FERS 4.4% payroll deduction

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No, you cannot opt out of FERS, and if you think you can get a better return on that biweekly deduction by investing it yourself, there’s a bridge I’d like to sell you. Your TSP deduction is the portion of your money that gets invested on your behalf. The pension deduction is a pay-in for an eventual payout. If you leave you can ask for a lump sum payout, but if you stay more than five years, you can get a pension benefit for life when you finally retire. It will be really small if you only stay a short time.

How can you calculate the pension you can get if you leave at 5, 10, 20 or 30 years?

With excel and a solid understanding of the impact of assumptions of salary increases, but especially inflation, in the intervening time between retirement and collection.

OPM also has a calculator: https://www.opm.gov/retirement-center/calculators/federal-ball-park-estimator/

OP asked about valuing the pension assuming leaving after as few as 5 years. This calculator assumes you will stay until MRA and doesn’t allow any other assumptions. It doesn’t account for inflation, as the pension is not adjusted at all for inflation until MRA for someone who leaves well before MRA. It doesn’t discount to present value, which is essential for answering the question of what a future stream of cash is worth.

[Anonymous]

yes, but one can feed in different ages, differing retirement ages, as well as differing service start dates to get a better idea.

it really all depends on how much work OP wants to do. or maybe they don't even know the basic formula of (years of service) * 0.01 * (highest salary average over a consecutive three years)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Everyone hired after 2014 also constantly whine about 4.4%.

Wait, do people hired after 2014 have a different plan?

I was hired in 1997 and get NO pension. Instead, they DoD unit contributed to a 403b (that I must also contribute to).

Anyone who still gets FERS is lucky.

I have been with the US government full time since 1997 and will get no pension from them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No, you cannot opt out of FERS, and if you think you can get a better return on that biweekly deduction by investing it yourself, there’s a bridge I’d like to sell you. Your TSP deduction is the portion of your money that gets invested on your behalf. The pension deduction is a pay-in for an eventual payout. If you leave you can ask for a lump sum payout, but if you stay more than five years, you can get a pension benefit for life when you finally retire. It will be really small if you only stay a short time.

How can you calculate the pension you can get if you leave at 5, 10, 20 or 30 years?

With excel and a solid understanding of the impact of assumptions of salary increases, but especially inflation, in the intervening time between retirement and collection.

OPM also has a calculator: https://www.opm.gov/retirement-center/calculators/federal-ball-park-estimator/

OP asked about valuing the pension assuming leaving after as few as 5 years. This calculator assumes you will stay until MRA and doesn’t allow any other assumptions. It doesn’t account for inflation, as the pension is not adjusted at all for inflation until MRA for someone who leaves well before MRA. It doesn’t discount to present value, which is essential for answering the question of what a future stream of cash is worth.

Pension is not COLA adjusted until 62, not MRA. In OP's case, her pension will be very small.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Everyone hired after 2014 also constantly whine about 4.4%.

Wait, do people hired after 2014 have a different plan?

I was hired in 1997 and get NO pension. Instead, they DoD unit contributed to a 403b (that I must also contribute to).

Anyone who still gets FERS is lucky.

I have been with the US government full time since 1997 and will get no pension from them.

I was hired in 87 under FERS w/ DOE/Navy but left in 90 to a different agency. I didn't realize DOD is not using traditional FERS. How does it work? How much do you put in vs. Govt contributions?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Everyone hired after 2014 also constantly whine about 4.4%.

Wait, do people hired after 2014 have a different plan?

I was hired in 1997 and get NO pension. Instead, they DoD unit contributed to a 403b (that I must also contribute to).

Anyone who still gets FERS is lucky.

I have been with the US government full time since 1997 and will get no pension from them.

I was hired in 87 under FERS w/ DOE/Navy but left in 90 to a different agency. I didn't realize DOD is not using traditional FERS. How does it work? How much do you put in vs. Govt contributions?

I don’t know what the first pp is talking about. They’re probably a contractor. Every federal employee still gets FERS. My DH is DoD and gets FERS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Everyone hired after 2014 also constantly whine about 4.4%.

Wait, do people hired after 2014 have a different plan?

I was hired in 1997 and get NO pension. Instead, they DoD unit contributed to a 403b (that I must also contribute to).

Anyone who still gets FERS is lucky.

I have been with the US government full time since 1997 and will get no pension from them.

I was hired in 87 under FERS w/ DOE/Navy but left in 90 to a different agency. I didn't realize DOD is not using traditional FERS. How does it work? How much do you put in vs. Govt contributions?

I don’t know what the first pp is talking about. They’re probably a contractor. Every federal employee still gets FERS. My DH is DoD and gets FERS.

Same here (DH is DOD and gets FERS).

[Anonymous]

Anonymous wrote:I think yiu can get your 4.4% contributions back with interest when you leave, if you give up your pension. I don’t think many people do it and not sure about the mechanics.

This is not true.

[Anonymous]

Anonymous wrote:When you receive your FERS pension in retirement, you'll be able to claim your after tax contributions and not pay taxes on them again.

Is this accurate? Where is this coming from? I always assumed my small FERS pension would be taxed?

[Anonymous]

Anonymous wrote:

Anonymous wrote:When you receive your FERS pension in retirement, you'll be able to claim your after tax contributions and not pay taxes on them again.

Is this accurate? Where is this coming from? I always assumed my small FERS pension would be taxed?

Pension is taxed for federal income tax like regular income but some states don’t tax for state tax

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Everyone hired after 2014 also constantly whine about 4.4%.

Wait, do people hired after 2014 have a different plan?

I was hired in 1997 and get NO pension. Instead, they DoD unit contributed to a 403b (that I must also contribute to).

Anyone who still gets FERS is lucky.

I have been with the US government full time since 1997 and will get no pension from them.

I was hired in 87 under FERS w/ DOE/Navy but left in 90 to a different agency. I didn't realize DOD is not using traditional FERS. How does it work? How much do you put in vs. Govt contributions?

Can't speak to all of DoD, I am a somewhat non-traditional AD employee (not GS).

I have to put in at least 5% and they put in 10%. Generous compared to the private sector, but FERS and TSP (another thing I do not get) sound better.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think yiu can get your 4.4% contributions back with interest when you leave, if you give up your pension. I don’t think many people do it and not sure about the mechanics.

This is not true.

you can get your contributions back (no interest). if you have the contributions refunded, and later rejoin the federal service and want to buy back in, you will have to redeposit the original amount plus interest.

https://www.usgs.gov/human-capital/retirement-deductions-refunds-fact-sheet

[Anonymous]

Anonymous wrote:

Anonymous wrote:When you receive your FERS pension in retirement, you'll be able to claim your after tax contributions and not pay taxes on them again.

Is this accurate? Where is this coming from? I always assumed my small FERS pension would be taxed?

It will be taxed, but the small portion that was your contribution is not. The correct taxable amount is reported to you yearly on a 1099-R. There’s a complicated formula, but about 2% of your pension income won’t be subject to taxation if you’re an “old” FERS employee. Closer to 5% won’t be subject to taxation if you’re FERS-FRAE hire. Lastly, we’re talking about a dozen dollars a month here.

[Anonymous]

Anonymous wrote:When you receive your FERS pension in retirement, you'll be able to claim your after tax contributions and not pay taxes on them again.

New poster here- I want to make sure I understand this comment. Is the 4.4% FERS contribution after-tax?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think yiu can get your 4.4% contributions back with interest when you leave, if you give up your pension. I don’t think many people do it and not sure about the mechanics.

This is not true.

There IS something where you can request your contributions back. https://www.opm.gov/retirement-center/fers-information/former-employees/

I have one year of service and had to resign due to moving. if I am unable to find something else at some point, I am going to request my contributions for that year be rolled over to my roth IRA.