The last five to ten years of a federal employee’s service represents a critical period if the employee intends to retire at the time he or she wants and with sufficient pension income and benefits that will last throughout the employee’s retirement years.

The items presented below are a general planning checklist for soon-to-be retirees.

1. Check Form SF 50 for accuracy

One the most important forms that every employee needs to check for accuracy is Form SF 50 (Notice of Personnel Action). In particular, an employee needs to check box 30 (“retirement plan”) and box 31 (“service computation date”).

With respect to box 30, the following chart summarizes the codes that the Office of Personnel Management (OPM) uses to specify which federal retirement system an employee is supposed to be covered by. If an employee determines that he or she is assigned to the wrong retirement plan as shown by the code in box 30, then the employee needs to immediately contact his or her Personnel Office and find out why the wrong code has been placed in box 30.

¹Permanent employees hired before 1/1/1984.
²CSRS employees with at least five years of service as of 12/31/1986, who left federal service for at least one year after 12/31/1983, and who returned to Federal service.
³Permanent employees hired after 12/31/1983 and before 1/1/2013.
⁴ Permanent employees first hired after 12/31/2012 and before 1/1/2014, or rehired employees between 12/31/2012 and 1/1/2014 with less than five years of Federal service prior to 1/1/2013.
⁵Permanent employees first hired after 12/31/2013, or rehired employees after 12/31/2013 and with less than five years of Federal service prior to 1/1/2014

The service computation date (SCD) in box 31 is used to determine annual leave accrual rates for full time employees. Another SCD – the SCD for retirement (frequently, but not always, the same date as the SCD for leave purposes) – determines the number of years the employee needs to be able to retire at a specified age and the number of years used in the computation of the employee’s CSRS or FERS annuity. Employees can find out their SCD for retirement by contacting either their Personnel Office or OPM’s federal retirement office.

An important reason for checking the SCD for retirement is for confirmation of deposits. Those employees who have made deposits for temporary or seasonal (“non-deduction”) service and/or military service should make sure that they have received full credit for the years covering their deposit. A full deposit for temporary or military service is reflected in an employee’s SCD for retirement which should be adjusted backward in time to include the years covering the deposit.

If an employee owes a redeposit for the CSRS or FERS contributions that the employee withdrew when he or she previously left federal service, then the employee’s SCD for retirement will be adjusted forward in time. The employee is encouraged to make a redeposit of the withdrawn funds and receive service credit time for the withdrawn contributions, thereby moving the employee’s SCD for retirement backward and giving the employee credit for retirement eligibility and annuity computation.

SEE ALSO: What Is Your Service Computation Date?

2. Review Federal Employee Health Benefits (FEHB) health insurance coverage

If a federal employee is enrolled in the FEHB program, either through himself or herself or has coverage in the FEHB program through a spouse who also is a federal employee or annuitant, then the employee must retain FEHB coverage through at least the last five years of federal employment ending on the day of retirement in order to allow the employee to retain FEHB coverage throughout retirement.

The federal government will continue paying its same share of the FEHB premiums for the retired employee as it did for the employee. Enrollment in TriCare (the health insurance program for members of the uniformed services) is also counted for purposes of fulfilling the “five-year” requirement.

SEE ALSO: The 5-Year Rule: Keeping Your Federal Health Benefits and Life Insurance After Retirement

3. Review Federal Employees Group Life Insurance (FEGLI) program choices

As their retirement gets closer, the need for life insurance for many employees diminishes. For example, some employees have life insurance in order to help pay off their mortgage when they die. But if an employee within five to 10 years of retirement is close to paying off his or her mortgage, the employee can perhaps decrease or eliminate the amount of his or her FEGLI coverage.

To keep FEGLI coverage for retirement an employee must have been enrolled in FEGLI during the five years ending on the day the   employee retires. Employees should note that FEGLI premiums get more expensive in retirement. An employee should evaluate his or her needs for life insurance in retirement as they get closer to retirement. Employees can reduce or eliminate their FEGLI coverage at any time by filling out and submitting Form SF 2817.

SEE ALSO:  4 Actions to Take Now to Avoid the FEGLI Trap

4. Consider Thrift Savings Plan Contributions and Withdrawal Options

If an employee expects to have a sufficient amount in his or her Thrift Saving Plan (TSP) by the time or retirement, then the employee should be contributing the maximum possible to their TSP. This includes regular contributions and “catch-up” contributions for employees at least age 50 as of Dec. 31.

Unless these employees plan to immediately withdraw all of their TSP account shortly after retiring from federal service – and most employees do not – they should allow for long-term growth of their TSP accounts by investing primarily in the three TSP stock funds – The “C”, “S”, and “I” funds.

SEE ALSO:  How to Maximize Your TSP Contributions and Not Lose Any Agency Matching Contributions

5.  Examine Future Social Security benefits

Employees are encouraged to go MySocialSecurity online at www.socialsecurity.gov/myaccount and create their own Social Security account in order to view and print out their Social Security statement at any time. The statement a history of an employee’s Social Security and Medicare earnings history and FICA taxes paid, together with the estimated Social Security benefits that will be paid to the individual and to his or her family in the event of disability, retirement or death.

Among the important questions employees should ask themselves when viewing their statements are:

1. Is my earnings history correct? For any year(s) in which the Social Security wages are reported incorrectly, action should be taken to correct it;

2. do I have enough credits to qualify for benefits?;

3. If I am covered by CSRS and have previous military service, will I be affected by the “catch 62” provision?

SEE ALSO: How Social Security’s Earnings Test Can Affect Your Retirement Benefits

6.  Consider Future Medicare Enrollment

Federal employees who are within five to 10 years of retirement should understand which parts of Medicare they should enroll in and when they need to enroll. If they will retire from federal service before age 65, then they should enroll in Medicare Part A (hospital insurance at no cost) and Medicare Part B (medical insurance that requires monthly premium payments depending on the individual’s modified adjusted gross income) within a few months of their 65th birthday.

If they are still working for the federal government at the time they are age 65 and are enrolled in the FEHB program, they should enroll in Medicare Part A within a few months of their 65th birthday. They should hold off enrolling in Medicare Part B until they retire from federal service. They would enroll in Part B within the eight month period following their retirement date and enroll in Medicare Part B at a local Social Security office.

The eight month enrollment deadline in Part B is done in order to avoid the late enrollment penalty in Part B. Information about the coordination between the FEHB program and Medicare Parts A and B may be found here which soon-to-be retired employees are encouraged to read.

SEE ALSO:  How Medicare Works and Minimizes Federal Retiree Medical Expenses

7.  Understand Survivor Benefits Payable Upon the Death of a CSRS or FERS Employee or Retiree

What should employees who are close to retirement consider with respect to survivor benefits? Survivor benefits are payable upon the death of an employee or annuitant at the time of his or her death. Survivor benefit elections made at retirement include:

1. spousal (current and former) survivor CSRS or FERS annuity benefits; or
2. insurable interest survivor annuity benefits.

SEE ALSO:

• Spousal Survivor Benefits Upon the Death of a FERS Annuitant
• Spousal Survivor Benefits Upon the Death of a CSRS/CSRS Offset Annuitant

8.  Married Federal Employees:  Be Aware of Surviving Annuity Options for Spouse

An employee may elect a maximum, partial or no survivor benefit to a current spouse. The spouse must provide written and notarized consent for other than a maximum survivor annuity benefit. A retiring employee must provide a survivor annuity to a spouse in order for the spouse to keep the FEHB health insurance benefits in the event the employee predeceases the spouse.

SEE ALSO:  Guide for Surviving Beneficiaries Upon the Passing of an Active or Retired Federal Employee

9.  Update Your Estate Plan

As federal employees get closer to retirement, it is a good time for them to update their estate plan. Among the most important parts to a proper estate plan are:

1.  Beneficiaries named for any type of an account in which a beneficiary can be named. A beneficiary can be named for the TSP, for a life insurance policy, for IRAs and for bank and brokerage accounts;

2. a will or a trust for assets in which beneficiaries cannot be named;

3. a living will and an advance power of attorney for financial asset management; and

4. setting up a trust to minimize the possibility of having to pay state estate or inheritance taxes if their states impose such taxes.

SEE ALSO: Every Federal Employee Needs An Estate Plan