telework policies to pre-pandemic levels within 30 days of the bill’s enactment, similar to the SHOW UP Act.  Click HERE to read more.

Can You Take Your FERS or CSRS Pension as a Lump Sum?

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If you ever look at your paystub and wonder what “cumulative retirement” means, it refers to the total amount of contributions that you have made to either FERS or CSRS. And many might wonder, upon retirement – can’t they just take this full amount instead of receiving guaranteed monthly payments for life? And while from 1986 to 1994, this was generally true for most federal retirees, the law was changed so this “alternative annuity benefit” is only available to those with a life-threatening condition or some “other critical medical condition.” Ultimately, OPM will determine one’s eligibility for the lump-sum payment when processing their retirement application.

The alternative annuity benefit is a lump-sum option available to those who are not expected to live beyond a few years, at most. This can only be done with immediate retirements, and is not available if you retire with a disability annuity. If you request the alternative annuity benefit, it cannot be switched to a disability annuity after OPM has finished processing the retirement claim – regardless of whether or not they approved the alternative benefit. For those requesting the lump-sum, they must submit their application with both their spouse’s written consent and a physician’s certificate verifying the medical condition. If an ex-spouse is entitled to any portion of their FERS or CSRS pension via court order, the lump-sum payment is not allowed.

The alternative benefit is a reduced lump-sum credit for FERS or CSRS annuitants with the dollar amount determined by an actuarial factor based on life expectancy. Any survivor benefits are not affected. However, any unpaid deposits for military service, temporary service, or any redeposits for refunded contributions all are considered paid and will boost the lump-sum amount.

Tax Implications

Note that alternative annuity benefit creates a tax liability, even if it is eventually returned to OPM. With the lump sum, there is usually a taxable portion and a non-taxable portion. The taxable portion, which is typically 80% – 95% of the total amount, can be rolled over to an IRA so taxes won’t be due until withdrawn from there. Click HERE to read more.

 

 

Congratulations! Carol Schmidlin Awarded Ethics Approved Status

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  MRFC

International Association of Registered Financial Consultants

MEDIA RELEASE

Nationwide- August 2023 

 

Carol Schmidlin Awarded Ethics Approved Status 

The International Association of Registered Financial Consultants (IARFC®) has recently awarded Carol Schmidlin of Franklin Planning the “Ethics Approved” Status for her adherence to the IARFC Code of Ethics.

This historical verification includes background checks from the Financial Industry Regulatory Authority (FINRA), and state licensing records. A clean record for the past 5 years satisfies the IARFC requirements for being “Ethics Approved.”

Additionally, Carol Schmidlin has successfully passed the IARFC required Code of Ethics Exam, which reaffirms her commitment to ethical behavior and integrity of service to the clients they serve.

The IARFC Code of Ethics is the foundation of a relationship between a consumer and their financial consultant. It is founded on these 6 principles:

  • I will put my clients’ interest above my own at all times within the scope of my abilities
  • I will maintain proficiency in my work through continuing
  • When fee-based services are involved, I will charge a fair and reasonable fee based on the amount of time and skill
  • I will abide by both the spirit and the letter of the laws and regulations applicable to financial planning
  • I will give my client the same service I would give to myself in the same circumstances
  • I will disclose all facts about fees, commissions, and any other sources of compensation received for services provided to clients

Carol Schmidlin has been serving clients nationwide for over 29 years specializing in the areas of:

Retirement Income Strategies, Wealth Accumulation, Asset Protection, Investment Advice And Management, Tax Minimization Planning, Estate Planning, Long Term Care Planning, Life Insurance, Social Security Strategies, IRA & 401(K) Rollovers.

Her mission statement:

“Our mission is to educate and empower federal employees to make the best financial decisions for their retirement”

“This is an effort towards increased transparency.” explained Trustee Chair Barry L. Dayley, MRFC®. “The public is more educated than ever and needs assurance of the background of their financial professional and their adherence to a Code of Ethics. We are proud of our members who maintain this high level of integrity year after year.”

The IARFC®, founded in 1984, is a non-profit credentialing Association formed to foster public confidence in the financial planning profession. Their professional designations and credential, Registered Financial Associate (RFA®), Registered Financial Consultant (RFC®), and the Master Registered Financial Consultant (MRFC®) are awarded to those consultants who can meet the high standards of education, experience, and integrity that are required of all its members. More info on the Association can be found at www.iarfc.org.

International Association of Registered Financial Consultants

PO Box 506 Middletown, OH 45402-0506

(800) 532-9060 info@iarfc.org         www.lARFC.org

This TSP Window Is Looking Like An Open And Shut Case

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You can’t walk up to the mutual fund window at the Thrift Savings Plan, and put cash on a granite counter. It’s virtual. Regardless, it’s in danger of closing.

Part of the problem is how few TSP account holders are actually using it to move a portion of their TSP. One reason for that could be that the window entails costs to the investor. You’ve got to pay a $55 annual administrative fee, a $95 annual maintenance fee, and a stiff $28.75 per trade. Plus, as the TSP points out, the mutual funds themselves typically come with fees of their own.

Converting part of your TSP to any of the mutual funds is procedurally intensive, too.

More fundamentally, the TSP brochure writers note, “If you choose the mutual fund window option, the first risk to consider is whether your investments in mutual funds will grow enough to offset the additional fees.” If the TSP funds track the various indices, and they generally do, the window doesn’t present a particularly compelling case. Click HERE to read more.

 

Credit for Military Service for Federal Retirement Annuities 

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Time spent on active duty in the Armed Forces of the United States can be added to your federal employment years of service, thus increasing the amount of your federal retirement annuity. I’ve written about this before, but I want to do it again because it can have such a significant impact on your retirement benefit. 

In short, you can get credit for your active-duty service in the armed forces if it was terminated under honorable conditions and was performed before you retire from your civilian job. The term “armed forces” includes the Army, Navy, Air Force, Marine Corps and Coast Guard. It also includes service in the Regular or Reserve Corps of the Public Health Service and if you were a commissioned officer of the National Oceanic and Atmospheric Administration. 

If you are – or will be – receiving military retired pay and want to have your active-duty service used in the computation of your civilian annuity, you’ll have to make a deposit to the civilian retirement system and – with one exception – waive your military retired pay. Here’s the exception: You won’t have to waive that pay if it was awarded for a service-connected disability incurred in combat with an enemy of the United States or caused by an instrumentality of war and incurred in combat in the line of duty during a period of war. 

If you are – or will be – receiving reserve retired pay under the provisions of Chapter 67, Title 10, U.S. Code (which relates to retirement from a reserve component of the Armed Forces), you won’t have to waive that pay. You’ll only have to make a deposit for that time. Note: Weekend drills are never considered to be creditable service for retirement purposes. Nor are annual active duty for training periods that occur while you are a federal employee. That’s because they are treated as if you were still on the job. 

If you don’t make a deposit to get credit for your active duty service, your annuity will be based solely on your civilian service. Whether to make the deposit is a financial decision you’ll have to make. In other words: will what you put it now be worth what you’ll get in return at a later date? If you decide not to make a deposit and later change your mind, you can do that as late as when you are about to retire. The only downside to delaying that decision is that interest will have accrued on the amount you owe. The longer you wait, the greater that amount will be. 

Source: Reg Jones, FEDweek-August 15, 2023