Are you retiring this year and exiting FERS? If so, this is a busy time. You’re likely finishing up projects at work while also planning the next phase of your life. You may be determining what to do with your FERS plan and other retirement assets and planning things like investments, asset protection, and insurance coverage.
While this is a busy time, it’s also an important one. Today’s decisions could have significant consequences for your future financial health. A few items often fly under the radar for federal employees. Check out the list below. If you’re nearing retirement and haven’t planned for these items, now is the time to do so. If you don’t check these items before you retire, you may not have a chance to do so later.
Creditable Civilian Service
Did you volunteer in some capacity for the federal government before you started your career as a federal employee? Or were you a qualified contractor? If so, you may be able to get credit for that service as part of your FERS annuity.
Check with your plan administrator and see if your service is creditable. Also, if you made deposits into a retirement plan in your prior service, you may be able to transfer those credits into FERS to increase your retirement benefit.
A financial professional with experience with federal employees can review your civilian service and determine if it’s creditable.
Military Service
Do you have active military service before your time as a federal employee? Again, this service may be creditable for your FERS retirement benefit. You may assume that FERS has already credited you for your military service, but that isn’t always true. It may be helpful to double-check your FERS credits to see if your military service is included.
Sometimes, you may need to make a FERS deposit to get credit for your military service. However, that deposit could be worth it if it significantly increases your benefit. A financial professional with federal employee experience can review your military service and determine if your military service can be added to your FERS credits.
Health Insurance
Are you part of FEHB? You may be under the assumption that you can carry your FEHB coverage into retirement. However, there are some instances where that’s not the case.
To take your FEHB benefits into retirement, you must meet the 5-year rule. This means that you must have five consecutive years of FEHB participation before retirement or from the earliest date you were eligible to be in the program. If you meet that qualification, you can continue with FEHB in retirement and pay the same premiums you paid as an employee.
If you do not meet the 5-year rule, you get 31 days of free FEHB coverage after you retire. You may opt for another 18 months of coverage but must pay 100% of the premium. After 18 months, you must find your health care coverage. Take time now to check your FEHB eligibility, so you aren’t surprised after you leave federal employment.
Life Insurance
You are also likely a part of the Federal Employees Group Life Insurance (FEGLI) program. FEGLI has a similar 5-year rule. If you meet the 5-year rule, you can carry your coverage into retirement. The month after your 65th birthday, your death benefit will drop to 25% of its value. If you keep it at that level, you can continue the coverage without further premiums.
You can also opt to keep your coverage at a higher death benefit amount, like 50% or even 100% of its original value. However, if you make that selection, you must pay a premium for the policy.
If you don’t meet the 5-year rule for FEGLI, you can keep the coverage without premiums for 31 days after you retire. At that point, you can switch to a private policy and pay full premiums or let the coverage expire. Meet with a financial professional to discuss your life insurance needs in retirement and determine which option is best for you.
Ready to plan your exit from federal employment?
Let’s talk about it. Contact us today to start the conversation. We welcome the opportunity to help you maximize your federal retirement benefits.
