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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.

Zurndorfer is also the author of several federal employee benefits guides published by Federal Employees News Digest.

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Tormund  
#1 Posted : Monday, November 4, 2019 5:56:12 PM(UTC)
Tormund

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I received an estimate for my FEGLI deduction as part of my ongoing DR package, and it's much higher than I thought. I pay less than $70/mo now for max everything A/B/C. The estimate was over $300/mo. I'm quite a few years from typical retirement age. I plan to shop around for some policies, but my health is not great so I'm not super sure WAEPA or the open market will give me much better.

Regardless, I'm confused though as I thought that annuitants pay the same as employees until they reach age 65. My guess is I should change my basic from no reduction to 75% reduction. I think I'll still have the same coverage to retirement age, but pay much less in premiums, and only lose the ability to have no reduction for basic after age 65. Since I have 5 multiples for Option B, this is fine to me. For option B/C, I think I can change from no reduction at a later date as the cost goes up it seems, but keeping no reduction for option A when I'm a few decades from retirement age doesn't seem like a wise choice.

What are you thoughts here?
Ed Zurndorfer  
#2 Posted : Tuesday, November 5, 2019 5:15:48 AM(UTC)
Ed Zurndorfer

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You are correct - keeping the full amount of FEGLI "Basic" in retirement is very expensive. But if you choose the 75% reduction for retirement, then you will keep the full amount of "Basic" you had on the day of retirement until age 65, paying the same premium you were paying as an employee, and then starting the month after your 65th birthday FEGLI "Basic" becomes free as the 75% reduction process starts. The FEGLI optional coverages - particularly Options B and C get progressively expensive as you get older, but later on you can reduce those coverages and pay much less. Option A (Standard) becomes free starting when you are age 65 as starting then it reduces to $2,500.
Tormund  
#3 Posted : Tuesday, November 5, 2019 5:51:33 AM(UTC)
Tormund

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Great thank you. Seems like a no brainer to reduce coverage either now during processing or immediately after if I'm approved. Understood on the other coverages gettting expensive into retirement as well. I was just confused why selecting no reduction on those didn't seem to change my premium where Basic did. I really appreciate the quick response.

One last question related to DR. I was given a bonus, however have been on LWOP for a few months now. I anticipate likely not being able to return to work any time soon. Do you happen to know if bonus pay counts as date of last pay?
Ed Zurndorfer  
#4 Posted : Tuesday, November 5, 2019 6:03:58 AM(UTC)
Ed Zurndorfer

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Normally bonuses are not counted as part of an employee's SF 50 salary which is used to determine one's high-three average salary in the computation of the CSRS or FERS annuity. But bonuses are part of an employee's taxable wages. In your case, the bonus will show up as part of your last pay period's taxable wages.
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