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Countdown to COLA
these hours), could have a final balance of 448 hours of unused annual leave available to cash out. Typically, the lump-sum payment is sent two to three pay periods or four to six weeks after one is off the agency’s rolls. Ask someone in your HR or payroll office when you might expect this payment, as it can take longer in some cases. According to OPM leave policy, the lump-sum leave period is the employee’s annual leave projected forward for all workdays the employee would have worked if he or she had remained in federal service, including holidays (even though they are typically non-workdays). The lump-sum payments for accumulated and accrued annual leave must reflect any general pay adjustment and locality pay adjustment that becomes effective during the employee’s lumpsum leave period. Typically, the payments will be subject to a 25% federal tax withholding, a fixed percentage as determined by the state if tax is necessary, 6.2% for Social Security tax, and 1.45% for Medicare Part A tax.
DELAYED ANNUITY FINALIZATION
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QI have been waiting over seven months for OPM to finalize my annuity payments. OPM “Services Online” indicates a specialist has been assigned. I have tried to have a conversation to fully understand what is causing such a long delay. I heard that OPM may be waiting on responses from other parties. I am assuming this might relate to deposits made for military and civilian prior service but not sure in the absence of details. Deposits were made years ago, and I submitted this evidence. What is going on? A It can be frustrating waiting for your annuity to be finalized. There are many reasons for a delay, such as: • Retirements that are processed under one of the “special provisions” (law enforcement officer, firefighter, etc.) may take longer to adjudicate • You are eligible for the FERS
Annuity Supplement • OPM is waiting for verification from the Payroll Office for a completed military deposit or other missing documentation • Conflicting information was provided from HR and Payroll regarding service history, date of birth and other pertinent information • A divorce decree was submitted and must be reviewed to determine benefits payable to a former spouse • OPM is waiting for information from Social Security to compute the Offset for a CSRS
Offset retirement • OPM may be waiting for a response from the retiree regarding missing signatures,
RETIREMENT
FEDVIP ELIGIBILITY
QI never had dental or vision insurance (FEDVIP) as an employee. Can I sign up now that I am a retired federal employee?
AYes, Open Season is a very good time to review your options. This year’s Open Season will begin November 14 and run through December 12, 2022. Your coverage will take effect on January 1, 2023. FEDVIP is available to federal employees and retirees. In addition, eligibility is available for uniformed services members: • Including retirees, reservists, family members and survivors • Most retirees are eligible for dental coverage • Most retirees and active-duty family members are eligible for vision coverage (if enrolled in a
TRICARE health plan) • Dependent children are covered until age 21 (nonstudents) or 23 (full-time students)
Details on how to contact BENEFEDS are above.
COUNTDOWN TO COLA
MONTH CPI-W Monthly % Change
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.20 percent in August 2022. To calculate the 2023 cost-of-living adjustment (COLA), the 2022 third- % Change quarter indices will from 253.412 be averaged and OCTOBER 2021 271.552 0.92 1.17 compared with the NOVEMBER 273.042 0.55 1.72 2021 third-quarter average of 268.421. DECEMBER 273.925 0.32 2.05 The percentage JANUARY 2022 276.296 0.87 2.93 increase determines the FEBRUARY 278.943 0.96 3.92 COLA. August’s index, MARCH 283.176 1.52 5.50 291.629, is up 8.65 APRIL 284.575 0.49 6.02 percent from the base. MAY 288.022 1.21 7.30 The CPI represents purchases of food and JUNE 292.542 1.57 8.99 beverages, housing, apparel, JULY 292.219 -0.11 8.87 transportation, medical care, AUGUST 291.629 -0.20 8.65 recreation, education and communication, and other SEPTEMBER goods and services. For FECA COLA updates, visit narfe.org and search for FECA.
decisions regarding unpaid deposits, etc. • The application may have been delayed in arriving at OPM from your former agency
It is important to include your address where you will be living shortly after you retire on your retirement application and keep OPM informed of any changes. It is also a good idea to keep contact information for your HR specialist and payroll office supervisor in the event you have questions about your retirement during processing. It is advisable to have at least six months of living expenses available during this transition. Eventually, OPM will finalize your retirement and make catch-up payments on any back pay it owes you. As a reminder, the FERS Annuity Supplement, if you are entitled to this benefit, is not paid until your retirement is finalized.
WEP AND GPO
QMy wife is qualified for Social Security retirement, but she is subject to the Windfall Elimination Provision (WEP) due to her government pension under CSRS. My Social Security benefit will not be affected by the WEP. If my wife files for Social Security at age 62, but I delay until 67, is she still eligible for the spousal Social Security benefit based on my earnings history? Her total benefit before WEP is higher than half of my FRA benefit but with the WEP it is lower.
ASince your wife retired under CSRS which is a retirement that was based on earnings that were not covered by Social Security during her federal employment, she may be affected by the WEP that can impact her own earned Social Security benefit and by the Government Pension Offset (GPO) that will impact the spousal benefit she is entitled to that is based on your Social Security earnings. Social Security will offset the spousal benefit by 2/3 of her CSRS retirement benefit, which will often eliminate any spousal or widow’s benefit payments based on your work record.
For more details on the GPO and WEP and government employees or retirees, visit https://www.ssa.gov/benefits/ retirement/planner/gpo-wep.html
DUAL FED COUPLE DIVORCE
QMy wife and I are federal annuitants. At retirement we elected a reduced spousal survivor benefit of 25% for each other. We are now divorcing and seeking to rescind this election to continue maximum annuities for ourselves with no reduction. There are no other beneficiaries for the benefits. Is there a form available? Are we required to submit a judge’s order/ divorce decree? How may we proceed with this mutually agreedupon request?
AYour election to provide a survivor annuity for a current spouse terminates upon the death of that spouse or if the marriage ends due to divorce or annulment. Once you are divorced, be sure to provide OPM with a copy of your divorce decree. You can do this by mailing a certified copy of the entire court order and all supporting documentation to OPM at:
U.S. Office of Personnel
Management
Retirement Operations Center
Post Office Box 45
Boyers, PA 16017-0045
Along with this information, you should request that your reduced annuity be restored to the unreduced amount (i.e., the amount without the reduction for survivor benefit election), retroactive to the date of the divorce. Be sure to include your CSA number, full name and signature with your request.
Here is a link to more information on this at the OPM website: https://www. opm.gov/retirement-services/ my-annuity-and-benefits/ life-events/#url=MarriageDivorce
FERS ANNUITY SUPPLEMENT
QWhy is the FERS Annuity Supplement different from what the agency said? I was counting on that amount in my retirement.
AThe FERS Annuity Supplement cannot be accurately determined until you’ve retired, and, like your retirement benefit, the final authority over this calculation lies with OPM. The supplement computation is determined by several factors, including constructed earnings history based on actual pay subject to retirement deductions. The service used to determine the FERS supplement is only your civilian employment under FERS. If you have paid your military service credit deposit, that time will be used to compute your FERS basic retirement benefit but cannot be included in the computation of the FERS supplement. Agencies use different software in preparing their retirement estimates, and it may be possible that the military service was included in the agency estimate of the supplement.
OPM’s pamphlet Information for FERS Annuitants provides general overview on how the supplement is calculated: https:// www.opm.gov/retirementservices/publications-forms/ pamphlets/ri90-8.pdf
The CSRS and FERS Handbook Chapter 51 provides
the details of how the supplement is calculated. To learn more, visit https://www.opm.gov/retirementservices/publications-forms/ csrsfers-handbook/c051.pdf
RETIREMENT CONTRIBUTIONS
QI am a CSRS annuitant (retired almost 20 years) with an election of the maximum survivor benefit to my wife. A portion of my annuity is tax-free from my retirement contributions. We have been doing some estate planning recently, which has raised a couple of questions. First, in the event of my death and my spouse survives me, if I have not claimed the full amount of my retirement contributions as tax-free income, can my surviving spouse continue to claim the taxfree income amount until all the retirement contributions are used? Second, in the event both of us should pass away without using all the retirement contributions as tax-free income, what happens to the remaining contributions if there is no qualified survivor?
AOnce you retire, you will continue to have a portion of your annuity tax-free until you fully recover your retirement contributions. In the event you pass away and there are contributions yet to be recovered, your surviving spouse will continue to recover them in her survivor annuity. Assuming you or your spouse fully recover these contributions during your lifetime, your annuity (or the survivor annuity) will become fully taxable at that point. If your annuity starting date is after July 1, 1986, and the cost of your annuity hasn’t been fully recovered at your (or the survivor annuitant’s) death, a deduction is allowed for the unrecovered cost. The deduction is claimed on your (or your survivor’s) final tax return as an “Other Itemized Deduction.” If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. Details are found in IRS Publication 721 https://www.irs. gov/pub/irs-pdf/p721.pdf
You will need to review your state’s or perhaps other states’ tax policies. Visit https://taxfoundation. org/center/state-tax-policy/.
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.
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