Contemplating retirement this year and need input please!

[bjean]

I am eligible to retire in July and need help on what to expect and am seriously thinking about retiring at the end of the year. I am due for a annual step increase in January, but screw that if congress votes to cancel the SS supplement in 2013. I mentally cant do it at work anymore............my husband has been preparing our taxes but I am afraid we need to hire someone now with me possible retiring. We have 4 rental properties which will be paid off in 3 years but I want to retire now as work has become unbearable. I live in Arkansas and there are no taxes on social security and first $7000 of retirement income.

What really got my attention was congress voting again to do away with the SS supplement in 2013. I transferred like a dummy from civil to fers in 1998 (my dad was passed away a year earlier and the people in my office at the time didnt believe in giving any type of advice). My FERS annuity will be basically less than half my salary not a third due to the 18 years in CSRS. I did not pay attention to my thrift until 5 years ago, and have slowly been learning some valuable guidance on this website. My balance is almost double in over three years and that's with being -15% balance last year and beginning from a -25% balance in 2008 (OUCH).

So I need input on-

1.BCBS payment - OPM will take out monthly pmt out of FERS annuity payment before federal taxes are applied to FERS annuity?

2.annual leave - if I dont take any for remainder of the year OPM will pay out and apply federal 20% tax? What about state tax on this?

3. sick leave - I only will have 360 hours as most of sick leave was use for maternity leave, really cant do anything with 180 hours?

4. tsp - do monthly payment, let tsp figure out minimum and fill out form to waive 10% taxes, I will be 56 upon my retirement andam I locked into this for 5 years or release from this when I turn 59? (I wanted to do something like 4% but am thinking I need more before 62 as my daughter will be attending college in a couple years and will need to assist.)

5. OPM will provide a report on how much money I paid for retirement and I will have to figure amount not to be tax?

6. How much of social security is tax for federal and what is federal retirement tax?

7. What other taxes will be charge in retirement?

Thanks again for this wonderful website..........unfortunately the federal worker has been made the sacrifical lamb with freezing of salaries, cutting promised retirement benefits........ while the govt continues to spend, spend, spend......there is so much waste in my agency.

Both polictical parties are corrupt and now fighting over birthcontrol for women while the govt is borrowing money that our grandchildren will have to pay back, how will this be explained to them.............wait til countries/states start fighting over water.....enough doom and gloom..............bj (a realist and sober 22 years)

(A person in my office retired in June and still hasnt recd her full retirement annuity from OPM.)

 

[tsptalk]

Hi barbarajean -

Unfortunately, I don't have an answer for you but we know there are folks here who can probably help. I don't normally recommend this, but you might want to "bump" this thread after the IFT deadline today so it doesn't get pushed down and out of sight.

Just reply to this thread with "bump" in the post sometime after noon ET.

Good luck!

 

[tsptalk]

Bump

 

[rangerray]

You badly need to attend one of those federal retirement seminars. My agency has one every 2 or 3 years, it seems.

 

[Show-me]

2. Federal and state withholdings would apply.
3. Take a few days, you sound stressed.

I'm not much help but I did read that the backlog of retirements is a real problem. Plan accordingly the OPM is not in a hurry to get you your money.

Good luck.

 

[Kaufmanrider]

I'll try and answer from what I understand, I can retire in June 2013, so I have taken a retirement class and been doing some research.

My answers are based upon my understandings of how things will go in retirement. Hopefully others will chime in to correct my errors.

I am eligible to retire in July and need help on what to expect and am seriously thinking about retiring at the end of the year.

So I need input on-

1.BCBS payment - OPM will take out monthly pmt out of FERS annuity payment before federal taxes are applied to FERS annuity?

Answer, health insurance is not pre-tax like it is during employment. It comes out after your full retirement annuity is taxed. If you are/were retired as a Public Safety Officer, you can deduct 3,000 of your premium payment when you do your taxes each year and get something back.

2.annual leave - if I dont take any for remainder of the year OPM will pay out and apply federal 20% tax? What about state tax on this?

Answer- Expect about a 30% Federal tax (Federal income, Social Security, Medicare) plus what ever your state income tax rate.

3. sick leave - I only will have 360 hours as most of sick leave was use for maternity leave, really cant do anything with 180 hours?

Answer - You'll get half your 360 hours credited toward your retirement, about 180 hours which will give you an extra .1% credit. Thats about 1 tenth of a percent. Is it worth keeping it? or using it? That's a decision you need to make.

4. tsp - do monthly payment, let tsp figure out minimum and fill out form to waive 10% taxes, I will be 56 upon my retirement andam I locked into this for 5 years or release from this when I turn 59? (I wanted to do something like 4% but am thinking I need more before 62 as my daughter will be attending college in a couple years and will need to assist.)

Answer -Conflicting answers. Check out 72t.Net |IRC Section 72(t) | 72t Distribution | 72t Calculators | SEPP Plans for information. I believe after age 55 you can make a withdrawal without the 10% penalty. TSP does not take the 10% penalty. They tax at either 20% or the Married plus 3 rate (but you can change that) depending what distribution plan you take.

I believe TSP Publication 721 says you can take withdrawals over age 55 without the extra 10% penalty.. If you do monthly withdrawals, under the 72T rules, it's for 5 years or until age 59 1/2, which ever is later. Personally, I'd call the IRS and read publication 721 for actual information.

5. OPM will provide a report on how much money I paid for retirement and I will have to figure amount not to be tax?

Answer- Not sure I fully understand this one? There is an IRS form where you can figure out your contributions to FERS and the amount you can deduct as not taxable. I don't remember the form off hand. I am thinking HR Block or one of the on-line tax programs might figure it out.

6. How much of social security is tax for federal and what is federal retirement tax?

Answer- this will be different for everyone, it depends on your annual income. You'd need to check with an accountant or check IRS publications.

7. What other taxes will be charge in retirement?

Answer- You'll continue to pay federal income tax and if your state taxes retirement income you'll pay that. Then of course all your normal taxes you already pay, sales tax, property tax, vehicle tax, etc.

Personally, when I get my retirement comp which I just requested, I am going to key the numbers into taxact.com and see what tax numbers the program spits out. Should give me a good rough estimate of my annual federal taxes and rate. You might try and do the same.

 

[clester]

I can help a little. For tsp, if you retire at 55 or later you can take monthly payments of your choice with no penalty. You can change the amount each January. I don't think you are tied to the 5 years like other methods. Tsp makes you take monthly payments instead of a little here or a little there. you could roll over to Ira at 59.5 and then you can do what you want, no penalty.

Your fers pension: they will take out survivors benefits first and it will not show on your statement. They will then deduct health insurance and taxes only. You can pick how much tax to deduct.

For taxes, your w2 will have the tax free part figured for your. Just enter it in turbo tax or whatever. It will also have your total premiums for health insurance in one of the boxes.

Dont forget the supplement. Let us know if you need help estimating it.

I had high taxes the first year due to leave payouts.

 

[clester]

I can help a little. For tsp, if you retire at 55 or later you can take monthly payments of your choice with no penalty. You can change the amount each January. I don't think you are tied to the 5 years like other methods. Tsp makes you take monthly payments instead of a little here or a little there. you could roll over to Ira at 59.5 and then you can do what you want, no penalty.

Your fers pension: they will take out survivors benefits first and it will not show on your statement. They will then deduct health insurance and taxes only. You can pick how much tax to deduct.

For taxes, your w2 will have the tax free part figured for your. Just enter it in turbo tax or whatever. It will also have your total premiums for health insurance in one of the boxes.

Dont forget the supplement. Let us know if you need help estimating it.

I had high taxes the first year due to leave payouts.

They should hire me to do retirement seminars.

 

[bjean]

They should hire me to do retirement seminars.

Thanks for all your replies, I am stressed.............I really cant believe that I actually might be able to retire. It's looking like congress might really do away with the social security supplement for FERS except for mandatory or law enforcement retirement.

My job has become more difficult and they expect more out of me at work. No twilight years for me at end of my retirement journey. I want so bad to get on the intercom last day of work and say take this job and shove it!

I was playing around with some numbers on tsp monthly payment and entering 5 % return and my allotment was alot higher than expected, my husband just wants me to take out 3 or 4 % but we need more money now than later with daughters college on the horizon.

bj

 

[clester]

Thanks for all your replies, I am stressed.............I really cant believe that I actually might be able to retire. It's looking like congress might really do away with the social security supplement for FERS except for mandatory or law enforcement retirement.

My job has become more difficult and they expect more out of me at work. No twilight years for me at end of my retirement journey. I want so bad to get on the intercom last day of work and say take this job and shove it!

I was playing around with some numbers on tsp monthly payment and entering 5 % return and my allotment was alot higher than expected, my husband just wants me to take out 3 or 4 % but we need more money now than later with daughters college on the horizon.

bj

I'll be glad to help if I can. One thing to look out for with tsp. if you take say 5% a year you may run out before you die. Find a calculator to estimate the payments and your estimated yearly returns on your account to see how long it will last.

Also, if you are not Leo, firefighter, or atc you get no cola until 62. Your supplement never gets one. It just changes to social security at 62.

But, you will no longer pay into retirement, tsp, social security, Medicare. Just insurance, survivor, and taxes. You do have to take at least 25% survivor to keep spouse on insurance.

 

[Khotso]

I'll be glad to help if I can. One thing to look out for with tsp. if you take say 5% a year you may run out before you die. Find a calculator to estimate the payments and your estimated yearly returns on your account to see how long it will last.

Also, if you are not Leo, firefighter, or atc you get no cola until 62. Your supplement never gets one. It just changes to social security at 62.

But, you will no longer pay into retirement, tsp, social security, Medicare. Just insurance, survivor, and taxes. You do have to take at least 25% survivor to keep spouse on insurance.

QUESTION: My understanding is that if you are CSRS, the survivor annuity required in order to keep spouse on insurance can be as small as you want it to be, e.g., $1.00 per year would do it. That's what I heard in a retirement seminar last week -- sounded pretty strange though. Can anyone verify this?

 

[clester]

QUESTION: My understanding is that if you are CSRS, the survivor annuity required in order to keep spouse on insurance can be as small as you want it to be, e.g., $1.00 per year would do it. That's what I heard in a retirement seminar last week -- sounded pretty strange though. Can anyone verify this?

I know it used to be that way and probably still is. The rule says you have to provide survivor benefits to get insurance. I think they fixed it by making fers either 25% or 50% survivor options where csrs could pick whatever 1% to 50%.

 

[Khotso]

I know it used to be that way and probably still is. The rule says you have to provide survivor benefits to get insurance. I think they fixed it by making fers either 25% or 50% survivor options where csrs could pick whatever 1% to 50%.

Cool. Thanks Clester!