#25 – SF-50, 240, Conversion
SF-50, 240 and conversion on today’s Fenobabble.
This is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com.
Welcome, everyone. It’s good to have you back to learn more about federal retirement benefits.
I’m Kevin Jones and I’m Cassie Knight. And we’re just going to jump into the questions and answer them for you. And helpful, hopefully.
Hopefully, that would be nice. What is an SF-50 Cassie?
Oh my goodness. Do you have this question often in your workshops? Let me ask you that on what an.
No, I actually I don’t. And and I think it’s because people are afraid to ask what an SF-50 is.
There are. All right. And I think that actually happens a lot. You know, we talk about it, that’s a fifty and people just go, oh, of course, and it’s a fifty. I know what that is. And they really don’t have a clue. They just go along with it. I think there’s a lot of that that happens. But what does an SF-50.
Yeah. So an SF-50 is actually a really important document that everybody should keep copies of. You’re going to have more than one.
OK, this is not one of those forms like, I don’t know, retirement application where you just submit one of them or two of them depending on what that looks like. But essentially you have many SF-50 throughout your career as a federal employee, and they are documents that show any change in your salary. So any step increases or any other sorts of increases in your pay. If you switched from one position to another, then you have documentation on that.
If you change your FEGLI benefits, you have an SF-50 for it. There is an SF-50 for every move and everything that you do throughout your career. And that’s why it’s especially important to keep a hold of them. I think you can go on your E opf and download your set fifty years and save them electronically if you can, you know, because this is a very important to have, if there’s any discrepancies in, you know, your position, your pay, benefits, what have you.
This is especially important to have for anybody, especially air traffic controllers who are subject to vision. One hundred or just in general, I think they’re actually required to have their last SF-50 when they submit the retirement application. But if you are a federal employee, you need to have this documentation because after you separate, if there’s any problems with the retirement application and you have to go back and get that information, it is ten times harder to get that document from OPM or wherever they have that.
They you know, I don’t even think that most of these are electronic. I’d have to look up the exact date. But I’m going to say it was like late nineties that everything went electronic, maybe early 2000s. And so everything previously is in a warehouse in the middle of nowhere.
Yep. And I even heard once, oh, I don’t even remember where I heard it, but there is a fifties and other documentation was in a warehouse and it burned down. And so they didn’t even have access to that.
So they tried to get it and they say, Yeah, it was in that fire. Yeah. Sorry, that’s too bad. So yeah. So SF-50s that you’re right. That’s another one that you want to keep track of, that everyone wants to make sure that they have a copy of every one of them. And I think one of the things that people don’t know what to how do I say this. They don’t know what should be on it. And so if something is missing, they don’t recognize that it is missing.
I heard once of a of a gentleman, for example, who got to the end of his thirty years of service and said, OK, I’m going to retire. And they came back, said, oh, I’m sorry, you don’t get anything. He said, well, why is that? And he said, yeah. And he said, well, you didn’t pay into your pension at all.
He said, What do you mean, I didn’t pay into my pension. I’ve been working for 30 years as a federal employee and I don’t get a penny. They said, well, you should have seen it on your SF-50, should have seen it on your pay stub. You should have said and you said, I didn’t know what to look for. I didn’t realize that it should have been on there in the first place. And and and I’m sure they had to admit that it turned out that they had to admit that it was their fault, not his fault, for not taking it out all these years.
But he didn’t know to look for it. And I don’t know what happened in the end, whether he got his pension or not. But still, you need to know what to look for. In fact, that might be a great video to do, just Cassie some day just on the 50s. And what’s there, what you should look for, what kind of things are, you know, so you don’t.
I think that would be valuable information for folks. What is an asset 50? What should be on there and what to look for if there’s any issues? You know, we can definitely have a little teaching about that. Yeah, good.
OK, that’s SF-50 next one annual leave carry over of 240. I understand that’s an incomplete sentence, but we’ll forgive that right there. We’re not we’re not going to be sentenced Nazis right now. So typically federal employees can carry over two hundred or forty hours from year to year. Sometimes it’s more depending on your position and situation.
Whatever is within the agency. There’s different reasons why these limits fluctuate. But I’ve seen it.
Three hundred and twenty or what have you like. There’s there’s different limits for different types of employees or different types of agencies. But essentially the the baseline is two hundred and forty hours. Right.
So normal or typical, federal employees only have two hundred forty hours that they can carry over of annual leave from year to year. Now you can still accrue annual leave with your two hundred and forty hour max, but then you have to use whatever is extra by the end of the year. Otherwise you just lose it, use it or lose it type of thing. And so essentially you can only carry over two hundred, forty hours into the next year.
So, yeah, and I think what this person is yeah. The second half of this says, what about the extra hours for twenty twenty. So I think what this person is talking about is let’s say there is an extra week in the pay period into twenty into the next year. Twenty, twenty one. But let’s throw that in. And you know what happens to that extra time because they don’t get paid the eight hours of annual leave until is it eight hours of annual leave, eight hours of annual leave per pay period.
Is that right? Am I saying that right now? Annual leave varies depending on how many years of service that you have.
And so newer employees earn less employees more and more they don’t get to for six and eight hour accumulation. But essentially, um. I’m sorry. Yeah, I’d have to double check that, but I’m pretty sure that is annual leave. That varies. Either way, there can be, you know, a hundred to two hundred hours that somebody earns in a given year. If you are close to retirement, I think it’s two hundred and twenty or something like that that you earn in a year because obviously you’re earning that eight hours.
Right. But you can retire with four hundred and forty eight hours or four hundred forty hours of annual leave and get paid out for them for those hours. So if you plan on retiring at the end of the year, you can accumulate all of that and not use it because you’re not going to lose it. But it said anything about you and I’m forty they want you to use throughout the year because you’re not going to carry it over into the next year.
But if you plan on retiring, then they’ll pay you out for those extra hours.
Then I think what this question here is asking is, if they retire at the end of the year, December 31st, they’ve rolled over 240, the build up their 2… Whatever to eight after that. Right. So they go out with 448 hours, but what about the extra hours in 2021 that they didn’t get from the pay period beforehand? So let’s say they get eight hours every pay period. They don’t get awarded that eight hours every hour until the end of twenty or end of the paper, which happens to be in 2021.
And so they’re missing out on eight hours of annual leave in that, in that instance. Right. And so and that’s just that’s the way it is. It’s better than I hear people all the time. And this is just a misunderstanding of how it should be applied. But some people say, well, I want that eight hours of annual leave and so I’m going to retire in the first week of twenty, twenty one. Not realizing that they have that they not only that they got the eight hours of annual leave, but they just dumped two hundred and forty or two hundred plus hours that it’s a trade off.
Two hundred plus hours or eight. Which one do you want.
I also want to point out that how it affects the pension as well. Right. So if they retire the first week of January. Right. Then they’re missing out on almost three weeks of their pension accrual and they’re not getting paid. Right. Right. So it doesn’t just affect the annual leave for the carryover standpoint, but also the pension accrual on the on the other end. And so, first, employers really have to make sure that they are retiring on the last day of the month.
So that way their pension begins accruing the first of the following month. Otherwise they lose out on unpaid whether they paid from being an employee or pension accrual. There’s there’s a week or two weeks or three weeks or four weeks, depending on the the month and the days and how all that works. But essentially, they can really you know, I don’t think that they take into consideration the other factors here when it’s, oh, I want to make sure that I’m leaving on the end of a pay period to get this time.
Well, what happens to the rest of it? What happens to the pension? What happens to, you know, whatever other things you need to think about for your case? Right. And so essentially, if you’re looking at maximizing your annual leave, you need to retire the end of the year in December, thirty first December 30th, what have you to make sure that you were not going to roll over and essentially lose those hours that you’ve accumulated the year prior.
OK, I’m going to throw a big caveat in there, Cassie. So what you said was spot on, right? If you want to maximize your annual leave, then you should retire December 31st and and do it that way. However, in some cases, that may push people. They get that check a couple of weeks later. That may push people into the next tax bracket for the next year, which means and I did a simple calculation and I took a fifty thousand dollar employee who worked 30 years, did some calculations and found out that if they retired on December 31st, having rolled over to 14 to eight that year, build up to four hundred forty eight hours, get paid two weeks later, yeah, they will actually be ten thousand dollars less than if they had done it differently.
So that is a huge amount. So it yes. Maximizing your annual leave, that is how you do it. However, that is not the only consideration we need to look at when retiring and people get stuck on that. Oh, I want to maximize my annual leave and don’t realize the domino effect it has on everything else. And federal employees have to be so careful of that.
Yeah, these benefits really do have a ripple effect if you do something to this one, that it affects all the rest of it. Right. So you really have to be cautious about that, because if they have a simple retirement to like for them to be able to finalize, then they’re getting the interim payments and then they’re getting all that back pay. And what if the SRS is in place? Right. What if they’re collecting Social Security, like all of these different factors have to be considered when you’re looking at retirement and how it’s going to affect the tax bracket.
That’s a whole nother conversation.
Yeah, yeah. And what affects this?
You’ve got to talk to somebody who knows what they’re talking about, who can help you out, who can help you figure out those considerations, though this is located. Yeah, I love our advisors and our network because we we know what they do. They’re looking at every single aspect of your employee benefits plus the financial side of it to really set you up so that way you’re not doing something that you actually think is right that might be wrong due to your situation or what have you.
And so I love that our advisers really look at all of these different things and the ripple effect that they have on every single benefit and really a financial plan or tax planning considerations. So taking a look at that and letting you know, hey, this is what’s going to happen here if you do this. So we do this, maybe you retire in September or August. You know, you get the annual leave payout and everything else, and that helps for this year.
And then next year you can be better by next year and you can set yourself up, get a better tax situation or what have you. That’s one of your concerns. It’s definitely important to talk with somebody who knows the federal benefits and how they work and what all of those considerations are so they can really help you out there.
Who knew that choosing what day you should retire would be so complicated? They say it can make the difference in sometimes tens of thousands of dollars of when. And so anyways, it’s complicated. We’ll just say that we only have a few minutes left for this last one. Can you change regular TSP to ROTH? TSP?
Well, thank goodness this one’s easy. The answer is no. There you go.
OK, put your traditional TSP into your it and convert it into a ROTH TSP. That’s not I mean, there are strategies to take out of TSP and into a private ROTH, but that’s a whole nother conversation. Essentially, though, you cannot switch your traditional ROTH and just move it over to the traditional TSP sorry, into a ROTH TSP now it’s right.
Just no right. Yeah. So in the in the accumulation phase, the answers, what you’re trying to do, the answer is no. In the distribution phase, you, you still can’t do it in the TSP. But there are ways to do basically essentially that just not in the TSP so it can be done outside but it can’t be done inside no matter what in the accumulation or distribution phase either. So it doesn’t matter.
TSP has limitations. Yep. Yes, it does. All right.
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Take care, everyone
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