US Feds: VSIP/VERA coming?

[Monkey Uncle]

OMB just came out with a memo instructing all the agencies on its "comprehensive plan for reforming the federal government and reducing the federal civilian workforce":

http://govmatters.tv/wp-content/uploads/2017/04/Executive-Order-M-17-22.pdf

One of the things I noticed is that there is a high likelihood that at least some agencies are going to be offering voluntary separation incentive payments (VSIP) and/or voluntary early retirement (VERA) as a way to offload people. 

OMB is scheduled to release its final government-wide reform plan along with the president's proposed FY '19 budget (in early calendar year 2018).  I suspect at that time we will know which agencies will be offering VSIP/VERA and the particulars of getting approved for it.  But high-level drafts of individual agency plans are due in June 2017, and final agency reform plans are due in September 2017.  These are supposed to include "immediate actions" that can be taken to reduce the federal workforce.  So it's possible we might start seeing some agencies requesting VSIP/VERA authorization later this year.

I'd be FI right now if it weren't for the uncertainty surrounding health care.  I don't have enough years in to qualify for VERA, but I think if a VSIP were offered independent of VERA, I'd apply for it.  VSIP payments are capped at $25k, which isn't a lot of money, but still should be enough to pay for a year of unsubsidized private health insurance while I figure out some other supplemental income stream to cover that cost.  I've been thinking about part-time consulting.  I just don't think I can tough it out until either health care is fixed or I reach minimum retirement age.  Especially with the chee-toh administration, which is openly hostile to federal employees.

Anyone else considering these options?  Has anyone taken a VSIP in the past?  How did it work out for you?

[BTDretire]

OMB just came out with a memo instructing all the agencies on its "comprehensive plan for reforming the federal government and reducing the federal civilian workforce":

http://govmatters.tv/wp-content/uploads/2017/04/Executive-Order-M-17-22.pdf

It took me a while to suppress my gag reflex after reading that steaming pile of "federal-workers-are-bunch-of-lazy-ass-good-for-nothings-who-should-all-be-fired" bullshit.

   I'm not sure we need as many federal workers as we have.
I do believe they are over paid, given excessive benefits, given
to many holidays off, paid for not working when the government shuts down,
given large retirement programs while paying less for it and receiving
almost twice the income of what the private sector does.

And add to that,
 "But being able to keep your FEHB in retirement *and* to have the government (insert hardworking taxpayers here) continue to pay for 72% of your premiums is, in my opinion as a financial planner for federal employees, your *best* benefit. - See more at: https://www.fedsmith.com/2012/09/27/your-best-benefit-ability-keep-fehb/#sthash.3CHPXrci.dpuf

Other than that, I agree :-)
  Two sides to a pancake.

[Monkey Uncle]

O.K., I suppose I should have withheld my opinion of the OMB memo.  From here on out, let's try to keep this on topic.  I've edited the OP to remove the part that triggered BTDretire's response, and I'd appreciate it if folks would not respond to his/her opinion of federal employees.

[Catbert]

Retired Federal HR manager here.  I saw many people offered VSIP and VERA before I retired.  IMO that that "needed" the 25K in order to retire were probably making a mistake b/c 25K isn't that much money toward retirement.  But I saw many other take it as just a sweetener (extra in bank, pay off child's last year of college or big trip) which was great.   I also saw people literally die while still working after optional retirement age because they wanted the extra 25K.  Now that was sad.

There is no reason you couldn't take a VSIP if you aren't eligible for VERA.  In fact, its a much better deal for the government when its downsizing.  25K and you're gone rather than an early pension and FEHB.  I know many people who would have happily take a VERA and forgone a VSIP if that was the offer. 

[kendallf]

I would be eligible if offered VERA, and I would probably leave immediately.  I'm 50 with less than six years to go anyway, so that would just give me a few gap years where I wouldn't get the supplemental pension.  No big deal.

I would think a bit about the foregone opportunity to do some heavy saving and investing in my last years, but I am pretty sure I could forget about it while moving on to my next life.  🙂

[Fomerly known as something]

Not at my agency, HR is terrified, seriously terrified, at the fact that so many people are eligible to retire in the next 4 years.  We are a National Security division so not on the downsize list and have hired since the 21st.

ETA:  FWIW, I don't get paid to not work during furloughs, I get to go to work and not get paid until there is a budget.  It is very motivating. 

I won't argue that I'm well paid if not overpaid but then again I'm not going to give it back.  If I didn't have a pension I would be gone right now though.

As for holiday's, is 10 too many.  Keep in mind I work on Good Friday, Christmas Eve, and Black Friday even if I get president's day off.

[Monkey Uncle]

Retired Federal HR manager here.  I saw many people offered VSIP and VERA before I retired.  IMO that that "needed" the 25K in order to retire were probably making a mistake b/c 25K isn't that much money toward retirement.  But I saw many other take it as just a sweetener (extra in bank, pay off child's last year of college or big trip) which was great.   I also saw people literally die while still working after optional retirement age because they wanted the extra 25K.  Now that was sad.

There is no reason you couldn't take a VSIP if you aren't eligible for VERA.  In fact, its a much better deal for the government when its downsizing.  25K and you're gone rather than an early pension and FEHB.  I know many people who would have happily take a VERA and forgone a VSIP if that was the offer.

Yeah, that's kinda where I am at this point - I'm pretty close to bailing regardless, but it would be nice to have the extra boost to get me started while I figure out a supplemental gig to help cover health insurance. 

It's been probably a decade or more since my agency offered VSIPs.  In the last round of downsizing, (c. 2010?) they just offered VERA.  So I guess I'll wait and see how this round plays out.

[Gunny]

I retired under VERA/VSIP and was eligible for both.  The VSIP was taxed at a high rate and the net covered what I paid to "buy back" my military time to qualify for VERA.  I retired from the Marines as an E7 and was a GS14-7 when I bought back my time so it was worth it to me.  This is not always the case.  In my experience the Federal government could easily do with 15-20% less employees, but as far as being over paid...hah!  Yes, I received a good salary, but considering that I was constantly deployed to a hostile fire area and was shot at more than a few times, and I didn't get a tax incentive to be deployed like a contractor, I feel I earned it. There are professionals working in the government that could make twice or more if they were in the private sector, but choose to serve their country.  These are doctors, attorneys, scientists, engineers....  They deserve what they are paid.  Are some over paid for what they do, yes, but there are thousands of hard working federal employees who earn what they are paid or are under paid. 

[Drifterrider]

Retired Federal HR manager here. 

I want to pick your brain on two issues:

1.  Temporary time buy back.  I've made the deposit for temporary time (prior to 1 Jan 1989) and it equates to 4.7 years.  Other than the letter from OMB with the dates and amounts, what documentation should I expect go have?  SCD for leave and SCD for retirement is not necessarily the same (but should be in my case with the deposit).

2.  FERS retirement before MRA (minimum retirement age) and the "supplemental".  By my read of the information at OPM.gov, anyone who retires under the MRA forfeits the supplemental.  I don't find any exception for VSIP/VERA.

[Gunny]

Retired Federal HR manager here. 

I want to pick your brain on two issues:

1.  Temporary time buy back.  I've made the deposit for temporary time (prior to 1 Jan 1989) and it equates to 4.7 years.  Other than the letter from OMB with the dates and amounts, what documentation should I expect go have?  SCD for leave and SCD for retirement is not necessarily the same (but should be in my case with the deposit).

2.  FERS retirement before MRA (minimum retirement age) and the "supplemental".  By my read of the information at OPM.gov, anyone who retires under the MRA forfeits the supplemental.  I don't find any exception for VSIP/VERA.

Let me jump in.  I retired before MRA with VERA.  According to my HR and OPM I am eligible for the special supplement but not until I am 56.

[Drifterrider]

Retired Federal HR manager here. 

I want to pick your brain on two issues:

1.  Temporary time buy back.  I've made the deposit for temporary time (prior to 1 Jan 1989) and it equates to 4.7 years.  Other than the letter from OMB with the dates and amounts, what documentation should I expect go have?  SCD for leave and SCD for retirement is not necessarily the same (but should be in my case with the deposit).

2.  FERS retirement before MRA (minimum retirement age) and the "supplemental".  By my read of the information at OPM.gov, anyone who retires under the MRA forfeits the supplemental.  I don't find any exception for VSIP/VERA.

Let me jump in.  I retired before MRA with VERA.  According to my HR and OPM I am eligible for the special supplement but not until I am 56.

Do you have that in writing?  I'm 54 with 33 yrs and I'm ready to go full timing now.

[Bruizer]

Retired Federal HR manager here. 

I want to pick your brain on two issues:

1.  Temporary time buy back.  I've made the deposit for temporary time (prior to 1 Jan 1989) and it equates to 4.7 years.  Other than the letter from OMB with the dates and amounts, what documentation should I expect go have?  SCD for leave and SCD for retirement is not necessarily the same (but should be in my case with the deposit).

2.  FERS retirement before MRA (minimum retirement age) and the "supplemental".  By my read of the information at OPM.gov, anyone who retires under the MRA forfeits the supplemental.  I don't find any exception for VSIP/VERA.

Let me jump in.  I retired before MRA with VERA.  According to my HR and OPM I am eligible for the special supplement but not until I am 56.

Do you have that in writing?  I'm 54 with 33 yrs and I'm ready to go full timing now.

From the OPM Website on VERA:

A FERS annuity supplement is payable to an employee who has completed at least one calendar year of FERS service when he/she reaches Minimum Retirement Age (MRA). MRA is age 55 to 57, depending on date of birth. The annuity supplement is payable until eligibility for Social Security begins at age 62, subject to an earnings limitation.

https://www.opm.gov/policy-data-oversight/workforce-restructuring/voluntary-early-retirement-authority/

[Drifterrider]

Retired Federal HR manager here. 

I want to pick your brain on two issues:

1.  Temporary time buy back.  I've made the deposit for temporary time (prior to 1 Jan 1989) and it equates to 4.7 years.  Other than the letter from OMB with the dates and amounts, what documentation should I expect go have?  SCD for leave and SCD for retirement is not necessarily the same (but should be in my case with the deposit).

2.  FERS retirement before MRA (minimum retirement age) and the "supplemental".  By my read of the information at OPM.gov, anyone who retires under the MRA forfeits the supplemental.  I don't find any exception for VSIP/VERA.

Let me jump in.  I retired before MRA with VERA.  According to my HR and OPM I am eligible for the special supplement but not until I am 56.

Do you have that in writing?  I'm 54 with 33 yrs and I'm ready to go full timing now.

From the OPM Website on VERA:

A FERS annuity supplement is payable to an employee who has completed at least one calendar year of FERS service when he/she reaches Minimum Retirement Age (MRA). MRA is age 55 to 57, depending on date of birth. The annuity supplement is payable until eligibility for Social Security begins at age 62, subject to an earnings limitation.

https://www.opm.gov/policy-data-oversight/workforce-restructuring/voluntary-early-retirement-authority/

Based on the above, I may just be ready to retire this afternoon!!

What do you know about drawing from TSP penalty free upon retirement.  I read something about taking equal payments to avoid the penalty.

[Catbert]

Retired Federal HR manager here. 

I want to pick your brain on two issues:

1.  Temporary time buy back.  I've made the deposit for temporary time (prior to 1 Jan 1989) and it equates to 4.7 years.  Other than the letter from OMB with the dates and amounts, what documentation should I expect go have?  SCD for leave and SCD for retirement is not necessarily the same (but should be in my case with the deposit).

2.  FERS retirement before MRA (minimum retirement age) and the "supplemental".  By my read of the information at OPM.gov, anyone who retires under the MRA forfeits the supplemental.  I don't find any exception for VSIP/VERA.

1.  I had temporary time that I paid for early in my career.  Proving it was no big deal when I retired.  IIRC I didn't have to "prove" it at all.  Once your retirement package goes to OPM for final computation/approval they know whether or not you paid it to them.  (It's been 8 years so memory is dim.)

2.  Sorry, retirement wasn't my speciality area and I wasn't FERS so I can't answer your second question. 

[Catbert]

What do you know about drawing from TSP penalty free upon retirement.  I read something about taking equal payments to avoid the penalty.

Several options: 

Roll to an IRA and then do either Roth pipeline or 72T withdrawals from the IRA.

You can annuitize it although I think you have to be 62 to do so.

You can leave it where it is until RMD age.  This is a great option if you don't need the money.  Lowest fees in the business (effective fees are lower than Vanguard).

You can also take money out before 59 1/2 and pay penalties.

However, I'm pretty sure you can only take one partial withdrawal (other than RMDs).  The second time they want you to take it all out.  My memory maybe faulty on this point.

Edited to add:  The TSP website will tell you more than you would ever want to know about withdrawals:

https://www.tsp.gov/forms/withdrawals.html

 

[Drifterrider]

2.  Sorry, retirement wasn't my speciality area and I wasn't FERS so I can't answer your second question.

My fantasy is some day I get a call and they say "We're sorry, we have been carrying you in the wrong retirement system.  You should have been left in CSRS.  Let's switch you back".

But then, I wake up and it's still FERS.

[Catbert]

2.  Sorry, retirement wasn't my speciality area and I wasn't FERS so I can't answer your second question.

My fantasy is some day I get a call and they say "We're sorry, we have been carrying you in the wrong retirement system.  You should have been left in CSRS.  Let's switch you back".

But then, I wake up and it's still FERS.

I remember when FERS came in and I was given the *opportunity* to switch.  Didn't take much analysis to decide that if it was going to save them money in the long run, it would cost me. 

[Monkey Uncle]

I got word today that my agency is planning to request both VERA and VSIP authority.  But they're saying that use of these authorities will be "limited," I guess to tamp down any expectations that everybody who applies will get approved.  I certainly can't see VSIP/VERA being used extensively, because my agency has been losing people for most of the 14 years that I've worked for it, while accomplishment expectations only keep growing.  I'll be watching closely to see how it plays out.

[TomTX]

OMB just came out with a memo instructing all the agencies on its "comprehensive plan for reforming the federal government and reducing the federal civilian workforce":

http://govmatters.tv/wp-content/uploads/2017/04/Executive-Order-M-17-22.pdf

It took me a while to suppress my gag reflex after reading that steaming pile of "federal-workers-are-bunch-of-lazy-ass-good-for-nothings-who-should-all-be-fired" bullshit.

   I'm not sure we need as many federal workers as we have.
I do believe they are over paid, given excessive benefits, given
to many holidays off, paid for not working when the government shuts down,
given large retirement programs while paying less for it and receiving
almost twice the income of what the private sector does.

And add to that,
 "But being able to keep your FEHB in retirement *and* to have the government (insert hardworking taxpayers here) continue to pay for 72% of your premiums is, in my opinion as a financial planner for federal employees, your *best* benefit. - See more at: https://www.fedsmith.com/2012/09/27/your-best-benefit-ability-keep-fehb/#sthash.3CHPXrci.dpuf

Other than that, I agree :-)
  Two sides to a pancake.

Twice what the private sector does? Not for equivalent work. Vast swaths of the lower paid work were offloaded by paying for contractors instead, typically at a notably higher rate. The remaining people trend more toward managers, PMs, senior scientist types - so yeah, average salary is higher than private industry if you don't take the job type/experience into account.