Author Topic: Any FERS + TSP FIRE folks out there?  (Read 16407 times)

Cycling Stache

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Re: Any FERS + TSP FIRE folks out there?
« Reply #50 on: March 09, 2017, 07:48:54 AM »
Following because I just learned about VSIP from this thread.

I'm currently at 8 years in, and I'm not going to hit any retirement age calculation.  I did not know about the VSIP lump sum payment for those who did not otherwise qualify for early retirement past the minimum retirement age.

The only thing I noted was that $25k sounds good, but it's 2 months of work for me.   So it only makes sense to use when you're about ready to jump anyway.

I do think that VSIP payments are likely, because I believe there was an executive order about trying to accelerate the reduction of the federal work force, and this seems like a good candidate, although I'm sure they'll lead with the early retirement folks since those are typically the highest salaries.

For the annuity, as indicated above, it vests after 5 years.  If you don't hit a minimum retirement age or other qualification, you get it at 62.  It's (number of years employed) times (high 3 average salary) times (1%) for those folks.  I don't think there's a chance that number will renegotiated for already employed workers since it's part of the compensation package.  I view it as a decent supplement to social security, but definitely not something I'm going to work years longer just to increase.

For the health benefit, that does seem like a good deal, especially for those able to get full retirement at an early age.  For the rest of us, though, if retirement is otherwise at 62, isn't that just bridging the gap until Medicare (assuming there's a Medicare, of course)?  I realize the years 62-67 are probably costly for insurance, but I just want to make sure I understand what exactly the benefit is.

marion10

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Re: Any FERS + TSP FIRE folks out there?
« Reply #51 on: March 09, 2017, 09:08:27 AM »
Right now ( and who knows what the future will hold) when you retire on an immediate annuity, you get o carry over your FEHB benefits at the same rate (including an employer contribution) as an employee. This is a very good deal. You also have access to open season, so you can change plans each year if another plan suits you better, You can include your spouse and children up to age 26.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #52 on: March 09, 2017, 11:31:44 AM »
Also, a couple things to remember re: FEHB: (1) you MUST be in a FEHB plan within the last 5 years of your federal employment; so if you're on your spouse's plan and you want to have FEHB in retirement, you must get into an FEHB plan 5 years before your retirement date; (2) in order for your spouse to carry over FEHB after your death in retirement, you MUST choose a FERS annuity survivor benefit, otherwise your spouse is SOL if you die.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #53 on: March 09, 2017, 11:50:47 AM »
The continuation of FEHB is only valuable if you make your MRA, or get a VERA, and are too rich to qualify for health insurance subsidies.  For a more typical mustachian, the ACA (or presumably any replacement plan) offers equivalent subsidies to what FEHB provides.  Many folks here will not need or use their FEHB even if they do make their MRA.


The whole point of FERS was to allow federal employees more retirement options than the CSRS handcuffs.  Don't feel like you are stuck until your MRA.  I'm not going to last that long, and I'm happy to give up my FEHB to have decades of my life back.  There are other ways to provide for your healthcare.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #54 on: March 09, 2017, 12:06:40 PM »
The continuation of FEHB is only valuable if you make your MRA, or get a VERA, and are too rich to qualify for health insurance subsidies.  For a more typical mustachian, the ACA (or presumably any replacement plan) offers equivalent subsidies to what FEHB provides.  Many folks here will not need or use their FEHB even if they do make their MRA.


The whole point of FERS was to allow federal employees more retirement options than the CSRS handcuffs.  Don't feel like you are stuck until your MRA.  I'm not going to last that long, and I'm happy to give up my FEHB to have decades of my life back.  There are other ways to provide for your healthcare.

True for many Feds, but the golden handcuffs of a 20/25-year LEO retirement, retiring as early 41-42 years old, is pretty damn hard to pass up.  In my case, I'll have done 21.5 years, and retired just before my 54th birthday, but considering the 14 years prior to my Fed career were essentially spent living the FIRE life more or less (military --> college --> law school), I can't quibble with having worked 21.5 years to walk away with a significant pension for life, good health care and a robust 401k, especially since that 21.5 years came with plenty of time off and 40-hour workweeks.

doggyfizzle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #55 on: March 09, 2017, 12:14:03 PM »
Does anyone know (Dude in particular) if all your years of FERS service need to be in an LEO position to qualify for LEO FERS retirement?  Could you work 19 years as a regular FERS employee and then 1 (or more) years as a LEO and qualify for an earlier than MRA pension?

Weathering

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Re: Any FERS + TSP FIRE folks out there?
« Reply #56 on: March 09, 2017, 05:48:18 PM »
Does anyone know if sick leave is paid out at retirement?
All the materials I've seen are vague but I've heard from retirees that they were either paid out their sick leave or were able to use sick leave for their last several months of work at the DoD.

Bruizer

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Re: Any FERS + TSP FIRE folks out there?
« Reply #57 on: March 09, 2017, 06:49:41 PM »
Does anyone know if sick leave is paid out at retirement?
All the materials I've seen are vague but I've heard from retirees that they were either paid out their sick leave or were able to use sick leave for their last several months of work at the DoD.

Unused sick leave is added to your length of service used to determine your pension. For instance, if you retire with 30 years and you have six months of sick leave, your pension is computed using 30 years and six months.
« Last Edit: March 09, 2017, 06:51:20 PM by Bruizer »


dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #58 on: March 10, 2017, 07:50:16 AM »
Does anyone know (Dude in particular) if all your years of FERS service need to be in an LEO position to qualify for LEO FERS retirement?  Could you work 19 years as a regular FERS employee and then 1 (or more) years as a LEO and qualify for an earlier than MRA pension?

You have to do 20 years in a LEO position.  However, only 3 of those have to be in a primary LEO position, the rest can be in a secondary LEO position.  Take the BOP, for example -- working in a federal prison is a primary LEO position. Once you've done those three years and vested in a LEO pension, you can move to a secondary position, like say, one of the Regional Offices, Central Office, Community Corrections (i.e., halfway houses), one of our Training Centers, etc.  Once you've done 20 years in a LEO position (3 primary, rest secondary), you're good.  After that, if you chose to continue to work in the federal government, you could go work in any non-LEO agency (VA, HHS, DOE, etc) and you still get a LEO pension.

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #59 on: March 10, 2017, 07:55:33 AM »
Does anyone know if sick leave is paid out at retirement?
All the materials I've seen are vague but I've heard from retirees that they were either paid out their sick leave or were able to use sick leave for their last several months of work at the DoD.

Unused sick leave is added to your length of service used to determine your pension. For instance, if you retire with 30 years and you have six months of sick leave, your pension is computed using 30 years and six months.

Correct. For those who've never used their sick leave, it's a good deal if you have a shitload, because it can mean an extra year (or 1%) on your pension, which adds up year after year.  For others (probably most), who've used theirs regularly for sickness, family illness, medical appointments, etc., if you're only carrying a couple months' worth, the decision to burn it down at the end of your tenure is usually the more beneficial one.  What we see a lot in LEO is guys having 3-6 months of sick time left and going out on "stress leave" for the last months of their career.  Essentially, terminal leave.  Not too hard to get a doctor to sign off on it, especially if you've been in a primary LEO position (say, working in a federal prison) all those years.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #60 on: March 10, 2017, 08:05:19 AM »
Generally speaking, it is usually beneficial to use up all of your annual leave and all of your sick leave before you go, if you can.

Your annual leave is paid out, but not added to your pension.  You sick leave is added to your pension but not paid out.  If you use either kind of leave before retiring, that time is both paid out AND added to your pension.


Bruizer

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Re: Any FERS + TSP FIRE folks out there?
« Reply #61 on: March 10, 2017, 08:31:42 AM »
Generally speaking, it is usually beneficial to use up all of your annual leave and all of your sick leave before you go, if you can.

Your annual leave is paid out, but not added to your pension.  You sick leave is added to your pension but not paid out.  If you use either kind of leave before retiring, that time is both paid out AND added to your pension.

It depends on your circumstances, too.  The lump sum you get from your unused annual leave is a nice retirement bonus if your job is not too stressful and you don't mind not using your annual leave up.  You'll have unlimited "leave" once you retire.  In my case, I'll have about two months of annual leave to cash in this fall.  I could extend my retirement date by two months and use up the leave, but then I'd delay getting my pension and supplement by two months.


sparkytheop

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Re: Any FERS + TSP FIRE folks out there?
« Reply #62 on: March 10, 2017, 12:21:47 PM »
Another thing to think about as far as using annual leave or cashing it out, is the rate at which it will be paid.  I worked with a guy who had been working a "term promotion" worth about $3/hour more.  He saved up his annual leave to cash it out when he retired, thinking he'd get the higher rate.  When he retired, they cashed out his leave at his permanent rate, rather than the higher rate.  The term promotion did help him on his high three, but he would have made more money taking that annual leave.

With sick leave, to earn a full year on your pension, you basically have to work 20 years without taking any sick leave at all.  To me, that's not worth it.  If the sick leave would bump me into MRA eligibility (by adding time, even if I'm not there age-wise yet), it might be a little more tempting, but it doesn't.  I keep a nice bank of hours, but I have no problem calling in sick.

And can I just say it's nice to be able to discuss this with people in a similar boat?  Most of the people I work with feel like they will never be able to afford being able to retire, plan to work through their 60s, and have a "good luck with that" type response when they find out I'm planning to leave the first date I'm eligible.  The non-coworkers don't understand all the nuances with TSP/fed stuff.  While I'm not trying to get out as early as many here, I understand that process too because I was desperate to get out of my last position, and would have taken a large hit on my retirement just to escape (fortunately it didn't come to that, but I did take a paycut for my current position, and don't regret that decision at all).

primozaj

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Re: Any FERS + TSP FIRE folks out there?
« Reply #63 on: March 10, 2017, 01:23:37 PM »
Does anyone know if sick leave is paid out at retirement?
All the materials I've seen are vague but I've heard from retirees that they were either paid out their sick leave or were able to use sick leave for their last several months of work at the DoD.

I have been reviewing an inch thick retirement book from a two-day class that gets taught at my base from time to time.  Here's a couple quotes about sick leave:

"Employees receive credit for the total number of unused sick leave hours accumulated through their date of retirement.
 - Unused sick leave hours are added to length of service
 - Unused sick leave credit is used only in the computation of the retirement benefit; it is not used to establish retirement eligibility or to calculate the high-3 average salary.
 - There is no limit on the amount of unused sick leave that can be credited."

"Retirement benefits are paid based on a 30-day month; therefore, for computation, all months have 30 days"

Cycling Stache

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Re: Any FERS + TSP FIRE folks out there?
« Reply #64 on: March 10, 2017, 04:52:27 PM »
Does anyone know if sick leave is paid out at retirement?
All the materials I've seen are vague but I've heard from retirees that they were either paid out their sick leave or were able to use sick leave for their last several months of work at the DoD.

I have been reviewing an inch thick retirement book from a two-day class that gets taught at my base from time to time.  Here's a couple quotes about sick leave:

"Employees receive credit for the total number of unused sick leave hours accumulated through their date of retirement.
 - Unused sick leave hours are added to length of service
 - Unused sick leave credit is used only in the computation of the retirement benefit; it is not used to establish retirement eligibility or to calculate the high-3 average salary.
 - There is no limit on the amount of unused sick leave that can be credited."

"Retirement benefits are paid based on a 30-day month; therefore, for computation, all months have 30 days"

Good information.  Correct that you don't get paid for your sick leave.  But I think what's being suggested is that some people just take most or all of it at the end before they retire.  So they're sick for 3-4 months, etc., then retire shortly after. 

Monkey Uncle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #65 on: March 11, 2017, 05:13:49 AM »
Generally speaking, it is usually beneficial to use up all of your annual leave and all of your sick leave before you go, if you can.

Your annual leave is paid out, but not added to your pension.  You sick leave is added to your pension but not paid out.  If you use either kind of leave before retiring, that time is both paid out AND added to your pension.

I'd love to do that, but I don't think I can figure out a way to make it work within any kind of reasonable time frame.  I've been hoarding my sick leave like free disability insurance, and have amassed somewhere between six months and a year's worth.  Plus I roll 240 hrs of annual leave over every year.  It would take quite a while to work through all of that while still being effective at my job.
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esskay1000

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Re: Any FERS + TSP FIRE folks out there?
« Reply #66 on: March 11, 2017, 06:32:25 AM »
I've amassed quite a lot of sick leave in my 21 years of service, but am now using more and more to take car of my elderly mother.  Just taking her to a doctor appointment requires a full day of sick leave, by the time I drive the 1.5 hours, get her there and back, and drive home. I was conservative with my sick leave my whole career and now I have over 1350 hours and the benefit is manifesting itself.

sol

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Re: Any FERS + TSP FIRE folks out there?
« Reply #67 on: March 11, 2017, 10:21:04 AM »
I don't think I can figure out a way to make it work within any kind of reasonable time frame.  I've been hoarding my sick leave like free disability insurance,

I think I may finally get that surgery I've been postponing.  Recovery could take months!

Gunny

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Re: Any FERS + TSP FIRE folks out there?
« Reply #68 on: March 14, 2017, 05:13:48 AM »
I don't think I can figure out a way to make it work within any kind of reasonable time frame.  I've been hoarding my sick leave like free disability insurance,

I think I may finally get that surgery I've been postponing.  Recovery could take months!

Sol, a job-ectomy?

fattest_foot

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Re: Any FERS + TSP FIRE folks out there?
« Reply #69 on: March 14, 2017, 08:41:17 AM »
Just keep in mind that with sick leave, it's only if you're doing a traditional retirement under FERS.

If you're going to FIRE and be out before your 30 or MRA, the sick leave does nothing for you.

I've wondered for a while about how to actually handle my sick leave for FIRE. It accumulates so fast that I keep carrying over more and more. I'm not sure how I will go about burning it all up at the end of my career. Hopefully I'll be working for a very understanding supervisor at that point who will be okay with me taking several months off, but I'm not counting on anything.

Cycling Stache

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Re: Any FERS + TSP FIRE folks out there?
« Reply #70 on: March 14, 2017, 08:50:46 AM »
Just keep in mind that with sick leave, it's only if you're doing a traditional retirement under FERS.

If you're going to FIRE and be out before your 30 or MRA, the sick leave does nothing for you.

I don't believe that's true.  You're entitled to an annuity beginning at age 62 so long as you have 5 years of service.  Your annuity is based in part on your years of service, calculated to the nearest month.  Your unused sick leave time is added to your years of service for the annuity formula. 

It's obviously worth more to you if you use it, but it still goes into the calculation if unused.

JohannaP

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Re: Any FERS + TSP FIRE folks out there?
« Reply #71 on: March 14, 2017, 12:32:06 PM »
Posting to follow, thanks.

marion10

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Re: Any FERS + TSP FIRE folks out there?
« Reply #72 on: March 14, 2017, 08:43:16 PM »
Look in the FERS annuity handbook ( google it) - sick leave is not creditable towards a deferred annuity.

Monkey Uncle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #73 on: March 16, 2017, 04:42:32 AM »
Look in the FERS annuity handbook ( google it) - sick leave is not creditable towards a deferred annuity.

It appears the handbook was last updated in 1998, which was long before the law was changed to allow credit for unused sick leave for FERS employees.  In 1998, no FERS employees got to count sick leave, no matter the circumstances of their retirement.

I did find a couple of third party websites that stated that sick leave is not creditable towards a deferred annuity (for either FERS or CSRS).  That fuckin' sucks.  Wish I had known about that years ago.  Now I have to figure out how to get sick for six months.
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randommadness

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Re: Any FERS + TSP FIRE folks out there?
« Reply #74 on: March 16, 2017, 07:54:04 AM »

And can I just say it's nice to be able to discuss this with people in a similar boat?

This.

Anyway, finally hit my 240 last year. FEELSGOODMAN. Want to keep that going forever. Going to be amazing hitting that 8 hours in 2021.

I also don't stress about my sick leave... I remember being in college and always trying to maintain about 40/40 leave balances, now I'm at like 320 sick hours.

Bruizer

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Re: Any FERS + TSP FIRE folks out there?
« Reply #75 on: March 16, 2017, 08:33:51 AM »
I've always viewed sick leave as short term disability insurance.  After 30 years, I'm up to 1200 hours which translates to about six months.  Since I've been blessed with no major health problems that required short term disability, I can now have the sick leave credited to my service length when I retire.  It will add about $60 per month to my pension - not a lot, but it's a nice bonus.


primozaj

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Re: Any FERS + TSP FIRE folks out there?
« Reply #76 on: March 17, 2017, 11:24:34 AM »
Nothing I am finding in this book my colleague loaned me says anything about sick leave not being counted for early or deferred retirement.  Its a book put out (that I referenced before) by the National Institute for Transition Planning.

I also wanted to share this link http://www.myfederalretirement.com/ to see if it might help.

sparkytheop

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Re: Any FERS + TSP FIRE folks out there?
« Reply #77 on: March 17, 2017, 09:58:41 PM »
First, a quote from fedweek that kind of sums it up

http://www.fedweek.com/retirement-financial-planning/the-impact-of-sick-leave-on-retirement-benefits/

Quote
Further, you won’t get any credit for unused sick leave if you leave government before you are eligible to retire and later apply for a deferred annuity.

Direct from a .gov site, worded a little more vague, but, by stating "immediate annuity" seems to be excluding deferred or postponed annuities:

https://www.opm.gov/policy-data-oversight/pay-leave/leave-administration/fact-sheets/sick-leave-general-information/

Quote
Unused sick leave will be used in the calculation of an employee's or survivor's annuity based on retirement with an immediate annuity or on a death in service.
(bolding mine)

If you can access EBIS, you should be able to put in various retirement scenarios and can see what will actually happen in your case (I know for MRA calculations, they ask for your sick leave balance, but not sure about a deferred calculation).

neverrun

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Re: Any FERS + TSP FIRE folks out there?
« Reply #78 on: March 18, 2017, 12:10:35 AM »
Does anyone know (Dude in particular) if all your years of FERS service need to be in an LEO position to qualify for LEO FERS retirement?  Could you work 19 years as a regular FERS employee and then 1 (or more) years as a LEO and qualify for an earlier than MRA pension?

You need 20 as a LEO.

neverrun

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Re: Any FERS + TSP FIRE folks out there?
« Reply #79 on: March 18, 2017, 12:26:56 AM »
My full retirement LEO in 2025 is one idea but in reality I'm on a month to month program.  (I've hit bare fire but would like more than minimum). I'll make a decision in 2019 (if I make it that far) as to if I'll finish it out.  I'm in a job that gets absolutely hammered every 4 years.  But I'm at max carry over on A/L getting 26 days of it a year and at quite a bit on S/L as shot term disability.  If I make it to age 47 and full retirement I'll have an immediate pension that is more than I need which is why I see 1/2020 as a tipping point if I'm still around it would be stupid imho to stop working at that point.  We'll see.

sparkytheop

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Re: Any FERS + TSP FIRE folks out there?
« Reply #80 on: March 18, 2017, 09:01:15 AM »
To verify the whole sick leave calculation (will I or won't I for deferred retirement), I did my retirement calculations in EBIS this morning.

With voluntary retirement (MRA + 35 years service), on the "estimate report" page, under "Creditable Service" it showed my sick leave balance as a credit (I just put in 300 hours as a test, giving a credit of 1 month 22 days). 

I did an "edit" changing retirement to Deferred retirement (MRA not met but 30 years service met). Everything else was left the same. Under the "Creditable Service" area, the numbers for sick leave as a credit were "0".

So, no, you can't use unused sick leave to add to your service credit if you defer retirement. (LEO and Postal retirements might be different, mine is just a civilian FERS retirement).

If you haven't played with the calculators on EBIS (employee benefit information system), I highly recommend it.  Each agency has their own link, so I don't really have one to share that would work for everyone.

LorettaLynn

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Re: Any FERS + TSP FIRE folks out there?
« Reply #81 on: March 18, 2017, 09:15:04 AM »
Posting to follow.  I only have about 4000ish more days to go until retirement.  As nutty as Uncle Sugar can be, we are so fortunate to have the great benefits we have.

QAA

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Re: Any FERS + TSP FIRE folks out there?
« Reply #82 on: March 19, 2017, 08:57:04 PM »
I am a retired fed with FERS+TSP, no other investment accounts.  As a Foreign Service officer, my MRA was 50 with 20 years in.  I retired at age 52 with 25 years.  I sold the house in DC and bought a house in Wisconsin.  My oldest was out of college, my youngest started this last year.  (I had pre-paid tuition via VA 529 plan. Since my kid is going to an out-of-state school, VA basically just sends the $$ to the UW-Madison.  It's enough to pay in-state tuition plus a bit more, so I'm just on the hook for room & board).  I continued the health plan.  The TSP is still sitting where I left it; I'll decide what to do with it later.  For right now I get my pension (reduced because I retired so early) plus a small supplement that represents SS.  At age 62 I'll lose the supplement, but gain SS.

Many of my former colleagues are/will be better off than I am - at least on paper.  I don't care.  I have avoided debt, lived below my means, and now have freedom.

Having a real pension is amazing.  I had thought about pulling the plug earlier, but am glad I stayed in.  While government service can be deadly, it can also be amazing because you're looking at the bigger picture.  For example, instead of being worried about making a specific sale (like I would have done in a private company), I was focused on helping ensure certain trade agreements gave American exporters a level playing field. There are a lot of different positions in the government; take the time to find one that's fun and that you can believe in.

Wow, hello future me. I'm 28. 2 years into my first post. Maxing out TSP and a Roth for a total of 23.5k/yr plus state matching. Hoping to retire at 52. What tips do you have for yourself 20 years ago? Anything you'd do differently? Do I have to TIC out to avoid the reduced pension?

primozaj

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Re: Any FERS + TSP FIRE folks out there?
« Reply #83 on: March 20, 2017, 07:52:43 AM »
To verify the whole sick leave calculation (will I or won't I for deferred retirement), I did my retirement calculations in EBIS this morning.

With voluntary retirement (MRA + 35 years service), on the "estimate report" page, under "Creditable Service" it showed my sick leave balance as a credit (I just put in 300 hours as a test, giving a credit of 1 month 22 days). 

I did an "edit" changing retirement to Deferred retirement (MRA not met but 30 years service met). Everything else was left the same. Under the "Creditable Service" area, the numbers for sick leave as a credit were "0".

So, no, you can't use unused sick leave to add to your service credit if you defer retirement. (LEO and Postal retirements might be different, mine is just a civilian FERS retirement).

If you haven't played with the calculators on EBIS (employee benefit information system), I highly recommend it.  Each agency has their own link, so I don't really have one to share that would work for everyone.

Thanks for doing that.  I should spend more time in EBIS playing with scenarios... but it wasn't until the last couple years that I've even thought about going early.

sparkytheop

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Re: Any FERS + TSP FIRE folks out there?
« Reply #84 on: March 28, 2017, 09:31:55 AM »
New question for my fellow FER-ies/TSP-ers...

Note-- I do *not* plan on doing this, just trying to find out if anyone else has heard of it...

I was just talking to one of my coworkers.  He found out I am helping my son with college by cash-flowing $1k/month (my son is responsible for coming up with the rest).  He told me there is a "secret" third type of TSP loan, that can be used for a dependent's college expenses.

According to him, you get the loan, but your payments are set at a lower tax rate.  You pay it back the same way, but while doing so, the money used to pay it back are taxed at about half the rate.  There is no penalty fee like there would be if you had withdrawn the money.  It is not one of the two better-known loan types (general and residential).

He said he took out a $48k loan for his child this way, but had to talk directly to TSP to do so.

This is completely new to me.  As noted, I don't plan to do this.  Between my son going to a community college for his first two years, the little bit of child support he gets, the Oregon Promise this year (maybe next year, but kind of doubtful), and the money he saves from his part time job, he should have enough to cover his last two years at a state college (including all the extras--food, room, books, etc).  If he can't quite get it covered, he should be able to still come out of it with less than $20k in loans (which I believe he should take out for himself, I'll have already provided quite a bit).  However, it does make me curious to whether or not this really exists, and in what form...

Bruizer

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Re: Any FERS + TSP FIRE folks out there?
« Reply #85 on: March 28, 2017, 09:55:37 AM »
New question for my fellow FER-ies/TSP-ers...

Note-- I do *not* plan on doing this, just trying to find out if anyone else has heard of it...

I was just talking to one of my coworkers.  He found out I am helping my son with college by cash-flowing $1k/month (my son is responsible for coming up with the rest).  He told me there is a "secret" third type of TSP loan, that can be used for a dependent's college expenses.

According to him, you get the loan, but your payments are set at a lower tax rate.  You pay it back the same way, but while doing so, the money used to pay it back are taxed at about half the rate.  There is no penalty fee like there would be if you had withdrawn the money.  It is not one of the two better-known loan types (general and residential).

He said he took out a $48k loan for his child this way, but had to talk directly to TSP to do so.

This is completely new to me.  As noted, I don't plan to do this.  Between my son going to a community college for his first two years, the little bit of child support he gets, the Oregon Promise this year (maybe next year, but kind of doubtful), and the money he saves from his part time job, he should have enough to cover his last two years at a state college (including all the extras--food, room, books, etc).  If he can't quite get it covered, he should be able to still come out of it with less than $20k in loans (which I believe he should take out for himself, I'll have already provided quite a bit).  However, it does make me curious to whether or not this really exists, and in what form...

Sounds like he took out a regular TSP loan and put it in a 529 Plan.  There are no taxes on a loan unless you default on it.


primozaj

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Re: Any FERS + TSP FIRE folks out there?
« Reply #86 on: March 28, 2017, 10:51:23 AM »

He told me there is a "secret" third type of TSP loan, that can be used for a dependent's college expenses.


Everything I am looking up says that it would be a general TSP loan.  I wonder if he got some sort of in-service withdrawal and thought it was a loan.  I'd almost want to call and inquire just to get more information.

ROF Expat

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Re: Any FERS + TSP FIRE folks out there?
« Reply #87 on: April 01, 2017, 01:24:34 AM »
QAA,

I recently retired from the Foreign Service (coincidentally, at 52) with almost 31 years of service. 

If you're maxing out your TSP and a Roth and presumably living well below your income, you've laid the groundwork for your retirement from the Foreign Service.  The FSPS retirement system is pretty generous and geared toward people retiring relatively early, with the basic minimum for immediate retirement being 20 years of service and 50 years of age.  If you joined at 26, you should be able to retire as early as 46 and draw a full pension.  At that point, you'd get a pension of about 34% of  your high three years average salary (with COLA) plus the snnuity supplement (no COLA and comes with an earned income limit at a certain age) and FEHB for life.  If you retire at 52, you'll get about 40% of your (presumably higher) high three salary, a bigger Annuity Supplenent, and FEHB. 

I don't understand your question about TICing out to avoid a reduced pension.  If you voluntarily leave the service before 20/50, you'll get whatever pension you qualify for, but not until way down the road when you reach a regular retirement age.  I'm not sure what happens if you TIC out before 20/50, but I suspect it is the same.  You can ask RNET.  In any case, to TIC out requires 22 years overall or 15 in a single grade.  By the time  you reach those numbers you would be close to regular retirement age. 

To my knowledge, the exception to the 20/50 rule is opening your window for the Senior Foreign Service.  If you open your window and aren't promoted into the Senior Service within six boards (effectively five years), you must immediately leave the Foreign Service.  If you don't have 20/50, you will still immediately collect your pension at whatever level you have earned without any penalty.  If you joined at 26, you could get promoted to FO-1 in time to open your window before age 45, so this would be a possibility. 

If you are planning on retiring at 52 (or even earlier), you might want to think about your TSP contributions.  I find myself in the position of having a lot of money in the TSP that I can't withdraw until 59-1/2.  This isn't a problem for me, and the money is growing in the meantime.  If your pension and supplement, Roth, and whatever other resources you have will allow you to bridge the gap between retirement and when you can access your TSP funds, I would fully fund the TSP.  If you can't cover the gap, you might consider funding the TSP up to the level of match and then investing the other money in ways that will give you access. 

A few other thoughts geared toward early retirement:

--While you are overseas, save the amount of money you think you'd have to pay in monthly rent in DC.  When you go back to DC you'll have a pile of cash or the downpayment on a home.  Remember that DC is one of the nation's most expensive real estate markets. 

--Avoid serving in DC.  Financially, being overseas is generally much more attractive.

--Consider serving in danger and/or hardship posts.  If you save and invest your differentials, it can add up to a lot of money.  Of course, this has to be balanced by family considerations and the possibility of being shot, blown up, or dying of some horrible tropical disease.  You generally get danger and hardship pay for good reasons. 

Good luck in your Foreign Service career.  I had a lifetime of adventure and hope you do, too.  Keep your head down and be safe.  Most people think we spend our careers wearing dinner jackets and attending cocktail parties.  They have no idea of the lives we and our families actually lead. 

Wow, hello future me. I'm 28. 2 years into my first post. Maxing out TSP and a Roth for a total of 23.5k/yr plus state matching. Hoping to retire at 52. What tips do you have for yourself 20 years ago? Anything you'd do differently? Do I have to TIC out to avoid the reduced pension?
[/quote]

Monkey Uncle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #88 on: April 01, 2017, 04:18:44 AM »
If you are planning on retiring at 52 (or even earlier), you might want to think about your TSP contributions.  I find myself in the position of having a lot of money in the TSP that I can't withdraw until 59-1/2.  This isn't a problem for me, and the money is growing in the meantime.  If your pension and supplement, Roth, and whatever other resources you have will allow you to bridge the gap between retirement and when you can access your TSP funds, I would fully fund the TSP.  If you can't cover the gap, you might consider funding the TSP up to the level of match and then investing the other money in ways that will give you access. 

You can always roll your TSP to a tIRA after you leave, then do a Roth conversion pipeline to access it.  Depending on the amount of your other income, you may owe regular taxes on the conversion amounts.
"Take this job and shove it" - David Allan Coe

Monkey Uncle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #89 on: April 01, 2017, 04:20:40 AM »
I don't think I can figure out a way to make it work within any kind of reasonable time frame.  I've been hoarding my sick leave like free disability insurance,

I think I may finally get that surgery I've been postponing.  Recovery could take months!

I had the flu this pay period, so I might actually get to use a few hours of sick leave.  Baby steps.
"Take this job and shove it" - David Allan Coe

ROF Expat

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Re: Any FERS + TSP FIRE folks out there?
« Reply #90 on: April 01, 2017, 06:51:01 AM »
If you are planning on retiring at 52 (or even earlier), you might want to think about your TSP contributions.  I find myself in the position of having a lot of money in the TSP that I can't withdraw until 59-1/2.  This isn't a problem for me, and the money is growing in the meantime.  If your pension and supplement, Roth, and whatever other resources you have will allow you to bridge the gap between retirement and when you can access your TSP funds, I would fully fund the TSP.  If you can't cover the gap, you might consider funding the TSP up to the level of match and then investing the other money in ways that will give you access. 

You can always roll your TSP to a tIRA after you leave, then do a Roth conversion pipeline to access it.  Depending on the amount of your other income, you may owe regular taxes on the conversion amounts.

Monkey Uncle,

I am interested in a Roth IRA for the possible tax advantages (I find it hard to believe that tax rates wouldn't be higher a decade or two from now).  I'm not so interested that I want to take the tax hit on over a million dollars...  Fortunately, since I have a generous pension and a working spouse, I can just let it sit.  Also, I am inclined to stay in the TSP for the G fund option.  If Congress takes that away, I would probably move from TSP to Vanguard.  I think your advice on a transfer is very much worth considering for the previous poster, an FSO who is just starting out. 

Gunny

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Re: Any FERS + TSP FIRE folks out there?
« Reply #91 on: April 04, 2017, 05:13:40 AM »
You can leave your money in TSP and take 72(t) distribution.  It's somewhat restrictive but allows access to money in your TSP penalty free.

blockzilla

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Re: Any FERS + TSP FIRE folks out there?
« Reply #92 on: April 04, 2017, 09:11:20 AM »
Great thread! I'm going to be 38 years old with just over 15 years as a DoD engineer in August, when I plan to hang it up. I'm actually going on LWOP for up to 2 years, my supervisor has approved with the rationale that my kids are 6 and 4 and I want a couple of good years with them as a sabbatical type thing.  HIGHLY doubt I would come back after two years though, but it is a nice safety net.

My wife wants to continue working so healthcare would be covered. I'm assuming I could just leave everything (~$500K) in TSP, and decide if I want to do a t-IRA later on if I wanted to explore Roth ladder to supplement her income? Or does it need to be done at the time of separation?  I've also thought about the 72t route, but most likely will just leave it all there until MRA.

I did learn that LWOP lets you carry FEHB for up to one year, so I'll have to just pay it from Aug-Oct, then transition the family onto my wife's plan during her fall Open Season.


evanc

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Re: Any FERS + TSP FIRE folks out there?
« Reply #93 on: May 02, 2017, 01:01:25 PM »
LivlongnProsper is right about the 5 years (I missed that part in the OPM handbook)...but then you don't have the option of drawing your pension any earlier than 62.

10 years means you can start drawing at your MRA (57) with a reduction...but again, its more flexible.

Or you could just take your cash and run.

Anyone considering drawing at MRA should run the numbers on the penalty (applies for each year under 62). In some cases, it can be quite costly. Just something to be aware of and plan for accordingly (I.e. Have other funds to bridge the gap).

CheapskateWife

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Re: Any FERS + TSP FIRE folks out there?
« Reply #94 on: May 02, 2017, 02:47:56 PM »
LivlongnProsper is right about the 5 years (I missed that part in the OPM handbook)...but then you don't have the option of drawing your pension any earlier than 62.

10 years means you can start drawing at your MRA (57) with a reduction...but again, its more flexible.

Or you could just take your cash and run.

Anyone considering drawing at MRA should run the numbers on the penalty (applies for each year under 62). In some cases, it can be quite costly. Just something to be aware of and plan for accordingly (I.e. Have other funds to bridge the gap).
I ran these numbers assuming that i'll FIRE with 14 years of service and looking at the option of drawing at 57 or drawing at 62.  With the penalty, my break even age for the cumulative income is 75.  It isn't a big enough difference to justify waiting for me.  I've done the same kind of math with SSI and drawing early is a gamechanger for early retirees.  I don't need much, but I do need it early :)

Monkey Uncle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #95 on: May 03, 2017, 04:27:36 AM »
LivlongnProsper is right about the 5 years (I missed that part in the OPM handbook)...but then you don't have the option of drawing your pension any earlier than 62.

10 years means you can start drawing at your MRA (57) with a reduction...but again, its more flexible.

Or you could just take your cash and run.

Anyone considering drawing at MRA should run the numbers on the penalty (applies for each year under 62). In some cases, it can be quite costly. Just something to be aware of and plan for accordingly (I.e. Have other funds to bridge the gap).
I ran these numbers assuming that i'll FIRE with 14 years of service and looking at the option of drawing at 57 or drawing at 62.  With the penalty, my break even age for the cumulative income is 75.  It isn't a big enough difference to justify waiting for me.  I've done the same kind of math with SSI and drawing early is a gamechanger for early retirees.  I don't need much, but I do need it early :)

Same here.  cFiresim says DW and I will be able to withstand a larger annual spend if we take FERS and SS as soon as we can.
"Take this job and shove it" - David Allan Coe

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #96 on: May 04, 2017, 07:11:56 AM »
My full retirement LEO in 2025 is one idea but in reality I'm on a month to month program.  (I've hit bare fire but would like more than minimum). I'll make a decision in 2019 (if I make it that far) as to if I'll finish it out.  I'm in a job that gets absolutely hammered every 4 years.  But I'm at max carry over on A/L getting 26 days of it a year and at quite a bit on S/L as shot term disability.  If I make it to age 47 and full retirement I'll have an immediate pension that is more than I need which is why I see 1/2020 as a tipping point if I'm still around it would be stupid imho to stop working at that point.  We'll see.

Also, don't forget that in addition to your FERS pension you will collect the SRS for 15 years (!) if you LEO retire at 47 (i.e., until age 62).  Depending on your salary level and time in service, that's an extra $9-$12k a year (on average -- I know a guy with 31 years that will be getting $19k/year from his SRS!).

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #97 on: May 04, 2017, 07:15:38 AM »
If you are planning on retiring at 52 (or even earlier), you might want to think about your TSP contributions.  I find myself in the position of having a lot of money in the TSP that I can't withdraw until 59-1/2.  This isn't a problem for me, and the money is growing in the meantime.  If your pension and supplement, Roth, and whatever other resources you have will allow you to bridge the gap between retirement and when you can access your TSP funds, I would fully fund the TSP.  If you can't cover the gap, you might consider funding the TSP up to the level of match and then investing the other money in ways that will give you access. 

You can always roll your TSP to a tIRA after you leave, then do a Roth conversion pipeline to access it.  Depending on the amount of your other income, you may owe regular taxes on the conversion amounts.

The Roth conversion ladder is not nearly as attractive to a retired FERS employee as it is to the early retiree who seeks to live on <$25k/year, because of the pension.  You will be taxed at much higher rates than the Go Curry Crackers of the world.

Monkey Uncle

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Re: Any FERS + TSP FIRE folks out there?
« Reply #98 on: May 05, 2017, 04:42:21 AM »
If you are planning on retiring at 52 (or even earlier), you might want to think about your TSP contributions.  I find myself in the position of having a lot of money in the TSP that I can't withdraw until 59-1/2.  This isn't a problem for me, and the money is growing in the meantime.  If your pension and supplement, Roth, and whatever other resources you have will allow you to bridge the gap between retirement and when you can access your TSP funds, I would fully fund the TSP.  If you can't cover the gap, you might consider funding the TSP up to the level of match and then investing the other money in ways that will give you access. 

You can always roll your TSP to a tIRA after you leave, then do a Roth conversion pipeline to access it.  Depending on the amount of your other income, you may owe regular taxes on the conversion amounts.

The Roth conversion ladder is not nearly as attractive to a retired FERS employee as it is to the early retiree who seeks to live on <$25k/year, because of the pension.  You will be taxed at much higher rates than the Go Curry Crackers of the world.

Yeah, I guess if you're planning to stay until your MRA (or close to it) your pension won't leave you much, if any, room for 0% tax Roth pipeline conversions.  But at that point a mustachian should be able to live mostly off the pension (and SS supplement if you stayed to MRA) without drawing much from the stash.  So the taxes you pay to get money out of the TSP, whether through conversions or through waiting until 59 1/2, would fall under the category of "first world problems."
"Take this job and shove it" - David Allan Coe

dude

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Re: Any FERS + TSP FIRE folks out there?
« Reply #99 on: May 05, 2017, 10:43:20 AM »
If you are planning on retiring at 52 (or even earlier), you might want to think about your TSP contributions.  I find myself in the position of having a lot of money in the TSP that I can't withdraw until 59-1/2.  This isn't a problem for me, and the money is growing in the meantime.  If your pension and supplement, Roth, and whatever other resources you have will allow you to bridge the gap between retirement and when you can access your TSP funds, I would fully fund the TSP.  If you can't cover the gap, you might consider funding the TSP up to the level of match and then investing the other money in ways that will give you access. 

You can always roll your TSP to a tIRA after you leave, then do a Roth conversion pipeline to access it.  Depending on the amount of your other income, you may owe regular taxes on the conversion amounts.

The Roth conversion ladder is not nearly as attractive to a retired FERS employee as it is to the early retiree who seeks to live on <$25k/year, because of the pension.  You will be taxed at much higher rates than the Go Curry Crackers of the world.

Yeah, I guess if you're planning to stay until your MRA (or close to it) your pension won't leave you much, if any, room for 0% tax Roth pipeline conversions.  But at that point a mustachian should be able to live mostly off the pension (and SS supplement if you stayed to MRA) without drawing much from the stash.  So the taxes you pay to get money out of the TSP, whether through conversions or through waiting until 59 1/2, would fall under the category of "first world problems."

Fortunately, being Fed LEO, I won't have to wait -- I get penalty-free access if I retire at age 50 or after, which will be the case for me.  A Roth pipeline just won't work for me with my pension income.  But I do have a Roth IRA and was able to backdoor $6,500 into it this year, and will continue to do so the next couple years, and when I retire and work part-time at a fun "job" I'll continue to put $6,500/year into it.