Presented by: Cherie L. Anderson, LUTCF, ChFEBC ℠ Of MetLife L [exp1212][AL,FL]

A ChFEBC ℠ (Chartered Federal Employee Benefits Consultants) is a prestigious designation for Financial Advisors, CPAs, Attorneys, and certain employees of the Federal Government, who have successfully completed an intensive training course and passed a rigorous examination covering all federal employee benefits. The training consists of a 16 module assignment curriculum. All types of federal employees are covered (such as CSRS, FERS, CSRS Offset, FERS Transferees, Law Enforcement, fire fighters, air traffic controllers, etc. ) The course is available by independent study or a two- day course on-site conducted by a qualified instructor.

 Basics  Retirement Requirements  Annuity  Survivor Benefits  Disability  Federal Group Life Insurance  TSP  Social Security  LTC  FEHB

 Program began 1/1/1987 and continues today  Is a three-benefit system  Participants contribute 6.2% to social security and.8% to their retirement annuity  Typically receive both a retirement annuity and a social security payment

 Hire date to retirement date if contributions are made.  Leave w/o pay up to 6 months in 1 calendar year  Workers Comp when returned to work  Part-time Service  Before 4/7/86 = Full Eligibility and Computation  On or After 4/7/86 = Full eligibility, prorated annuity computation  Intermittent when actually employed for days worked, 260 max  Break in service up to 3 days  Buy back time (deposit service)  Before 1/1/89 = 1.3% deposit and full E + C  After 1/1/89 or no deposit = No E and No C  Redeposit of contributions withdrawn  Redeposit = Full E and C  No redeposit = No E and No C  Military Service  For service before 1/1/1957 no deposit needed  For service after 1/1/57: deposit made = E + C  For service after 1/1/57: No deposit made = No E and No C

 Non-Reduced: 62/5, 60/20, MRA+30  Early Out: Any Age w/25- 2% permanent reduction for every year < 55*  Reduction in Force (RIF): 50/20  DCS Separation: 50/20, Any Age/25, 2% reduction for every year < 55*  Disability: Any Age w/5  Deferred: 62 w/5 * Reduction may be waived

 Under 62 with less than 20 yrs(1% x Hi- 3 x yrs of service )  Age 62 with more than 20 yrs (1.1% x Hi- 3x yrs of service)  Special Retirement Supplement: MRA + 30yrs. or 60/20 FERS will receive their age 62 S.S. benefit until they reach 62  Earnings test: no penalty, $1 reduction for every $2 over.  Early out or involuntary also receive the supplement if they have reached MRA  No matter when FERS retires, the annuity begins on the first of the next month  COLAs begin at age 62

 Cost 10% of annuity and provides a 50% survivor benefit  Partial Survivor Benefit cost 5% and provides a 25% benefit  At least some benefit must be kept to maintain FEHB  Children’s benefit is reduced by any SS received  Death < 10 yrs. of service, spouse gets $15,000 adjusted by 12/1/87 dollars ($29,722 in 2010) + 50% of salary or High-3, whichever is greater.  More than10yrs, Lump Sum same as above + 50% of basic annuity without reduction and the special retirement supplement if spouse is younger than 60.

 Must apply for SSI prior to applying for DI.  1st year disability is 60% of High 3 reduced by 100% SSI  2nd year until Age 62 is 40% of High 3 reduced by 60% of SSI  At age 62 the benefit is recomputed to include all yrs worked plus all yrs on disability with COLAs

 Basic:  Present salary rounded up to the next $1,000 + $2,000  Extra benefit:  Same as basic and is free, but reduces by 10% per year at 35.  Option A: $10,000 (includes AD&D)  Option B: 1-5 x Salary  Option C: $2,500 child/$5,000 spouse x 1-5

 Option A  Has only one option in retirement  At 65 will decrease until there is only 25% remaining  There is no cost after age 65  1% reduction per month at retirement or at 65, whichever is later, until it reaches 50% of the Basic amount.  $.60/$1000 cost per month after age 65  No reduction  $1.83/$1000 per month after age 65

 Option B: Reduces after age 65 until there is nothing left  No premiums after age 65 or retirement, whichever is later  Keep coverage for life, Premiums increase at age intervals  Option C:  Employee must keep basic coverage  Coverage reduces at 2% per month at age 65  Premiums stop at age 65 or retirement, whichever is later  If the retiree chooses to continue the coverage  Premiums will increase at age intervals

 FERS can contribute $16,500 per year, $5,500 extra if over 50  1% government contribution regardless of individual participation  Up to 5%of the FERS contributions matched  FERS must work for 3 years to be vested  FERS are immediately vested in their own contributions

 G – Government Securities  F – Fixed Income  C – Common Stock  S – Small Cap  I – International There are 5 Lifecycle funds:  Rebalanced daily and adjusted quarterly to maximize return for given risk. They are managed by Mercer Investment Consulting with a combination of the 5 TSP funds.  L Income – For those taking current income or planning retirement within 2 years.  L 20XX – Investment mix that reflects a time horizon for retirement near this date.

 While working, after age 59 ½ you may make a 1 time in service withdraw.  At age 55 or older, there will not be a 10% penalty for any withdrawals if retired or separate from service simultaneously.  TSP may be transferred to a Traditional IRA.  Lump sump distribution – taxes paid at time of withdrawal.  Purchase an annuity through TSP.  Take equal monthly payments.  Choose amount to be paid. May adjust annually.  Use the IRS’s calculation of payments, ie.RMD

 If an employee makes an in-service withdrawal, they may continue to contribute and FERS will match – but their withdrawal options will be limited in retirement. Additional Withdrawal Options:  Less than $200 = automatic cash out.  If withdrawn before age 55, there is a 10% penalty for early withdrawal plus taxes unless a 72(t) (equal and substantial or life annuity)  If funds are withdrawn, other than a transfer, 20% is withheld for taxes.  FERS spouse has rights as to how contributions are withdrawn.  Spouse must sign a waiver.  Former spouse, due to court order, may need a waiver also.

Calculating S.S. is a 4-steps process: If born between 1929 and 1978 – must earn $50 per quarter.  After $4,360 at any point = 4 credits for the year  Born before 1929 need less than 40 credits  After 1929 need 40 credits  Once someone has 40, they are eligible for some SS  You cannot buy credits, borrow, or inherit them. Determine full SS:  Year of birth determines eligibility for full retirement at 65, 66, or 67  All may take a reduced amount at 62 if they have 40 quarters  If deferred until age 70, SS will be higher  SS tax income limits:  Single AGI: $25K - $35K = 50% tax, $35K+ = 85% tax  Joint AGI: $32K – $44K = 50% tax, $44K+ = 85% tax.

 A spouse at full retirement (65-67) may take 100% of their SS or 50% of their spouse’s, whichever is greatest  A spouse age 62 may take 80% of PIA or 37.5% of their spouses, whichever is greater  A spouse, at any age, caring for children under 16yrs may take 50% of spouse’s PIA  A child, unmarried, under age 19 if in high school, or any age if disabled before age 22 may take 50% of worker’s PIA

 John Hancock is the Federal LTC provider  Benefit levels are $100-$450 daily in increments of $50 with benefit periods of 2,3,5 and lifetime  Elimination period is 90 days and inflation riders are 4% compound, 5% compound, and GPO  Tax qualified, so premiums are deductible if they exceed 7.5% of AGI  Available only during open enrollment

 FEDVIP Dental and Vision is available to employees, retirees, and family members  FSA: $5,000 medical, $5,000 dependent, use it or lose it March 15. Pre-tax dollars  HSA: Must have HDHP. FEHB member owns the account. Unused rolls over  HRA: Must be enrolled in HDHP and not HSA  No individual contributions allowed.  Credits carry over, but are forfeited if member leaves

 Hospital: Part A  Deductible of $ 1,100 and no premium  1.45% deducted out of each paycheck while working  Medical and Doctor:Part B  Deductible of $ 135 and 20% copay  The premium $ for new enrollees and $96.40 for current  If retired must enroll 3 months prior or 3 months after 65th birthday(7mo. window)  General Enrollment January1-March 31  10% penalty for each 12-months late  If retired after 65, you have 8 months to enroll with no penalty