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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

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The Q&A forum is moderated by Ed Zurndorfer -- an expert on federal employee benefits -- and a Certified Financial Planner, chartered life underwriter and chartered financial consultant in Maryland.

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nearlyDone  
#1 Posted : Friday, November 9, 2018 3:22:32 PM(UTC)
nearlyDone

Rank: Newbie

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Joined: 6/14/2012(UTC)
Posts: 7

Dec 31

Pros:
Your annuity starts a month earlier with Dec 31. Benefit begins January with first payment in early February. This is the major PRO for 12/31 !
You get the same annual leave payout even though you don't get 8 hours for PP26. This is because Jan 1 is a holiday and you effectively get an extra 8 hours in your Unused Annual Leave Lump Sum Payout. See next pro for a clarification on "same payout":
You still get a full final paycheck: According to Ed's expertise, part of your unused leave payout is used to make this a full 80 hour pay period, but then you have a slightly smaller Lump Sum Payout (about 32 hours less to make up for that final paycheck ) . This has advantages as you can contribute a larger amount to TSP.

Con if you are 70 1/2 in 2018: (otherwise no con )
You will have to take 2 RMDs from your TSP in 2019: one before April 1, 2019 (for 2018) and one before 12/31/2019 for 2019. With Jan 5 retirement you can postpone your first RMD to April 1, 2020. If you are trying to maximize your TSP growth for later years, this could be important.

Ed, Any comments or corrections on the above ?
Ed Zurndorfer  
#2 Posted : Monday, November 12, 2018 5:30:07 AM(UTC)
Ed Zurndorfer

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Yes, you are correct. The only comment is that if there is a government-wide pay increase taking effect 1/6/2019 (so far, nothing official to indicate this will happen), then most of the lump sum payment for unused annual leave hours (the portion not paid for the last four days of pay period 26) will include the government-wide pay increase and locality pay adjustment.
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