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AFSA Retiree Newsletter - August 2016
In this issue you will find:
- Federal Long Term Care Price Increases
- AFSA and Smithsonian Associates
- TSP Withdrawals
- FS Retirees Engage with High School Students
- First FEGLI Open Season Since 2004
- AFSA Honors Award Recipients
- ADST Seeks New President
AFSA shares the concerns of many AFSA members over the dramatic recent increases in premiums for the Federal Long Term Care Insurance Program (FLTCIP), effective November 1, 2016. There has been a great deal of coverage in the media and online regarding these premium increases. Please be advised that, according to OPM, the federal agency responsible for FLTCIP, the only authoritative source of information is LTC Partners, which administers the plan. Please refer to the two attachments provided by LTC Partners: 1) FLTCIP 2016 Enrollee Decision Period (July 18 – September 30, 2016), and 2) FLTCIP Fact Sheet with Frequently Asked Questions.
Essentially, all but about 10,000 of the 274,000 people in FLTCIP are affected. (Those not affected include new enrollees after August 1, 2015, those 80 or older when they purchased, those in FLTCIP’s Alternative Insurance Plan, and those currently eligible for benefits or awaiting a claims decision.) Those affected will receive a package of personalized options, mailed out in July. The personalized options will generally include:
- maintaining current benefits and inflation protection with a premium increase (this is the default if no action is taken),
- maintaining the current premium with a reduction in coverage, and
- a few specific options to partially increase premiums while partially reducing coverage (enrollees may request other options than those provided for in the package of personalized options, but they may require underwriting and/or a higher premium).
The deadline for decisions is September 30, 2016.
About 60 percent of those facing a premium increase which exceeds a certain percentage will also be offered an option known as “paid-up, limited benefit” (also known as “contingent benefit upon lapse”), whereby the enrollee stops paying premiums and benefits are capped at the accumulated value. If you are eligible for this benefit, it will appear as one of your personalized options. The Paid up Limited Benefit is only offered during the Enrollee Decision Period period and a future lapse may not entitle you to this benefit. By exercising the contingent benefit upon lapse, you could significantly reduce the benefits of your coverage, so please give this option careful consideration before you select it. We encourage you to discuss your options with a financial advisor on the potential implications of changing your long term care insurance coverage.
In addition to the authoritative guidance in the two attachments from LTC Partners, more information is available on their website: http://www.ltcfeds.com/QA.
If you are covered by FLTCIP and have not yet received your personalized packet, you may visit www.LTCFEDS.com/MyAccount to view it online. Our contacts at LTC Partners strongly advise all policy holders to call 1-800-LTC-FEDS (1 (800) 582-3337, Monday – Friday, 8am-8pm, Eastern Time) to discuss their specific options. In many cases, LTC Partners can bring acceptable options to the attention of policy holders which they may not have been aware of. And while the premium increases are indeed dramatic, our contact at LTC Partners assures us that the FLTCIP remains competitive compared to non-Federal LTC plans on the market.
AFSA will continue to monitor this issue closely and work with the Federal Postal Coalition and civil service unions (NARFE and AFGE) to advocate on behalf of members who are dealing with these increases. Please feel free to contact us with the specifics of your case if you encounter problems coming up with a solution that works for you (firstname.lastname@example.org). Many members have found the online AFSA Community a helpful platform for comparing options and sharing suggested solutions. Also note that AFSA retiree Vice President Tom Boyatt will address this issue in depth in the October issue of AFSA News.
On August 2, AFSA and the Smithsonian Associates offered a day-long program called “Inside the World of Diplomacy” for the third consecutive year. As with the previous programs, this event was completely sold out. Participants spent the morning at AFSA, where FSO Matthew Palmer gave them an introduction to the Foreign Service, the Department of State and embassies. Ambassador (ret.) and AFSA Governing Board member Pat Butenis then provided an overview of a day in the life of an Ambassador. The audience peppered the speakers with questions and came away full of admiration for the Foreign Service. After lunch, the group headed over to the Department for two briefings from the Op Center and FSI. The Smithsonian Associates program is one of many partnerships AFSA has that offers speaking opportunities to our members. If you are not yet taking advantage of our Speakers Bureau, click here to do so.
For years AFSA has advised its members that the Thrift Savings Plan (TSP) is an incredible deal for federal employees: good portfolio diversification, low management fees, and easy, convenient reallocation of contributions. Many AFSA members have taken the advice and built up some pretty nice “nest eggs” in TSP. But what to do with the nest egg when we retire? What are our withdrawal options? Are there penalties for early withdrawal? Should we keep our TSP account or transfer the funds to an IRA? These and other questions will be addressed on Thursday, October 6, 2:00 to 4:30 p.m. at AFSA, by Randy Urban, Training & Liaison Specialist for the Federal Retirement Thrift Investment Board. Read on for some of the most basic TSP information to prepare for his presentation (as always, we’ll record the presentation and post it on our website for those not able to attend). Click here to register.
The conventional TSP wisdom is that employees should contribute at least five percent of their salaries to get the full government match. As much as possible, employees should maximize contributions (including “catch-up” contributions allowed after age 50). But after retirement, the conventional wisdom is not so clear. Earlier this year, a few retirees have shared regrets on the online AFSA Community over having closed their TSP accounts by transferring the entire balance into outside Individual Retirement Accounts. Those concerns have prompted us to review TSP withdrawal options.
For starters, if you are age 59½ or older and still working and contributing, you may make a one-time age-based withdrawal with no penalty. You may also make financial hardship in-service withdrawals once every six months (there is a six-month waiting period on contributions after such withdrawals), but may incur a penalty if under age 59½. When you retire, you can no longer contribute to TSP. But, provided you have a balance of at least $200, you can leave your money in TSP, rebalance your portfolio (i.e., move funds around) whenever you like and, thus, take advantage of TSP’s low management fees to maximize your portfolio’s growth. In retirement, you can also transfer eligible funds into a TSP account from an IRA or eligible employer plan. You can let your TSP balance sit, at least until you reach 70½ (and are no longer in federal service), at which point you must take minimum withdrawals, according to an IRS-based schedule. You can also make a one-time, single partial withdrawal (e.g., to pay off a mortgage), but only if you had not previously made an age-based in-service withdrawal. Or, you can make a full withdrawal, either as a single or monthly TSP payment or as a life annuity.
A full withdrawal is taxed on the entire (non-Roth) amount unless it is rolled over directly into an IRA. If it passes first into a retiree’s hands, it could be subject to immediate taxation, even if intended for an IRA. A full withdrawal effectively closes the TSP account for good. A monthly payment withdrawal based on IRS life expectancy tables is updated each year on the anniversary date of the first monthly payment. Or, a fixed monthly payment of not less than $25 can be made until your account is depleted. For a lifetime annuity, TSP will purchase an annuity for you from the TSP’s annuity provider, guaranteeing a monthly payment for the rest of your life. It is important to review your TSP beneficiary designations, especially upon retirement or any life changes (e.g., marriage, divorce, deaths, births, adoptions, etc.). Without designated beneficiaries, your account will be automatically distributed in the event of your death in the following order of preference: spouse, children equally (including descendants of deceased children), parent(s), appointed executor of your estate and next of kin, as defined by the laws of the state in which you reside at death.
One of the benefits of the TSP is that a surviving spouse can inherit it as their own TSP, enjoying the same withdrawal options as the deceased spouse. But any other beneficiary must inherit their share of the TSP as a lump sum: one reason many people roll over all or part of their TSP into an IRA is because an inherited IRA can be paid out over a period of time. In retirement, you can avoid TSP regrets by carefully researching all your withdrawal options. Don’t forget, if you withdraw your entire balance, your TSP account is closed for good. For more information, visit www.tsp.gov or call 1 (877) 968-3778.
As part of AFSA’s ongoing efforts to partner strategically with organizations whose mission aligns with our own, we have been working with the World Affairs Councils of America to send Foreign Service speakers to their youth events. This summer, two retired members of the Foreign Service, Ambassador Shaun Donnelly and Ambassador Lino Gutierrez, spoke to such groups with great success. Our colleagues at WACA were thrilled, saying “how wonderful and real these speakers are with the students, which they (and we) loved, and how well and thoroughly they were able to answer any question the students threw at them.” If you are interested in being part of this kind of public engagement, in which you tell the story of the Foreign Service, please join the AFSA Speakers Bureau if you have not done so already. Our members are our profession’s best Ambassadors, and we are eager to deploy you as part of this ongoing effort.
This is a rare opportunity for federal employees who are eligible to elect or increase their FEGLI life insurance: 2016 FEGLI open season. Coverage elected will be effective the first pay period beginning on or after October 1, 2017. Eligible employees may enroll or increase coverage in Basic, Option A, up to five multiples of Option B, and/or up to five multiples of Option C. Outside of an open season, eligible employees can only enroll or increase their coverage by taking a physical exam or with a Qualifying Life Event (QLE—marriage, divorce, death of spouse, or acquisition of an eligible child). Active employees must submit an SF2817 to their human resources office within 60 days of the QLE. Enrollees who are satisfied with their current FEGLI coverage do not need to make any elections during 2016 FEGLI Open Season.
Retirees can never increase their FEGLI coverage, even during a FEGLI Open Season. However, federal employees and federal retirees can reduce or cancel FEGLI at any time. Retirees don’t submit a form; they simply write a signed letter to OPM’s Retirement Office: OPM, Retirement Operations Center, P.O. Box 45, Boyers, PA 16017-0045. The letter must clearly state the reduction of cancellation they would like to make, including their annuity number (CSA/CSF) or Social Security number, as well as their phone number. Beneficiaries can be changed at any time by submitting an SF2823 to one’s human resources office (active employees) or to OPM’s retirement office in Boyers, PA, above (retirees). Effective January 1, 2016, some premiums changed. The Basic Insurance premium for employees did not change but premiums for Options A, B, and C decreased. Premiums for Post-Retirement Basic Insurance with 50% reduction and no reduction increased, as did premiums for older age bands of Options B and C: 2016 FEGLI premium rates.
On June 23, AFSA had the pleasure of honoring the recipients of this year’s AFSA awards for lifetime contributions to American diplomacy, constructive dissent and exemplary performance. 300 guests joined us for the occasion in the Benjamin Franklin State Dining Room on the 8th floor of the Department of State.
Ambassador (ret.) Ruth A. Davis received the award for Lifetime Contributions to American Diplomacy on honor of her long, groundbreaking Foreign Service career and her dedication to the profession in the years since her retirement. Her devotion to the cause of increased diversity in the Foreign Service and her consistent mentorship efforts are truly commendable. Ambassador Davis’s acceptance speech was one for the ages; we highly recommend that you click here to enjoy it.
Jefferson D. Smith received the William R. Rivkin award for constructive dissent by a mid-level Foreign Service officer. Smith advocated that the United States be a leader rather than follower when it comes to compensation for locally engaged staff. His efforts led to a 22% pay increase for LES at posts in the Persian Gulf region.
AFSA also honored Michael Honigstein (Mark Palmer Award for the Advancement of Democracy), John Naland (Achievements and Contributions to the Association), Toni Kula (Nelson B. Delavan Award for Foreign Service Office Management Specialists), Sara Locke (M. Juanita Guess Award for Community Liaison Officers), Shawn Akard (Avis Bohlen Award for Eligible Family Members) and Karn ‘KC’ Carlson (AFSA Post Representative of the Year). Click here for a recording of the entire ceremony.
The Association for Diplomatic Studies and Training is looking for a dynamic, innovative person to serve as its next President and take the organization to the next level in its development. The President is the Chief Executive Officer for ADST, a small, 501(c)(3) non-profit. Located at the State Department’s George P. Shultz National Foreign Affairs Training Center in Arlington, Virginia, ADST advances understanding of American diplomacy and supports training of foreign affairs personnel through a variety of programs, publications, and activities. ADST’s governing body is the Board of Directors, which meets three times a year and to which the President reports.
For more than 30 years, ADST has captured the horrifying, thought-provoking, and the absurd aspects of Foreign Service life. Its extensive collection of diplomatic oral histories is the world’s largest and is also archived at the Library of Congress.
Major areas of responsibility include:
- Overseeing a staff of five, including professionals responsible for the oral history and publications program and a part-time office administrator, as well as one FSO on a one-year detail who serves as Executive Director and who supervises ADST’s vibrant internship program.
- Working with the Board of Directors, developing a much-needed campaign on fundraising, including finding and cultivating new private sector donors.
- Handling outreach to FSI, universities, and others interested in diplomatic history through presentations, networking, and social media.
- Collaborating with the new Diplomacy Center to integrate ADST’s oral histories into its exhibits and look for ways ADST’s products can be further incorporated into college coursework.
- Enhancing ADST’s profile on the Internet by searching for new platforms, websites, and opportunities where ADST can be highlighted.
Candidates must be familiar with the workings of the State Department, be willing to serve for at least three years, and have extensive contacts within the foreign affairs community and with private sector and government contractors or be able to develop them. They must have an entrepreneurial spirit and an appreciation for U.S. diplomatic history. A background in social media and WordPress website content management as well as experience with non-profits are a plus. Applicants should send a CV and cover letter to admin@ADST.org before September 9. Qualified candidates will be contacted to arrange an in-person interview.
Contact us at email@example.com or (202) 338-4045.