1. Retirement and Benefits
Food Safety and Inspection Service
Retirement and Benefits

2. Marcie Noyes, HR Benefits Specialist
Every employee in in charge of planning their own retirement and making financial preparations for the future. Disclaimer…
Disclaimer: Any information that you take away today should be discussed with a financial professional for your own decision-making and individual planning purposes.

3. OBJECTIVES Know your benefits Retirement eligibility Life events
Setting goals for retirement
Protecting and building your future and that of your family

4. Definitions
CSRS – Civil Service Retirement System FEHB – Federal Employees Health Benefits FEGLI – Federal Employees Group Life Insurance FERS – Federal Employees Retirement System FERS-RAE – Revised Annuity Employees FERS-FRAE – Further Revised Annuity Employees LWOP – Leave Without Pay MRA – Minimum Retirement Age OPM – Office of Personnel Management OWCP – Office of Workers’ Compensation Programs OASDI (FICA) – Old Age and Survivors Disability Insurance (Social Security) USERRA – Uniformed Services Employment and Reemployment Rights Act

5. Recent Changes Self plus One Health Insurance (2015)
TSP New Employee Auto 3% contribution
TSP New Employee Auto Life Cycle distribution
Affordable Care Act-coverage for children between ages of 22-26; married children; children with or eligible for employer-provided health insurance; stepchildren; and eligible foster children.
Certain Temporary and Intermittent employees may be eligible to enroll in Federal Employee Health Benefits after 11/17/2014.
Flexible Spending Account Carryover (New in 2015).
• New FEGLI premium rates for Option B - Additional, Option C – Family,
and Post-Retirement Basic coverage (January 2016)
Revised FEGLI regulations
Option B and C elections at retirement
No additional election at age 65
Power of Attorney may now make some elections on behalf of employee
The Benefits and Retirement regulations have changed significantly since 2009.
# Same sex marriage does not include civil unions or domestic partnerships. Must be a valid marriage.
# Key date for determining retirement coverage is December 31, 2012
# Starting January 1, 2014, it is 100% service credit is given for Sick Leave.
#Employees who previously worked under FERS and took a refund of their retirement contributions when they resigned, can now make a redeposit to OPM to have this time count in the computation of their annuity. The time counts towards retirement eligibility.
#DC Employees – creditable service issues are determined on a case by case basis
#Part Time reemployment – This applies to reemployment for retired personnel in a limited appointment without an salary offset. This is very limited authority and is mostly a staffing issue. No additional retirement benefit.
#This applies to individuals that took a refund of their retirement contributions for a period of service prior to October 1, The new regulations changed the date to March 1, 1991.
#The calculation of the High-3 for those individuals covered by CSRS with part time service on or after April 7, 1986 was revised.
#Individuals were offered a post-tax contribution opportunity in the Thrift Savings Plan. Taxes are paid up front and earnings are tax-free if certain conditions are met at the time you draw the money out. We are not tax advisors so we steer employees to their own financial advisors and to the TSP website.

6. Benefit & Retirement Awareness
You have a retirement benefit if you have a career appointment and work at least five years.
You may be able to receive retirement credit for prior Federal civilian or Military service.
Your TSP Account belongs to YOU!
There is no guarantee that Social Security will stay in its current form.
Know that your Federal insurance benefits can be yours for life if you meet certain requirements.
This emphasizes the importance that employees start their retirement planning as soon as they are hired. We have ongoing educational articles, educate employees on the phone, AgLearn has a large selection of free courses geared towards benefits and retirement and OPM”s website has volumes of material.

7. Benefit Plans FERS - (Federal Employees Retirement System)
CSRS - (Civil Service Retirement System)
Employee contributes 7%
Employer contributes 7%
No social security contribution
Medicare contribution 1.45%
Voluntary contributions
TSP
Benefit limited to 80% of High-3 average salary (41Years, 11 months of work service)
100% S/L credit in computation of annuity (not subject to the 80% limit)
FERS - (Federal Employees Retirement System)
Three-tiered plan
Employee contributes 0.8%
Employer contributes 13.2%
Social security contribution 6.2%
Medicare contribution 1.45%.
TSP (government matching)
100% S/L credit in computation of annuity
A defined benefit plan requires a mandatory contribution from the employer/employee and after vested, in this case we are vested after 5 years of retirement covered service, provides a set benefit for the employees lifetime.

8. FERS-RAE, FERS Revised Annuity Employees
Benefit Plans (cont.)
FERS-RAE, FERS Revised Annuity Employees
Effective January 1, 2013
In general, employees first hired on or after 1/1/13 under a retirement-covered appointment
Employee contributes 3.1%
Employer contributes 11.1% (FY 2015)
Social Security Contribution 6.2%
Medicare Contribution 1.45%
TSP (receive government matching)
100% S/L credit in computation of annuity

9. FERS-FRAE, FERS Further Revised Annuity Employees
Benefit Plans (cont.)
FERS-FRAE, FERS Further Revised Annuity Employees
Effective January 1, 2014
In general, employees first hired on or after 1/1/14 under a retirement-covered appointment
Employee contributes 4.4%
Employer contributes 11.1% (FY 2015)
Social Security Contribution 6.2%
Medicare Contribution 1.45%
TSP (receive government matching)
100% S/L credit in computation of annuity

10. CSRS 1.5% of High-3 first 5 years Eligibility
Voluntary – 1 out of 2 rule
Age 55 with 30 years*
Age 60 with 20 years*
Age 62 with 5 years*
Disability
Any Age with 5 years*
*Creditable years of service
Quick Tip:
(Years of Service x 2) – % = Estimated Annuity Percentage
For example: Jan has 32 years of CSRS Service. Her estimated annuity would be 60.25% of her high-3 average salary.
Alternative (Quick method):
(Years of Service – 2) x 2 = Estimated Annuity Percentage
Maximum Annuity is 80% of the high-3 average which is 41 years, 11 months of Federal service (sick leave does not count towards the maximum but is still added to increase annuity.)
Computation
Voluntary
1.5% of High-3 first 5 years
1.75% of High-3 between 5-10 years
2 % of High-3 for service over 10 years
Disability
Same as above unless service is less than 21 years, 11 months

11. FERS Eligibility Voluntary Disability *Creditable years of service
Minimum Retirement Age (MRA)with years*#
Age 60 with 20 years*
Age 62 with 5 years*
Disability
Any Age with 18 months*
*Creditable years of service
# less than 30 years would be subject to a permanent age reduction
FERS
Quick Tip:
Years of Service x 1% = Estimated Annuity Percentage
(1.1% per year if 62 with 20 years or more of retirement covered service)
For example: Bill has 21 years of FERS Service at age 60. His estimated annuity would be 21% of his high-3 average salary
If Bill was 62 years old when he retired with 21 years of FERS service his annuity would be 23.1% of his high-3 average salary
Computation
Voluntary
See quick tips at left
Disability
Under age 62: 1st 12 months – 60% of high-3 minus 60% of SSA benefit
After 1st 12 months – 40% of high-3 minus 60% of SSA.

12. FERS Annuity Supplement
General Purpose:
To provide a level of income before age 62 similar to what the retiree will receive at age 62 as part of a Social Security benefit, if eligible for social security at that age. Paid by OPM not Social Security.
Ends at age 62 regardless of whether you apply for a social security benefit.
Eligibility
Under age 62 at time of retirement
Covered by FERS
MRA with 30 years
Age 60 with 20 years
Quick Tip:
If FERS years equal 20 then it would be approximately ½ of your social security benefit at that age. Look at your annual Social Security Benefits Statement.
Not included in interim pay

13. Leaving Federal Service Prior to Retirement
Postponed
Eligible for an immediate annuity but postpone receiving payments to avoid the age reduction (called MRA+10).
In most instances may be able to resume health and life insurance.
Deferred
Not eligible for an immediate annuity but will be eligible for an annuity if the retirement contributions are left on deposit.
Will not be eligible to resume health and life insurance.

14. HIGH-3 AVERAGE
For most employees it will be the last 3 years of their careers.
Example:
Employee retired on August 31, Assuming their last 3 years were their highest salary, the high-3 would be a daily average from to

15. Creditable Service Do you owe a deposit?
Civilian Service
Service for which no retirement deductions were withheld.
Service for which retirement deductions were refunded.
Military Service
Military service prior to Civilian Service.
Military service which interrupted Civilian Service (furlough or break-in-service).

16. Military Service - Honorable
CSRS
Civilian Service
Actuarial reduction to annuity.
FICA Service prior to
10 % reduction
Refunded Service prior to
Reduction based on age and amount of redeposit due
Service counts towards eligibility but not computation of annuity.
FICA Service after
Refunded Service on or after
Military Service - Honorable
Military Service before does not require a deposit.
Will you have 40 credits towards social security by age 62 (CATCH-62) or at the time of retirement if over age 62.
When were you first hired under CSRS?
Before
On or after must make deposit to receive credit for the service

17. Military Service - Honorable
FERS
Civilian Service
No retirement credit for FICA only service performed on or after
Deposit must be made in order to receive credit for retirement eligibility and computation purposes
FICA only service prior to
Redeposit not required to receive retirement credit for eligibility purposes but must be paid to receive credit for computation purposes
Refunded retirement contributions
Military Service - Honorable
Deposit must be made in order to receive service credit for retirement
Military service prior to civilian service (3% of your military estimated earnings)
Military service that interrupts civilian service-LWOP-US Military (the lesser of 3% of estimated earnings or amount of retirement contributions that would have been deducted had your military service not interrupted your employment - USERRA.
Interest free period if paid within 3 years of first coverage under FERS

18. Sick Leave and Annual Leave
Annual leave is paid in a lump sum within 4-6 weeks of your separation if no outstanding obligations.
Sick leave cannot be used to determine eligibility to retire, only in the computation of annuity.
Examples:
1 month = 174 hours
1 year = 2087 hours
Who said you can’t take it with you?

19. Other Service Credit Items
LWOP for personal reasons extending for more than 6 months in a calendar year.
OWCP (Workers’ Compensation)
Intermittent Service
Breaks in Service
Military Furlough

20. Survivor Elections CSRS FERS
Maximum Benefit = 55% of the base amount of annuity
Total Annuity less reduction for deposit or redeposit service
May elect any percentage under maximum or no benefit with spousal consent
Cost to provide benefit is:
2.5% of amount up to $3,600
Plus, 10 % of the amount over $3,600
FERS
Maximum Benefit = 50% of base amount of annuity
Total Annuity less reduction for age
May elect 25% or no benefit with spousal consent
Must elect survivor benefit to continue health insurance
Cost to provide benefit is:
10% for 50%
5% for 25%
NOTE: You must elect a survivor benefit in order for your spouse to be eligible to continue health insurance if self and family coverage.

21. Federal Benefits FEHB Employee must retire on an immediate annuity.
Employee must be enrolled in an FEHB plan at the time of retirement.
Employee must have been continuously enrolled in a plan under FEHB for the 5 years immediately preceding retirement or for all service since first opportunity to enroll.

22. Federal Benefits (cont.)
FEGLI
Employee retires from a position in which insured.
Employee does not convert to an individual policy.
Employee retires on an immediate annuity.
Employee must have been continuously insured under FEGLI for the 5 years of service immediately preceding retirement or the full periods of service during which life insurance was available.

23. Federal Benefits (cont.)
Federal Employees Dental and Vision Insurance Program
Eligible to continue in retirement, eligible to enroll after retirement during qualifying period.
Federal Flexible Spending Account Program
Terminates on date of retirement, lose what remains if no eligible health care expenses prior to date of retirement.
Federal Long Term Care Insurance Program
Eligible to continue in retirement, eligible to enroll after retirement.

24. Social Security (cont.)
40 credits to qualify for a benefit (less credits necessary for a disability benefit).
Work may affect the amount of your benefit.
May be taxable for Federal Tax purposes.
Lump sum for annual leave may count towards your earnings limitation if you have a mid-year retirement.
How your benefits are calculated:
for benefit calculation examples.

25. Social Security (cont.)
Government Pension Offset (GPO)
Affects Spousal Benefits only
2/3 of the amount of government pension will be used to reduce the social security benefit
Affects CSRS in most cases
Windfall Elimination Provision (WEP)
Primarily affects CSRS employees that have 40 credits
Personal Benefits Statement will not take this in to account
Amount can be estimated
(FERS Employees and Widow/Widower(s) are not subject to any of the above unless they have a CSRS component to their annuity.)

26. Social Security (cont.)
Disability
Definition of disability differs from CSRS/FERS.
Survivor Benefits
Certain family members may be eligible for survivor benefit (including a parent).
One time special death benefit to surviving spouse or eligible child.
Former spouse may also receive benefit.

27. MEDICARE Part A – Hospitalization
Apply 3 months before age 65 (in most cases it is free)
Part B – Medical Insurance
Automatic Enrollment at age 65 (premium)
Can be deferred if you are still working
After retirement, there may be advantages to enrolling in Part B even if you are enrolled in the FEHB Program
Part C – Health Plan Options
Through private companies approved by Medicare
Part D – Prescription Drug Coverage
Monthly premium plus deductible and co-payments

28. TSP Free Money. Defined Contribution Plan.
5% contribution rate doubles immediately.
Tax is deferred until you take the money out.
Can transfer a qualifying previous employer plan into TSP.
Contributions are based on tax year.
Roth TSP Option.

29. TSP (cont.) Traditional TSP Pre-tax contributions.
Taxes are deferred so less money is taken out of your check.
Transfers allowed to and from eligible employer plans and traditional IRA’s and some Roth IRA’s.
Taxable when withdrawn.
No annual fee.
Roth TSP
After-tax contributions.
Government match will always be part of your traditional TSP balance.
Transfers allowed to and from Roth 401(k)’s, Roth 403(b)’s, Roth 457(b)’s, and some Roth IRA’s.
Earnings are tax-free if time and age requirements are met.
Note: Consult your Financial Advisor to determine which option is best for you.

30. TSP (cont.) Loans Hardship withdrawals Regular contributions
Catch-up contributions (age 50 and over)
Matching contributions (FERS only)
Various options on withdrawing when you retire

31. Misc. Information
Disability Retirement (medical condition that is expected to last longer than one year and keeps you from performing your assigned job duties)
Alternative Form of Annuity (terminal illness/short life expectancy and eligible to retire on immediate annuity)
Designation of Beneficiary (update when you have a qualifying life event)
Life Events (marriage, birth of child, divorce, death, etc…)
Death of an Employee
Note: Contact your Benefits Specialist if you have questions about the above.

32. What your Financial Planner needs to know:
Both CSRS and FERS are defined benefit pensions. All federal employees who have a least 5 years of civilian retirement covered service are vested.
CSRS/FERS pension is defined by length of service and high-three years of salary.
Your pension must be taken in the form of an annuity.
Your CSRS/FERS annuity will last you the rest of your life.
Your CSRS/FERS annuity may be adjusted by cost of living adjustments (COLAs).
There is a link between choosing a survivor benefit and the Federal Employees Health Plan.

33. Things To Keep in Mind:
Estate Planning (wills, trusts, health care directives, etc…)
How much money will you need to meet your needs in retirement?
Sources of income
Inflation
Taxes
Investment Management
Debt Management
Risk Tolerance

34. Compound Interest Sally Joe
Saves $2,000 per year, for her first 8 years of work, then stops saving for the next 32 years
Total contributions: $160,000
Joe
Does not save for the first 8 years of work, then starts saving $2,000 per year for the next 32 years
Total contributions: $64,000
Assume interest rate is 10% each year.

35. Compound Interest (cont.)
Q: Who was the wisest investor?
A: Sally
Because of compounding, Sally earned more than Joe, even though Joe invested 4 times more than Sally.
Start Saving Today!

36. Dream
Plan BIG!

38. HR Benefits Team
Option #3