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COVER STORY
rollovers Stay or Go? Agencies Act to
Reduce Bad Financial Advice, Increase TSP Options
P.22 P.30
battling for state tax parity
P.36
annual state tax roundup
Volume 92 • Number 4
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WashingTon Watch
6
House Bill to Reform the WEP Earns NARFE’s Support; Here’s Why
8
President Obama’s Budget Has Good News for Feds
9
House Bill Aims at Restricting Rights of Federal Employee Unions
9
Senate Panel Approves Bill to Limit Administrative Leave
10 NARFE Bill Tracker
22
Cover Story
rollovers. The exodus of money from the Thrift Savings Plan may be curbed as agencies advance plans to improve guidance from financial advisers and increase TSP investment options.
13 Tips on Hosting a
Candidate Forum
Columns
4
From the President
42 Managing Money 44 The Informed Citizen DEPARTMENTS
14 Questions & Answers 46 For the Record: TSP state tax parity Several NARFE state federations have succeeded in cutting taxes on federal annuities; others hope to follow.
30
Returns, Retirement Claims Status, Countdown to COLA
48 NARFE News 56 The Way We Worked
On the Web
special sections
visit us online at:
36 Annual State Tax
www.narfe.org
Roundup
50 National Convention:
like us on facebook:
NARFE National Headquarters follow us on twitter:
@narfehq
NARFE-PAC Breakfast
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 2016 | Volume 92 | 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: crawfordjim62@gmail.com 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… to join NARFE:
Call (toll-free) 800-627-3394 OR GO TO www.narfe.org To change your mailing address, phone number or email address:
CALL (TOLL-FREE) 800-456-8410, EMAIL memberrecords@narfe.org OR LOG ON TO www.narfe.org and go to “My Account”
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
TO REACH A FEDERAL BENEFITS Specialist:
Email fedbenefits@narfe.org NARFE HEADQUARTERS
606 N. Washington St. Alexandria, VA 22314 703-838-7760
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 © 2016, 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
Growing in Challenging Times
I
n the January issue, I wrote in this column about our legislative successes in 2015. The Association’s clout on Capitol
Hill has elevated NARFE’s reputation as a trusted source of information by legislators, our coalition partners and a wide array of media outlets. This month, let’s look at our membership trends, our bottom line and how new offerings will help keep NARFE on track for stability and growth. Despite NARFE’s wins in countering legislation harmful to feds’ earned benefits and advancing initiatives that enhance them, we still are waging an uphill battle against demographic trends that are challenging the health of our membership base. In recent years, membership has continued its downward trend; however, losses in 2015 were 30 percent fewer than in 2014. This is good
news. Slowing the decline is the first step in a return to growth. The number of members who did not renew last year was down by more than 7,000, and the number of members who had let their memberships lapse and who later reinstated exceeded more than half of the nonrenewals – an unprecedented and gratifying uptick! NARFE is beginning to reverse the downward trend by providing new programming to active and retired feds who are hungry for information and guidance on their benefits. The Association recently launched the NARFE Federal Benefits Institute, which presents live webinars and serves as a repository of benefits information. To date, we have conducted five webinars hosted by Tammy Flanagan, a well-known federal benefits expert. In November, our webinar on FEHBP and Medicare attracted more than 1,800 registrants, about 300 of whom were new to NARFE. Fiscally, NARFE has maintained its assets despite a slight operational loss. And the Association’s fundraising efforts last year were remarkably successful − realizing about $2.9 million. Your membership dollars go far in keeping you informed and your well-earned assets protected. So help us spread the word to your fellow retirees or agency co-workers who are not yet members of NARFE. Let them know the low-cost, highreturn benefits of belonging to NARFE.
Richard G. Thissen NARFE national President natpres@narfe.org
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Washington Watch
House bill to Reform the WEP earns NARFE’s support; Here’s why
N
ARFE long has sought repeal of the Windfall Elimination Provision (WEP), a particularly onerous requirement in Social Security law that affects
government retirees who earned a pension from government work that was not covered by Social Security but who also qualify for Social Security benefits from other employment. For federal retirees covered by the Civil Service Retirement System (CSRS), the WEP often reduces the Social Security benefits they earned through years of private-sector employment. A bill is pending in Congress that would reform, but not repeal, the WEP. That bill, the Equal Protection for Public Servants Act of 2015, H.R. 711, was introduced by Rep. Kevin Brady, R-TX. When narfe magazine published a story in the February 2016 issue, reporting on the Association’s support of H.R. 711, many NARFE members contacted the Legislative Department, expressing both support and opposition, and asking questions about the bill. It is important to point out that NARFE continues to support full 6
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repeal of the WEP and the Government Pension Offset, which reduces or eliminates the spousal Social Security benefits of some federal retirees. At the same time, however, NARFE also supports H.R. 711, given the lack of enthusiasm on Capitol Hill to pursue full WEP repeal. On February 19, NARFE President Richard G. Thissen sent a letter to Brady, officially backing H.R. 711. “The WEP unfairly deprives dedicated public servants of the full Social Security benefits
earned through the contributions they paid into the system,” Thissen said. “They are denied these benefits solely because they also worked outside of Social Securitycovered employment, through government service.” The bill “would help mitigate the WEP penalty by providing some relief for both current beneficiaries through a rebate and future Social Security recipients by improving the formula going forward,” Thissen noted. “This relief is long-past due, but would be very much appreciated by individuals who have for too long been penalized for their public service.” Here are answers to frequently asked questions about the bill: What would the bill do? H.R. 711 would not repeal the WEP but would reduce the penalty on an individual’s Social Security benefits. • For those who turn age 62 before 2017, it would reduce the WEP penalty applied to future Social Security benefit payments, beginning in 2017. The amount
of the reduction would be determined by the Social Security Administration (SSA) actuary, but is currently estimated to be about 32 percent of the WEP penalty. • For those who turn 62 in or after 2017, it would provide a new formula for determining Social Security benefits, which would calculate those benefits in better proportion to Social Security contributions made. This would reduce the WEP penalty for most individuals. We do not yet know how much this would mean in dollar terms. Any reduction would not be retroactive. How is this bill paid for? The bill directs SSA to use available data to improve enforcement of the WEP penalty for individuals who have underreported their non-Social Security-covered employment earnings to SSA. Because SSA already has been fully enforcing the WEP provision for federal retirees through use of data provided by the Office of Personnel Management, WEP penalties for federal retirees would not increase as a result of this enhanced enforcement. The estimated cost savings from the greater enforcement would determine the amount of the rebate for individuals who turn age 62 before 2017. So the bill is costneutral. What are the bill’s prospects? Although previous efforts to repeal or reform the WEP have been
unsuccessful, this bill appears to have a good chance of moving through the legislative process. So, what has changed? First, Brady, the bill’s sponsor, rose to become the chairman of the House Committee on Ways and Means in November 2015, when the previous chairman, Rep. Paul D. Ryan, R-WI, became Speaker of the House. This puts the bill’s lead supporter in charge of moving it forward for a potential floor vote, as the Ways and Means Committee has jurisdiction over the bill. Second, thanks to creative work by Brady’s staff, the bill includes enforcement provisions, which would not affect federal retirees and would make the bill cost-neutral. This means there is no cost to the federal government. Third, the bill has now garnered fairly wide bipartisan support in Congress. Finally, President Obama’s fiscal year 2017 budget released in February included a proposal to change the WEP formula for future beneficiaries, but starting in 2027, in much the same way as H.R. 711. However, it did not include any reduction for those currently being penalized – something NARFE views as essential to its support for any reform efforts. This year, NARFE has been urging its members to contact their members of Congress to ask them to cosponsor H.R. 711, and those efforts have begun to bear fruit. Nine new cosponsors signed onto
the bill in early February alone. But more voices need to be heard to grow support for it. NARFE urges all members to contact their members of Congress immediately! (To send the NARFE message, go to www.narfe.org; click on the Contact Congress graphic in the carousel on the home page; then click on Contact Congress on the top of the resulting page and select H.R. 711.) To learn more, NARFE has posted a summary of the bill on www. narfe.org (click on “WEP Reform” in the “Latest From NARFE” section of the home page). If you have questions that are not addressed on that page, email leg@narfe.org. —By John Hatton, Deputy 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.
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Washington Watch
President’s budget has good news for feds
P
resident Obama’s final budget, sent to Congress February 9, contained some modest good news for federal employees and retirees. For the fourth year in a row, following a three-year string of pay freezes, the president proposed a raise for active employees. In response, NARFE President Richard G. Thissen commented: “NARFE welcomes the 1.6 percent pay raise proposed by President Obama. For the first time in seven years, the increase follows the letter of the law. However, the proposed increase still lags behind the average increase in privatesector pay, which rose by 2.1 percent, according to the Employment Cost Index, calculated by the Bureau of Labor Statistics. Now that our economy is on a stronger footing, it is time to start closing, not growing, the gap between public- and private-sector wages and salaries.” President Obama’s fiscal year 2017 budget also calls for six weeks of paid parental leave for federal employees for the birth or adoption of a child. NARFE supports legislation providing paid parental leave for feds. In part due to the efforts of NARFE’s lobbyists, absent from the president’s budget was a perennial proposal to cut Federal Employees’ Compensation Act (FECA) benefits – a proposal NARFE has long opposed. The Office of Management and Budget credited NARFE and other stakeholders with the change. Thissen thanked President Obama for not including any
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FECA cuts in the budget plan. “Proposals to reduce benefits contained in previous budgets relied on the assumption that benefits in retirement age under FECA are excessive. But that assumption has since been debunked by a Government Accountability Office (GAO) report. NARFE is grateful that the president reconsidered his position based on the factual evidence provided by the GAO, and dropped the ill-advised proposal from his budget.” In response to the 2015 data breaches at the Office of Personnel Management (OPM), the president’s budget also proposes significant investments in cyber security at OPM and related agencies, and it proposed steps to improve the federal government’s information technology infrastructure. In addition, the budget proposes an increase in the number of staff who respond to customer inquiries in OPM’s Retirement Services Center. Action on the budget now turns to Capitol Hill, where House Speaker Paul D. Ryan, R-WI, and Senate Majority Leader Mitch McConnell, R-KY, have expressed their hopes of keeping the budget process on track, including timely action on all 12 annual appropriations bills. Action going forward, however, remains unclear. With a two-year budget deal already in law, appropriators do not need to wait for the budget committees’ resolutions before getting to work. As of press time, there was disagreement within the House Republican caucus on what the House budget should look like. Keeping the pre-
MYTH vs. REALITY Myth: Federal work is more lucrative than the average jobs in the finance, information and professional fields. Reality: Professionals, such as doctors, nurses, engineers, scientists, statisticians and lawyers, now make up a large and growing portion of the federal workforce. For example, 2014 government data show that 18.8 percent of federal employees work in these fields, compared to only 9.4 percent of the private sector. A January 2012 report from the Congressional Budget Office found that when benefits are weighed, America’s most educated and experienced federal workers earn about 18 percent less in total compensation than they would if they worked in the private sector. In 2013, the Office of Personnel Management reported that the average salary for a full-time, permanent federal employee was roughly $79,000. The maximum a federal employee in the General Schedule can be paid is $158,700 (in 2015). Members of the Senior Executive Service can be paid a maximum of $203,700. Employees in the private sector can, and do, make much more, particularly in the occupations listed above.
viously agreed-to numbers in the budget won’t balance the federal budget within 10 years, an ongoing priority for many in Congress. Expect more debate on this to come. —By Alan Lopatin, legislative counsel
Bill Aims at restricting rights of Federal Employee unions
A
bill introduced in the House would limit the rights of federal employee unions and the employees they represent. H.R. 4461 (which has the misleading title “Federal Employee Rights Act”) does not take direct aim at membership associations such as NARFE, but any movement on the bill could signal the beginning of a slippery slope that could eventually have an impact on NARFE and other organizations representing federal employees and retirees. It was introduced in February by Rep. Tom Price, R-GA, chairman of the House Budget Committee.
Under the bill, federal employee unions would be barred from automatically deducting dues from workers’ paychecks, despite the fact that federal employees are not required to join unions or pay dues if they choose not to join. This is common practice among not only unions, but membership associations and charities. In addition, H.R. 4461 would alter the way union elections are conducted by counting workers who decline to vote as a “no” in the final tally. The bill also aims to enforce practices that are standard for most federal unions, such as prohibiting unions from using dues
to conduct political activity. This is unnecessary, as most unions and organizations such as NARFE raise funds separately for such purposes. H.R. 4461 also requires unions to vote by secret ballot, a practice largely already in place. This is not the first time members of Congress have introduced legislation aimed at restricting federal employee union rights. NARFE and other federal employee groups oppose the Federal Employee Rights Act on the grounds that it is unnecessary and paints a false picture of the role of federal employee unions. —By Jessica Klement, Legislative Director
panel approves bill to limit admin leave
A
Senate panel has approved a bill that would define and limit the use of paid administrative leave for federal employees who are under investigation for wrongdoing. S. 2450, the Administrative Leave Act of 2016, was introduced in January by Sen. Jon Tester, D-MT, and has bipartisan support. Three Republicans – Sens. Charles E. Grassley, R-IA; Ron Johnson, R-WI; and James Lankford, R-OK – and two Democrats – Sens. Thomas R. Carper, D-DE, and Claire McCaskill, D-MO – were original cosponsors of the bill. The Senate Homeland Security and Governmental Affairs Committee approved S. 2450 on February 10. The bill is a response to broad application of administrative leave
– a term not currently defined by statute – that can allow federal managers to place employees on paid leave for extended periods. Such cases can cost taxpayers money, by paying someone who isn’t working, and deprive federal employees accused of wrongdoing from a fair hearing, as there is no official agency action to challenge. To avoid such circumstances, the legislation defines administrative leave as separate from other forms of leave and limits its use to five consecutive days. The bill formalizes other common types of leave that otherwise would fall under the umbrella of administrative leave, such as weather and safety leave for employees who cannot safely travel to, or work at, their places of employment. It also creates investigative and
notice leave categories for employees under investigation or on notice of an adverse action, subject to a multi-step process with escalating controls to prevent unjustified use. It requires agencies to consider other options, including re-assignment or telework, before using these new types of leave. This issue has interested Congress since the Government Accountability Office issued a report in 2014, revealing that, over a three-year period through September 2013, more than 53,000 employees had been on administrative leave for more than a month, and 263 had been on leave for more than a year. S. 2450 now awaits consideration by the full Senate. NARFE has no objections to the bill. —By John Hatton, Deputy Legislative Director w w w. n a r f e . o r g
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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
HEALTH CARE
Bill Number / Name / Sponsor H.R. 2175: FEHBP Prescription Drug Oversight and Cost Savings Act / Rep. Stephen F. Lynch, D-MA Cosponsors: 2 (D)
H.R. 3351: CPI-E Act of 2015 / Rep. Mike Honda, D-CA COLA
Cosponsors: 31 (D)
What Bill Would Do
Latest Action(s)
Provides the Office of Personnel Management greater oversight authority over the prescription drug contracting and pricing methods of the Federal Employees Health Benefits Program.
Referred to the House Committee on Oversight and Government Reform
Requires Social Security and many federal retirement programs to use the Consumer Price Index for the Elderly (CPI-E) to calculate cost-ofliving adjustments in retirement benefits.
Referred to the House committees on Ways and Means, Veterans’ Affairs, Oversight and Government Reform, and Armed Services narfe, October 2015
Union Rights
H.R. 4461: Federal Employee Rights Act / Rep. Tom Price, R-GA Cosponsors: 40 (R)
Would limit the rights of federal employee unions by barring them from automatically deducting dues from workers’ paychecks, alter the way union elections are conducted and prohibit unions from using dues to conduct political activity.
Referred to the House Committee on Oversight and Government Reform
H.R. 485: Wage Grade Employee Parity Act / Rep. Matt Cartwright, D-PA
Gives the president the authority to provide Wage Grade, or hourly, employees a pay raise.
Referred to the House Committee on Oversight and Government Reform
Provides for a 3.9 percent pay raise for federal employees and a 1.4 percent increase in locality pay in 2017.
Referred to the House Committee on Oversight and Government Reform
Expresses the sense of the House that the U.S. Postal Service should maintain six-day 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
Repeals the service standards implemented by the Postal Service on 1/5/15 and directs the Postal Service to reinstate 12/31/2011 service standards.
Referred to the House Committee on Oversight and Government Reform
See story, p. 9
Cosponsors: 9 (D), 3 (R) Federal Compensation
H.R. 4585: The Federal Adjustment of Income Rates (FAIR) Act / Rep. Gerald E. Connolly, D-VA Cosponsors: 32 (D) H.Res. 12: Expresses the sense of the House that the Postal Service should take measures to ensure continuation of six-day delivery / Rep. Sam Graves, R-MO
Postal Reform Cosponsors: 176 (D), 54 (R) H.R. 784: Protect Overnight Delivery Act / Rep. Rosa DeLauro, D-CT Cosponsors: 99 (D), 3 (R)
NARFE’s Position: 10
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Support
Oppose
No position
Editor’s Note: Several items have been removed from the NARFE Bill Tracker. Those bills are all listed online at cqrcengage.com/narfe/home.
ISSUE
Postal Reform
Bill Number / Name / Sponsor
What Bill Would Do
Latest action(s)
S. 1742: Rural Postal Act of Returns to service standards 2015 / Sen. Heidi Heitkamp, of July 2012, preserves six-day delivery and puts a two-year D-ND moratorium on plant closures. Cosponsors: 7 (D)
Referred to the Senate Committee on Homeland Security and Governmental Affairs
S. 2051: The Improving Postal Operations, Service and Transparency Act (iPost) of 2015 / Sen. Thomas R. Carper, D-DE
Referred to the Senate Committee on Homeland Security and Governmental Affairs
Cosponsors: 1 (D), 3 (R)
Requires postal employees and retirees to enroll in Medicare in order to continue receiving their current federal health insurance coverage and cuts workers’ compensation benefits for injured federal employees.
H.Res. 54: Expresses the sense of the House that the Postal Service should take all measures to restore service standards in effect on July 1, 2012 / Rep. Dave McKinley, R-WI
Expresses the sense of the House that the U.S. Postal Service should restore service standards as of July 1, 2012. 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
narfe, March 2016
Cosponsors: 183 (D), 46 (R)
Campaign finance
H.R. 20: The Government By the People Act / Rep. John Sarbanes, D-MD Cosponsors: 156 (D), 1 (R) H.R. 973: Social Security Fairness Act of 2015 / Rep. Rodney Davis, R-IL Cosponsors: 103 (D), 34 (R)
GPO/wEP
Reforms campaign finance laws Referred to three to put small donors on par with House committees wealthier donors. Provides a tax credit for contributions and government matching contributions. Repeals the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).
Referred to the House Committee on Ways and Means
S. 1651: Social Security Fairness Act of 2015 / Sen. Sherrod Brown, D-OH
Referred to the Senate Finance Committee
Cosponsors: 15 (D), 5 (R), 1 (I)
narfe, September 2015
H.R. 711: Equal Treatment of Public Servants Act of 2015 / Rep. Kevin Brady, R-TX
Referred to the House Committee on Ways and Means
Reforms the Windfall Elimination Provision (WEP). For individuals who turn 62 in 2017 or later, it provides a new formula that would decrease the Cosponsors: 24 (D), 36 (R) WEP penalty, on average, for those affected. For those who turn(ed) 62 before 2017, it would reduce the WEP penalty by up to 50 percent, based on savings derived from improved enforcement of WEP, as determined by the Social Security actuary.
See story, p. 6
(Continued on p. 12) w w w. n a r f e . o r g
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Washington Watch
narfe bill tracker
(Continued from p. 11) ISSUE
Bill Number / Name / Sponsor
H.R. 3029: RECOVER Act / Del. Eleanor Holmes Norton, D-DC Cosponsors: 30 (D), 1 (R) OPM Security breach
S. 1746: RECOVER Act / Sen.
What Bill Would Do
Latest Action(s)
Expands lifetime coverage of credit monitoring and identity theft protection of no less than $5 million to all individuals affected by the security breaches at the Office of Personnel Management.
Referred to the House Committee on Oversight and Government Reform
Allows federal agencies to review and select job candidates from other federal agencies’ “best qualified list” of applicants.
Referred to the House Committee on Oversight and Government Reform
Benjamin J. Cardin, D-MD
Cosponsors: 5 (D), 1 (I) H.R. 2827: Competitive Service Act / Rep. Gerald E. Connolly, D-VA Cosponsors: 1 (R) federal hiring
S. 1580: Competitive Service Act / Sen. Jon Tester, D-MT
narfe, November 2015
H.R. 532: Federal Employees Paid Parental Leave Act / Rep. Carolyn Maloney, D-NY
Allows federal employees six weeks of paid leave for the birth or adoption of a child.
Cosponsors: 59 (D), 1 (R)
Pension Scam Protection
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Referred to the House committees on Administration, and Oversight and Government Reform narfe, May 2015
S. 2033: Federal Employees Paid Parental Leave Act / Sen. Brian Schatz, D-HI
Referred to the Senate Committee on Homeland Security and Governmental Affairs
Cosponsors: 2 (D)
DC Statehood
Passed the House on 2/29/16 Passed the Senate on 9/17/15
Cosponsors: 2 (D), 4 (R)
Paid parental leave
Referred to the Senate Committee on Homeland Security and Governmental Affairs
narfe, November 2015
Sets forth procedures that H.R. 317: New Columbia Admission Act / Del. Eleanor would allow the District of Columbia to become a Holmes Norton, D-DC state known as New Columbia. Cosponsors: 130 (D)
Referred to the House committees on Oversight and Government Reform, and Administration
H.R. 3850: Annuity Safety and Security Under Reasonable Enforcement (ASSURE) Act / Rep. Matt Cartwright, D-PA
Referred to four House committees
Cosponsors: 24 (D), 1 (R)
Requires appropriate disclosures regarding “pension advance” schemes and caps the interest rates on these advances. Also creates a private right-ofaction to allow individuals to enforce these laws in court.
NARFE’s Position:
Support
narfe, January 2016
Oppose
No position
Tips on Hosting a candidate forum
T
he 2016 elections are heating up. NARFE members who are wondering how they can get involved this election season should consider working within their federation or chapter to host a forum with candidates for Congress. It’s a great way to meet the candidates, hear their views on NARFE issues and help NARFE members make informed decisions before heading to the polls. Now is the time to get started. Here are a few tips: • Invite all the candidates for a specific office (congressional district or Senate race). Once you have a few dates and times in mind for the forum, send a formal request to the campaign office of each candidate.
Make sure to follow up with a phone call after a week or two. • Once a schedule is set, work with the campaign offices to finalize the forum structure. Things to work out include: - The length of the forum; - How questions will be handled (from the audience versus decided ahead of time); and - The role of the media in the event. Candidates will need to know these details ahead of time to properly prepare, and may want to be involved in the decision-making. • At the event, a designated emcee should introduce the candidates and moderate the forum to keep
the discussion on topic. It may be helpful for the emcee to begin with a brief introduction of NARFE’s key legislative issues. • If time allows, end the event with a meet-and-greet to allow NARFE members to continue the discussion with candidates. • Following the event, send each candidate a letter thanking them for attending the event. This will help continue building relationships between the candidates and NARFE. If you have any questions or need resources to host an event, contact NARFE’s Legislative Department by emailing leg@narfe.org or calling 703-838-7760. —By Carolyn Dorf, Legislative Staff Assistant
NARFE-PAC CONTRIBUTION FORM I would like to be a SUSTAINER and make a monthly credit card contribution to NARFE-PAC of: q $25/month q $10/month
Monthly contributors of $10 or more will receive the NARFE-PAC Sustainer lapel pin and a NARFE duffle bag.
q Other: ______/month (minimum of $10) OR
q Please charge to my credit card (required for monthly contribution) Credit Card Information Type:
q MasterCard q VISA q Discover q American Express
Card No.: _____________________________________ Expiration Date: _____ /_________ mm
yyyy
I would like to make a one-time contribution of:
Name on Card: ________________________________
q $250 GOLD – Gold lapel pin and duffle bag
Signature: ____________________________________
q $100 SILVER – Silver lapel pin
Date: ________________________________________
q $50 BRONZE – Bronze lapel pin q $25 BASIC – Basic lapel pin q Other: _______________
q Please do not send any gifts for my contribution.
Or make check payable to NARFE-PAC. Mail to: National Active and Retired Federal Employees Association Attn: Budget & Finance 606 North Washington St. | Alexandria, VA 22314
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.
w w w. n a r f e . o r g
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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 Changing FEHBP Premium payment source
Q
Unable to access My wife is planning to retire under the Benefits statement Federal Employees Retirement System, Ever since the appearand I am retired under the Civil Service ance of the Employee Retirement System. We agreed she is not Express (EEX) website at going to provide a survivor annuity for me. I have www.employeeexpress.gov was modified a few months ago, fed10 percent deducted from my annuity to provide her a survivor annuity. Currently, she has the Federal eral employees have been unable to access their Federal Employee Employees Health Benefits Program (FEHBP) preBenefits Statements (FEBS). The mium deducted from her pay. We want it coming page states: “The FEBS has been from my annuity when she retires. How do I go temporarily removed. It will be about having this changed, and are there deadlines restored as soon as possible.” The ongoing lack of access to we have to meet?
A
One of the permissible events that allow retirees to enroll in the FEHBP is when he or she loses coverage as a dependent under another’s FEHBP enrollment. The request must be made within 30 days prior through 60 days after losing coverage. The tricky part here is to make sure to coordinate the cancellation of your wife’s enrollment with your enrollment so 14
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Q
that there is no gap in coverage for either one of you. Our advice is to not do this during an Open Season period. Actually, it would be best for your spouse to wait a month or two after her retirement is finalized so that you can make the requests – hers to cancel and yours to enroll – at the same time to the same agency – the Office of Personnel Management.
this important tool is a real problem, especially for those who are actively planning for retirement. It is akin to being denied access to one’s own banking information and is unacceptable. Relinking EEX to the FEBS should be a high priority for those managing EEX. I have written several messages to EEX through its online message link. I’ve received only one response, which simply restated that FEBS
would be restored as soon as possible. I would greatly appreciate any assistance NARFE can lend in encouraging EEX to explain why our access to FEBS has been removed and to restore it immediately.
A
We asked the Office of Personnel Management (OPM) to provide us with information on the status of the Employee Express system, specifically the FEBS page. Here is the answer we received: “Employee Express went through a major technology upgrade that was deployed in October of 2015. The Employee Benefits Statement was an add-on that was part of the upgrade. The original module was developed by an EEX-member agency and given to EEX to run for the benefit of any agencies that wanted to use it. As an ‘inherited’ piece of software, it was written in a programming language that was not part of the OPM standard toolset and did not come with much documentation. OPM supported this program, making only minor changes when absolutely necessary. The technology upgrade has required a complete rewrite of this very complex set of business rules and regulations that displays the Benefits Statement. Although significant testing was done, there were test cases that were overlooked and found to be incorrect. This resulted in the decision by the [User] Board to temporarily remove the Benefits Statement from the menu until the errors could be fixed. “… [T]he User Board decides
the priority of the changes that are made. Our priorities up to this point have been the support of the CFC, Health Benefits Open Season, and the issuance of W-2s and 1095-Cs. We have been concentrating on the Benefits Statement for only a little over a month, making the necessary changes to the Benefits Statement and running rigorous regression tests to ensure an accurate resulting product. We believe we are close and are pushing hard to re-release the Benefits Statement this month [February 2016]. We realize what an important tool this is for employees and are eager to make it available but not without the proper testing.” We read the response to mean OPM is testing the upgrades made in order to ensure the system works correctly. When we checked in late February, the FEBS was not yet available.
retirees When do TSP required distributions begin?
Q
At what age do I have to start withdrawing funds from my Thrift Savings Plan (TSP) account? What percentage per year must I withdraw?
A
If you are age 70½ and are retired, you must either withdraw your entire TSP account or begin receiving monthly payments by April 1 of the year following the year you turned 70½. The TSP automatically will
start distributing the Internal Revenue Service (IRS) required minimum distribution – a minimum amount of money from your account that you must receive each year. The TSP calculates the annual amount of your required minimum distribution based on your prior year-end account balance and your age, using the Uniform Lifetime Table as required by IRS regulations. To learn more about all of your withdrawal options after retirement, visit www.tsp.gov, click on Plan Participation, then select “Withdrawals After Leaving Federal Service.”
Password Problem and access to 1099-R
Q
Because I did not enter the Services Online website of the Office of Personnel Management (OPM) for five months, my password expired, and I have been unable to download my 1099-R tax form. For three weeks, I have been calling OPM’s toll-free phone number to speak to someone so I can receive a new password. The phone has been busy during business hours any time of the day. If the 1099s will be mailed, it would be a great relief to know this.
A
Unless you told OPM you wanted to receive your statements and information electronically, it would have mailed your 1099-R to you. From what we understand, the forms were mailed the last week in January. If you didn’t tell OPM you w w w. n a r f e . o r g
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Questions & Answers
wanted them electronically, you probably should have received yours in the mail by now. To obtain a new password for use in OPM’s Services Online, email the request to retire@opm. gov. Make sure you include your retirement claim number. Or you can keep trying the 888-767-6738 phone number.
Spouse Fears losing FEHBP coverage
Q
We live in California and currently have GEHA insurance coverage under the Federal Employees Health Benefits Program (FEHBP) and Medicare. My husband is suffering
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from severe dementia and may need to go into long-term care. It has been suggested that we apply for Medi-Cal (the name of California’s Medicaid system) because it covers long-term care, but I am concerned about potentially losing the GEHA coverage for myself, as my husband is the retiree.
A
As your husband’s dependent spouse, you can lose your federal health care coverage only if your husband, while alive, changes his enrollment to Self Only. If your husband predeceases you, you will be eligible to be covered under the federal health insurance as a widow if your hus-
band was still enrolled in a Self and Family or Self Plus One and had elected to provide you with a survivor benefit in the event of his death. The federal government has offered long-term care insurance to federal employees and retirees since 2002. For information on the benefits offered, as well as how to enroll, either call Long Term Care Partners at 800-5823337 or go online to www.ltcfeds. com. NARFE Insurance Services, a NARFE Affinity Partner, also offers an individual long-term care plan for NARFE members. You can call 877-435-7186 to get information on what it offers.
4/15/14 1:28 PM
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Digital Hearing Aid Outperforms Expensive Competitors This sleek, lightweight, fully programmed hearing aid is the outgrowth of the digital revolution that is changing our world. While demand for “all things digital” caused most prices to plunge (consider DVD players and computers, which originally sold for thousands of dollars and today can be purchased at a fraction of that price), yet the cost of a digital medical hearing aid remains out of reach. Dr. Cherukuri knew that many of his patients would benefit but couldn’t afford the expense of these new digital hearing aids. Generally they are not covered by Medicare and most private health insurance policies. The doctor evaluated all the high-priced digital hearing aids on the market, broke them down to their base components, and then created his own affordable version — called the MDHearingAid AIR for its virtually invisible, lightweight appearance.
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Questions & Answers
Beware of Medicare enrollment snafu
Q
In an article I wrote in The Postal Supervisor, a magazine of the National Association of Postal Supervisors, I related a recent experience in enrolling in Medicare. I had applied by phone for Medicare Parts A and B. It was an easy process. I received my Medicare card a short time later. Everything seemed to be going smoothly, until I received an itemized monthly bill for not only my Part B premium but also a $224 bill for Part A. Medicare taxes were withheld from my wages from 1983 on, which should have qualified me
to get Medicare Part A on a premium-free basis. I made calls to Social Security and Medicare and was told I did not have enough quarters under Social Security to get Part A without paying a monthly premium. After visiting the local Social Security office and being told the same thing, I asked to speak with a supervisor and showed him my latest Social Security statement, which listed the years I paid Medicare taxes. It was explained to me that a mistake was made when I initially applied for Medicare, probably due to the fact they rarely see Civil Service Retirement Service (CSRS) employees or annuitants applying for Medicare.
I am concerned that this might happen to other CSRS annuitants, and there are federal retirees paying premiums for Medicare Part A insurance when they should not have to. I hope you will share this with other retirees.
A
Thank you for sharing your experience with us. We are including it here for members’ information.
Opportunity to Enroll in self plus one
Q
The Open Season for health insurance ended December 14, 2015. Recently, I became aware of an
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Questions & Answers
NARFE at Your Service opportunity to make a change February 1 through February 29, 2016. I didn’t think it was possible to make changes after Open Season ended. Is there any validity to what I read?
A
There was a special Self Plus One enrollment period, which ended February 29, for current employees only. The Office of Personnel Management authorized this time to allow employees who were prevented from making this change during the regular Open Season for unavoidable reasons related to their work to do so. Retired federal workers were not included in this special en-
rollment period because, by law, retirees can request to change from a higher type of coverage to a lower one at any time. Retired federal enrollees can request to change from Self and Family coverage to Self Plus One or to Self Only coverage at any time of the year; they do not need a special enrollment period to do so. 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 the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.
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,
www. narfe.org.
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Ask the Expert THE TRUTH ABOUT COCHLEAR IMPLANTS
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Cover Story
TSP
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Illustration by Bill Pragluski, Critical Stages, LLC
CLOSING THE
ROLLOVER GAP Agencies Act to Reduce Bad Advice, Increase Investment Options
Thrift Savings Plan (TSP) assets are a critical component of the retirement nest eggs of federal employees and retirees. While there are some reasons that a federal employee or retiree might wish to transfer − or “roll over” − TSP investments into other investment vehicles, federal employee advocates, including NARFE, have expressed concerns that financial advisers with conflicts of interest are persuading many federal employees and retirees to roll over TSP funds into higher-cost, more-risky investments that are not in their best interests. In a November 2014 memo, the Federal Retirement Thrift Investment Board (FRTIB), which administers the TSP, reported that
By David Tobenkin
CLOSING THE
TSP ROLLOVER GAP 45 percent of all TSP participants who separated from service in 2012 withdrew all of their TSP funds and closed their accounts by the end of 2013. Now, agency developments that are supported by NARFE appear poised to deal with the issue head-on. The first is the U.S. Department of Labor’s (DOL’s) anticipated release by summer of new rules to protect investors in 401(k) and individual retirement accounts (IRAs) from sellers of financial products with conflicts of interest. The second is a series of changes that the FRTIB will make to the TSP over the next several years that address some of the most common reasons investors remove money from the TSP.
THE ROLLOVER DILEMMA
Typically in a rollover, investors move retirement assets from a company or government 401(k)type defined-contribution plan − such as the TSP − to a portfolio managed by an outside company. Because the TSP’s enormous size gives it economies of scale and because it is not a profit-making enterprise, the administrative fees it charges are nearly always lower than those of outside plans. A February 2015 White House Council of Economic Advisers analysis found that conflicts of interest result in annual losses of about 1 percentage point on investments each year for affected retirement savers. The White House noted that a 1 percentage point lower annual return − with all other factors held constant − would reduce investor savings by more than a quarter over 35 years. Currently, advice on rollovers is not covered by the existing regulatory definition of “fiduciary” investment advice. If an adviser is acting as a
The proposed new rule would require advisers to act in their clients’ best interests.
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fiduciary, he or she is entrusted to act solely in the best interests of the account holder, not for the adviser’s own profit. Therefore, since rollovers are not currently covered under the definition of fiduciary advice, financial advisers may legally recommend that TSP account holders roll over their TSP holdings into an IRA, even if it is not in the account holder’s best interests. The proposed DOL rule would change that, says Tim Hauser, deputy assistant secretary for program operations of DOL’s Employee Benefits Security Administration. “If you are a financial adviser and you advise an investor to roll money out of a low-cost plan into a plan that is similarly designed, offers no other benefits, and costs more, you’d have a lot of explaining to do under the proposed rule,” says Hauser. In an August 2015 public hearing before the DOL on its new proposed rule, NARFE National President Richard G. Thissen testified that while there are some legitimate reasons an investor might seek to roll over TSP holdings into an IRA – including the investor’s higher tolerance for risk, a desire to invest in some asset types not available in the TSP funds, and wanting expanded withdrawal options – in most cases, federal employees and retirees are better off leaving their money in the TSP. Bad, conflicted advice prompts many to make such rollovers, Thissen noted. He cited research conducted by John Turner, a retired DOL economist who heads the Washington, DC-based Pension Policy Center. Turner advocates against TSP rollovers, based on findings from his 2014 study in which he and other federal employees or retirees made calls to a variety of financial advisers. Asked if they should roll over their TSP funds into IRAs, eight out of nine major investment firms advised the callers they should, recommending IRAs that provided the same or similar investments at substantially higher fees, noted Turner.
WHAT THE NEW RULE WOULD REQUIRE
The DOL issued its proposed version of the rule for comment in April 2015. Under current regulations, as noted, the fiduciary best interests standard does not apply to advice regarding rollovers. It also does not apply to advice given on a one-
time basis or on investing in IRAs. Instead, such advice is often subject only to a weaker “suitability” standard. Under the proposal, the activities covered by the fiduciary best interests standard would be expanded to encompass this type of retirement investment advice. DOL’s proposal creates an exemption from the rule, if certain conditions are met, that would allow advisers to continue to receive compensation that otherwise would be prohibited. Under this “best interest contract” exemption, these advisers would have to formally acknowledge their status as fiduciaries and enter into a contract with their customers in which they commit to fundamental standards of impartial conduct, such as giving advice that is in the customers’ best interests and making truthful statements about investments and their compensation. They would have to clearly explain investment fees and costs, have appropriate policies and procedures to mitigate the harmful effects of conflicts of interest, retain certain data on their performance and notify DOL that they intend to rely on this exemption. The proposed rule would allow investors to take legal action against financial advisers whom they feel have violated the rule. However, Barbara Roper, director of Investor Protection at the Consumer Federation of America, notes that the proposed rule does not prohibit advisers’ use of clauses in their contracts that may limit the amount of money that investors can recover by directing the dispute to arbitration rather than a court. It also would allow the DOL itself to take regulatory action against advisers who violate the rule. The exact content of the final rule, and how it differs from the proposed rule, will not be known until its release, which is expected in the first half of 2016.
THE RULEMAKING AND LEGISLATIVE BATTLES
The rule has been vigorously opposed by many in the financial community, who contend that the possibility of legal and regulatory actions against them, the lack of clarity in the proposed rule and the paperwork necessary to show compliance make the rule impractical and could render good
financial advice less available to investors who are not affluent. They have lobbied against it entirely or argued for eased standards and increased exemptions from it. “We’ve had lots of comments from groups to make the proposed rule’s exemptions more workable for financial advisers, and we have considered those comments very seriously,” says DOL’s Hauser. “But the fundamental nature of the conflicts of interest proposal is to make sure that when investors get advice − regardless of its source − it is advice that is in their best interests. That is the North Star guiding this effort that will not change in the final rule.” Opposition to the proposed rule has included legislation introduced in the House of Representatives designed to thwart it. Even if the key provisions remain in the final rule, and the rule is not preempted by legislation, the outcome could be changed by how the rule is enforced and whether the Obama administration’s successor supports its implementation, Roper notes. Others claim that investors who are not proactive in examining financial advisers’ fees and actions – not an easy task given the complexity of both fees and investments – could still suffer harm. “I think the rules are a step in the right direction, but I think that substantive problems will remain,” says Turner. “Financial advisers could still dispense terrible advice, and the average person is unlikely to find that out.”
INCREASING INCENTIVES TO STAY
Last year, the FRTIB authorized actions designed to keep investor funds in the TSP. These initiatives address TSP participants’ common reasons for withdrawing their money. In surveys conducted by the FRTIB, those reasons include investors’ desires for more withdrawal flexibility, greater investment options and more financial advice. These actions will take effect over the next several years. The first of these – approved in July 2015 − may be the most impactful since it calls for legislation that will provide TSP participants greater flexibility in withdrawing their funds from the program. Currently, for TSP participants who are still employed by the government, the TSP limits withdrawals to hardship situations and a single
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CLOSING THE
TSP ROLLOVER GAP partial withdrawal after age 59½. If a participant takes this type of in-service withdrawal, he or she is not permitted to take a partial withdrawal once separated from the government. When retired from federal service, participants currently may choose to take no action until age 70½, or take a one-time partial withdrawal (unless one was taken while in service), or elect a full withdrawal. The proposed legislation would change the withdrawal options by allowing multiple partial, age-based withdrawals for those in-service and multiple partial, post-separation withdrawals. It also would alter post-separation full withdrawals made using periodic payments to allow an expanded variety of periodic payments and payment amounts and stoppage of periodic payments, while allowing the remaining balance to stay in the plan. The proposal also would eliminate a current requirement that TSP participants must make a post-separation withdrawal election by April 1 of the year following the year in which they turn 70½ and are separated from federal service. The FRTIB likely will seek legislation by this spring, says Kim Weaver, the FRTIB’s director of external affairs. The second major criticism of the TSP plan has been that it offers too few investment options. Currently under the TSP, participants can invest in four index-based funds (large company domestic stocks, small company domestic stocks, international stocks, and bonds) and a government securities fund, as well as in Lifecycle funds that automatically adjust the risk level of a blended investment portfolio from more aggressive to more conservative as retirement approaches. Some participants as well as some outside financial advisers have criticized the TSP as offering too few funds, lacking − for example – the real estate sector, international emerging markets and socially responsible funds. The FRTIB has, in the past, retained advisers to examine the design of its plan and concluded that it is adequately diversified with its existing funds. In July 2015, however, the FRTIB acknowledged that offering more investment options through a “mutual fund window” – an opportunity to invest in a range of mutual funds – would appeal to sophisticated and experienced investors
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TSP reforms would offer more withdrawal options, diversification and advice. who want more investment options. It authorized the addition of a mutual fund window that would allow plan participants to invest a portion of their assets in a wider array of investments. The FRTIB likely would design the presentation of the mutual fund window in a manner that distinguishes it from its core offerings and highlights its intended use by more experienced investors. There is no firm date for implementation of the proposal, Weaver says. The third TSP reform is one that would provide online advice and counseling that address investors’ individual financial circumstances. Currently, the TSP provides general information about investments (including warning against the dangers of TSP withdrawals) but does not provide investment advice tailored to individual investors. “This new TSP effort could be an effort to reach out and provide you with more education,” Weaver says. “Many financial companies are, for example, proactive in incenting clients to take financial actions, by doing things such as sending an email message when a client turns 30 or has kids, to ask whether a client has thought about whether his or her asset allocation remains appropriate.” The new online advice would, at a minimum, feature a self-service online tool that makes recommendations to participants on appropriate TSP contribution rates and investment choices. It also would allow a participant who entered relevant information to consider his or her other assets, investments, retirement plans, projected Social Security benefits and, as applicable, spousal assets and accounts. Whether actual individual counselors would be provided and whether fees would be assessed has not been determined, says Weaver, who notes that there is currently no time frame for this effort. —David Tobenkin is a freelance writer based in the greater Washington, DC, area.
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By Everett A. Chasen
Battling for Tax in the Through hard work and planning, Indiana NARFE members helped reduce federal retirees’
state tax burden
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Parity States “We didn’t want to pay less − we just wanted to be treated equally,” explains Don Savage, president of NARFE’s Indiana Federation. Thanks to Savage, federation board officers and NARFE members throughout the state, Civil Service Retirement System (CSRS) retirees and their surviving spouses in Indiana will receive an $8,000 deduction when they file their 2015 state taxes this year, and a $16,000 deduction for tax year 2016 and thereafter. Before Indiana Gov. Mike Pence signed an omnibus tax bill for the state into law in May 2015, CSRS
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state tax parity retirees could claim only a $2,000 deduction, and their surviving spouses could claim nothing at all. According to Savage, the new law was a matter of simple fairness. Social Security and railroad retirement benefits are not taxed in Indiana. Most CSRS retirees do not receive these benefits, unlike Federal Employee Retirement System (FERS) retirees, who do because they receive Social Security benefits. CSRS annuitants had to pay 3.4 percent state tax on their annuities, plus an average county tax of 1.45 percent. “It was almost like we had never retired,” Savage says. “We were almost being treated as if we were active employees, not retirees.” NARFE federations in Oklahoma and Missouri have engineered similar victories in recent years, says Christopher Farrell, NARFE’s senior analyst. In addition, Farrell reports, efforts to create tax parity are underway currently in at least six other states – Connecticut, Iowa, Maryland, New Jersey, Rhode Island and Virginia. Now is a good time to be raising this issue, he explains, because state revenues are rebounding, thanks to the economic recovery. “In many states, those receiving Social Security get more of a tax benefit than those receiving civil service annuities in the older CSRS system,” he says. “Changes to tax law could pay off in dollars and cents.”
INDIANA’S BATTLE FOR PARITY
The Indiana Federation began its quest to have Indiana retirees treated equally more than five years ago. Its rationale was that increasing the state tax deduction would keep retirees in the state as well as attract new retirees who were considering relocation. “I talked to two economists and a business professor, prepared tables and charts, but this proposal didn’t go anywhere,” Savage says. A bill exempting all civil service annuities from state taxes, introduced by a legislator on NARFE’s behalf, also went nowhere. Then the federation happened upon the fairness argument. Savage found a website with congressional statistics on Social Security (www.ssa.gov/policy/docs/factsheets/cong_ stats/) and used the information to determine that retired Indiana workers received an aver32
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age $16,000 in annual Social Security benefits. CSRS employees received no such benefits. “The $16,000 number was what we started pushing for,” says Savage. “You can see right away there’s a discrepancy there.”
HOW THE LAW WAS PASSED
Savage learned many important lessons as he and the federation fought to have his proposal become law. “I learned to keep it simple, professional and positive,” he explains. “You build bridges with legislators − you don’t burn them!” The key, he says, was to have a champion within the legislature. For the Indiana NARFE Federation, that person was State Rep. Ed Clere, R-New Albany. Savage met or spoke with Clere “three or four times a week.” “I didn’t know him before this started,” he says. “Now, we’re very close friends.” Savage refers to Clere as his “offensive coordinator,” who called many of the plays that Savage, as quarterback, executed. Clere introduced the fairness legislation, which was cosponsored by other key leaders in the House, in several legislative sessions. He worked with his colleagues to drum up support and encouraged the Indiana Federation to conduct grass-roots advocacy. Savage and his fellow NARFE members embraced the challenge. By matching ZIP codes with legislators’ districts, they assigned individual members to work with specific legislators. They held an Advocacy Day at the state house, during which members visited with their respective lawmakers. Federation members were provided with talking points and scripts about the fairness argument in advance of their meetings, while green NARFE T-shirts with chartreuse lettering captured the attention of all. Participating members – along with 13 House legislators − also wore pins displaying the words “Fairness Now” on Advocacy Day. “It was a way of demonstrating our presence that was very effective,” Savage says. “We also tried to get everyone to talk to legislators about how they were impacted by an inordinate tax burden,” he continues. “We wanted legislators to know that they would use the money to purchase medications, buy clothes and pay utility bills. It wasn’t as if they were going to buy a boat!”
Another argument NARFE used in the meetings was one of demographics. While the number of Social Security recipients in Indiana was increasing rapidly, the number of CSRS annuitants in the state was decreasing and would eventually dwindle to zero. They also compared the annuitants’ tax situation with that of the surrounding states of Illinois, Kentucky, Michigan and Ohio and were able to demonstrate that most of those states have lighter tax levies on civil service retirees than Indiana. In addition, the NARFE federation members met with the Indiana Legislative Impact Service, which is required to prepare a fiscal impact statement prior to the passage of any such law. As part of the federation’s lobbying strategy, it mailed a candidate questionnaire to both incumbent legislators and their challengers, asking their opinions on proposed legislation. The questionnaire got about a 47 percent response rate. “This was a good way to introduce them up front to our legislation and our issue,” Savage says. In 2015, two Southern Indiana senators introduced the bill in the Senate, with the same language as a bill that had unanimously passed the House in 2014 but had been tabled in the state’s upper body. Savage and select executive board members met with two significant figures in the State Senate − the chair of the Appropriations Committee and the chair of the Tax and Fiscal Policy Committee. The committee chairmen were gracious and professional, says Savage, “but we also were prepared; and when we finished our presentation, the chair of Appropriations said, ‘Well, you have a strong argument.’ Then the two Senate chairs met, and they told us they were willing to give us a tax break.” NARFE had won the battle.
Tax parity efforts are underway currently in Connecticut, Iowa, Maryland, New Jersey, Rhode Island and Virginia.
With such a victory in hand, the Indiana Federation can show real results to beneficiaries. Savage built a template for the federation’s website that visitors can use to find out the extent of their tax reduction by entering the amount of their annuity. “You can demonstrate to people how much money they’ll be saving,” he says.
OTHER STATE VICTORIES
“I don’t want to call attention to myself, but this effort requires someone in the federation who is willing to expend the time and energy this requires,” Savage says. “It was the grass-roots efforts that led to final success!” Farrell agrees. “It’s kind of remarkable how similar our success stories are,” he says. In Oklahoma, James Crowder, the Oklahoma Federation’s state legislative officer, led the effort. In Missouri, the leader was Richard G. Thissen, then the regional vice president and now NARFE’s National President. The Oklahoma law raised the deduction for annuitants from $5,500 to $10,000 in 2006 and to 100 percent for CSRS retirees in 2011. FERS retirees also received an exclusion for their retirement benefits of up to $10,000. For Crowder, this was the culmination of 15 years of effort − and it passed the state legislature on the last day of Oklahoma’s 2006 special session. “Without the hard work of many people in NARFE … we would never have achieved this great victory,” says Crowder, who also cites the work of several individual legislators. “I was very proud to lead this effort over the years.” The Missouri success not only provided tax relief to federal annuitants, but also to all Social Security recipients. In Missouri, taxpayers with an average gross income of under $85,000 (if they are single, heads of households, married filing separately, or qualified widows or widowers) or $100,000 (if they are married filing jointly), may now exempt either $6,000 or 100 percent of their federal pension income, whichever is greater, up to a maximum of $36,976 per taxpayer. “Our process took more than a decade,” says Thissen. “It lasted over several elections and a change in party control of the legislature and governor.” Thissen and his federation formed coalitions with military groups, state employees, teacher retirees and other retiree groups. They w w w. n a r f e . o r g
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state tax parity also developed relationships with legislators in both parties, especially the chairs of important committees. The federation attended all scheduled hearings and provided both written and verbal testimony. In its testimonies, federation officers referred to two U.S. Supreme Court decisions (Davis v. Michigan and Barker v. Kansas) that supported better tax treatment for public employees. They had busloads of members come from throughout the state for the hearings, packing the hearing rooms to overflow. “I developed a working relationship with a St. Louis Post-Dispatch writer who covered public issues,” Thissen recalls. “She would interview me about our testimony and print facts about why bills were compatible with the Supreme Court decisions. This helped us to kill bills that did not comply.” Finally, the federation generated grass-roots notifications by NARFE members to every state legislator and to the governor. The result − as in Indiana and Oklahoma − was victory. “A lot of the work can be done by one person, but in both Oklahoma and Missouri, the leaders called out a larger group of NARFE members at strategic moments and got them to engage,” explains Farrell. “Legislative champions can be a lot more authoritative if they show they have a cast of supporting characters. In all three cases, our leaders found a champion. They took advice from that legislator on how to work the rest of the system and when was the best time for our leaders to engage a larger audience.”
CURRENT EFFORTS
In Virginia and Maryland, tax reform has been folded into an entire agenda of issues to provide favorable treatment of civil service benefits. In New Jersey − under the leadership of federation legislative officer Jerome (Jerry) Rubin − a tax exclusion bill for seniors was passed by the legislature in 2014 but was vetoed by Gov. Chris Christie. The bill included a provision for federal retirees. In Rhode Island, legislation has been introduced in the current session of the state’s general assembly that would exempt all Social Security benefits from state income tax, as well as income received from federal, state and local government retirement plans (such as CSRS and FERS), disability benefits, military pensions, 34
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and private pension plans and deferredcompensation plans. David MacDonald, president of the Rhode Island Federation, explains that the bill has “strong support.” It has 40 cosponsors, which is “the most we have ever seen on this measure.” In January of this year, he and other federal and military retirees participated in a special press conference in support of the bill. “It is long overdue,” he says. In Iowa, Dorman Otte, NARFE state legislative chair, is working with the state legislature on two bills to provide tax relief for federal retirees. In a letter to a champion in the state Senate, he wrote: “NARFE views these savings as an economic incentive [that] is invested back in the community. The reduced taxes are virtually all used for needed goods and services by seniors with limited personal resources.”
THE DIVIDENDS OF TAX-LAW CHANGES
Thissen, Savage and Farrell believe that successful tax law changes carry additional benefits. Farrell points out that the lobbying effort itself can change the public’s perception of federal retirees by showing that NARFE members are hard-working and public-minded. Farrell also suggests that the personal relationships NARFE establishes in these campaigns can yield reciprocal benefits in the future. Savage and his network of supportive legislators, for example, have pledged to work together on other issues. “Success begets success,” Farrell says. He mentions that fully half of the members of both the U.S. House of Representatives and the U.S. Senate served either in state legislatures or as governors and that working with these politicians early in their careers can build relationships that will be helpful to NARFE later on when some of these lawmakers come to the nation’s capital. NARFE leaders know that victory on the state level is every bit as crucial as wins on the national front in creating broader awareness of NARFE’s mission and bringing new members to the Association. “Legislative success is a powerful recruitment tool,” says Thissen. ——Everett A. (Ev) Chasen is a writer and communications
consultant in the washington, DC, area. He retired from the federal government After 35 years of service.
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Special Section
State Tax Treatment
Alaska Florida Nevada
States With No Personal Income Taxes New Hampshire1 South Dakota Tennessee2
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+.
1
Texas Washington Wyoming
2 Tennessee: Taxes certain interest/dividend income at 6% if it exceeds $1,250 (single) or $2,500 (joint filer). Individuals age 65+ have additional means-based exemption (see below).
States Exempting Total Amount of Civil Service Annuities*
Alabama Hawaii Illinois
Kansas Louisiana Massachusetts
Mississippi New York Pennsylvania
* In addition, the five states listed below exempt certain federal civil service annuities from taxation. Some exemptions depend on the taxpayer’s age or dates of government service. 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. Michigan: Full exemption only applicable to taxpayers born before 1946. See below for taxation of federal (and other) pension income for taxpayers born in 1946 and later. North Carolina: Annuities not taxed if the individual had five years of government service as of August 12, 1989. 36
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If otherwise, see below. OKLAHOMA: CSRS annuities excluded from taxation. Taxpayers with annuities with both FERS and CSRS components may exclude the portion attributable to CSRS service. Oregon: Annuities not taxed if individual retired before October 1, 1991. Those who retired after October 1, 1991, are taxed only on that portion of the annuity attributable to government service after October 1, 1991.
Tax Year
Federal Annuities Other Exemptions Alabama: SS, federal retirement, military retirement and state pension income are exempt. Income from all defined-benefit pension plans is exempt. ARIZona: SS is exempt. $2,500 exclusion for federal, military, and Arizona state and local pension income. Additional personal exemption for all residents age 65+. Arkansas: SS is exempt. Exempts up to $6,000 in federal retirement, military, in-state and out-of-state state or local government and private pension income. IRA distributions can be included as part of the exemption if the taxpayer is age 59½+. California: SS is exempt. Additional $109 personal exemption for residents age 65+. Residents age 65+ with AGI below $69,902 who qualified
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 *Federal law does not permit states to tax Railroad Retirement income. Exemption is not noted in roundup except where it affects other provisions.
This roundup of state tax treatment of federal annuities and other tax information 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.
as HH in 2013 or 2014 by providing a household for a qualifying individual who died during 2013 or 2014 may claim a tax credit of 2% of their income, up to a maximum of $1,317. All private and public pensions are taxed. Colorado: $24,000 pension/ annuity exemption for all taxpayers age 65+. $20,000 pension/annuity exemption for all taxpayers between the ages of 55 and 64. Exemption applies to SS 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). Beginning in tax year 2015, exempts 100% of federally taxable military retirement pay. Delaware: SS is exempt. Taxpayers age 60+ may exclude $12,500 of investment and qualified pension income (including federal and out-of-state 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, 2015, 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, 2015, or totally disabled, may exclude $4,000 if
earned income is less than $5,000 and AGI is $20,000 or less. District of Columbia: SS is exempt. For taxpayers age 62+, DC or federal government survivor benefits are exempt. The $3,000 exclusion for taxpayers age 62+ of military, federal and DC government pensions has been repealed as of tax year 2015. Georgia: SS is exempt. 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 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. Hawaii: SS is exempt. Federal retirement, military retirement, state or county retirement system pension income, and qualifying distributions from employer-funded pensions are exempt. Additional personal exemption of $1,144 per person age 65+. Idaho: SS is 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 $31,956 (if single) or $47,934 (MFJ) minus SS and RR received. Deduction w w w. n ar f e . o r g
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expanded beginning in tax year 2015 to include workers under the Foreign Service Retirement and Disability System (FSRDS). Retirement benefits deduction also available for military retirees. Persons using MFS status are not eligible for the retirement benefits deduction. Illinois: SS and income from any qualified employee benefit plan are exempt (including federal government plans). Indiana: SS is exempt. Taxpayers age 60+ may exclude $5,000 of military retirement income. Taxpayers age 62+ may deduct up to $8,000 of a federal civil service annuity minus the total amount of any SS or RR benefits. Beginning in tax year 2015, surviving spouses are eligible to claim the deduction. Taxpayers age 65+ can take additional personal exemption of $1,000. Additional personal exemption of $500 if federal AGI is less than $40,000 for residents age 65+. (See story, p. 30, on NARFE Indiana Federation state tax activity.) Iowa: SS is exempt. Beginning in tax year 2015, military retirement pay is exempt. 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. Additional $40 personal exemption credit for those age 65+. Kansas: SS is exempt if federal AGI is $75,000 or less. Federal, military and in-state/local pensions are exempt. Additional $850 deduction for those age 65+ ($700 each if MFJ or MFS). Kentucky: SS is exempt. 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, 38
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of which taxpayers may exclude up to $41,110. An additional credit of $40 for each individual age 65+ or blind ($80 if both). 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 is exempt. May deduct from federal AGI $10,000 of eligible pension income, including federal civil service annuity income. Except for military retirement pay, the $10,000 deduction must be reduced for SS and RR benefits. Additional standard deductions for age and blindness are: $1,250 per individual per qualifying condition for MFS or MFJ, and $1,550 per individual per qualifying condition for single filers and HH. Maryland: SS is exempt. If age 65+, may exclude up to $29,200 in pension income, reduced by SS or RR benefits. Additional $1,000 exemption for residents age 65+ or blind. Beginning in tax year 2015, military retirement subtraction increased to $10,000 if 65+; subtraction remains at $5,000 for those under age 65. To qualify, must have been 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, or the member’s surviving spouse or ex-spouse. Massachusetts: SS, federal civil service and military pensions 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 military pensions are exempt. Other pension and retire-
ment 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 and may subtract qualifying private pension and retirement benefits up to $49,811 if filing single or MFS, or $99,623 if MFJ. SS and RR benefits are exempt. Taxpayers born between January 1, 1946 and December 31, 1952, should refer to instructions for MI-1040 to see if they qualify for a pension and retirement subtraction. Taxpayers born between January 1, 1946, and January 1, 1954, who receive retirement benefits from employment exempt from Social Security (including CSRS) may deduct an additional $15,000 in qualifying pension and retirement benefits if filing single, $30,000 if both spouses qualify and are MFJ. (This deduction has been expanded for tax year 2015 to include recipients born on or after January 1, 1953, but before January 2, 1954.) Minnesota: Taxpayers 65+ may be eligible for subtraction, based on income. Mississippi: SS and retirement income from federal, state and private retirement systems are 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 $36,976 per taxpayer. Taxpayers with AGI exceeding the limitation may qualify for a partial exemption. 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.
Tax Year
Taxpayers with AGI over these limits may be eligible for a partial exemption. 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. Taxpayers with AGI exceeding the limitation may qualify for a partial exemption. Taxpayers may deduct 90% of military pension income. Montana: Taxpayers with AGI $33,190 or less may exclude $3,980 of pension income; for AGI above $33,190, the pension income exclusion is reduced $2 for every $1 of AGI above $33,190. 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: New for tax year 2015, taxpayers with AGI of $58,000 MFJ or $43,000 for all other returns may deduct Social Security income. Also new, retired military can make a onetime election to exclude from taxable income 40% of military pension. Election must be made within two years of their retirement from military service. New Hampshire: Tax applied only to interest and dividend income exceeding $2,400 ($4,800 for joint filers). Residents age 65+ qualify for $1,200 exemption. New Jersey: SS and military pensions 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 pro-rata 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). 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. Additional $1,000 personal exemption for residents age 65+. 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) or $51,000 (MFJ). If age 100+, exempt from state income tax if centenarian is single. If MFS or MFJ, both must be 100+ for total exemption, or centenarian may exempt half of community income and all of his/her separate income. New York: SS and state and federal pensions, including military, are exempt. An additional pension and annuity income exclusion of up to $20,000 is available to persons age 59½+. North Carolina: SS is exempt. 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. Ohio: SS and military pensions 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. 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. 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: SS is exempt. Federal pension income 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. TSP withdrawals made after retirement are eligible for subtraction based on dates of service. If the taxpayer moves money from a TSP to another type of account, the account loses its character and is no longer a federal pension, and future withdrawals would not be eligible for subtraction. Taxpayers age w w w. n ar f e . o r g
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39
Tax Year
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. Additional standard deduction if age 65+ of $1,200 (single, HH), $1,000 each spouse age 65+ (MFJ, MFS and QW). Pennsylvania: SS, federal civil service, military retirement benefits and other employer-sponsored retirement plan benefits exempt. Distributions from IRAs, if age 59½+, are exempt. South Carolina: SS is exempt. If below age 65, may deduct $3,000 of qualified retirement income (including federal retirement plans and military retirement). If 65 or older, may deduct $10,000 of qualified retirement income. All individuals age 65+ are entitled to a $15,000 deduction from income, reduced by any deduction claimed for qualified retirement income. 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 $37,000 or less, or $68,000 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). 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. The credit is phased out by a percentage of the excess of modified AGI over a certain amount based on filing status. See Phase-out Calculation instructions. Virginia: SS is exempt. Taxpayers age 65+ may claim an age deduction: Those whose birthdate is on or before January 1, 1939, may claim an age deduction of $12,000. Those whose birthdate is between January 2, 1939, and January 1, 1951, will have the $12,000 deduction reduced by $1 for every $1 that federal AGI exceeds $50,000 (single) or $75,000 (MFJ, MFS). Additional personal exemption of $800 if age 65+ or blind.
West Virginia: $2,000 of military, federal retirement and state pensions is exempt. Additional exemption for military pension income up to $20,000. Taxpayers age 65+ may exclude the first $8,000 each of any remaining nonexempt income. Wisconsin: SS is exempt. Federal civil service retirement payments are exempt if the individual: retired from the system before January 1, 1964; 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 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+. 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.
State Sales Taxes* Alabama 4.0% Alaska 0.0 Arizona 5.6 Arkansas 6.5 California 7.5 Colorado 2.9 Connecticut 6.35 Delaware 0.0 Dist. of Col. 5.75 Florida 6.0 Georgia 4.0 Hawaii 4.0 Idaho 6.0 Illinois 6.25 Indiana 7.0 Iowa 6.0 Kansas 6.5
Kentucky 6.0% Louisiana 4.0 Maine 5.5 Maryland 6.0 Massachusetts 6.25 Michigan 6.0 Minnesota 6.875 Mississippi 7.0 Missouri 4.225 Montana 0.0 Nebraska 5.5 Nevada 6.85 New Hampshire 0.0 New Jersey 7.0 New Mexico 5.125 New York 4.0 N. Carolina 4.75
N. Dakota 5.0% Ohio 5.75 Oklahoma 4.5 Oregon 0.0 Pennsylvania 6.0 Rhode Island 7.0 S. Carolina 6.0 S. Dakota 4.0 Tennessee 7.0 Texas 6.25 Utah 4.7 Vermont 6.0 Virginia 5.3 Washington 6.5 West Virginia 6.0 Wisconsin 5.0 Wyoming 4.0
*Exemptions, local and county add-ons, and varied rates for particular sales may apply.
40
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Managing Money
win-win: A Qcd saves on taxes, benefits charity
A
Qualified Charitable Donation (QCD) is a taxsavings tool for charitably inclined owners of individual retirement accounts (IRAs). Also
known as IRA charitable rollovers, QCDs were first introduced in the Pension Protection Act of 2006 and originally were permitted for years 2006 and 2007. Since then, the QCD rules have been in constant limbo. They’ve lapsed, been reinstated (often retroactively) and lapsed again, only to be reinstated again. Finally, after eight years of uncertainty, Congress has made QCDs a permanent fixture in the tax law. A QCD is available to an IRA owner older than age 70½. If you are turning that age, be careful because you can’t simply attain age 70½ in the year you do a QCD; you actually have to be at least 70½ at the time you do the QCD. One attractive feature of the QCD is it may satisfy an IRA owner’s required minimum distribution (RMD). QCDs are limited to $100,000 per year, which means you will likely be able to do a QCD in excess of your RMD if you wish. The $100,000 limit applies to individuals, so married couples may contribute up to a combined $200,000. There’s no gift splitting, however, so each spouse must make a QCD from his or her own IRA. A QCD must be transferred directly from the IRA custodian to the charity. Checks are fine, 42
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as long as the IRA custodian makes the check payable to the charity. It’s even permissible for you to receive the check (as long as it’s not made out to you) and deliver it to the charity. It’s also important to note that QCDs may be done only from an IRA and are not allowed from other types of retirement accounts, such as the Thrift Savings Plan and 401(k)s. For those who normally give to charity, another key benefit of the QCD is that the amount transferred from the IRA to the charity is not included as income (subject to the $100,000 annual limit) when calculating adjusted gross income (AGI). This is beneficial because as AGI increases and reaches certain levels, various tax advantages are reduced or disappear altogether.
By Mark A. Keen,
CFP®
For example, at certain AGI thresholds, taxpayers experience loss of personal exemptions and the phaseout of itemized deductions. By maintaining a lower AGI, a QCD may also help you avoid the alternative minimum tax, the 3.8 percent Medicare surtax on investment income, and higher Medicare Part B and Part D premiums. Additionally, the tax rate you pay on capital gains is ultimately determined by your income. For example, if you are in the 25 percent, 28 percent, 33 percent or 35 percent tax brackets, your long-term capital gains tax rate is 15 percent. If you are in the 39.6 percent bracket, the long-term capital gains tax rate increases to 20 percent. But for those in the 10 percent and 15 percent brackets, the longterm capital gains tax rate is 0 percent. Medical expenses tend to increase with age. Fortunately, the IRS permits a small tax break by allowing us to deduct qualified medical expenses as an itemized deduction. Here again, AGI plays a role, and using a QCD to keep your AGI lower potentially will allow you to deduct more of your medical expenses. If you itemize your deductions, you get to write off your charitable contributions up to a cap equal to 50 percent of your
BENEFITS BONUS NARFE offers members a wide range of benefits information. Visit www. narfe.org/federalbenefits and www.narfe.org/ FederalBenefitsInstitute.
AGI (though 20 percent and 30 percent limits apply in some cases). But what about those who don’t have enough deductions to itemize? Because QCDs are excluded from income, they’re a great way for folks claiming a standard deduction to get a tax break, too. Another important tax-related feature of a QCD is that it is presumed to come from the pre-tax portion of the IRA account. Under normal cir-
cumstances, the “pro-rata” rule dictates an IRA distribution will consist of pre-tax and post-tax money (assuming the IRA holds post-tax money). This means you can isolate the basis (post-tax contributions) in your IRA by donating the pre-tax money to charity via the QCD, and then convert the remaining basis to a Roth IRA tax-free. Or at the very least, you can reduce the pre-tax money so more of a Roth conversion comes from after-tax funds, thereby reducing the taxable conversion income. If you are charitably inclined and own an IRA, the QCD may be an excellent gifting strategy for you. 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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w w w. n a r f e . o r g
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43
The Informed Citizen
winning in the states
A
round the country, NARFE federation leaders are enlisting members in state legislative advocacy. The feature article beginning on p. 30 salutes our past state tax victories and the persistent leaders who guided their federations to success. The time is ripe to join NARFE’s state tax advocacy. Revenues are recovering in most states but growing more slowly than historic averages. Realized or anticipated budget surpluses allow states to replenish rainy day funds and return money to taxpayers. Taken together, these factors make this an excellent time to join federation and chapter leaders in state advocacy. Fight Rather Than Switch The annual state tax roundup (p. 36) may suggest to the casual observer that the grass is much greener elsewhere. Another use of the disparate tax treatment of federal retirement income is as information with which to fight city hall rather than switch jurisdictions. States and local governments choose a mix and rate of taxes – income, sales, estate and property – to provide public services. Just as governors seek new employers and investors, they are eager to retain existing businesses, retirees and college graduates. Retiree Mobility There is great conjecture about retiree moves from one state to another. Instead of anecdotes, the Internal Revenue Service and Census Bureau cooperate to publish annual, empirical data on taxpayer migration, including from one state to another. Cli44
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mate and proximity to children, even more than taxes, drive retiree relocation.
By Christopher Farrell, senior analyst
A federation convention is the perfect venue to invite statewide office holders, especially the governor. Use numbers from the Federal Family section of the Protect America’s Heartbeat Toolkit (http:/bit.ly/1TmE1iO) to attract your governor by showing your state’s counts of federal employees, postal workers and federal retirees. Ask questions about taxes on federal retirees, invite the press, take pictures, make news. Most governors’ websites have a contact module with information on where an invitation can be sent.
Coalitions: Power in Groups In Alabama and Georgia, NARFE has joined and led coalitions to defend existing tax law and gradually improve the tax code. When the governor of Alabama floated a trial balloon to begin taxation of defined-benefit retirement plans in January 2015, NARFE joined with other Alabama retiree organizations to work with state legislators leading the opposition. The Georgia Federal Military Retiree Coalition began in the early 1980s and has worked continuously and successfully to improve the state tax treatment for civilian and military retirees in Georgia.
Enlist Today State advocacy varies from federation to federation. Fortythree federations have named a State Legislative Chair, and 407 chapters have a Legislative Officer for State Advocacy. NARFE’s Legislative Action Center can translate a ZIP+4 into a listing of the elected officials, including governor and state legislators, for each location. OpenStates.org is a gateway to interactive maps of state legislative districts. Consider running for the legislature. NARFE members serve in state legislatures, and some hold leadership positions.
Invite the Governor Federation conventions gather NARFE’s heaviest hitters to the same place at the same time.
In the chart on p. 41 of the February issue, the Oregon legislature’s majority party affiliation was incorrect. It is Democratic.
CORRECTION
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’15
2016
G FUND
F FUND
C FUND
S FUND
I FUND
february
0.15%
0.68%
-0.12%
0.50%
-2.82%
January
0.19%
1.49%
-4.96%
-8.72%
-5.62%
December
0.18%
-0.30%
-1.57%
-3.91%
-2.03%
YTD
0.34%
2.18%
-5.07%
-8.26%
-8.28%
1 year
2.08%
1.89%
-6.11%
-14.45%
-14.91%
3 year*
2.11%
2.68%
10.83%
7.13%
0.69%
5 year*
2.01%
3.93%
10.20%
7.53%
0.86%
10 year*
2.90%
4.93%
6.50%
6.52%
1.73%
L INCOME
L 2020
L 2030
L 2040
L 2050
’15
2016
*Annualized
February
0.01%
-0.24%
-0.41%
-0.51%
-0.63%
January
-0.91%
-2.55%
-3.58%
-4.21%
-4.86%
december
-0.28%
-0.92%
-1.32%
-1.61%
-1.85%
YTD
-0.90%
-2.79%
-3.97%
-4.70%
-5.46%
1 Year
-0.17%
-3.74%
-5.74%
-7.09%
-8.46%
3 year*
3.39%
5.17%
5.81%
6.28%
6.60%
5 year*
3.40%
5.16%
5.84%
6.30%
6.58%
10 year*
3.89%
4.81%
5.12%
5.28%
N/A
*Annualized
RETURNS are net of the effect of accrued administrative expenses and investment expenses/costs. Source: TSP (For additional monthly returns, go to www.tsp.gov.) 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: (Lifecycle) 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.)
OPM Retirement Claims Processing status
The U.S. economy continued to show moderate strength in February, and the C and S Funds ended the month almost where they started. Economies in Europe and Asia are slowing, and the I Fund fell almost 3 percent, although returns would have been worse without a weakening U.S. dollar. Yields fell again, as expectations of the Federal Reserve raising interest rates this year diminished further, causing the F Fund to climb. The L Funds performed as expected. —BY Ravindra Deo, Chief Investment Officer, Thrift Savings Plan
Countdown to COLA
T
he Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.12 percent in January. To calculate the 2017 cost-of-living adjustment (COLA), the indices of July, August and September 2016 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, 231.061, is down 1.36 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 0.12 percent higher than the December 2015 base index of 230.791. 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
2015
’16
For the Record
february returns are mixed; I fund slides; f fund climbs
Thrift savings Plan fund returns
Claims Received Inventory
FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST September OctOBER November December JanUARY
9,219 5,478 6,292 7,845 6,920 9,862 7,341 6,300 8,374 6,019 4,753 15,423
24,014 20,594 18,226 15,374 14,511 16,455 16,350 14,706 12,642 12,562 11,399 19,761
Avg # of Days % Processed in to Process Case in 60 Days or Less More Than 90 Days
81% 82% 73% 68% 69% 69% 70% 70% 74% 76% 78% 79%
103 99 74 79 99 97 98 94 86 98 104 94
FOR THE NUMBER of new retirement cases the Office of Personnel Management (OPM) receives each month by agency and the percent with errors that it returns to those agencies, go to www.opm.gov/retirement-services/. Source: OPM 46
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CPI-W
Monthly % Change
% Change from 234.242
October 2015
232.373
-0.12
-0.80
November
231.721
-0.28
-1.08
December
230.791
-0.40
-1.47
January 2016
231.061
+0.12
-1.36
February March April May June July August September
Donate to NARFE Programs Support Alzheimer’s Research
Your charitable contribution is tax-deductible to the fullest extent allowed by law.
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. Please circle: Mr. Mrs. Miss Ms. and mail to: Name: Alzheimer’s Association Address: 225 N. Michigan Ave., 17th Floor City: State: ZIP: Chicago, IL 60601-7633 Chapter Number: Credit Card Information: MasterCard VISA NARFE members contributed for If you have any questions, write to: Discover AMEX Alzheimer’s research: $12 Million Fund National Committee Chair Card Number: Merv Stuckey, 2272 E. Buster Mountain Dr. Expiration Date: (mm)/ (yy) Oro Valley, AZ 85755-4709 *Total as of January 31, 2016 3-Digit Security Code: 100% of all contributed funds go to Name: (please print) Email: narferoadrunner@comcast.net
$11,681,668* Alzheimer’s research.
Signature
Join the Silver CIrcle Clip this contribution form and mail to: NARFE Silver Circle, 606 N. Washington St. Alexandria, VA 22314
•For a contribution of $25 or more, you will receive a Silver Circle pin, and your name will be listed in narfe magazine with other contributors. •For a contribution of $1,000 or more, your name will be placed on the “Wall of Fame” at NARFE Headquarters.
YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.
/
Enclosed is my Silver Circle contribution: $ ID # (ID # may be found on your narfe magazine label or your NARFE membership card)
Name: Address: City: State: ZIP: Silver Circle contributions are NOT deductible for federal income tax purposes.
Installment Plan Wall of Fame 12-month installment plan
Give to the Scholarship and Disaster Funds
Please mail coupon and check to: FEEA 3333 S. Wadsworth Blvd., Suite 300 Lakewood, CO 80227
/
All donations go to the NARFE General Fund to support NARFE programs and operations.
My check is enclosed
(Please make check payable to NARFE Silver Circle.)
Please charge my credit card Card type MasterCard VISA Discover AMEX Card Number: Expiration Date: (mm)/ (yy) Name: (please print)
Signature
Make check payable to: NARFE-FEEA Disaster Fund or NARFE-FEEA Scholarship Fund.
Date
YES!
Date
/
/
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
Scholarships!
Photo Contest deadline: April 15
T
he deadline for submission of photographs for the 2016 NARFE Calendar Photo Contest has been extended to April 15. “We know that the harsh winter weather in many parts of the country affected the schedules of members,” says Monica Williams, deputy director of Membership Marketing. “To give all members who want to submit photos an op-
portunity to do so, we have extended the deadline to April 15.” For contest guidelines, visit
The deadline to submit applications in the NARFE 2016 Scholarship Program is April 29. To access the application and competition rules, go to www.narfe.org and click on the Scholarship Program graphic in the carousel on the home page. The competition is open to high school seniors only. Sixty winners will be chosen. Each will receive a $1,000 award.
www.narfe.org and click on the Photo Contest graphic in the carousel on the home page.
Oops! Sorry, Moms! The 2016 NARFE Calendar has the wrong date for Mother’s Day. This year, Mother’s Day will be celebrated on Sunday, May 8. NARFE regrets the error.
The 5th Edition of NARFE’s
Questions & Answers Book is Available Now!
NARFE’s retirement experts answer questions most frequently asked by federal annuitants and employees. Order your copy of the new Questions & Answers today!
Only $9.95
Clip and mail to: NARFE Q&A Book, 606 N. Washington Street, Alexandria, VA 22314 Name___________________________________________________________________ Address _________________________________________________________________
Number of Books
City _______________________________________ State ______ ZIP ____________
_____ x $9.95 = ________
Member ID# (As it appears on narfe magazine label) _____________________________
(includes shipping & handling)
Tax (if applicable) = _____ Virginia residents must add 6% tax (60 cents per copy)
Total cost = ___________
o Charge to my credit card
o MasterCard o Visa o Discover o AMEX
Card # __________________________________________________________________ Exp. Date ___________ / ____________ (mm)
(yy)
Name on card (print) ______________________________________________________ Signature ________________________________________ Date _________________
Make checks payable to NARFE (No phone orders) 48
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The Vision of a Better Future Is Central to NARFE Strategic Plan
T
says. “They all want to he chairman of see NARFE meet its the NARFE challenges and get Strategic back to a more solid Planning Commitfooting as an tee says he looks organization, and forward to a stable s e c u r e they were willing to and growing Aswork hard to sociation resulting the help make that hapfrom the commitf u t u r e pen.” tee’s work. The NARFE Strategic “Something I think Plan vision is a part of the about a lot is a time when plan that gets very little attenNARFE will not be in a state tion, yet is critical as a motivator of crisis or near crisis,” says Jon for those who will adopt the plan, Dowie, NARFE National Secretary/ Dowie believes. Treasurer, who serves as the chairAccording to planning experts, man of NARFE’s Strategic Planvision statements answer two quesning Committee and the Strategic Planning Team. “The whole strategic tions: What do we want to do, and what does success look like? The anplanning process and the plan itself swer to both questions can be found are intended to focus our attention on how we can get to that point.” in the NARFE Strategic Plan vision The shared desire for an improved statement: “To be an effective, responsive future for the Association is one champion and the trusted voice of the reasons the members of the of the civilian federal community, Strategic Planning Committee were NARFE must intentionally become so eager to join and were so genera more fiscally healthy, more effecous with the time they spent doing tive, and growing organization.” the work of the committee, Dowie
s trate g i c p l an N I N G
STrategic Planning Video available A video interview with two members of the NARFE Strategic Planning Team is now available for viewing on the NARFE website, www.narfe.org (log in and click on the Strategic Planning banner). The video also will be offered to NARFE federations to show at conventions and other meetings. Lou Ann Sabatier, who facilitated the NARFE Strategic Planning process, poses key questions about the planning process, actions and recommendations to Jon Dowie, NARFE National Secretary/Treasurer and chair of the Strategic Planning Committee and the Strategic Planning Team, and Evelyn Kirby, Region II vice president and Strategic Planning Team member.
Characteristics of a great vision include presenting a vivid description of a desired outcome, inspiring members and adapting as conditions change. “Our vision of a thriving, effective organization drives everything else in the Strategic Plan,” says Ted Jensen, past president of the Maryland Federation and Ted Jensen a member of the Strategic Planning Committee. “That’s why we are all trying so hard to share that vision with our members and why we are excited about NARFE’s future. “Starting with a handful of members and a big idea, NARFE’s founders built a great organization that served us well for many years,” Jensen says. “We imagine a great organization with the same mission but able to function at a high level in a fast-moving, connected, electronic world that our founders could not have dreamed about.” Vision is definitely at the core of NARFE’s strategic plan and the recommended changes to secure the future of the organization, Jensen notes. “We see glimpses of that future already in some of our new initiatives,” he says, “but we need to act boldly now, as our founders did, to make that vision come true.” w w w. n a r f e . o r g
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Convention NARFE-PAC Breakfast
T
he National Convention will include a breakfast on Thursday, September 1, from 7-8:30 a.m. to thank top NARFE-PAC supporters and encourage additional giving to the Association’s political action committee. “Our top NARFE-PAC contributors are crucial to electing fedfriendly members of Congress and defeating threats to federal employees’ and retirees’ earned pay and benefits. This breakfast is held each convention to thank them for their support,” says NARFE President Richard G. Thissen. The breakfast will feature a yet-tobe-determined guest speaker to discuss the upcoming 2016 elections. NARFE members may attend the breakfast if they meet one of the fol-
Register online! Convention registration is now open online at www.narfe.org/convention 2016. Using the online registration form, members also can purchase banquet tickets and sign up for State Night. Alternatively, members can register for the convention and purchase banquet tickets by using the paper registration form, found on the facing page (p. 51), and paying by check or credit card. The registration deadline is August 1. In addition, chapter officers now can visit the convention website to designate a delegate or proxy. Candidate statements also appear on the convention website as they are submitted to the NARFE Communications Department. The convention website features responsive design, which enables it to be viewed easily using a computer, tablet or smartphone. 50
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fast to help grow our political influence,” NARFE Legislative Director Jessica Klement says. Space is limited. Attendees who meet the criteria and want to attend should reserve spots prior to the convention by emailing Jason Freeman at leg@narfe.org with the subject line “NARFE-PAC Breakfast.” A confirmation email will be sent when attendees are added to the RSVP list. lowing criteria: • Contribute $250 or more over the course of the 2015-16 election cycle (a Gold-level supporter); • Contribute $10 or more each month via credit card (a NARFEPAC Sustainer); • Provide a new contribution of $100 or more in connection with the breakfast. “Because only direct contributions to NARFE-PAC fund our political work, NARFE-PAC relies solely on member contributions. If you are not a Gold-level supporter or NARFE-PAC Sustainer, please consider joining us for this break-
Lunches Provided This year, the National Convention registration fee includes lunches for all attendees on Monday, Tuesday and Wednesday of convention week. The lunches also are made possible through the generous support of convention sponsors.
DEADLINES
• Resolutions: No later than May 13 • Delegate Forms: June 1 • Registration: August 1 • Proxy Forms: August 1
HOTEL Arrangements Grand Sierra Resort and Casino 2500 E. Second St., Reno, NV 89595 800-648-5080 NARFE Rate: Single/Double Tier 1: $79 + tax; Luxury Summit Single/Double: $129 + tax. Additional person, more than two per room: $20 each For the NARFE Rate when calling, use Group Code: NRF16 Visit convention website for link to book hotel online. Cutoff date: July 24
AIRLINE DISCOUNTS Delta Airlines: www.delta.com/meetings. When booking online, select “Book Your Flight” and enter meeting ID NMMM5. A $25 charge will apply if booking by phone (800-328-1111). United Airlines: www.united.com. When booking online, select “All Search Options” and enter Offer code ZVVB272256. A $25 per ticket charge will apply if booking by phone through United Meeting Reservations, 800-426-1122.
CONVENTION PRICING
$99 if postmarked by Aug. 1; $125 after Aug. 1 and onsite. Each attendee must complete a separate form. Includes lunch on Monday, Tuesday and Wednesday. BANQUET PRICING
$70 per ticket.
CANCELLATION POLICY
The convention registration fee is nonrefundable. Banquet refunds are available only if reservations are cancelled 72 hours prior to Banquet. PAYMENT BY CHECK
Make checks payable to NARFE and send to: NARFE Secretary/Treasurer’s Office 606 N. Washington St. Alexandria, VA 22314-1914 BANQUET SEATING
Tables will be assigned on a first-come, first-served basis. Tables will seat 10 people. Groups wishing to sit together should submit only one request, specifying number of seats desired and attach list of names. Banquet tickets will be included in your registration packet. Groups may pick up tickets at the NARFE Information Desk.
REGISTRATION FORM FOR CONVENTION AND BANQUET We encourage you to register online at www.narfe.org/convention2016. If you would like to participate in Casino Night, you must complete your entire convention registration online. This event is limited to the first 120 who sign up and pay.
CONVENTION REGISTRATION ATTENDEE TYPE Please check: o Member
o Nonmember Guest
NARFE ID # _____________________________________________________ Name ___________________________________________________________ Address _________________________________________________________ Name for Badge __________________________________________________ Chapter # ______________ Location of Chapter________________________ NOTIFY IN CASE OF EMERGENCY: Name __________________________________________________________ Phone number ____________________________________________________ SUBTOTAL – FOR CONVENTION (if postmarked by August 1): $
99
BANQUET TICKETS PLEASE RESERVE ___ TICKET(S) AT $70 EACH SUBTOTAL – FOR BANQUET: TOTAL (CONVENTION + BANQUET)
+$ $
CHARGE MY CREDIT CARD o MasterCard o VISA o Discover o AMEX Credit Card # ____________________________________________________ Expiration Date ____/____ (mm/yy) Name on card (print) ______________________________________________ Signature ________________________________________________________ DIETARY RESTRICTIONS/ ALLERGIES ____________________________
_____________________________________________________
Active and Retired Federal Employees ...
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
If your future security is tied to federal retirement benefits — 1. Complete this application and return by mail with your payment. federal retirees, current employees, spouses, and individual 2. Join online at www.narfe.org. survivors — you should join NARFE. 3. Call 800-627-3394, Monday through Friday, 8 a.m. to 5 p.m. ET.
NARFE MEMBERSHIP APPLIC ATION
1Q5
q YES. I want to join NARFE.
I am a (check all that apply) q Active Federal Employee q Active Federal Employee Spouse q Annuitant q Annuitant Spouse q Survivor Annuitant
Street Address _____________________________________
Apt./Unit __________________________________________
q 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.
q Mr. q Mrs. q Miss q Ms.
Full Name _________________________________________
Choose Your Membership Type
All NARFE members receive narfe magazine, access to federal benefits specialists, NARFE’s News Watch, legislative Hotline, and exclusive member discounts, along with professional lobbyists advocating on your behalf. Members choose one of two chapter options.
q Local Chapter
Under the direction of local leadership, chapters offer regular meetings often with invited speakers, as well as networking, volunteer and grass-roots lobbying opportunities. Annual chapter dues, determined by the locality, are charged in subsequent years.
Chapter Affiliation: Chapter # __ __ __ __
OR
_____________________________
PAYMENT OPTIONS q Check, Money Order or Bill Pay (Payable to NARFE) q Bill me (NARFE membership will start when payment is received.) q Charge my: q MasterCard q VISA q Discover q American Express Card No. ____________________________________ Expiration Date _____ /_________ mm yyyy Name on Card ________________________________
q eNARFE
The eNARFE Chapter provides a place for members to keep active in and informed about the federal community without the formality of a local chapter. Advocacy is encouraged within the e-community, and members may join with local groups for grass-roots participation. There are no additional dues for the eNARFE Chapter.
TOTAL DUES $40 First-Year Dues X __________ = __________ Per Person # Enrolling Total Dues
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
SAVE MONEY WITH NARFE Perks NARFE appreciates your service, and so do businesses across the country. Whether you are planning your next vacation or planning for retirement, members can save money on everyday purchases, thanks to our Affinity Partners. It’s just one more way we’re able to say “thank you” for being a NARFE member. union puts members first by offering low-rate loans and a high-interest checking account. Members have access to 5,000+ shared branches and 56,000 surcharge-free ATMs.
finance and Legal
new
IDShield 571-830-5489 www.legalshield.com/info/narfe LegalShield along with Kroll will monitor your identity from every angle, not just your Social Security number, credit cards and bank accounts. This takes the work required to restore your identity off your shoulders, placing it in the hands of a licensed fraud investigator. NARFE members receive the discounted monthly rate of $8.95 for individuals or $17.95 for families when you sign up through the website above.
w
ne LegalShield 571-830-5489 www.legalshield.com/info/narfe Whether it’s big, small or somewhere in between, you have affordable legal help when you need it. With your legal plan, you or your family members can contact your law firm anytime you need legal advice or assistance. NARFE members receive the discounted rate of $16.95 for individuals or $18.95 for families of 10 (two adults and up to 8 children) when you sign up through the website above.
InFirst Federal Credit Union 800-328-1500 www.infirstfcu.org As a member of NARFE, you are eligible to join InFirst Federal Credit Union, formerly NARFE Premier FCU, serving active and retired federal employees and their families since 1935. The credit 54
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insurance
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.
GEICO 800-368-2734 www.geico.com/fed/narfe GEICO offers a special discount opportunity for NARFE members. To find out how much you could save, visit our website or call today and mention that you are a NARFE member. Have your current coverage information available in order to secure a comparable quote. Your completed quote will help benefit NARFE! For complete terms and conditions, visit www.narfe.org/memberperks.
NARFE Insurance Services 800-233-5764 www.narfeinsurance.com Designed and administered by Mercer Consumer, exclusively for NARFE members: senior age whole life, term
life, Medicare supplements, hospital income plan, short-term recovery insurance, pet insurance, accidental death and dismemberment, cancer care, enhanced dental insurance and long-term care.
Moving services
Bekins Van Lines 800-248-4810 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. Please mention you are a NARFE member.
Wheaton World Wide Moving 800-248-7960 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 today and mention you are a NARFE member to start the moving process.
narfe merchandise
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, clothing, accessories, cups and mugs, plaques and clocks, and much, much more. Check out our online catalog for our customizable product line.
Telecommunications
new
Sprint 877-746-8249 www.sprint.com/fed NARFE members receive a 15% discount with Sprint! Access www.sprint. com/fed, call 877-746-8249 or visit the Sprint store nearest you to take advantage of this offer. Please bring your member ID card with you to our stores to sign up for the discount, and provide code GNARF_ZMB.
Choice Hotels International 800-258-2847 www.choicehotels.com With 6,200 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, charitable donations 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 through phone number or website above; cannot be redeemed at individual hotels. Choice Hotels brands are: Comfort Inn, Comfort Suites, Sleep Inn, Ascend Collection, Cambria, MainStay Suites, Surburban, EconoLodge, Clarion, Quality and Rodeway Inn.
new
Verizon FiOS www.narfe.org/memberperks
Local Hospitality www.narfe.org/travel
NARFE members can save up to $10 a month on a new qualifying Triple Play bundle with Verizon FiOS Internet, TV and home phone service – savings of up to $120 per year. The FiOS 100% fiberoptic network delivers award-winning broadband and entertainment to your home. Only FiOS Internet customers get upload speeds as fast as their download speeds. With FiOS TV, 625+ channels are available, including 185+ in HD, and over 130,000 On Demand titles, thousands free. This exclusive online-only savings is only available to new Verizon customers or those upgrading to the Triple Play Package.
NARFE is pleased to offer its members an exclusive travel discount service. Savings may exceed 50% and average 10-20% below market on all hotels and car rental suppliers around the world. Any hotel, any car, anywhere, anytime!
Alamo 800-462-5266 www.alamo.com Drive Happy® with Alamo® where NARFE members receive year-round discounts. Call or visit our website today and reference Contract ID 262544.
NARFE members 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 costeffective, we have the right hotel for you ... and at the right price. Call to reserve your room today at one of these fine hotels: Wyndham Hotels and Resorts®, Days Inn®, Ramada Worldwide®, Baymont Inns and Suites®, Hawthorn Suites® By Wyndham, Microtel Inns and Suites®, Howard Johnson®, Travelodge® and Knights Inn®. Advance reservations required through phone number above; cannot be redeemed at individual hotels.
Wellness
new
travel
Wyndham Hotel Group 877-670-7088
National 800-CAR-RENT www.nationalcarrental.com 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. For complete terms and conditions, visit www.narfe.org/ memberperks.
Beltone Hearing Care 888-418-6763 Beltone has been helping the world hear better for 75 years. NARFE members receive 25% off, and those with Blue Cross Blue Shield Service Benefit Plan insurance coverage may be eligible for two Beltone True 3™ hearing aids for ZERO out-of-pocket.
Life Line Screening 800-324-9906 www.lifelinescreening.com/ NARFE Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct health screenings using state-ofthe-art ultrasound technology in your neighborhood. To schedule an appointment, please call the number above and give the operator code number BKHN075 or visit the website.
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. w w w. n a r f e . o r g
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The Way We Worked
USDA’s link to SaFe sausages In this 1910 photo, a Bureau of Animal Industry (BAI) inspector oversees sausage manufacturing in a Nebraska meat packing plant. His duties were to ensure only clean and wholesome meats were used, prevent the use of prohibited preservatives and adulterations, and ensure the process was sanitary. The BAI was established within the Department of Agriculture in 1884 to protect the public from contaminated meat products, eradicate animal disease and improve livestock quality. Photo from the Records of the Bureau of Animal Industry, National Archives; courtesy of National Archives History Office; 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. To join, visit http://shfg.org. 56
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Did you know? The U.S. Department of Agriculture’s Food Safety and Inspection Service is responsible for ensuring that the nation’s commercial supply of meat, poultry and egg products is safe, wholesome, and correctly labeled and packaged. It inspects domestic products, imports and exports. It also educates the public about the importance of food safety. Visit its website, www.fsis.usda.gov.
Co N nt o ra ct
ife et e G bl r L K. ou fo TAL D es ut E in W M ith w
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We proudly accept the following credit cards.
IMPORTANT CONSUMER INFORMATION: WE TALK offer valid on 400 minute plan and applies to new GreatCall customers only. Offer valid until plan is changed or cancelled. Jitterbug is owned by GreatCall, Inc. Your invoices will come from GreatCall. All rate plans and services require the purchase of a Jitterbug phone and a one-time set up fee of $35. Coverage and service is not available everywhere. Other charges and restrictions may apply. Screen images simulated.There are no additional fees to call GreatCall’s U.S. Based Customer Service. However, for calls to an Operator in which a service is completed, minutes will be deducted from your monthly balance equal to the length of the call and any call connected by the Operator, plus an additional 5 minutes. Monthly minutes carry over and are available for 60 days. If you exceed the minute balance on your account, you will be billed at 35¢ for each minute used over the balance. Monthly rate plans do not include government taxes or assessment surcharges. Prices and fees subject to change. We will refund the full price of the GreatCall phone and the activation fee (or set-up fee) if it is returned within 30 days of purchase in like-new condition. We will also refund your first monthly service charge if you have less than 30 minutes of usage. If you have more than 30 minutes of usage, a per minute charge of 35 cents will be deducted from your refund for each minute over 30 minutes. You will be charged a $10 restocking fee. The shipping charges are not refundable. Jitterbug and GreatCall are registered trademarks of GreatCall, Inc. Samsung is a registered trademark of Samsung Electronics Co., Ltd. ©2016 Samsung Electronics America, LLC. ©2016 GreatCall, Inc. ©2016 firstSTREET for Boomers and Beyond, Inc.
NEW!
Green
Maize
NEW! Teal
• Rib knit collar and cuffs!
• Knit of soft cotton & no-iron polyester!
NEW! Blue
NEW! Red
• Deep 3-button placket for easy on/off! Light Blue
• 100% Machine Wash & Wear!
FSHRIPPEINEG! Better Hurry! It’s a THREE-FOR-ALL! Get a season’s supply for less than the cost of ONE shirt elsewhere!
• Button-through chest pocket with loop for glasses!
Haband® #1 Bargain Place, Jessup, PA 18434-1834 Visa
Check here for Protection Plus! (X46)
AmEx
Check
Lavender
Expedites replacement of items lost in transit. Add $2.99 to protect your entire order.
Card # _________________________ Exp.: ____/____ Mr. Mrs. Ms. ______________________________________ Address _____________________________ Apt. # ______ City & State________________________ Zip ___________ Phone/Email ______________________________________
11 MP FREE SHIPPING! Ø5 25 Regular Sizes: S(34-36) Ø8 M(38-40) L(42-44) C7 XL(46-48) HR *Big Men (just $4 more each): Ø9 2XL(50-52) 3XL(54-56) SB 4XL(58-60) 17
state & local sales tax for the following states: AZ, FL, GA, MA, MN, NE, NJ, PA, WI, & WV.
4 shirts for 39.47 5 shirts for 48.45
Discover ®
Imported
I enclose $________ purchase price, and only $5.99 shipping & handling for my entire order. Please add applicable
Yes, you get 3 shirts for 29.97. In stock & ready to ship. Hurry!
MC
Peach Stripe
755–1HXD4
WHAT HOW SIZE? MANY?
GREEN MAIZE BLUE RED LIGHT BLUE PEACH STRIPE LAVENDER WHITE BLUE STRIPE TEAL
100% Satisfaction Guaranteed or Full Refund of merchandise purchase price.
When you pay by check, you authorize us to use information from your check to clear it electronically. Funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.
White
®
Blue Stripe ®
For Faster Service Call: 1-800-543-4810 or visit www.Haband.com/bestdeals