June/July 2021 NARFE Magazine by NARFE

A NARFE PUBLICATION FOR FEDERAL EMPLOYEES AND RETIREES

JUNE/JULY 2021 VOLUME 97 ★ NUMBER 5

P. 24

Retirement Drawdown Strategies P. 34 Federal Managers: Wading Through the Red Tape

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Contents JUNE/JULY 2021 COVER STORY PAGE 24

FEATURE PAGE 34

RETIREMENT DRAWDOWN STRATEGIES There are a variety of ways annuitants can pull from their different retirement income streams. Learn tips to maximize your savings. WADING THROUGH THE RED TAPE While managers in the civil service can have unique challenges and restrictions, innovative approaches to leadership and potential reforms can help them succeed.

Washington Watch

Columns

6 Report Says OPM

4 From the President

Reorganization Would Not Solve Agency Challenges

8 NARFE Invites Members to Participate in Grassroots Advocacy Month

9 New WEP Reform Bill Introduced

10 Postal Service Releases 10-Year Strategic Plan

12 Bill Tracker

22 Benefits Brief 44 Managing Money 46 Alzheimer’s Update

A NARFE PUBLICATION FOR FEDERAL EMPLOYEES AND RETIREES

JUNE/JULY 2021 VOLUME 97 ★ NUMBER 5

P. 24

Retirement Drawdown Strategies P. 34 Federal Managers: Wading Through the Red Tape

Departments

16 Questions & Answers

ON THE COVER Illustration by TGD

48 For the Record 50 NARFE News 54 Member Perks 56 The Way We Worked

Connect with us! Visit us online at www.narfe.org Like us on Facebook NARFE National Headquarters Follow us on Twitter @narfehq

NARFE MAGAZINE www.NARFE.org

JUNE/JULY 2021 VOLUME 97 ★ NUMBER 5

REGIONAL VICE PRESIDENTS

EDITORIAL DIRECTOR Jenn Rafael

REGION I James C. Risner

SENIOR EDITOR Mabel Yu CONTRIBUTING EDITOR Jessica Klement CREATIVE SERVICES MANAGER Beth Bedard ADDITIONAL GRAPHIC DESIGN TGD EXECUTIVE EDITOR Helen Mosher EDITORIAL BOARD Kenneth J. Thomas, Kathryn E. Hensley, Barbara Sido CONTACT US NARFE Magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Editorial: communications@narfe.org Advertising Sales: Anita Nelson advertising@narfe.org 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 NFBNEWSLINE® service at 866-504-7300 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.

NARFE MAGAZINE JUNE/JULY 2021

NATIONAL OFFICERS

KENNETH J. THOMAS President; natpres@narfe.org KATHRYN E. HENSLEY Secretary/Treasurer; natsectreas@narfe.org

EXECUTIVE DIRECTOR BARBARA SIDO execdir@narfe.org

(Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) Tel: 207-540-6233 Email: rvp1@narfe.org

REGION II Gary Roundtree Sr.

(Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) Tel: 443-929-7045 Email: groundtreesr@comcast.net

REGION III Clarence Robinson

(Alabama, Florida, Georgia, Mississippi, South Carolina, Puerto Rico and Virgin Islands) CELL: 404-312-8028 Email: crobin8145@att.net

REGION IV Robert L. Helfrich

(Illinois, Indiana, Michigan, Ohio and Wisconsin) Tel: 317-501-1700 Email: rlhelfrich@yahoo.com

REGION V Cindy Reneé Blythe

TO JOIN NARFE, RENEW YOUR MEMBERSHIP OR FIND A LOCAL CHAPTER: CALL (TOLL-FREE) 800-456-8410 OR GO TO www.narfe.org TO CHANGE YOUR ADDRESS, PHONE NUMBER OR EMAIL LISTING:

CALL (TOLL-FREE) 800-456-8410 EMAIL memberrecords@narfe.org OR GO TO www.narfe.org, log in and click on “My Account”

TO REACH A FEDERAL BENEFITS SPECIALIST:

EMAIL fedbenefits@narfe.org

NARFE HEADQUARTERS

606 N. Washington St. Alexandria, VA 22314 703-838-7760 Hours of operation: Monday-Friday, 8 a.m.-5 p.m. ET

(Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) Tel: 785-256-1450 Email: mrsdocbusyb@yahoo.com

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 Robert H. Ruskamp (California, Hawaii, Nevada and Republic of Philippines) Tel: 703-628-3234 Email: rvp8@narfe.org

REGION IX Linda L. Silverio

(Alaska, Idaho, Montana, Oregon and Washington) Tel: 503-391-2963 Email: l.l.silverio.narfe@gmail.com

REGION X William Shackelford

(Kentucky, North Carolina, Tennessee, Virginia and West Virginia) Tel: 703-830-6590, CELL: 703-201-6304 Email: rvp10@narfe.org

NARFE Magazine (ISSN 1948-4453) is published monthly except in February and July 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 $48. 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 © 2021, 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 Magazine, but at the same time we will not undertake to guarantee the reliability of our advertisers.

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From the President NARFE’S MISSION STATEMENT To support legislation and regulations beneficial to federal civilian employees and annuitants and potential annuitants under any federal civilian retirement system and to oppose those detrimental to their interests. To promote the general welfare of federal civilian employees and annuitants and potential annuitants, to advise and assist them with respect to their rights under retirement, health and other employee and retiree benefits laws and regulations, and to represent their interests before appropriate authorities. To cooperate with other organizations and associations in furtherance of these general objectives.

In Case You Missed It …

group of 20 Senate Democrats and Republicans have been breaking bread at lunch for weeks in the

hopes of sparking bipartisan progress on a range of hot-button issues. The odds of the group producing anything of substance are unclear, but it is a start. Keep breaking bread, and hopefully sooner or later, legislation will get passed in the upper and lower chambers of Congress. Democrats tout their legislative accomplishments, with the big one being another COVID-19 relief bill, while Republicans continue to hammer the Biden administration for slow school reopenings and the crisis at the border. Democrats in Congress are eying their next agenda goals, including climate change, immigration, infrastructure and jobs via the budget reconciliation process. In the Senate, skepticism abounds, and there is no sign that there will be smooth sailing on all or even some of these legislative items. Of interest to NARFE members, the National Academy of Public Administration (NAPA)

completed its report on the Office of Personnel Management (OPM) and concluded that OPM does not have a strategic planning office to facilitate a workforce human capital lifecycle perspective in developing policy, regulations and guidance; providing services; and crafting and sharing promising practices. I’m sure this comes as no surprise to those reading this column. The report stated that the OPM director should be the principal adviser to the president on human capital and should be the lead for federal civilian human capital, setting policy and establishing a framework for agencies and departments to manage their workforces. NARFE supports this recommendation. The basic findings from NAPA conclude that OPM needs more independence, more authority over workforce policies covering every civilian employee, and more funding to modernize and operate effectively in the 21st century. OPM’s modernization is critical to building the federal workforce the United States needs, but the agency’s rigid and outdated hiring, pay and performance policies and practices, and systems are hurting the government’s capacity to respond to unprecedented challenges. You can read more about the report on page 6. Stay safe.

KENNETH J. THOMAS NARFE NATIONAL PRESIDENT natpres@narfe.org 4

NARFE MAGAZINE JUNE/JULY 2021

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Washington Watch

Report Says OPM Reorganization Would Not Solve Agency Challenges

he National Academy of Public Administration (NAPA) published a report that concludes the previous administration’s proposal to reorganize the Office

of Personnel Management (OPM) and move its functions to various other federal agencies would have been ineffective in addressing OPM’s challenges. The report offers an alternative set of comprehensive recommendations to advance OPM’s mission fulfillment and fix long-standing issues that have constrained the agency for nearly two decades.

NAPA conducted the yearlong study pursuant to a provision in the fiscal year 2020 defense authorization bill that directed OPM to contract with NAPA to study the agency’s challenges and opportunities. The legislation also blocked any implementation of the previous administration’s reorganization proposal until 180 days after the release of the report. NARFE played the leading role in advancing the legislative language that approved the study, and the association contributed its views to the development of the report. NARFE expressed serious concerns with the reorganization plan and 6

NARFE MAGAZINE JUNE/JULY 2021

supported congressional efforts to scrutinize and block it from moving forward. Efforts to implement the reorganization proposal were dropped in

late 2020 and have not been revitalized. Rather than deconstruct OPM, NAPA’s report proposes alternative solutions to properly address persistent agency problems and to elevate strategic human capital management and performance governmentwide. The report argues that the OPM director needs a seat at the table as “the principal adviser to the president on human capital” to reaffirm the agency’s status as the federal government’s leader on the subject. Additionally, the report contends that sustained leadership is necessary to properly realign OPM’s priorities

JUNE/JULY ACTION ALERT: URGE YOUR REPRESENTATIVE TO COSPONSOR WEP REFORM BILL. NARFE is calling on members of the House of Representatives to cosponsor the Public Servants Protection and Fairness Act, H.R. 2337, legislation to reform the Windfall Elimination Provision (WEP). This long-standing, misguided provision reduces the Social Security benefits of nearly 2 million people nationwide. Use NARFE’s Legislative Action Center, located at www.narfe.org, to personalize a message to your Representative requesting cosponsorship of the bill.

MYTH VS. REALITY MYTH: Federal employees are guaranteed annual pay raises that track with the average increase in the private sector due to the Federal Employees Pay Comparability Act of 1990 (FEPCA). REALITY: While FEPCA sets the baseline for federal pay rates, Congress may appropriate specific annual pay increases or freezes. Absent congressional action, the president may propose an alternative pay plan for federal employees. In the past decade, federal pay has been impacted by a mix of federal pay freezes, below-market raises and congressionally appropriated increases. Changes in federal pay are different from annual cost-of-living adjustments (COLAs) for federal annuities. Federal annuities are adjusted under an automatic plan using a formula calculated by the Bureau of Labor Statistics with the goal of helping retirees’ annuities keep pace with inflation.

and overcome management challenges. In the past five years, the agency has worked under six directors or acting directors. Even as the report recommends an elevated role for OPM, it also suggests significant reforms to the agency itself, recommending that OPM redefine its mission statement and structure to better focus on human capital management and shift the agency’s emphasis from compliance to “setting policy, establishing a framework for agencies to manage their workforces, facilitating innovation and the sharing of best practices and lessons learned, and both collecting and using data and data analytics.” OPM’s staff, the report posits, will also need to be reoriented to move the agency’s internal culture away from a compliance-oriented model to a “more customerfocused, strategic and forwardlooking mindset.” Notably, the report identifies OPM’s outdated information technology (IT) environment as a critical area that must be addressed to move the agency forward. NAPA recommends that OPM seek funding from Congress to facilitate IT modernization that will “upgrade technology

systems supporting the federal retirement programs, enable a modern human capital data and analytics platform, and transform its website to be both user-centric and user-friendly.” While discussing IT modernization, NAPA’s report also mentions OPM’s funding woes, a concern further complicated by the moving of the revenue-generating National Background Investigations Bureau to the Department of Defense. OPM’s funding comes from multiple revenue streams with rigid allocations, leaving the agency with little room to manage its resources and priorities, says NAPA. This in turn has exacerbated OPM’s complicated IT modernization. To support IT modernization, NAPA suggests that OPM establish an IT working capital fund. The agency has the authority to establish the fund under the Modernizing Government Technology Act and has reportedly requested authority to do so for the fiscal year 2022 budget. Of particular importance to NARFE members, NAPA engaged stakeholders on OPM’s benefits programs, gaining feedback on the service programs offered by OPM’s Healthcare and Insurance

unit and Retirement Services unit. Unsurprisingly, the report highlights the widespread recognition that OPM’s retirement processing needs updating, with a focus on automation and a move away from reliance on paper processes. NAPA notes that OPM’s Office of the Chief Information Officer is working with OPM’s Retirement Services to update its current tools, such as the retirement calculator and the call center system. This is a welcome change to those navigating the paper-based process. NAPA also states that “benefits programs represent key elements of the human capital lifecycle and should be managed by the central human capital management agency,” an explicit recognition of the importance of benefits in strategic human capital management and the need for OPM to facilitate the federal benefits program. NARFE intends to use the findings from NAPA’s report and other studies to highlight areas in need of improvement within OPM. The association will work with Congress and the administration to fix long-standing issues that have affected the agency’s ability to serve the American people and the federal community. —BY ROSS APTER, POLITICAL ASSOCIATE NARFE MAGAZINE www.NARFE.org

Washington Watch

NARFE GRASSROOTS ADVOCACY LEARN MORE about how you can take action to protect your earned pay and benefits by reviewing NARFE Grassroots materials at www.narfe.org/advocacy.

NARFE Invites Members to Participate in Grassroots Advocacy Month

ARFE’s Grassroots Advocacy Month is fast approaching, and the advocacy team is busy developing a robust campaign to successfully engage members and lawmakers in discussions on NARFE’s legislative priorities. The campaign is held annually in conjunction with the summer recess when members of Congress return to their districts and states seeking ample opportunities to engage with their constituents. The House is scheduled for recess from August 2 to September 16, with some of those weeks allocated to committee activity (but no floor votes), while the Senate is in recess from August 9 to September 10. The August recess marks a critical time for lawmakers in what is essentially a constituent contact marathon typically lasting at least four weeks, giving them time to assess public opinion on the work they are doing in Congress. Since the inception of Grassroots Advocacy Month, NARFE members’ advocacy has raised public awareness of NARFE legislative priorities, such as the Windfall Elimination Provision (WEP), through published letters to the editors of community newspapers, thousands of direct meetings with lawmakers, email

NARFE MAGAZINE JUNE/JULY 2021

messages, phone calls and more. NARFE-organized groups have participated in town hall meetings, county fairs, coffee hours and other community events. In 2020, even with COVID-19 pandemic restrictions limiting in-person advocacy activities, members met with lawmakers virtually and engaged on social media platforms. These and other grassroots activities during

WE CHALLENGE EACH OF YOU TO LEND YOUR VOICE TO THIS YEAR’S GRASSROOTS ADVOCACY MONTH CAMPAIGN.

the August recess keep federal community issues and concerns alive and on lawmakers’ minds when they return to Capitol Hill in September. The results we’ve achieved over the years with just a fraction of NARFE members participating have been encouraging. An increase in member participation would undoubtedly amplify NARFE’s voice, demonstrate the size and influence the federal

community has in every state and district across the country, and improve advocacy outcomes. We challenge each of you to lend your voice to this year’s Grassroots Advocacy Month campaign. Your voice is the most powerful tool you can use. Your legislators are interested in knowing how you, their constituent, voter and member of the federal community, are affected by policies. For example, if you are affected by the Windfall Elimination Provision, which significantly reduces your earned benefits because you held jobs in both the public and private sectors, the financial impact it has on you is what resonates with the lawmaker. When lawmakers are undecided, they will recall your communication, and the thousands they’ve received from other constituents, and hopefully act accordingly. Visit the Grassroots Advocacy Month webpage at www.narfe. org/gam21 for resources to successfully guide you through this year’s campaign. NARFE thanks you in advance for your support of Grassroots Advocacy Month. If you have any questions or need additional information, contact us at advocacy@narfe.org. —BY MARSHA PADILLA-GOAD, GRASSROOTS PROGRAM MANAGER

New WEP Reform Bill Introduced

n April, House Committee on Ways and Means Chairman Richard Neal, D-MA, introduced the Public Servants Protection and Fairness Act, H.R. 2337, which would reform the Windfall Elimination Provision (WEP) and provide much-needed relief to the nearly 2 million people affected by it. The WEP reduces the Social Security benefits of retirees who also worked in the public sector and did not contribute to Social Security during that time, such as Civil Service Retirement System (CSRS) retirees. Join NARFE’s call-to-action campaign to garner support for and increase cosponsors of the bill by visiting NARFE’s Legislative Action Center at www.narfe.org. The legislation would provide current Social Security

beneficiaries turning age 62 before 2023 with a $150 monthly rebate, offsetting some of the WEP penalty, which in 2021 can be as high as $498 per month. For those turning 62 in 2023 or later, a new, fairer formula would be implemented, one that calculates benefits based on the proportion of earnings covered by Social Security to total earnings. These future retirees would receive the calculation that results in the lowest penalty, either as a result of the new formula or the old one. The WEP affects government retirees who collect both an annuity from their government jobs (during which they did not contribute to Social Security) and Social Security benefits from employment in the private sector. This includes

federal retirees who began their employment prior to 1983 and are covered by CSRS. The WEP does not apply to federal employees covered by the Federal Employees Retirement System (FERS). NARFE also supports legislation, H.R. 82, that would fully repeal the WEP and the Government Pension Offset (GPO). Why does NARFE support both full repeal and the reform bill? Both bills represent solutions that would bring significant relief to retirees penalized by these provisions for decades. Repeal legislation remains the ideal solution. However, political and fiscal realities have prevented it from advancing through the legislative process in the past. Therefore, we also SEE WEP ON P. 10

NARFE-PAC:

New Goals for 2021-2022 NARFE-PAC, the political arm of NARFE, works to defend your earned pay and benefits by building strong relationships between NARFE and members of Congress. Support the PAC, especially during NARFE-PAC month in March, and help fight for the federal community. Below are the new goals for the 2021-2022 election cycle.

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120

NARFE MAGAZINE www.NARFE.org

Washington Watch LEGISLATIVE RESOURCES NARFE NewsLine – A weekly newsletter that goes out to NARFE members on Tuesdays and includes weekly recaps of legislative news, compiled by NARFE’s advocacy and communications teams. LEGISLATIVE ACTION CENTER – A one-stop site to send a letter to Congress, and more, at www.narfe.org.

Postal Service Releases 10-Year Strategic Plan

elivering for America, the U.S. Postal Service’s (USPS) new strategic plan, aims to slow mail delivery and raise prices to reduce costs and increase profits for the struggling agency. Initially released in April, the far-reaching initiative looks to achieve a positive net income by 2023 and plans to break even over the next decade, striving to convert a 10-year projected $160 billion loss into a $200 million net profit. A key aspect of the plan will increase postal rates above inflation to generate $24 billion in additional revenue over the next 10 years. The price increases will apply to most mail services, including firstclass mail, marketing mail, periodicals and more. The Postal Regulatory Commission (PRC) gave the postmaster general the authority to implement the increases in a 2020 order. To cut costs, the agency plans to slow first-class mail delivery from a one- to three-day timeframe to a one- to five-day window, a move that requires approval from the PRC. Additionally, the agency will cut overall work hours, decrease overtime, reduce extra transportation trips and more. The plan anticipates saving another $58 billion through legislative action, including Medicare integration and ending the requirement that the agency fully prefund the future health insurance benefits of its retirees. Rep. Carolyn Maloney, D-NY,

NARFE MAGAZINE JUNE/JULY 2021

presented draft postal reform legislation in March that looks to accomplish these goals. As of press time, however, the legislation had yet to be officially introduced and is subject to change. Expansion of package revenue, which reached $28.5 billion in fiscal year 2020, is also a major focus of the plan. To facilitate growth, the agency will add 45 annex facilities mostly dedicated to package processing. Additionally, current processing centers will replace underutilized flat mail sorting equipment with package processing machines. The agency will also roll out a new program called “USPS Connect,” which will implement local drop points that facilitate one- to twoday deliveries from retail stores, similar to those of companies like UPS and Amazon. Additionally, USPS will close and consolidate underutilized mail processing centers that were originally set to be closed in 2015. USPS plans to allocate $40 billion in capital investments toward infrastructure modernization efforts, such as introducing a new fleet of energy efficient delivery vehicles, improving technology and cybersecurity, and upgrading retail locations. The funds will also be used to improve employee training and development, human resources, energy efficiency and environmental sustainability. Furthermore, the project seeks to cut noncareer employee turnover by half. Improved opportunities

for employee growth and unspecified “improved retention strategies” would drive the effort. The agency will continue moving noncareer employees to career positions, having already converted more than 10,000 since January 2021. As of press time, the plan had been submitted to Congress for review. Some provisions in the plan can be implemented by USPS directly, but most major recommendations require legislation from Congress, approval from the PRC and/ or new labor agreements with postal unions. —BY SETH ICKES, GRASSROOTS ASSISTANT

WEP FROM P. 9

support reform efforts, as they represent an improvement over the current situation and are more likely to gain traction in Congress. Any relief for those affected by the WEP and GPO is welcome. The reform bill’s chance of advancing is aided by the fact that Neal, its sponsor, chairs the committee with jurisdiction over the issue. His leadership role could also improve the chances of WEP reform being included in a larger bill. Additionally, House rules stipulate that any bill with 290 cosponsors will receive a vote on the House floor, so your continued effort is important to moving the bill through the legislative process. —BY SETH ICKES, GRASSROOTS ASSISTANT

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NARFE’S 2021 LEGISLATIVE TRAINING CONFERENCE JUNE 21-23 2021

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Join NARFE members across the country at a virtual training event that will help you: •

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LEGcon21 is going to be a full-scale virtual event with specialized trainings for expert and novice advocates alike. Dedicated general sessions and breakouts will prepare you to be a strong advocate and advance NARFE’s legislative priorities. Visit www.narfe.org/LEGcon21 for the full lineup and to register.

Celebrate With Us June 21, 2021 A special virtual evening event celebrating NARFE and the civil service. Visit www.narfe.org/centennial for updates. Eargo and GEHA are proud sponsors of NARFE’s Centennial.

Washington Watch

NARFE BILL TRACKER

THE NARFE BILL TRACKER IS YOUR MONTHLY GUIDE TO LEGISLATION NARFE IS FOLLOWING. CHECK BACK EACH ISSUE FOR UPDATES. ISSUE

NARFE CENTENNIAL

BILL NUMBER / NAME / SPONSOR H.Res. 131/S.Res. 76: Resolution Celebrating NARFE’s Centennial / Rep. Gerry Connolly, D-VA / Sen. Ben Cardin, D-MD Cosponsors: H.Res. 131: 4 (D) 1 (R) S.Res. 76: 3 (D) 2 (R)

WHAT BILL WOULD DO

LATEST ACTION(S)

Congratulates NARFE on the celebration of its 100th anniversary on February 19, 2021 and recognizes the vital contributions its members have made to the United States over the past 100 years.

Referred to the House Committee on Oversight and Reform (H.Res. 131) / Agreed to in the Senate by unanimous consent on February 25, 2021 (S.Res. 76)

H.R. 695/S. 145: USPS Fairness Repeals the U.S. Postal Service’s Act / Rep. Peter DeFazio, D-OR / prefunding requirement. Sen. Steve Daines, R-MT POSTAL REFORM

Cosponsors: H.R. 695: 214 (D) 50 (R) S. 145: 5 (D) 5 (R) H.R. 82/S. 1302: The Social Security Fairness Act / Rep. Rodney Davis, R-IL / Sen. Sherrod Brown, D-OH

GPO/WEP

H.R. 2337: The Public Servants Protection and Fairness Act / Rep. Richard Neal, D-MA

H.R. 304: The Equal COLA Act / Rep. Gerry Connolly, D-VA Cosponsors: H.R. 304: 14 (D) 1 (R)

H.R. 51/S. 51 Washington D.C. Admission Act / Del. Eleanor Holmes Norton. D-DC / Sen. Thomas Carper, D-DE DC STATEHOOD

Reforms the Windfall Elimination Referred to the House Provision (WEP) by providing a monthly Committee on Ways and rebate of $150 to current beneficiaries Means (age 62 or older before 2023) and creating a new formula to calculate benefits for future WEP-affected individuals (turning 62 in or after 2023). Provides Federal Employees Retirement Referred to the House System (FERS) retirees with the same Committee on Oversight annual cost-of-living adjustment (COLA) and Reform as Civil Service Retirement System (CSRS) retirees.

Provides for the admission of the State of Washington, DC, into the Union.

Cosponsors: H.R. 51: 216 (D) 0 (R) S. 51: 43 (D) 0 (R) 1 (I)

NARFE’s Position:

Referred to the House Committee on Ways and Means / Referred to Senate Committee on Finance

Cosponsors: H.R. 82: 97 (D) 36 (R) S. 1302: 19 (D) 4 (R) 1 (I)

Cosponsors: H.R. 2337: 142 (D)

FEDERAL ANNUITIES

Repeals both the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP).

Referred to the House Committee on Oversight and Reform (H.R. 695) / Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 145)

NARFE MAGAZINE JUNE/JULY 2021

Support

Passed the House 4/22/21 by a vote of 216-208 / Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 51)

Oppose

No position

NARFE BILL TRACKER

THE NARFE BILL TRACKER IS YOUR MONTHLY GUIDE TO LEGISLATION NARFE IS FOLLOWING. CHECK BACK EACH ISSUE FOR UPDATES. BILL NUMBER / NAME / SPONSOR

ISSUE

FEDERAL PERSONNEL POLICY

FEDERAL COMPENSATION

WHAT BILL WOULD DO

LATEST ACTION(S)

H.R. 302: Preventing a Patronage Requires presidential administrations to obtain the agreement of Congress to System Act / Rep. Gerry reclassify competitive service positions Connolly, D-VA outside of merit system principles. Cosponsors: H.R. 302: 9 (D) 1 (R)

H.R. 392/S. 561: The Federal Adjustment of Income Rates (FAIR) Act / Rep. Gerry Connolly, D-VA / Sen. Brian Schatz, D-HI

Referred to the House Committee on Oversight and Reform

Provides federal employees with a 3.2 percent average pay raise in 2022.

Referred to the House Committee on Oversight and Reform (H.R. 392) / Referred to the Senate Committee on Homeland Security and Government Affairs (S. 561)

Cosponsors: H.R. 392: 41 (D) 1 (R) S. 561: 9 (D) 0 (R) 1 (I)

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Questions & Answers

Q&A

THE FOLLOWING QUESTIONS & ANSWERS were compiled by NARFE’s Federal Benefits Institute experts. NARFE does not provide legal, financial planning or tax advice or assistance.

EMPLOYMENT

SURVIVING SPOUSE FEDERAL EMPLOYEES HEALTH BENEFITS (FEHB) COVERAGE

I have a friend who died of COVID-19 while actively employed in federal service. His widow told me that she has been waiting for an official death certificate to submit to the Office of Personnel Management (OPM). She said that his health insurance, which she was covered under, was suspended upon his death. Months later, she is still in limbo and without health insurance as she is still waiting on her survivor benefit case to be processed. Shouldn’t there be some contingency plan for these situations? It seems like a terrible way to treat the spouse of a long-time, loyal employee.

First, we are very sorry to hear about the loss of your friend and send our sympathy to his widow. The death of a spouse is undoubtedly a stressful and heartbreaking event. One suggestion would be for his widow to contact the human resource office of the agency where he was employed. Hopefully, the office has already been in contact with her to help navigate the “business of death” that has to be attended to during 16

NARFE MAGAZINE JUNE/JULY 2021

this difficult time. According to OPM, at the enrollee’s death, the employing office will tentatively determine the survivors’ eligibility for continued health benefits enrollment. The retirement system will make the final determination of eligibility after it reviews all the retirement and health benefits records. Survivors generally do not need to take any action to continue enrollment if they meet all of the following requirements:

• Coverage under Self Plus One or Self and Family enrollment. • A marriage that lasted at least nine months or included the birth of the first child, if less than nine months. Benefits are also payable if the marriage lasted less than nine months if the death was determined to be accidental. • Entitlement to the FERS Basic Employee Death Benefit and/ or survivor annuity. ◦ At the time of his death, she would be entitled to the FERS Basic Employee Death Benefit if he had been employed for at least 18 months. ◦ In 2021, the FERS Basic Employee Death Benefit is equal to 50 percent of the employee’s final salary or high-3 average salary, if higher, plus $34,991.07. ◦ She would also receive a monthly survivor annuity if he had at least 10 years of creditable service. There are many situations in addition to the death of an employee where there can be

a delay in processing a change in health insurance. Here are a few examples: • When an employee retires at the end of the year and makes an Open Season change. In that case, the change isn’t processed by the agency, and there can be a delay when waiting for OPM to become aware of and process the change. • For a postponed MRA + 10 retirement, the former employee may not have coverage immediately if there is a delay in processing the retirement claim when requesting reinstatement of insurance. • When a couple divorces and the former spouse loses entitlement under the family plan and needs to apply for temporary continuation of coverage or coverage under the spouse equity provisions. It is very important to report the life event (death, marriage, divorce, birth or adoption) as soon as possible as there are time limits for making changes, and any delay in reporting will further delay the processing of the request. At the time the claim is finalized, OPM will offer retroactive coverage back to the date that the life event commenced. Medical expenses incurred during this period can be filed retroactively for payment. Note: How long it takes to receive death certificates varies by state and by the type of death. The pace of the process depends on the completion of the death certificate by the doctor. If there’s a medical examiner involved, it can take longer depending on tests needed and reports to be filed. For a period of time after the date of death, the funeral home is generally able to obtain additional copies of the death

certificate from the local registrar for a small fee. After that, additional copies can only be ordered through Vital Records. Signed copies of death certificates are needed for just about any account that the decedent owned. Examples include bank accounts and investment accounts, government agencies (OPM, TSP, SSA, VA, etc.), mortgage lenders and creditors, and life insurance claims. If you think you ordered enough copies, order a few more.

RETIREMENT RETIREMENT PAPERWORK

I considered retiring a couple of years ago; my spouse signed the consent form and it was notarized, but I did not retire at that time. For how long is the notarized form good?

The notarization of a document never expires as long as the seal used during the notarization process is still valid, states the National Notary Association. However, to avoid any unnecessary delays, you should complete a new form and have it notarized closer to your retirement date. The survivor election on the spousal consent must match the annuitant’s election on the retirement application in Section F of the SF 2801 for those under the Civil Servants Retirement System (CSRS) or Section D of the SF 3107 for those under the Federal Employees Retirement System (FERS). Keep in mind that the original form must be turned in with ink signatures, and the date the spouse signs must match the date the notary signs. Also be aware that on many of the retirement forms, OPM will not accept corrections. New forms must be completed.

FEHB COVERAGE

My spouse is a federal employee but has been covered on my federal health insurance for many years. If I do not elect a survivor benefit, can he continue FEHB coverage if I die first?

If your husband qualifies for an immediate FERS or CSRS retirement benefit and has been covered by FEHB (either through your enrollment or his own) for the last five years of his federal career, then he would be entitled to enroll in Self Only coverage with the premiums deducted from his retirement benefit if you predecease him. This change can be made 31 days before or up to 60 days after the loss of coverage regardless of whether the loss of coverage was caused by death, cancellation, or change of enrollment to Self Only or Self Plus One. Remember that the election of a full or partial survivor benefit at retirement is critical if your spouse is not entitled to FEHB in his or her own right and you die first. The only survivor eligible to continue the health benefits enrollment is the designated family member covered under FEHB on the date of death as long as that individual is entitled to a survivor annuity. No other family members are entitled to continue the enrollment even though they may be entitled to a survivor annuity. If your own personnel records do not show that you have FEHB coverage during the five years of service immediately prior to retirement, then you may need to provide documentation to show coverage under your spouse’s plan (or he under yours). Your agency’s retirement specialist will assist in providing this documentation NARFE MAGAZINE www.NARFE.org

Questions & Answers to OPM. Documentation of the employee’s FEHB status and eligibility to continue coverage into retirement must be included in the retirement application package along with a memorandum noting any circumstances that would help OPM determine the eligibility to continue coverage.

FERS ANNUITY

If my FERS annuity will be $2,500 per month and I choose the maximum 50 percent survivor benefit for my spouse, my monthly annuity will be $2,250/month. Is that correct?

Yes, that is correct. The reduction to your FERS retirement benefit to provide your spouse with a survivor annuity worth 50 percent of your unreduced FERS benefit will reduce your FERS benefit by 10 percent. This reduction also reduces your taxable retirement income, so the actual “cost” of this election is less than it appears. In addition, if your marriage should end in divorce or your spouse predeceases you, then your annuity can be restored to the unreduced amount. It is important to report the death of a retiree or survivor annuitant promptly to OPM’s Retirement Services office. You can report a death online (https://rsreporting. opm.gov/AnnuitantDeath) or you can call 888-767-6738.

FEGLI

How much life insurance are we entitled to at age 65 or older if retired? What form is used to continue this benefit and what is the cost?

If you were enrolled in the Federal Employees’ Group Life Insurance (FEGLI) Program for at least

NARFE MAGAZINE JUNE/JULY 2021

the five years immediately prior to retirement (or for all opportunities to be enrolled), you are entitled to carry the enrollment into retirement. The amount of your Basic and optional FEGLI coverage maintains its value based on your salary at the time you separated for retirement. If you retire before reaching age 65, this amount continues until you are 65. Once you are retired and over age 65, the election made at the time of retirement on form SF 2818 “Continuation of Life Insurance Coverage,” will determine how much coverage will remain and the cost of continuing coverage. Once retired, you will no longer have accidental death and dismemberment coverage. For Basic insurance, you must choose 75 Percent Reduction, 50 Percent Reduction, or No Reduction. You can change to the 75 Percent Reduction at any time; your coverage will be as if you had originally elected 75 Percent Reduction, and your “extra premium” will stop. You will not receive a refund of premiums. • 75 Percent Reduction ($0.325/$1,000 monthly until age 65 and then free) ◦ Basic insurance will reduce by 2 percent of the preretirement amount each month at the beginning of the second month after your 65th birthday or at retirement, whichever is later. Your Basic insurance will continue to reduce until 25 percent of the preretirement amount remains. If you choose 75 Percent Reduction, you cannot later change your election. • 50 Percent Reduction ($1.035/$1,000 monthly until age 65, then $0.71/$1,000 monthly)

◦ Basic insurance will reduce by 1 percent of the preretirement amount each month at the beginning of the second month after your 65th birthday or at retirement, whichever is later. Your Basic insurance will continue to reduce until 50 percent of the preretirement amount remains. When you turn 65, your “regular” premium for Basic insurance stops, but you continue to pay an extra premium for this choice. • No Reduction ($2.4550/$1,000 monthly until age 65, then $2.13/$1,000 monthly) ◦ Basic insurance will not reduce. When you turn 65, your “regular” premium for Basic insurance stops, but you continue to pay an extra premium for this choice. Option A ($10,000) has a monthly premium of $13.00 per month from age 60 until retirement (less expensive at younger ages). Once retired, Option A is free after age 65 and the coverage reduces to $2,500 at the rate of 2 percent per month. Option B (multiples of your final salary rate) and Option C (family coverage) may continue in retirement at no reduction (with continued escalating premiums) or full reduction with premiums ending at retirement or age 65 (the later of the two) and coverage reducing by 2 percent per month until it reaches $0 value. According to the FEGLI Handbook, shortly before you reach age 65, your retirement system (or the Office of Workers’ Compensation Programs for compensationers) will send you a letter reminding you of your initial election and ask if you want to make any changes. At that time, you can choose to change your initial election and

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Questions & Answers have some multiples of Option B and/or Option C (as applicable) coverage reduce and others not reduce. If you wish to change your election, return the letter to OPM’s Retirement Operations Center with your new “Age 65” election. If you wish to retain your initial election of coverage, do nothing.

REEMPLOYED ANNUITANT

If you come back to work for the government as a rehired annuitant and have a dual compensation waiver, do you still need to worry about the FERS annuity supplement reduction?

Yes, because you will have earned income from postretirement employment. A dual compensation waiver means that you may become reemployed and receive your FERS retirement

benefit and your new salary without either being reduced. This does not apply to the FERS annuity supplement or Social Security retirement benefits (if you are under the full retirement age for Social Security); however, these benefits are subject to an earnings limit. Federal retirees who return to federal employment as reemployed annuitants without a dual compensation waiver will generally have their new salary reduced by the amount of their retirement benefit.

NARFE AT YOUR SERVICE At NARFE Headquarters, experts are available to answer questions and assist in helping with a variety of benefit matters.

CALL NARFE AT

800-456-8410, OPTION 2

To obtain an answer to a federal benefits question, NARFE members should call 800-456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

NARFE 2021 Summer Webinar Topics NARFE has something for everyone. Whether you are a mid-career Fed, within five years of retirement or planning ahead for your loved ones, we’ve got you covered. Join us for our summer webinars.

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NARFE FEDERAL BENEFITS INSTITUTE

NARFE MAGAZINE JUNE/JULY 2021

Questions? Members can call 800-456-8410 x2 or email NARFE’s federal benefits specialists for one-on-one help fedbenefits@narfe.org. Not a member? Join NARFE today at NARFE.org/Join.

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Benefits Brief

Steps to a Smooth Retirement: How to Ensure a Simpler Process

etirement is a stage in life to look forward to. You worked hard throughout your career so that you can spend your retirement doing what you wish. However, for some, the

retirement process can be fraught with challenges and delays. The good news is that there are actions you can take leading up to retirement to ensure a smooth transition. First, if there are any concerns regarding your retirement coverage—Civil Service Retirement System (CSRS), Federal Employees Retirement System (FERS) and CSRS Offset—or creditable service, it is best to try to resolve these issues while you are receiving a paycheck rather than when you are waiting for your first regular retirement check. Any problems are easier to address while you have direct access to your human resources office. After you separate, keep in mind that though you may be retired, your human resource officer is not and still has an agency full of employees to support. When filling out your retirement forms, be sure to answer all questions, check all applicable boxes and initial everywhere necessary. If you make an error on a form, you will need to complete the document again. Forms with any type of errors or incomplete sections will not be accepted. Here are some of the specific areas on the forms that you should pay particular attention to: • On the retirement application, be sure to make

NARFE MAGAZINE JUNE/JULY 2021

an election in Section F (CSRS SF 2801) or Section D (FERS SF 3107), whether you are married or not.

THE GOOD NEWS IS THAT THERE ARE ACTIONS YOU CAN TAKE LEADING UP TO RETIREMENT TO ENSURE A SMOOTH TRANSITION. ◦ If you are married and elect less than the full survivor annuity, spousal consent is needed. You must complete the “Spouse’s Consent to Survivor Election” form, and it must match your election in Section F (CSRS SF 2801-2) or Section D (FERS SF 3107-2). Notarization is necessary. OPM requires an original form with ink signatures, and the date the spouse signs the form must match the date the notary signs. • On the retirement application, everyone must answer

question 2 in Section E (CSRS) or Section C (FERS) regarding former spouses. • The Federal Employees’ Group Life Insurance (FEGLI) form, SF 2818 - “Continuation of Life Insurance Coverage” requires that you check one of the boxes for: ◦ Basic Life Insurance in Item 7, indicating if you want coverage or if you received a full Living Benefit (lump sum payment of life insurance if diagnosed terminally ill), and the reduction schedule you want in retirement in Item 8. ◦ Option A in Item 9, indicating if you do not have Option A or if you want to continue Option A or not. ◦ Option B in Item 10, indicating that you do not have Option B, or if you want to continue coverage or not, and, if applicable, the number of No Reduction or Full Reduction multiples you want in retirement in Item 11. ◦ Option C in Item 12, indicating if you do not have Option C or if you want to continue coverage or not, and, if applicable, the number of No Reduction or Full Reduction multiples you want in retirement in Item 13. The most common error OPM finds in retirement packages is failure to document the five years of coverage necessary to continue participating in the Federal Employees Health

Benefits (FEHB) program in retirement. Be prepared to provide documentation, if necessary, to show coverage under TRICARE For Life or a spouse’s FEHB plan. Some delays are beyond your control, like OPM or agency backlog. Your specific circumstances may make your application more complicated. Such issues include: court orders; part-time service; special retirement; CSRS offset applicants within 90 days of or over the age of 62; unpaid deposits; VA part-time direct medical solutions (DMS) physicians, including doctors, scientists and surgeons; unverified or missing service; and receipt of military retired pay. If you fall into any of these categories, make

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NARFE MAGAZINE JUNE/JULY 2021

RETIREMENT DRAWDOWN STRATEGIES: Get the Most Out of Your Money BY TAMMY FLANAGAN

hile the idea of retirement can evoke thoughts of relaxation and time for family, hobbies and travel, those perks rely on having a solid financial foundation. It’s much easier to

relax knowing that you can reap the well-earned rewards of your long career. One way to maximize your retirement income is to plan your retirement drawdown—how you will withdraw funds from your pension and retirement accounts. Having a retirement drawdown strategy addresses the risks faced by new retirees when creating a stream or streams of income to replace their biweekly paycheck. The risks include taxes, investment risk, longevity and inflation.

NARFE MAGAZINE www.NARFE.org

Consider how important it is that your retirement income will be able to buy the same groceries and pay for the same expenses whether your retirement lasts for 10, 20, 30 or even 40 years. Running out of money too early is an example of how inflation risk and longevity risk can derail your financial security. Federal retirees are fortunate to have a government pension under either the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) and, for many, Social Security retirement benefits as well. These benefits were designed to last a lifetime and are adjusted for inflation to help maintain their value over time. They both also offer protection for dependents—in particular, a surviving spouse. The other source of retirement income for many federal retirees is the Thrift Savings Plan (TSP).

FEDERAL RETIREMENT THEN AND NOW

Not everyone who is retired needs to worry about having a drawdown strategy. For federal employees who retire under CSRS, the lifetime stream of income received as a monthly retirement benefit based on 30 to 40 years of service may adequately replace their biweekly paycheck. CSRS was designed in 1920 (15 years before Social Security and more than 60 years before the inception of the TSP) as a single benefit retirement plan. The CSRS monthly benefit payment generally replaces between 56 percent (for 30 years of service) and 80 percent (41 years and 11 months of service) of the high-three average salary for most CSRS retirees, providing a comfortable retirement by itself. In such cases, no strategy is required other than choosing the best date to retire. There are some CSRS retirees who have substantial savings in the TSP and who have qualified for Social Security retirement; however, the government pension generally remains the main source of their retirement funds. Fast forward to the current federal workforce, which is mostly covered by a three-tiered retirement system. While it includes a fairly generous government pension, it is less generous than the CSRS annuity. The FERS basic benefit only replaces 30 to 44 percent of the high-three average salary for 30 to 40 years of service; the remainder of the income needed to retire comfortably comes from Social Security and the TSP. This three-tiered FERS system has significant advantages as it can provide flexibility and more control over retirement

NARFE MAGAZINE JUNE/JULY 2021

Once you retire, all three sources of FERS retirement income can be claimed independently. There is flexibility when it comes to “turning on” your retirement income streams. Federal employees typically file for FERS retirement benefits immediately upon separation from federal service.

planning. The system also makes it easier to enter and leave federal service without worrying about a gap in the Social Security earnings record or the “golden handcuffs” of not completing 35 or 40 years of service in the single benefit CSRS system. However, the price of these advantages is more complex management of three distinct benefits, each with administration by a different agency and each with its own set of tax issues. Once you retire, all three sources of FERS retirement income can be claimed independently. There is flexibility when it comes to “turning on” your retirement income streams. Federal employees typically file for FERS retirement benefits immediately upon separation from federal service. Once the dust has settled, the full FERS annuity

begins, and the lump sum annual leave payment has been spent, decisions must be made concerning TSP distributions and Social Security claiming—or possibly continuing to work after retirement from federal service to delay drawing from the TSP and Social Security. Alternately, some employees who are over their Social Security full retirement age (FRA: 65 to 67, depending on the year of birth) receive Social Security retirement benefits and continue to work for the federal government since there is no longer a reduction due to earnings. The obvious benefit of working longer is to have extra income that may allow for increased savings for the future when fully retired. And after age 59½, TSP in-service agebased withdrawals are available.

CONSIDERATIONS FOR THE TSP There are a wide variety of options for drawing down the balance in your TSP account once you have retired. Withdrawal options include installment payments available on a monthly, quarterly or annual schedule. These payments can be for a specific dollar amount that can be changed when necessary, or the TSP can compute your payments based on your life expectancy. The TSP also allows single withdrawals, and there is no restriction on the number of withdrawals you can take (though processing times limit you to no more than one every 30 calendar days). Another option is to purchase a life annuity from the TSP’s annuity vendor, MetLife Inc. It is possible to create a secure lifetime stream of income through

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the purchase of a TSP annuity, though this option has not been very popular among federal retirees. There are several reasons for this: • Many federal retirees simply don’t need this third stream of income to meet their living expenses. • The annuity interest rate index was 1.880 percent for annuities purchased in April 2021 and 1.691 percent for annuities purchased in March 2021. The rate was as low as 1.209 percent in July 2020 and hasn’t been above 5 percent since January 2007. The interest rate index for the month you purchase your annuity is fixed for the life of the annuity. • The rate of inflation for an “increasing payment” TSP annuity is fixed at 2 percent. • You give up your money and the control of it in exchange for guaranteed lifetime monthly payments. • Annuity purchases are irrevocable.

NARFE MAGAZINE JUNE/JULY 2021

It is also possible to transfer or roll over your TSP partially or fully to an IRA or other eligible employer plan. The reasons why people move their money out of the TSP include: • There are more investment options targeted to specific sectors of the market for greater diversification. • Required minimum distributions (RMDs) must come from your Roth TSP and traditional TSP balances, although you may choose to transfer your Roth TSP balance to a Roth IRA to avoid this issue. • It’s not possible to convert a traditional TSP to a Roth TSP. Roth conversions must be done outside of the TSP. • It’s not possible to make a qualified charitable distribution (QCD) from the TSP. A QCD is an otherwise taxable distribution from an IRA owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity and is excluded from your income entirely for tax purposes. • Transferring management of your investments to a financial professional can allow for additional tax strategies such as Roth conversions or creating a bucket strategy to lower longevity risk. • There is no ability to draw from specific funds in the TSP; all withdrawals are made pro rata among the G, C, F, S, I and L Fund distributions. Traditional and Roth distributions can be specified separately. Although those rationales for moving TSP funds to an IRA might make sense for some, there are just as many reasons to leave your money in the TSP. Listed below are some of the benefits of that choice: • The TSP allows penalty-free distributions if you retire/resign in the year you reach age 55 or later (age 50 if you are retiring under the law enforcement/firefighter retirement provisions). • Administrative expenses are reasonable; the TSP doesn’t charge sales commissions and its management fees are low. • There are multiple flexible withdrawal options. • The TSP is protected from creditors’ claims; your TSP account cannot be garnished to pay debts. • The G Fund is unique to the TSP. It invests in short-term U.S. Treasury securities specially

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down more of your retirement savings between retirement and age 70 to compensate for the delayed application for Social Security. A married couple may decide that the spouse with higher earnings should delay his or her claim for Social Security to get more bang for the buck while the lower earner claims at retirement or at the FRA. In case of death, this strategy allows the surviving spouse to claim the higher benefit, even if it is the one earned by the spouse who passed away. Social Security benefits are generally tax friendly since at least 15 percent of your benefits are tax free on the federal level and only 13 states tax Social Security retirement.

TAX SAVINGS THAT CAN PRESERVE YOUR NEST EGG

issued to the TSP, and payment of principal and interest is guaranteed by the U.S. government.

DELAYING SOCIAL SECURITY

One way to maximize your lifetime stream of Social Security income is to delay claiming it until your FRA or later. Waiting to claim benefits reduces the chances of outliving your money. By delaying claiming your Social Security until age 70, your benefit could be more than 75 percent higher for the rest of your life than if you had claimed the benefit at the first eligibility age of 62. As an example, let’s say your FRA for Social Security is age 66 and your benefit at age 66 is $2,000 per month. If you had filed for the benefit at age 62, it would have been reduced by 25 percent to $1,500, but if you delay receiving the benefit until age 70, it will increase by 32 percent to $2,640 for the rest of your life. Does this mean you will need to work until age 70? Not necessarily, but it might mean that you need to draw 30

NARFE MAGAZINE JUNE/JULY 2021

Convert future taxable income into tax-free income: One potential way to minimize future taxes is by investing in a Roth IRA. With a Roth IRA, you contribute after-tax dollars and withdraw any earnings tax-free in retirement. By contrast, although you generally get a tax deduction on your contributions to a traditional IRA—and the money grows tax-deferred—you have to pay taxes when you withdraw the money in retirement. To avoid this, many investors do a Roth IRA conversion, moving their money from a traditional IRA to the Roth variety or from the traditional pretax TSP to a Roth IRA. The strategy is also known as a backdoor Roth IRA, as it allows investors normally ineligible for Roth to set one up, sneaking in through the back door as it were. Having some tax-free money available in retirement can help avoid a higher income-related monthly adjustment amount (IRMAA) level for Medicare premiums or higher taxes on your Social Security retirement income. Keep income under the next marginal tax bracket: If you have both traditional and Roth accounts, and you don’t want to pay any more tax than you have to, consider limiting your traditional account withdrawals so that they won’t be taxed at a higher marginal rate, then supplement that income as needed with tax-free withdrawals from your Roth accounts. There are currently seven federal tax brackets ranging from 10 percent to 37 percent. Diversifying your investment accounts can help you better control your tax situation in retirement. To owe as little tax as possible, reduce your taxable income, increase your deductions and take advantage of tax credits.

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Avoid the Social Security tax torpedo: Some retirees may find themselves hit head-on with a “torpedo” of higher taxes when they have to take required minimum distributions from their TSP and other retirement savings plans. The “tax torpedo” is defined by William Meyer and William Reichenstein of Social Security Solutions Inc. as an increase and then a decrease in the marginal tax rate curve as a taxpayer’s income increases due to the taxation of Social Security benefits. Social Security benefits can be tax-free in retirement, or you may pay tax on up to 50 percent or 85 percent of your Social Security benefit, depending on what’s known as your provisional income—your combined income, which includes half of your Social Security benefit plus your gross income and any tax-exempt interest. This tax torpedo primarily affects lower- and middleincome households. To learn more about this issue and how to avoid it, search the web “Meyer and Reichenstein tax torpedo.” It is clear that tax planning is an important part of retirement planning. When you’re retired, each

NARFE MAGAZINE JUNE/JULY 2021

source of retirement income has its own unique tax-planning issue and can be affected by your age, your total income, and, of course, the laws in effect at the time that you have to pay taxes on the income. There are strategies that can be helpful in minimizing taxes and maximizing your retirement income. But as we all know, there are pros and cons to every good idea, so proceed with caution. Please do not make any decisions based solely on this article. It may be worthwhile to engage with a professional financial adviser who is bound by a fiduciary duty to look out for your best interests and who is well-versed in federal retirement benefits, or a CPA who can help you find ways to pay the least amount of required taxes. For more detailed information on tax, retirement and financial planning strategies, check out the library of webinars archived from the NARFE Federal Benefits Institute at www.narfe.org. —TAMMY FLANAGAN IS THE PRINCIPAL OF TAMMY FLANAGAN LLC (RETIREFEDERAL.COM). SHE IS A FEATURED PRESENTER ON NARFE’S FEDERAL BENEFITS INSTITUTE WEBINARS.

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Wading Through the Training, support and oversight can help federal managers overcome workplace challenges By David Tobenkin

ederal managers often have difficult jobs—as they themselves are the first to acknowledge. Despite such challenges, they often produce remarkable results. A case in point is the work of Neil Evans, Kathleen Frisbee and Kevin Galpin, Department of Veterans Affairs (VA) physicians and managers awarded a 2020 Samuel J. Heyman Service to America medal (“Sammie”) award for management excellence by the Partnership for Public Service. They developed vital telehealth options, mobile apps and digital services for veterans to receive health care virtually.

NARFE MAGAZINE www.NARFE.org

The expansion of service was implemented just in time to build up the reach of telehealth service to VA patients during the COVID-19 pandemic. Veterans aided via telehealth services rose from 40,000 mental health telehealth appointments in February 2020 to 905,000 appointments in June 2020, increasing access to care and reducing potential exposure to COVID-19 from in-person medical visits, and eliminating long commutes for veterans located in rural regions. “Neil, Kathleen and Kevin exemplify what we mean by engaged leadership here at VA. They looked at a crisis, and instead of taking a step back and thinking that these are obstacles that are insurmountable, they looked at it as an opportunity,” said Robert Wilkie, former VA secretary. “Not just an opportunity to serve people in the midst of a crisis, but to serve people after this is over by changing the very nature of the way VA helps American veterans.” Yet to aspire to such achievements, federal managers must overcome a variety of challenges that may be greater than those faced by managers in the private sector. With a new administration and

a future emergence from the COVID-19 pandemic, proposals to improve federal management, both new and old, are under review.

A Tough Road Unlike Evans, Frisbee and Galpin, not all federal managers feel empowered to execute positive change and optimize operations. They certainly lack some of the compensation incentives for this often demanding and stressful work, with salaries that generally peak much lower, and with lower bonuses, than their private-sector counterparts. Federal managers’ ability to use employee salaries and bonuses as leverage to spur achievement of objectives is also typically less than that of private sector managers, given a federal pay system in which compensation is often determined by longevity, discretionary bonuses are generally modest, and the ability to vary compensation based upon performance is restricted by a civil service compensation system designed to limit the potential of cronyism. In addition, the collaborative nature of much federal work can make it more difficult to identify the relative contributions of employees.

Not all federal managers feel empowered to execute positive change and optimize operations.

NARFE MAGAZINE JUNE/JULY 2021

CONTROL WHAT YOU CAN. INSURE WHAT YOU CAN’T. You plan for your tomorrow, but have you planned for the possibility of a tomorrow without you in it? At a time when your loved ones should be focused on memories of you, they shouldn’t be troubled with thoughts of financial burdens.

The NARFE Senior Term Life Insurance Plan This plan, specifically designed for our members ages 50–74, offers coverage amounts between $5,000 and $25,000* for members ages 50–64 or coverage amounts of $5,000 or $10,000* for ages 65–74. Plus, coverage is available with no medical exam required.

Benefits include: Available to NARFE members and spouses age 50–74. No medical exam required.

• Spouse Coverage Available to help provide both you and your loved one with the protection you may need.

• Economical Group Rates negotiated with our insurance partners exclusively for our members.

• Choice of Coverage Amounts to custom fit your financial needs and budget.

• No Medical exam required! It’s that easy.

To learn more or enroll in the NARFE Senior Term Life Insurance Plan, call 1-800-233-5764 or visit us at www.narfeinsurance.com *At age 80, coverage, if greater than $5,000, will reduce to $5,000 with an appropriate adjustment in premium. All benefits are subject to the terms and conditions of the policy. Policies underwritten by Hartford Life and Accident Insurance Company detail exclusions, limitations, reduction of benefits and terms under which the policies may be continued in force or discontinued. Coverage may vary and may not be available in all states. The Hartford® is The Hartford Financial Services Group, Inc., and its subsidiaries, including issuing company Hartford Life and Accident Insurance Company, Hartford, CT 06155. Life Form Series includes GBD-1000, GBD-1100, or state equivalent.

Program Administered by Mercer Health & Benefits Administration LLC

“Continuing resolutions, furloughs and sequestrations damage morale because of the uncertainty of your pay and job, and because it also costs more to perform our jobs.” Craig Carter, national president, Federal Managers Association

At many agencies, with the exception of some with special hiring authorities, hiring new employees can be agonizingly slow, leading to the loss of highly qualified candidates. Another challenge that disproportionately impacts federal managers has been the increasing partisan gridlock in Washington. Program funding by short-term continuing resolutions rather than full fiscal year or multiple-year allocations has resulted in stops and starts in funding that make sustained programmatic planning, program management and hiring more difficult. “Continuing resolutions, furloughs and sequestrations damage morale because of the uncertainty of your pay and job, and because it also costs more to perform our jobs,” notes Federal Managers Association (FMA) National President Craig Carter. “We are not able to long-term plan or purchase materials and equipment or award contracts.” At many agencies, managers must function under the vagaries of political management who can drastically change expectations and styles of management. Manager X, who asked not to be named, a manager for much of his 35-year tenure at a U.S. Health and Human Services subagency, says a particular problem at his agency has been the injection of politically appointed private sector senior executives with little understanding of the agency and a tendency to micromanage longtime agency civil service managers, erroneously 38

NARFE MAGAZINE JUNE/JULY 2021

assuming they know the job better than the civil service managers do. The Partnership for Public Service has made the case for new political appointees to lead under the same expectations as their career leader counterparts, notes Marshall. Some at federal labor unions would like managers to be more forceful in protecting government from political excesses that they believe undermine agencies’ missions. Jacqueline Simon, public policy director at the American Federation of Government Employees union, was disturbed by some of those appointed in recent years to head agencies “who actively opposed the missions of their agencies and politicized management at their agencies. … There were not a lot of heroes among career federal managers. A small number resisted, but most did what they were told.” Others argue that wading into those waters are out of managers’ scope. “Career federal employees do not set policies; they execute the policies,” says Senior Executives Association (SEA) Director of Policy and Outreach Jason Briefel. A structural problem at a considerable number of agencies is that managers are often recruited from the ranks of technical experts, regardless of whether they have the skills and desire to be a good manager, to ensure that they stay at the agency. As noted, federal hiring roadblocks make bringing in outsiders, particularly those from the private sector, more difficult. Once in place, many federal managers have been criticized for failing to discipline or remove employees who are poor performers or who create hostile work environments for others. John Mahoney, a Washington, DC-based federal employment attorney at the Law Firm of John P. Mahoney Esq., Attorneys at Law, says that a plethora of U.S. Equal Employment Opportunity Commission and court complaints by federal employees provide a reliable guide to continuing weaknesses at many agencies in preventing such conduct. “Many managers are not proactive

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enough in addressing time and attendance issues, [responding to] hostile work environments, and in accommodating statutorily required reasonable accommodations for disabled employees,” Mahoney notes. “Failure to address those can lead to more significant issues that balloon in importance.” Managers themselves comprise a disproportionate share of his clients, Mahoney says, noting that unlike many federal employees, they lack unions to advocate their cases. Cronyism, such as senior leaders favoring friends in the managerial ranks over more qualified candidates for advancement opportunities, is a particular scourge for federal managers, Mahoney notes. There are many ways that senior leaders can demonstrate favoritism. One way, says Manager X, is to go through OPM notice and posting requirements, technically complying with transparency requirements but then allowing a favorite to remain in an acting position such that he or she obtains an insuperable advantage over other candidates once the time for selection arrives. Manager X, who is partially disabled and who transitioned to a nonmanagerial position last summer in preparation for retirement, says his ability to advance through the managerial ranks was stymied by the failure of his agency to adhere to statutory requirements for hiring and promoting disabled employees.

Proposals for Reform Innumerable proposals for managerial reforms have been made over the years. In June 2018, a coalition of federal workforce leaders sent a letter to the U.S. House of Representatives Committee

on Oversight and Government Reform seeking key federal civil service reforms. Among the leadership/ management reforms advocated for were cultivating leaders better, professionalizing the practice of leadership, reducing the number of agency political appointees and improving standards for them. No action has been taken on the letter, Briefel notes. The SEA and the FMA also support strengthening the Office of Personnel Management (OPM) to provide leadership and structure to federal workforce management. OPM has suffered from years of disarray after a slew of directors and acting directors as well as a failed proposal from the previous administration to move workforce policy away from OPM and into the White House Office of Management and Budget, a move to increase White House control over agencies. Better training and standardized best practices across the civil service is also needed, with many noting that the quality of management varies widely between and within agencies. In January 2021, a task force on management quality that included SEA, the IBM Center for The Business of Government and several academics released a new white paper, Creating and Supporting a Management Quality Improvement Learning Center for Federal Managers. It calls for the adoption of a framework of best practices in federal government. Also needed, many interviewed say, is better federal agency agility, flexibility and cooperation in addressing cross-agency concerns. In addition, part of the solution may be greater oversight, perhaps by OPM or Congress, to make sure agencies follow existing laws. Briefel notes that

“Many managers are not proactive enough in addressing time and attendance issues, [responding to] hostile work environments, and in accommodating statutorily required reasonable accommodations for disabled employees.” John Mahoney, federal employment attorney

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many statutorily required actions are not followed or are given lip service, including tracking of performance management goals, tasks and results, such as training of employees, which is required under the Government Performance and Results Act of 1993.

Agency Leaders Emulating successful agency management leaders may also provide a path forward. The U.S. Department of Defense (DOD), Department of State and the federal intelligence agencies are generally given high marks as organizations that, taking advantage of special statutory authorities, have adopted highly evolved performance management systems designed to accurately classify positions, identify program and personnel objectives, and effectively measure performance—all attributes conducive to good management. Some of the agencies have instituted these reforms as part of pay-for-performance reforms that tie salary, bonuses and advancement to ratings under their more sophisticated performance systems. For example, 20 years ago, the Air Force instituted a centrally managed Civilian Force Development Program that supports development of existing leaders and promotes development of future leaders, according to a 2019 publication released by the IBM Center for The Business of Government, Preparing the Next Generation of Federal Leaders:

NARFE MAGAZINE JUNE/JULY 2021

Agency-Based Leadership Development Programs. “The program is characterized by sustained lineitem funding, a full continuum of learning that is constantly updated, and a governance structure that ensures accountability and alignment with talent management programs within the Air Force,” notes the report. “I know at shipyards the training for supervisors has increased over the last four or five years,” notes the FMA’s Carter, an assistant project superintendent at the Norfolk Naval Shipyard in Portsmouth, VA, another DOD subagency. “In years past, you were given your promotion and sent out to find your way. Now, we have several training courses for different levels of supervisors and managers who are promoted that average a few weeks in length. You complete this training before you start in your new position.” Top performers in the Federal Employee Viewpoint Survey and the Partnership for Public Service’s Best Places to Work in the Federal Government rankings also tend to reflect wellmanaged federal organizations, many note. Since its first set of rankings in 2003 to today, the Partnership has found leadership to be the No. 1 driver for employee engagement and satisfaction, says Andrew Marshall, director for leadership development at the Partnership for Public Service. —DAVID TOBENKIN IS A FREELANCE WRITER BASED IN THE GREATER WASHINGTON, DC AREA.

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This mobility product cannot be returned, but if it arrives damaged or is defective, at our option we will repair it or replace it. Medicare and Medicaid no longer subsidize scooter sales. © 2021 firstSTREET for Boomers and Beyond, Inc.

Managing Money

Decoding the Underpayment of Estimated Tax Penalty Part II s discussed last month, the U.S. has a pay-as-you-go tax system, and unless taxes are paid as income is earned, taxpayers will face an underpayment penalty.

In some cases, taxpayers will need to make estimated tax payments to ensure they satisfy the pay-as-you-go rules. While estimated tax payments are generally required to be made in equal quarterly installments, taxpayers who generate one-time taxable events, such as a Roth conversion, may find it necessary to file using the annual income installment method to reduce or avoid an underpayment penalty. The regular installment method simply takes the total required estimated tax payment for the year and divides it by four to calculate the four equal quarterly estimated tax payments. This default method follows the IRS’ assumption that all income is earned equally over each quarter of the year, requiring estimated taxes to be paid in equal quarterly installments as well. Unlike tax withholding, which is assumed to be paid in equal installments throughout the year (regardless of when it’s actually withheld), estimated tax payments are credited in the quarter when paid. This means taxpayers may be hit with the underpayment penalty if an estimated payment is missed— even if they made up the missed payment in a later quarter. Rather than simply assuming income is earned evenly each quarter, the annual income installment method is a pay-asyou-go tax method that allows a taxpayer to calculate the required 44

NARFE MAGAZINE JUNE/JULY 2021

IN SOME CASES, TAXPAYERS WILL NEED TO MAKE ESTIMATED TAX PAYMENTS TO ENSURE THEY SATISFY THE PAY-ASYOU-GO RULES. quarterly estimated tax payment based on actual income earned during the quarter. Taxpayers may choose to use the annual income installment method when they file their tax return as well. Depending on the circumstances, this may be necessary to reduce or eliminate the underpayment penalty when the safe harbor exception based on 100 percent (or 110 percent if income was greater than $150,000) of the prior year’s tax liability or 90 percent of the current year’s tax liability does not eliminate the penalty.

For instance, taxpayers who trigger an unplanned taxable event later in the year (such as realizing a large capital gain or executing a Roth conversion), may find that they owe a penalty even if they made an estimated tax payment to cover the tax on the income event. Take, for example, a retired couple who in 2019 had an adjusted gross income (AGI) of $150,000, which consisted of pension and Social Security income and resulted in a federal tax liability of about $18,500. Given their consistent income, they have $18,000 withheld from their income in 2020, which is more than enough to satisfy the 90 percent of current year tax liability to avoid any underpayment penalty. Late in 2020, however, they decided to convert $200,000 from the TSP to a Roth IRA, and as a result, their 2020 tax liability jumped to $65,583. Knowing they needed to pay their tax as they earned their income, they made an estimated tax payment on January 15, 2021, of $47,000 to cover the additional tax related to the conversion. To their surprise, however, they discovered that they still owed an underpayment penalty when they prepared their tax return a couple of months later. Due to the increased income and taxes, the minimum amount they needed to have withheld to avoid the penalty was $20,350, which is 110 percent of the

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previous year’s tax liability. Despite paying a total of $65,000 ($18,000 in tax withholding plus the $47,000 estimated payment), the regular installment method required the estimated tax payment of $2,350 (the difference between the safe harbor amount and their withholding) to be paid in equal quarter payments. As a result, they would be assessed an underpayment penalty for not making an estimated tax payment in quarters one, two and three. Instead of using the regular installment method, they filed their return using the annual income installment method, which allowed them to allocate the $200,000 conversion as fourth quarter income and align it with their fourth quarter estimated tax payment to avoid the underpayment penalty. This is a simple example to illustrate when the annual income installment method may help, but filing under the annual installment method can

be complicated. For additional information, check out the instructions for IRS Form 2210 as well as the actual Form 2210, which is used to calculate estimated tax payments with the annual income installment method. MARK A. KEEN, CFP®, IS PARTNER, KEEN & POCOCK, AND AN INVESTMENT ADVISER REPRESENTATIVE AND REGISTERED PRINCIPAL OF THE STRATEGIC FINANCIAL ALLIANCE INC. (SFA). SECURITIES AND ADVISORY SERVICES ARE OFFERED THROUGH SFA.

TAX PAYMENT DATE CORRECTION The May Managing Money column listed erroneous dates for the quarterly estimated tax payment due dates for 2021. The correct dates are April 15, 2021; June 15, 2021; September 15, 2021; and January 18, 2022. NARFE regrets the error.

Order your copy of NARFE’s Congressional Directory for the 117th Congress (2021-2022) today!

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NARFE 606 N. Washington Street Alexandria, VA 22314 Phone: 1-800-456-8410 Email: advocacy@narfe.org www.narfe.org

Clip and mail to: NARFE Congressional Directory 606 N. Washington Street /Alexandria, VA 22314-1914 Name___________________________________________________________________

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Please allow 3-4 weeks for delivery. Visit new.narfe.org/directory to order online. Call NARFE’s Advocacy Department at 800-456-8410, option 3, to order by phone.

NARFE MAGAZINE www.NARFE.org

Alzheimer’s Update

The Concerning Effects the Coronavirus Has on Brain Health xamination of those who have been affected by the coronavirus has produced some troubling results as researchers track the disease's long-term effects on the

brain, central nervous system and other parts of the body.

According to a study from the Northwestern Medicine health system, more than 80 percent of patients hospitalized due to COVID-19 have experienced neurological symptoms. Neurological effects associated with the virus include dizziness, headaches, temporary loss of taste and smell, extensive confusion, seizures and strokes. Some coronavirus “long haulers,” who continue to have symptoms months after the virus has cleared their bodies, have also been challenged by memory loss, attention difficulty and brain fog, affecting their ability to carry out daily activities. Scientists are concerned that this could lead to a swell of dementia and neurodegenerative cases in the future. In a recent paper published in Alzheimer’s and Dementia: The Journal of the Alzheimer’s Association, Gabriel A. de Erausquin, a professor of neurology at the University of Texas Health Science Center at San Antonio, and his coauthors highlighted research on how the virus may be directly invading the brain, resulting in chronic consequences that can be detrimental to people’s quality 46

NARFE MAGAZINE JUNE/JULY 2021

of life. The virus and abnormal brain imaging have been found in postmortem brain tissue samples from people in all parts of the world who had coronavirus.

NEUROLOGICAL EFFECTS ASSOCIATED WITH THE VIRUS INCLUDE DIZZINESS, HEADACHES, TEMPORARY LOSS OF TASTE AND SMELL, EXTENSIVE CONFUSION, SEIZURES AND STROKES. Previous studies of common viral infections have shown a connection between having such an infection and developing cognitive decline. In a January AARP article, Avindra Nath, clinical director of the National Institute of Neurological Disorders and Stroke (NINDS) at the National Institutes of Health (NIH), noted that “In general, we know that as you get older and get any kind of disease, … it can bring out an underlying dementia.” It is possible that contracting COVID-19 may increase the risk of developing dementia, de Erausquin says, but more

research is needed. He and colleagues from more than 30 countries will engage in a large-scale study involving approximately 40,000 patients. The researchers will look at how COVID-19 may increase the risk, severity and progression of neurodegenerative diseases such as Alzheimer’s, as well as examine the long-term effects that coronavirus can have on the brain. Heather Snyder, vice president of medical and scientific relations at the Alzheimer’s Association noted that asymptomatic patients and those who had severe illness will be included, and researchers will assess patients’ “behavior, their memory, their overall function” at six-month intervals. The Alzheimer’s Association is funding the study, along with technical guidance from the World Health Organization (WHO). Initial results are expected in 2022. Please keep those affected by the coronavirus in your thoughts. And thank you for your continued support in the fight to stamp out Alzheimer’s disease and dementia-related conditions. For more information about Alzheimer’s disease and dementia, please contact the Alzheimer’s Association at www.alz.org or call the 24-hour helpline at 800-272-3900. OLIVIA A. WILLIAMS IS CHAIR OF THE NARFE-ALZHEIMER’S NATIONAL COMMITTEE. EMAIL: OEASHF3@ GMAIL.COM. THIS COLUMN APPEARS QUARTERLY.

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For the Record

POSITIVE OUTLOOK LEADS TO GAINS

THRIFT SAVINGS PLAN FUND RETURNS 2021

G FUND

2021

C FUND

S FUND

I FUND

APRIL

0.13%

0.82%

5.33%

4.23%

3.09%

MARCH

0.11%

-1.23%

4.38%

-0.39%

2.35%

FEBRUARY

0.08%

-1.45%

2.76%

5.21%

2.26%

YTD

0.40%

-2.55%

11.83%

12.34%

6.73%

1 YEAR

0.89%

-0.17%

45.96%

78.00%

40.34%

3 YEAR*

1.87%

5.24%

18.62%

19.66%

6.65%

5 YEAR*

2.00%

3.30%

17.39%

18.55%

9.49%

10 YEAR*

1.98%

3.62%

14.19%

13.44%

5.58%

L INCOME

2021

F FUND

L 2025

L 2030

L 2035

L 2040

APRIL

1.14%

2.15%

2.74%

2.99%

3.24%

MARCH

0.71%

1.44%

1.78%

1.93%

2.08%

FEBRUARY

0.63%

1.35%

1.70%

1.86%

2.03%

YTD

2.39%

4.76%

6.01%

6.56%

7.12%

1 YEAR

10.04%

N/A

27.55%

N/A

33.47%

3 YEAR*

5.06%

N/A

10.06%

N/A

11.56%

5 YEAR*

4.92%

N/A

10.15%

N/A

11.63%

10 YEAR*

4.23%

N/A

8.24%

N/A

9.25%

L 2045

L 2050

L 2055

L 2060

L 2065

APRIL

3.45%

3.66%

4.35%

MARCH

2.20%

2.33%

2.92%

2.91%

FEBRUARY

2.17%

2.32%

2.93%

YTD

7.60%

8.10%

10.05%

1 YEAR

N/A

38.84%

N/A

3 YEAR*

N/A

12.82%

N/A

5 YEAR*

N/A

12.93%

N/A

10 YEAR*

N/A

10.08%

N/A

*ANNUALIZED.

Equity investors responded positively to indications of economic strength, including better-than-expected corporate earnings, significant growth in employment, and rapid expansion of manufacturing activity. Although some observers associated these trends with higher inflation expectations, long-term interest rates edged lower. The Federal Reserve left its target short-term interest rate unchanged, citing the ongoing public health crisis. The C and S Funds posted gains. The I Fund also rose, helped in part by a weaker U.S. dollar. The decrease in interest rates contributed to the F Fund’s gain. All L Funds finished higher. —BY MICHAEL JERUE, FINANCIAL ANALYST, THRIFT SAVINGS PLAN RETURNS are net of the effect of accrued administrative expenses and investment expenses/costs. Source: TSP 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.)

COUNTDOWN TO COLA The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.81 percent in March 2021. To calculate the 2022 cost-of-living adjustment (COLA), the 2021 third-quarter indices will be averaged and compared with the 2020 third-quarter average of 253.412. The percentage increase determines the COLA. March’s index, 258.935, is up 2.20 percent from the base. The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. For FECA COLA updates, visit narfe.org and search for FECA.

OPM RETIREMENT CLAIMS PROCESSING STATUS

2021

2020

Claims Received

MONTH

Inventory Monthly FYTD (Steady State Average Processing Average Processing is 13,000) Time in Days Time in Days

MARCH 6,566 21,264 APRIL 6,740 19,889 MAY 6,648 18,177 JUNE 6,555 17,432 JULY 6,819 17,631 AUGUST 6,775 18,570 SEPTEMBER 6,244 18,274 OCTOBER 8,323 19.605 NOVEMBER 5,876 20,022 DECEMBER 5,135 19,687 JANUARY 13,850 26,968 FEBRUARY 7,495 26,460 MARCH 9.664 27,638

61 68 83 81 95 73 73 77 74 74 85 77 69

60 61 64 65 68 68 69 77 76 75 78 78 76

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/. l Source: OPM 48

NARFE MAGAZINE JUNE/JULY 2021

CPI-W

Monthly % Change

% Change from 253.412

OCTOBER 2020

254.076

0.03

0.26

NOVEMBER

253.826

-0.10

0.16

DECEMBER

254.081

0.10

0.26

JANUARY 2021

255.296

0.48

0.74

FEBRUARY

256.843

0.61

1.35

MARCH

258.935

0.81

2.20

APRIL MAY JUNE JULY AUGUST SEPTEMBER

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to NARFE Programs

Support Alzheimer’s Research NARFE members contributed for Alzheimer’s research: $14 Million Fund

$13,832,858.57*

Enclosed is my NARFE-Alzheimer’s contribution: $ _________ Every cent that is contributed is used for research. q Mr.

q Mrs. q Miss q Ms.

*Total as of March 31, 2021; 100 percent of all contributed funds go to Alzheimer’s research.

Name: ______________________________________________

If you have any questions, write to:

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NATIONAL COMMITTEE CHAIR

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NARFE News

NARFE MAGAZINE SUMMER SCHEDULE

Why You Need NARFE Now More Than Ever n the past five years, we’ve seen a political landscape that

As a reminder, this is a combined June/July issue of the magazine. There will not be a separate July issue mailed in late June.

federal government. In uncertain times, that mission is more important than ever. To that end, of emerging communication (or possibly over-communication) NARFE nurtures connections technologies, and a global pandemic that has changed how we and alliances with influential interact with the world around us. There’s a lot of information members of Congress and the administration to protect coming at us fast, and we need help filtering out the noise. your future. Rest assured, our experienced advocacy team will rather than helping you take best continue to work tirelessly for Professional associations advantage of the federal benefit the federal community for the provide connections with opportunities you already have. next 100 years. people who share your interests, NARFE’s educational content, There’s one more thing you and they offer direct access to articles and other resources can count on from your NARFE focused, expert answers without membership—value. all the static. NARFE If you research the is the association cost of the multiple that helps federal NARFE IS THE ASSOCIATION THAT sources of information, employees and retirees education and solutions cut through the clutter HELPS FEDERAL EMPLOYEES AND NARFE provides for and get straight to the RETIREES CUT THROUGH THE less than the price of resources that help CLUTTER AND GET STRAIGHT TO one fancy coffee drink them understand and THE RESOURCES THAT HELP THEM per month, you’ll find manage their valuable that no one else comes federal benefits. UNDERSTAND AND MANAGE THEIR close to providing the Of course, there VALUABLE FEDERAL BENEFITS. same kind of value are other sources of for that small annual information. Do a investment. In short, quick Google search federal employees and retirees on “How to manage my TSP?” provide deep answers and like you need direct access to and you’ll get more than 15 unbiased guidance from experts million results, many from with decades of experience, skilled analyses of the issues that affect you, as well as websites hosted by firms that helping active and retired Feds expert advice and impartial offer financial planning services. get more out of their federal answers to help you maximize Some information from these financial and health benefits. the value of your federal providers can be helpful, but Since 1921, NARFE’s mission benefits—you need NARFE. they often try to steer you into has been to defend and advance other services they manage the benefits you were promised —BY DAVE BOWMAN, SENIOR DIRECTOR OF (and get commissions from), when you signed on with the MEMBERSHIP DEVELOPMENT

changes quickly and dramatically without warning, a proliferation

NARFE MAGAZINE JUNE/JULY 2021

NARFE MEMBER BENEFITS • Access the NARFE Federal Benefits Institute for powerful resources to help you fully understand and manage your benefits.

Active and Retired Federal Employees ... Join NARFE Today! 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 questions.

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• Visit the Legislative Action Center to contact your representatives about bills affecting federal benefits. • Get NARFE Magazine with news and insights for the federal community. • Save time, hassle and money with NARFE Perks. • The opportunity to get involved at the local level by joining a chapter in your area. 1Q6

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NARFE News

2021 FEDERATION CONFERENCES

This information was correct as of late April; because of potential COVID‑19 restrictions, please contact your federation to make sure these details are current. COLORADO: October 7 in Aurora ILLINOIS: September 27-29 in Normal MINNESOTA: October 19-20 in Breezy Point OKLAHOMA: August 26-27, location to be determined

SOUTH DAKOTA: August 18-20 in Pierre SOUTH CAROLINA: October 18-19 in Summerville VIRGINIA: October 11-13 in Richmond

As NARFE commemorates its centennial, NARFE Magazine is providing a look back at milestones for the organization and its work on behalf of federal civilian employees, retirees and their survivors. A year after NARFE was founded, the association launched The Annuitant, a twice-yearly publication. It moved to quarterly issues in March 1928 and was published six times per year starting in August 1952. In October 1954, The Annuitant was replaced by Retirement Life, a monthly publication providing a key communication tool for members. It quickly was recognized as an important source of information on retirement planning for Feds. According to records of the Senate Special Committee on the Aging in 1961, some federal agencies even distributed copies of Retirement Life to help civil servants prepare for life after federal service. NARFE’s name changed in 2004 to encompass active as well as retired federal employees, and the title of the publication evolved as well. Today, the award-winning NARFE Magazine is distributed 10 times a year to NARFE members. Visit narfe.org/centennial for more about NARFE’s century of service. Eargo and GEHA are proud sponsors of NARFE’s Centennial.

NARFE MAGAZINE JUNE/JULY 2021

Thank you

to all off the members that have donated to the Centennial Fundraising Campaign. Visit www.NARFE.org/century-club to see who has joined the Century Club. Help NARFE celebrate 100 years of fighting for the earned pay and benefits of federal employees and retirees.

You can join NARFE’s CENTURY CLUB with your donation of $100 or more in 2021 Donate now at www.NARFE.org/donatenow With NARFE’s thanks, you will receive: • A commemorative NARFE centennial key ring • Recognition in the December NARFE Magazine, on NARFE.org and at NARFE headquarters • Early distribution of the 2022 NARFE calendar Donations of any amount are greatly appreciated and will be recognized on NARFE.org.

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GE Appliances Store Use the link below to start shopping!

Save with NARFE members-only access to the GE Appliances Store! You will enjoy NEW! up to 25% off MSRP every day on the latest in high-quality appliances. Shop your favorite GE®, GE Profile™ Series, Café, HotPoint®, Haier, and Monogram® appliance brands and more. While in the store sign up for the GE Appliances e-newsletter and be the first to know about special offers and national rebates. https://www.myapstore.com/GEStore/Appliances/Registration?AuthCode=MONARFE21

LegalShield 410-419-7130 | www.legalshield.com/info/narfe

Whether it’s big, small or somewhere in between, you have affordable legal help when you need it. Members receive the discounted rate of $16.95 for individuals and $18.95 for families of 10 (two adults and up to 8 children).

Office Depot 855-337-6811 x 2897 | www.officediscounts.org/narfe

Because you’re a member of NARFE you have access to exclusive, members-only discounts at Office Depot and OfficeMax. Office Depot and OfficeMax offer thousands of products discounted below retail pricing both online and in any store location. With your NARFE membership, you can save up to 75% off regular prices (as listed on officedepot.com) on our Best Value List of preferred products. Create an account and browse through our discounts, or shop in-store by printing your FREE Store Purchasing Card. Visit https://officediscounts.org/narfe for details and more! Text NARFESPC to 833‑344‑0228 and save your free store discount card on your phone. *Tech, software and select furniture items are not part of the discount program.

Purchasing Power www.PurchasingPower.com/NARFE

While not a discount program, Purchasing Power is an exclusive purchase program helps members buy brand-name computers, electronics, appliances and furniture via annuity allotment when cash is not an option. No credit check or down payments.

Sam’s Club 877- 579-1201 l Use the Link Below to Sign Up Now!

NARFE Members can now take advantage of huge savings at Sam’s Club with an exclusive membership offer! Save up to 40% on a 1-year membership and receive a limited-time free gift upon purchase! To sign up please visit: www.rebrand.ly/narfe-samsclub

Ship Sunshine www.shipsunshine.com

Ship Sunshine offers cheery gifts - at all price levels - for all occasions, and especially for no occasion at all! You can also build your own custom gift and include personalized items. Use promo code NARFE at www.shipsunshine.com for a 5% discount!

MOVING SERVICES

Coleman Allied 850-375-0917 | jack.jacobs@colemanallied.com

With over 300 agency partners and an entire team dedicated to a quality move experience, Coleman Allied provides customized discount levels for all NARFE members for Interstate moves. *The NARFE pricing only applies to moves that leave the state you currently reside in.

Wheaton World Wide Moving 800-248-7960 | narfe@wvlcorp.com

At Wheaton, we know interstate relocation is much more than trucks and boxes. With a network of top-quality agents throughout the United States, Wheaton provides peace of mind with every relocation.

NARFE Insurance Services 800-233-5764 | www.narfeinsurance.com

INSURANCE

Designed exclusively for NARFE members, (plans administered by Mercer) Senior Age Whole Life Insurance, Senior Term Life Insurance, Hospital Income and Short Term Recovery Insurance, Dental Insurance, Vision Insurance, AssistPlus, Discount Prescription Plan and Pet Insurance.

Choice Hotels International 800-258-2847 | www.choicehotels.com

TRAVEL & TRANSPORT

With 6,400 hotels throughout the world, Choice Hotels offers something for everyone. As a member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967.

Enterprise Rent-A-Car® Book Now! https://partners.rentalcar.com/narfe

When you’re ready to go, Enterprise Rent-A-Car makes it easy. We offer everyday low rates on a great selection of cars, trucks and vans and customers are picked up at no extra cost*. See website for exclusions.

Hotel Engine Link https://members.hotelengine.com/join/narfe175

The National Active and Retired Federal Employees Association is proud to partner with Hotel Engine, a private hotel booking platform, to connect affinity organizations and their members to deeply discounted hotel rates. Top benefits of your complimentary membership include: • An average savings of 26% off public rates at 150,000+ hotels globally • No contracts, annual fees, or spending minimums • 24/7, U.S.-based customer support

NEW!

National Car Rental® 800-CAR-RENT | www.nationalcarrental.com

NARFE members receive great rates with National Car Rental! At National, we pride ourselves on always providing you with unsurpassed convenience and choice. Book Now! https://partners.rentalcar.com/narfe

Brookdale Senior Living Communities 877-713-2762 | www.brookdale.com/narfe

WELLNESS

As the largest operator of senior living communities in the US, Brookdale has over 1,000 locations all across the country. Members are eligible for 7.5% discount at Brookdale Independent Living, Assisted Living and Memory Care communities and 10% discounts on Brookdale Private Duty Home Care. Discounts are for new move-ins/customers only.

Life Line Screening 800-324-9906 | www.lifelinescreening.com/NARFE R

PRE-PLANNING

Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct health screenings using state-of-the-art ultrasound technology in your neighborhood. Operator code BKHN075.

Neptune Society 800-NEPTUNE (637-8863) | www.neptunesociety.com

Our prearranged plans cover all necessary expenses for one guaranteed price even if the services are not needed for 40 or 50 years. The Neptune Society offers a $100 discount to all NARFE members. Discounted offer is not valid for residents of Louisiana, Tennessee and Kentucky. Void where prohibited. *Discounted offer is not valid for residents of Louisiana, Tennessee and Kentucky. Void Where Prohibited.

ADDITIONAL PERKS

SEE HOW MUCH YOU CAN SAVE AT

www.NARFE.ORG/memberperks

The Way We Worked

USDA Camp for Future Leaders

In an effort to promote youth development, the U.S. Department of Agriculture (USDA) hosted a National 4-H camp in June 1927 in Washington, DC. Delegates to the National 4-H Club Camp slept in tents on the National Mall in front of the USDA Building. During the event, 142 4-H campers from 38 states toured the nation’s capital, visiting the USDA Research Farm facility near Beltsville, MD. USDA workshops familiarized attendees with federal programs. In later years, the camp moved to the National 4-H Youth Conference Center. USDA continues to sponsor the annual event, which promotes education, civic engagement and leadership.

DID YOU KNOW?

PHOTO from the records of the Department of Agriculture, National Archives, courtesy of the 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 www.shfg.org.

The Way We Worked celebrates the past 100 years of public service through archival images.

NARFE MAGAZINE JUNE/JULY 2021

Federal funding for 4-H is provided by the USDA’s National Institute of Food and Agriculture. The agency’s mission is to invest in agriculture-related research and education. Visit nifa.usda.gov

Eargo and GEHA are proud sponsors of NARFE’s Centennial.

5 Great Reasons

Why Oticon MoreTM could be the answer to your hearing problems.

1 Oticon More with Brain HearingTM technology

A revolutionary hearing aid that gives the brain more of the relevant information it needs to make better sense of sound. So you can get better speech understanding with less effort and the ability to remember more.

3 Connectivity made easy

Simple, wireless connectivity to your favorite devices via Bluetooth®. Make hands-free calls, stream music, connect to smart devices and more!

2 The hearing aid with built-in intelligence Works more like how the brain works because it learned through experience. Clinical studies prove Oticon More delivers 30% more sound to the brain and increases speech understanding.1

4 Never change a battery again

A trouble-free rechargeable solution allows you to recharge at night for a full day of hearing. FREE charger included!2

5 No out of pocket expense

Take advantage of your $2500 hearing benefit! You may be eligible for a pair of Oticon MoreTM3 hearing aids for $0 out of pocket.3

This special offer for federal employees and retirees is available only at Your Hearing Network locations. To find your location call 1-877-696-5335. Compared to Oticon Opn STM, Santurette, et al. 2020. Oticon More clinical evidence. Oticon Whitepaper Lithium-ion battery performance varies depending on hearing loss, lifestyle and streaming behavior. 3 Your out-of-pocket costs may vary depending on plan benefits, eligibility, deductible, co-insurance, and model of device chosen. This is not a guarantee of coverage or payment. Benefit is not available through all insurance plans. Please call us to verify your coverage. 1 2

Learn how to save on your hearing health!

Two hearing aids with $0 out-of-pocket! Call today to see if you qualify* With more than 30 years in hearing care, HearUSA has helped over 1 million people experience a better quality of life through better hearing. As a NARFE member you have access to the latest hearing aid technology. Receive the highest level of quality hearing healthcare service in the industry. There have been such amazing advancements in hearing aid technology — the options are almost limitless in terms of size, comfort, sleek styling and rechargeable technology. Conversation in background noise, hearing the television and speaking on the phone all become easy again!

Telehealth Available • FREE service visits for one year • FREE three year warranty, loss & damage, batteries • Risk-free 60-day trial • 10% off hearing accessories at hearingshop.com

In-person or telehealth appointments available. Schedule your FREE hearing appointment today: 1-855-252-0025

*This is not insurance and insurance benefits vary. Some restrictions apply. 1 year battery supply with purchase of hearing aids. Offer valid at participating HearUSA providers only. Call for details.

June/July 2021 NARFE Magazine

Articles inside

Member Perks

Managing Money

From the President

Alzheimer’s Update