11/10/2020 - Federal Employee Benefits Newsletter

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As a current or retired federal employee, you know that the government offers generous benefits packages. However, understanding the packages and all the goings-on can become overwhelming. As federal employee benefits management specialists, the team at West Advisory Group is committed to assisting clients in developing a better understanding of some of the provisions offered under the federal government benefits and retirement plans so that they can make the best decisions for themselves and their families.

As part of our commitment to helping clients develop a better working knowledge of the benefits and retirement options available to federal government employees, we provide regular updates to help you stay on top of all the news that may affect you and your family. In this edition of our Federal Employee Benefits Newsletter, we highlight changes to the 2021 COLA, FEHB plans, retirement claims, and so much. If you have any questions regarding the employment and benefit decisions for federal government employees, contact our advisors.

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2021 COLA: LAWMAKERS PROPOSE EMERGENCY INCREASE

Source: My Federal Retirement

It turns out the initiative applies to individuals making $4,000 or less per pay period after a number of pre-tax deductions. Federal employee groups and lawmakers deem the decision to make the deferral mandatory a short-term loan, resulting in an effective pay cut for next year. Officials from the National Treasury Employees Union assert that statements by federal payroll processors on this subject were misleading.

SIGNIFICANT CHANGES COMING TO SOME FEHB PLANS IN 2021

Source: FedSmith

Federal employees and retirees can expect to see “significant plan changes for 2021” to some health care plans under the Federal Employees Health Benefits Program (FEHB). The changes include a list of plans that are leaving the FEHB in 2021 as well as new plans coming into the program. This year’s Federal Benefits Open Season started on Monday, November 9, and will continue up until Monday, December 14, 2020. During this period, federal employees and retirees have the opportunity to enroll, change plans or plan options, change enrollment type, or cancel enrollment in plans under the FEHB

NEW METHOD FOR MAKING TSP CATCH-UP CONTRIBUTIONS IN 2021

Source: My Federal Retirement

The Federal Retirement Thrift Investment Board (FRTIB) will implement a new method for “catch-up” contributions, called the “spillover” method at the beginning of the new year. Spillover of TSP contributions will apply to all active civilian and uniformed service members age 50 or older during the current calendar year. This new method will help simplify the TSP catch-up program that is in place for both participants and agencies or services. Those TSP participants who plan on retiring soon should make the necessary adjustments to ensure a sufficient amount is contributed to each pay date so that they can stay on track to reach their desired contribution for the year in which they plan to retire.

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NEW RETIREMENT CLAIMS AT OPM SURGE 33% OVER PREVIOUS MONTH

Source: FedSmith

During the month of October 2002, the number of new retirement claims rose by over 33% compared to the new claims submitted the month before, going from 6,244 to 8,323. This increase pushed the total backlog of retirement claims at the Office of Personnel Management up to 19,605, a 7% increase over September. Around this time last year, the backlog was nearly 10% lower than it is now. So far in 2020, the average number received by OPM each month has been 8,108 — slightly lower than last year. Last month, however, nearly 7,000 claims were processed in an average of 77 days. This increase is likely due to the situation with the COVID-19 pandemic.

BIPARTISAN HOUSE BILL WOULD INCREASE RMD AGE TO 75

Source: My Federal Retirement

In late October, the House introduced a Bipartisan legislation that would — along with other provisions — increase the required minimum distribution (RMD) from retirement plans to age 75. This is an increase from the current law, which generally requires participants to start taking distributions from their retirement plans at age 72. The new legislation was introduced by Ways and Means Committee Chairman Richard E. Neal (D-MA) and Ranking Member Kevin Brady (R-TX). It is referred to as the Securing a Strong Retirement Act.

BIDEN VICTORY PROMISES END TO TUMULTUOUS FOUR YEARS FOR GOVERNMENT UNDER TRUMP

Source: Government Executive

Former Vice President Joe Biden became the president-elect at the beginning of the month after an extended vote count confirmed that he had defeated President Trump in the polls. Biden’s victory will likely have significant and immediate impacts on federal agencies. Biden has been vocal regarding the value of public service and promised to listen to and respect experts across the government, something to which Trump has frequently demonstrated with reluctance. The president-elect has also mentioned that he consistently leaned on and learned from career federal employees throughout his time as a senator and vice president, vowing to again depend on their expertise as president. With a new leader in the Oval Office, things are looking bright for federal agencies.