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Retirement Planning


Whether you are close to federal employee retirement or just starting out in your career, this is the place to share ideas with your federal colleagues on creating a secure financial foundation.


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Conundrum  
#1 Posted : Monday, August 31, 2009 9:52:46 AM(UTC)
Conundrum

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Can someone tell me what this number actually tells me? And what it means to my retirement, how it factors in, etc? I've done plenty of google searches and every answer I can find just says something maddenly generic like "Tells total paid towards your retirement". That doesn't tell me anything useful.

Thanks

P.S. FERS
The HalfBreed  
#2 Posted : Monday, August 31, 2009 11:16:24 AM(UTC)
The HalfBreed

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From memory, it says exactly what it says... although I believe it's YOUR total, not what the government paid, which is an exact amount.

When you retire, that number (times 2) will be divided into your "Life Expectancy" and used at the tax free portion of your lifetime contributions...(or maybe it's just YOUR contributions).

IF you contribute 50K (not taking into account the governments matching 50K) and live for 25 yrs, your withdrawal is 2k/year. If you make 50K each year, 2K will be NON Taxable, as it's a return of your previously taxed contributions.

If I'm wrong or off base, I'm sure someone will chime in and polish this up a bit.
Of course, I'm in CSRS, so that's my point of view.
RETIRED 12/19/2012 !!! Good Bye Tension !!! Hello Pension !!!
Warrenlm  
#3 Posted : Monday, August 31, 2009 5:15:12 PM(UTC)
Warrenlm

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Joined: 11/5/2006(UTC)
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This amount is the current balance of contributions withheld from your pay. As noted above, at retirement the amount is used to determine your annual "previously taxed" amount of your annuity for IRS and tax purposes, thereby reducing your taxable amount of annuity. There's an actuarial table that must be used, regardless of your own expectations of life remaining. Also, during employment and until retirement, it is payable as a lump sum to beneficiaries at death.

The amount is treated differently by OPM than by the IRS. OPM considers it reduced monthly by your annuity payments during retirement until exhausted. So it usually goes to zero, and thus does not benefit beneficiaries, after about 18 months of retirement.

One does not use the balance in Block 19 in any of the calculations on annuity, except to identify the "previously taxed" portion of the annuity for IRS purposes.
tesaje  
#4 Posted : Monday, September 07, 2009 11:56:01 PM(UTC)
tesaje

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Joined: 2/16/2009(UTC)
Posts: 213

It also may not be an accurate number. If you changed pay systems or your agency changed pay systems sometime during your career, the early contributions are probably not counted in that number.

After you retire and after OPM makes your retirement calculations final, you will get the true amount reported to you along with the amount you can deduct on your taxes. Only the amount you contributed is deductible - the amount your agency contributed is not. You also have to follow the IRS formula for how much is deductible per year.
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