HRs report, delayed FEHB, and private ROTH all on today’s Fednobabble.com.Welcome to today’s Fenobabble, I’m Kevin Jones, where we we take federal retirement benefits and make them understandable for people like you in under 20 minutes. And I’m Cassie Knight , we take your questions that you’ve submitted online and that Kevin gets from his workshops and webinars and I get from financial advisors that are from employees and we answer them on the show and know talk about them and just have a discussion.
Let’s so let’s the first question today, Kevin first question is, will you share it? Sure.
Will you share, subscribe and do all that good stuff?
OK, question number one is that H.R. report. Different than the federal benefits statement. Now, yeah. The the HR report that they’re talking so in this is this comes directly from the workshop in the workshop, I mentioned a different way to figure out if you’re eligible or not. And it doesn’t come through and it comes through filling out a form that goes to OPM and OPM writes back with a report or, you know, they they’ll email you this report.
OK, so they’ll email you the report.
Are you talking about the certified summary of service?
That I am. OK, well, from what I get from this employer, from the question is the benefit statement and OPM actual retirement report that they provide, right?
I believe what I believe what this person is saying is the federal benefits statement. Now, this is something that I mentioned in our workshops, is that when someone comes up and says, OK, federal benefits statement, the federal benefits statement to what again, to one agency may be called something different to another agency, maybe call it something different. You may get it through H.R. or you may get it through our website. It really depends. So it’s all over the place.
And here’s the other thing. There’s two separate types of reports. Yes, you can only benefit statement from which is typically from HR, right, and then you can get the OPM statement, which is like your retirement estimate, right? Right. And so there’s two separate reports, and that’s how I understand it, is they were asking about the two different reports.
Yes. And I do believe that’s what it is. Here’s the issue, though, is that most people think that the federal benefits statement that they get from H.R. or whatever it’s called, when they get them from H.R.. Right
Is it that is what they go off of to try to retire? They don’t know about the report that comes from OPM. Most federal employees don’t have a clue that it actually exists. In fact, most H.R. people don’t know that it exists.
Oh, boy. Yeah, because they can have a very different information, right? Like, I see the emplacements and I see the HR or the OPM retirement statements and the employee statements simply just have the employee information. Right. The difference is their current FEGLI and FEHB elections. It breaks all the law that all of that stuff down doesn’t always get into the different types of service. It really depends on the the employee benefit statement that the H.R. agency provides.
But then OPM is just showing the cost. It’ll show your pension amount based on when you want to retire. And then obviously just the cost as of right now for your current benefits most of the time. Sometimes it can also give different scenarios of somebody is like, well, I’m going to cancel my family so they won’t put the information on there. But the thing is, they’re just going to put whatever you think that might be. Right. That doesn’t mean that that’s actually what you should be doing because they’re not giving you any guidance.
And it also doesn’t mean that that’s what OPM is going to base your retirement off of. I remember talking to one lady who, when she got the report and she did it before she came to the workshop, which was good because, again, hardly any federal employee knows about this. And so she got it from OPM and she noticed that. So early in her career, she worked in Turkey as a federal employee for seven years, OPM had no record of it.
Yeah, none. And and and she thought everything was just going to be fine, but didn’t realize that her or her pension and everything else would be based off seven LES years.
So she had to go back and get all the documentation and try to prove that she had worked in Turkey for seven years. Wow. Yeah, you know, when I see that all the time, when people will submit, when they are when our advisers submit the information for me to build the reports for their federal employees, of course, I ask them to include any other documentation regarding an employee’s employee’s history, whether that’s the estimate, whether it’s our employee benefit statement, like all of that information can, and sometimes other information that I need to make sure that the information we’re getting back to or the report that we’re getting back to the employee is accurate.
Right. But so many times I am seeing where the advisor is gathering more information or more accurate information than what the H.R. statement is saying, because they’ll like, oh, yeah, I mean, my deposit for my career as a military military time, but that the OPM retirement statement doesn’t even show the military service included in there at all. Right. And so people think that that is because it’s from OPM, that it is the most accurate statement.
I mean, if you work part time and they don’t have that factor in there, that could be something that hinders you the other way. And so it’s very, very important to just have that looked at by somebody and make sure that it’s actually good to go because we want to correct those things before retirement as early as we can. That way, people have the time to get that corrected, because I’ve seen all too often as well with financial advisers where they’re like, hey, this employee had to delay retirement or delays the finalisation of their pension amount or of the retirement application with OPM.
And so obviously they’re not receiving a full pension amount because they have to go back and correct these these issues or discrepancies in their service or there’s discrepancies in their deduction, amount of their paycheck or whatever it is. It’s just there’s so many different factors that can play a role in making sure that the information that you have a solid and that’s why we strongly encourage all the time for employees, make sure you get your SF-50, make sure that you’re gathering different documentation that you need to get a hold of, you know, way before retirement, at least five years before retirement.
Get that sort of summary. Make sure that all of your service history is listed on their property, because if there’s any discrepancies, again, you’ve got to figure that out and approved your department or OPM or whoever to make sure that that’s taken care of before. Before it delays something, yeah, I remember one when one gentleman, he came in and he said, I got this report three years ago, there was a mistake on it and I’m still battling it.
I’m still fighting it three years later. So it’s a real thing. It has to be done or OPM will figure out what your retirement is based on wrong numbers. No one wants to be in that situation. So now, in fact, my uncle real quick.
Yeah, he had military service that for some reason didn’t get recorded properly. And he has been fighting for, I want to say, two years ish, maybe longer. But he’s about to the point where he is going to have to write Congress. About it, because there is absolutely no record from the service had done for a sort of period of time in the military. I mean, it’s not on TV to 14. And so then it doesn’t get over to this federal service.
He wants to make the deposit for it and he obviously can’t because there’s no record right. Of the time or need. Right. And all of the different factors that go into that. And he I mean, he’s been working on this for a number of years. And I mean, luckily, he’s always off until retirement. But could you imagine if he was retiring this year or trying to deal with it because he has to go through all of these hoops and do all of these things to make sure that that’s taken care of, that so very, very important.
Yeah, yeah. OK, question number two. Oh, this is a long one. If you have health care benefits five years prior to retirement, OK, so fulfilling the five year thing, that’s good, but do not need to use the benefits immediately because you can be covered by a spouse. Can you take that benefit later in retirement when needed? It sounds like what they’re asking is, can I put off using the benefit? Can I suspend it?
I believe that’s what they’re saying. OK. Yeah, and I’m going to say it depends. Right. So doesn’t it always. So what type of help does that employee have? It’s not the federal employee, but the employee spouse, rather. Do they have TRICARE and ChampVA coverage or are you looking at going on their employer sponsored program? What does that look like? Because essentially it boils down to two things. There are only two reasons why you can suspend coverage in retirement.
One is for TRICARE and ChampVA coverage. The other one is if you’re getting into a Medicare Advantage type plan. Right. OK, not original Medicare, not a Medicare supplement, but essentially that’s why you can suspend your FEHB coverage. Otherwise, you need to stay in the program because you don’t want to get to the point where you’re canceled because you thought you would be able to jump back in, but you actually can’t then you don’t allow this happens.
I know it does. I know now if you’re a federal employee couple, that’s a different scenario. Yep, right. At a premium conversion where you can jump from if federal employees are still working and the the federal employee is going to retire, then, yes, they can hop onto that federal employee spouse’s FEHB and make them primary and then come back later to the other one. That’s fine. Right. Actually, in working with adviser right now who’s there’s a federal employee couple one is going to be retiring from service, I want to say, this year or next year.
The other one is separating from service, but they’re not going to separate from service for another few years. Right. So but they’re just separating, they’re not actually retiring from service won’t qualify because their age is won’t be there. OK, so the federal employee is going to retire. And at that time, well, actually the year before they retire. So I think this open season, they’ll be shifting to the employees spouses FEHB. Mm hmm. They’re paying for FEHB pretax.
Right. And then the year before that federal employee spouse will be separating from service. Then they’re going to go back and get on to the retired federal employees FEHB. That way they can continue it and not have any time without FEHB coverage and not have it canceled because once it’s canceled, you can’t get back out of retirement.
So it’s very key to strategize this properly and just make sure that you make the changes to FEHB during the open season, because retirement or separating from service does not count as a qualifying life event. Right. To make those changes and get those women that question all the time.
And people are disappointed when they find out. No, it doesn’t the way to say it, but no. Yeah, OK, very good. OK, that’s a question to question three, can you have a private ROTH and a TSP ROTH?
So. Really, the answer is yes. Yeah, unless I can’t think of a it depends here, but it’s just a plain old yes. So you can save up to what, nineteen thousand five hundred in your TSP ROTH plus put another, what is it, seventy five hundred in a regular ROTH IRA. Is that what it is, at least here for me. Yeah it is actually. Sixty five hundred. Yeah. For the max that a person, if they’re over the age of 50 then they can make those extra contributions is less than 50 then obviously they can’t do that.
Well that’s the catch up contribution you’re talking about, right.
Yes, OK. Because I’m only comptrollers. Go ahead. OK. They can only contribute ninety thousand five hundred dollars maximum for 2020. Right. If they are over 50, then they can do the catch up contributions of the extra sixty five hundred sixty five hundred, but then they can put another sixty five hundred into a IRA ROTH, a Roth IRA.
Not sure about that.
You can, can you. Oh yeah. Well, essentially though, whether or not it’s worth it for an employee to have both TSP ROTH and a private life or private ROTH is not something obviously that we can say that that is in your best interest rate and definitely with a financial adviser.
Yeah, that’s that’s the thing I hear all the time. Oh, you can OK, I’m going to go do that and I have to stop people and say, wait a minute, that may be a horrible idea for you, but the guy sitting next to you, it may be a great idea.
So you can’t just go and decide to do it. Just because you can doesn’t mean that you ought to do it. And we have to be very, very careful as we start making moves like this. We hear that, you know, people can listen to this to this podcast and watch a show and pick up something new and think, oh, I’ve got to go do that. Don’t we’re not saying to go do it. We’re saying that you have to go you should go visit someone and see if it’s like you said, if it’s in your best interest to make it happen.
Yeah, everybody’s situation is different, everybody’s got different things to think about in their financial picture, and this is just one piece of the puzzle that you’ve got to figure out how it all fits together. Right. So as a federal employee, they’re very lucky to have all of these pieces to be able to put together. Right. Because, I mean, everybody has to think about these things, but they actually have more tools and resources and benefits to be able to put together to make a solid financial plan.
But that’s the thing is you’ve got to know how to put it together, other ways you can really screw yourself in retirement. And that’s what we don’t want. That’s why we’re that’s why we have the show. We want to bring awareness to federal employees and encourage them to take action. Right. Take responsibility of your retirement, because it’s not just going to happen automatically. These are definitely things that that you need to think about and and talk with somebody about.
And if you don’t have an advisor or financial adviser that you feel comfortable with or you’re just not sure you want to make sure that you have somebody who’s a who’s versed in the federal benefits, then let us know. Go to Fednobabble.com, like subscribe share all of those different things. But more importantly, fill out some information. Right. Give put your information in. Let us build that report for you. We’ll get you connected to a financial adviser in your area, or at least that’s versed in the federal benefits.
So that way, you know that they’re going to help you build a solid financial plan, because we’ve got these these advisors, we’re making sure that they’re going to build comprehensive financial plans with you. They’re not just after your TSP or the life insurance or anything else. They want to make sure that all of these different pieces of your benefits are put together correctly for your financial goals. Yeah.
So I would say overall, you brought up a good point there, not after anything there. I mean, the people that we work with, there may be others. I don’t I mean, I know that there are others and I don’t want to lay blame or anything like that. But you and I, we work with kind of the cream of the crop, those who are out for the best interest of the federal employee instead. And of course, if if you’ve heard something today and need some more information about something and want to ask a follow up question, you can also go to Fednobabble.com.
And as always, if you’d like to please, we highly recommend that you subscribe to the podcast that you or our or to the show on YouTube, Facebook, whatever it is, and like it and share this with your friends, if you would. And besides that, any other words of wisdom from you? Cassie. Yeah, don’t forget to submit a question, right? Go to Fednobabble.com and let us know what you have questions about, because that way we can answer it here.
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