The federal retirement system can be complicated and confusing, even for federal workers who have had decades to become familiar with their benefits. In part one of this blog, we revealed five lesser-known “secrets” of the FERS system. Read on for four more surprising facts about your retirement system.
You can make certain changes to your health benefits after retirement. If you and your spouse are both federal employees, you might already know that you can choose two self-only enrollments in the Federal Employees Health Benefits Program, or you can both enroll in one self-and-family plan. Once you both retire, you can change from one self-and-family plan to two self-only plans if it benefits you, and both of you will retain continuous coverage.
No earnings limit after you reach full retirement age. You might know that claiming your Social Security benefits early, while you’re still working, can result in a reduction of your benefits depending upon how much money you earn. But once you reach full retirement age, as defined by Social Security, you can file for your own benefits, survivor’s benefits, or spousal benefits without being subject to an earnings limit. You will receive your full benefits check no matter how much money you earn each year.
Death benefits for your surviving spouse. You might worry about what will happen to your spouse, in the event that you pass away before you retire. Your spouse will be eligible to receive a lump sum death benefit payment, plus 50 percent of your final basic annual pay rate. If you had accumulated at least 10 years of creditable service, your surviving spouse can also receive a spousal annuity. These rules might also apply to your ex-spouse, depending upon your divorce agreement.
Your Social Security benefits might not be subject to state taxes. Because of your income from federal retirement benefits and the Thrift Savings Plan, you might already know that your Social Security benefits might be subject to federal income taxes. However, in most states those benefits will not be subject to state taxes. Some federal retirees choose to move to a state that will not tax their Social Security benefits.
Did any of these little-known facts surprise you? If you have questions or want to learn more about your federal employee retirement benefits, call our office to schedule an appointment.Read More