When people retire, especially during the months of December and January, they often make life-changing resolutions. Some involve health, entertainment, travel, family. A lot deal with diet choices. But in every case the retiree wants to be and should be in control. But that doesn’t always happen. Some new retirees suffer an unexpected and extended clash-flow problem. It can have an impact on their standard of living, which includes important stuff, like food, the electric bill and vacations. That can continue until their post-retirement income is straightened out. Which could take awhile…
Most federal-postal retirees will leave with a good-to-excellent monthly benefit. On paper! Indexed, in whole or part, to inflation. The government will pay most of their health premiums, for life. Cost of living adjustments each January will help fend off future rising living costs. But there is the immediate period, the weeks — and in many cases, months — right after retirement which people have to live off much less than they had to spend before retirement. That’s because it can take their agency, and the Office of Personnel Management, a long time to process their retirement claim and okay their full benefit. There are lots of reasons for that, including the work history of the applicant. Did they have breaks in service? Work for a lot agencies, making them harder to track? And the fact that OPM is swamped with applications, especially in December and January.
Federal News Network tracks the monthly retirement backlog. And this isn’t the time or place to point fingers or affix blame. If there is any to affix. But this is intended as a heads up for anyone who retired in December, or this month, or who plans to retire in the future, regardless of the time of year. Bottom line: Have a nest egg. A cushion so you don’t have to spend any payments for unused annual leave. Or dip into your TSP sooner than you had planned.
Here’s a note of caution from a recent (2020-2021) retiree. This is his heads-up!
I retired on 31 December 2020, so 2021 was my first year as a FERS retiree, and I feel it necessary to point out a few points regarding the OPM online Service Center account and what a new retiree can expect during that first year all the way through the year until they receive their first 1099R.
OPM processed and put our 1099R in our online accounts on 17 January 2022. That shows my gross for 11 months; that is, what the annuity should be as if interim payments were not part of my annuity payments. It shows my taxable amount. It shows my FERS total deposits when employed. And lastly it shows my total federal taxes paid.
I received my OPM account CSA number by mail on or about 1 February 2021 and my password in a separate letter a few days later.
I received interim payments on 1 February 2021 and 1 March 2021 that were a bit generous, and did not withhold [Federal Employee Health Benefits] or [Federal Employees Dental and Vision Insurance Program] for those months from my interim payments, only federal taxes. I downloaded my payment information from my online account each month.
On 1 February 2021, Benefeds informed me I needed to pay them a certain amount, by check each month until my annuity payments start.
On 15 March, OPM notified me by letter that my interim payments did not withhold enough for FEHB and federal taxes. I paid Benefeds directly for my FEDVIP for February and March of 2021, or it would have been more. OPM informed me they would withhold the difference from my June monthly annuity payment unless I pay them by check before then.
On 1 April 2021, I received my first full annuity showing the proper gross payment and withdrawals for FEHBP, Benefeds and federal taxes based on my W4P I submitted with my retirement application for married with zero allowances. I downloaded the monthly annuity statement as a PDF like I used to do for my [leave and earnings statements] from my pay as an employee.
On 1 April 2021, I noticed my interim payment history was no longer available on my OPM online account; only the annuity information was available. In addition, once a new annuity statement shows up, the previous month’s statement is no longer available like it was under myPay. However, the 2021 annuity history for a 12-month period starting in April through December was available for downloading as a PDF.
I was concerned throughout the year of 2021 since my interim history and annuity history did not add up to my real gross annuity with the proper withdraws for 11 months. OPM informed me those reports could not be used for tax purposes.
The bottom line was it all worked out at the end of the year where my federal income tax withholdings were considerably higher than what was on my two interim statements and nine annuity statements for 2021.
My advice to new retirees is to download their monthly statements and history statements as soon as they are available on their online account. They should not be concerned with the interim statements not agreeing with the actual annuity statements since it will all work out on the 1099R at the end of the year.
PS: TSP has not yet posted the 1099R but said it will be available online 31 January 2022, and Social Security said it will be available online 31 January 2022 or before. OPM, Social Security, and TSP all said IRS form 1099R and SSA 1099 will not be mailed until Mid February 2022.