Welcome to another edition of our newsletter for federal employees! As your financial experts dedicated to helping you to your financial independence, we make it a point to stay on top of all the news that might affect you, and we strive to keep you informed in this space.

Today we have several items to share with you as we cover everything from federal employee pay raises to payroll tax deferral. As always, if you have any questions, please don’t hesitate to reach out to us. We’re here to help.

MORE FEDS ARE SUBJECT TO MANDATORY PAYROLL TAX DEFERRAL
Source: Government Executive

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.


WHAT’S GOING ON WITH THE FEDERAL EMPLOYEE PAY RAISE FOR 2021?
Source: FedSmith

The process of determining what amount federal employees will receive as a pay raise is always a tricky one.  This year is no exception. The House passed a funding bill to keep federal agencies funded into December, but what about 2021? The best guess is a 1% pay raise for the federal workforce. Time will tell.


NEW WORKERS AUTOMATICALLY CONTRIBUTE TO THEIR TSP ACCOUNTS
Source: Government Executive

Effective October 1st, all new federal employees and members of the military automatically contribute the increased rate of 5% of their salaries to their Thrift Savings Plan (TSP) accounts. What’s more, this guarantees they’ll receive the full employer match. Once enrolled, though, employees can adjust their contributions. This change applies to both new and rehired employees.


THERE ARE MORE FEDERAL EMPLOYEE MILLIONAIRES NOW THAN BEFORE THE PANDEMIC STARTED
Source: FedSmith

Despite the ups and downs of the stock market since March, an excellent third quarter translates to a greater number of millionaires in the federal government’s Thrift Savings Plan. In particular, the C and F funds did especially well. In January 2012, there were approximately 200 TSP millionaires. At the end of 2016, there were 9,599 TSP millionaires. Today, there are over 50,000 TSP millionaires. Congratulations if you’re one of them!


PROTECTION BILL PASSES FOR FEDERAL EMPLOYEES RETURNING TO OFFICES
Source: My Federal Retirement

The House has passed a bill designed to protect federal employees who are returning to the workplace amid the coronavirus pandemic. Named after a federal employee who died due to Covid-19 while serving as a daycare center kitchen staff member, this new legislation includes provisions to protect federal and contract workers in federal workspaces. Every federal agency would be required to publish online a reopening plan at least 30 days before employees return.


EMPLOYEES WILL PAY 4.9% MORE FOR HEALTH CARE PREMIUMS IN 2021
Source: Government Executive

On average, federal employees and retirees will spend 4.9% more on health care insurance premiums next year. It may seem high, but it’s lower than last year’s average increase of 5.6%. A significant portion of the increase for 2021 is being driven by an increase in health care spending. A plan comparison tool is available to help federal employees choose a plan. More dental and vision options will be available in 2021. Open enrollment for the Federal Health Insurance Exchange is between November 1 and December 15.