Author Topic: Big FIRE news for Fed LEO/FF's  (Read 5775 times)

dude

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Big FIRE news for Fed LEO/FF's
« on: June 25, 2015, 06:34:14 AM »
H.R. 2146, the "Defending Public Safety Employees' Retirement Act" passed the Senate yesterday and is on its way to the President's desk for signature.  The Act will now exempt certain federal law enforcement and firefighter personnel from the IRS 10% penalty for withdrawing from the Thrift Savings Plan before age 59 1/2 for those retired individuals who've attained the age of 50.  Game-changer for lots of folks, I'd imagine.  For me, it's only going to potentially cut 7 months off my LEO career, but for others it could make a significant difference, especially for the Mustachian LEO/FF's out there.

dandarc

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Re: Big FIRE news for Fed LEO/FF's
« Reply #1 on: June 25, 2015, 06:37:57 AM »
Nice - that simplifies the withdrawal strategy a ton.

dude

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Re: Big FIRE news for Fed LEO/FF's
« Reply #2 on: June 25, 2015, 07:06:07 AM »
Nice - that simplifies the withdrawal strategy a ton.

Indeed!  Not having to deal with life expectancy payments and being locked in for 5 years or 59 1/2 is huge.

dude

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Re: Big FIRE news for Fed LEO/FF's
« Reply #3 on: July 01, 2015, 01:31:58 PM »
Incidentally, this was signed into law by the President on June 29, 2015.  Applicable to withdrawals made after December 31, 2015.

forummm

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Re: Big FIRE news for Fed LEO/FF's
« Reply #4 on: July 01, 2015, 01:56:54 PM »
So early withdrawals don't have a penalty. But do you still only get 2 total withdrawals (one partial and one full)? If so, that would be a lot of tax to pay all at once.

Sunny

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Re: Big FIRE news for Fed LEO/FF's
« Reply #5 on: July 01, 2015, 06:50:17 PM »
I subscribe to the FERSGUIDE which provides up-to-date information.  It's a small annual fee and has been worth the fee. The author is a retired LEO.   www.fersguide.com

dude

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Re: Big FIRE news for Fed LEO/FF's
« Reply #6 on: July 02, 2015, 06:44:51 AM »
So early withdrawals don't have a penalty. But do you still only get 2 total withdrawals (one partial and one full)? If so, that would be a lot of tax to pay all at once.

For the TSP, in addition to the two major withdrawals, you have a monthly payment option, which you have to set once a year (can't be changed until the next year).  Which is fine for a 4% strategy, as you adjust for the previous years' inflation each year when setting the payment amount for the coming year.

dude

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Re: Big FIRE news for Fed LEO/FF's
« Reply #7 on: July 02, 2015, 06:50:04 AM »
I subscribe to the FERSGUIDE which provides up-to-date information.  It's a small annual fee and has been worth the fee. The author is a retired LEO.   www.fersguide.com

Yes, the FERSGUIDE is very good.  I actually just had an online conversation with Dan Jamison yesterday, because he was quoted in a FedSmith article earlier this month as saying that under the new bill Fed LEOs could retire before age 50 and then start penalty-free withdrawals at 50, which is NOT the case.  As with the Age 55 Exception, with the Public Safety Employee Exception, you must be in service in or after the year you turn 50 to be eligible for the penalty-free withdrawals. Dan acknowledged the error and said it was based on discussions about a previous version of the bill, and stated he was updating the 2015 FERSGUIDE accordingly.

Frs1661

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Re: Big FIRE news for Fed LEO/FF's
« Reply #8 on: July 02, 2015, 11:00:09 AM »
Good for you federal LEOs! I have just written to my representatives to suggest they extend this benefit to the rest of the federal workforce, but I'm not holding my breath.

Fiscally, it makes sense. If more feds can retire early, the more expensive workers drop off their books, and their future pension benefits are reduced as well. Win-win right?

I wonder if this was passed on its merits, or because the fast-track authority for the TPP was grafted onto it?

enigmaT120

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Re: Big FIRE news for Fed LEO/FF's
« Reply #9 on: July 02, 2015, 12:10:39 PM »
I guess I thought we all could withdraw from the TSP without the tax penalty if we retire after age 50.  I wasn't planning to anyway though -- I am hanging on until 56 and should have no problems living off my pension and the Social Security Supplement until age 62.  Unless future governments yank that last one out from under my feet!

If nothing else, my forest land should be ready for a good commercial thinning by that point.  Only if timber prices are good at the time though.



Blonde Lawyer

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Re: Big FIRE news for Fed LEO/FF's
« Reply #10 on: July 15, 2015, 03:11:19 PM »
Good for you federal LEOs! I have just written to my representatives to suggest they extend this benefit to the rest of the federal workforce, but I'm not holding my breath.

Fiscally, it makes sense. If more feds can retire early, the more expensive workers drop off their books, and their future pension benefits are reduced as well. Win-win right?

I wonder if this was passed on its merits, or because the fast-track authority for the TPP was grafted onto it?

I think one of the reasons it is LEO only is because LEOs frequently have a mandatory retirement age such that they couldn't work up to the penalty free withdrawal period even if they wanted to.  Other positions at least have a choice.

Bajadoc

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Re: Big FIRE news for Fed LEO/FF's
« Reply #11 on: July 15, 2015, 06:28:16 PM »
What is the mandatory retirement age of federal LEO's?
« Last Edit: July 15, 2015, 06:33:05 PM by Bajadoc »

Blonde Lawyer

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Re: Big FIRE news for Fed LEO/FF's
« Reply #12 on: July 16, 2015, 08:59:09 AM »
From a benefit's website.  Actual title redacted to try to stay anon.  I'm not the fed, my husband is.

[X jobs] are classified as law enforcement, or hazardous duty, and as such are required to pay a slightly higher portion of salary toward their retirement than non-hazardous duty employees (1.7% for law enforcement officers versus 1.2% for non-law enforcement employees in 2000). Under the Federal Employees Retirement System (FERS), Federal law enforcement officers may retire at age 50 with 20 years of hazardous duty service, or at any age with 25 years of hazardous duty service. Mandatory retirement age is 57 years old, as mandated under the provisions of 5 U.S.C. § 8335(b),8425(b).

I mistakenly thought retirement was mandatory at age 50 or 25 years of service.  It is only mandatory at 57 apparently. 

Roman

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Re: Big FIRE news for Fed LEO/FF's
« Reply #13 on: March 17, 2016, 02:44:46 PM »
I subscribe to the FERSGUIDE which provides up-to-date information.  It's a small annual fee and has been worth the fee. The author is a retired LEO.   www.fersguide.com

Yes, the FERSGUIDE is very good.  I actually just had an online conversation with Dan Jamison yesterday, because he was quoted in a FedSmith article earlier this month as saying that under the new bill Fed LEOs could retire before age 50 and then start penalty-free withdrawals at 50, which is NOT the case.  As with the Age 55 Exception, with the Public Safety Employee Exception, you must be in service in or after the year you turn 50 to be eligible for the penalty-free withdrawals. Dan acknowledged the error and said it was based on discussions about a previous version of the bill, and stated he was updating the 2015 FERSGUIDE accordingly.

Dude! Your knowledge of FLEO retirement finally got me to register and post on here. Mind helping with some erroneous thoughts I had about potential FLEO FIRE?  I have six years of civil fed service and will soon finish my fourth year as FLEO.  I'm about to turn 33, and after devouring this blog for the past month want to seriously consider FIRE within three to five years.

You opened my eyes to the fact above-I can't retire early then expect to access my TSP at age 50.  When would I have penalty-free access? I also need help regarding the pension. I first thought that if I retired early, I would receive at least pension payment for my Leo years starting at age 50 (calculated 1.7%x leo years X high 3). I'm guessing that's totally wrong. Then later it would increase to include my civil years (6x1%xhigh 3).  Please set me straight on this as far as access age, penalties, pension reductions. I'm ignorantly optimistic and want to know the real consequences of early retirement.

Thanks for the help. I'm watching for retirement seminars at work and will likely join fersguide and email Dan in the future.

 

Wow, a phone plan for fifteen bucks!