Every year some of the numbers affecting federal employee and retiree benefits change. This year, all of them did. Some of them you already know about. Others may be news to you.
So let’s get started.
If you are a federal employee, you got a 1 percent pay increase. It wasn’t as much as you had hoped for, but it was better than nothing. You can find out exactly what you’ll be making this year, by going to OPM’s website at www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/pay-executive-order-2015-adjustments-of-certain-rates-of-pay.pdf. If your basic pay falls above the annual salary cap (marked with an asterisk there), you won’t receive any pay above that amount. Since your annuity will be based on the actual basic pay that cap could affect the amount of your annuity when you retire.
Another pay related area involves Social Security taxes, for those who pay them (primarily FERS employees, but also the relatively small percentage of feds in CSRS Offset). That 6.2 percent of salary payroll tax only applies up to a certain level. This year it’s $118,500.
With one exception, once you’ve earned that much in a calendar year, Social Security taxes will no longer be deducted from your pay. Here’s the exception. If you are a CSRS Offset employee, full deductions will continue to be taken out. Instead of 6.2 percent going to Social Security and .8 percent to CSRS, 7 percent will go to CSRS.
P.S: There isn’t any limit on Medicare taxes of 1.45 percent. They will continue to be deducted from your pay regardless of how much you earn.
As an employee, you also need to know that the maximum amount you can invest in your TSP account in 2015 is $18,000. However, if you are at least 50 years old at any time during the year, you can also make “catch-up contributions” that won’t count that limit. In 2015 that limit is $6,000.
If you are a CSRS retiree who has been retired for at least one year as of November 30, 2014, you’ll have received the full 1.7 percent cost-of-living adjustment (COLA) in your January 2015 annuity payment. If you’d been retired for less than a year prior to that date, what you got depended on how many months you’d been on the annuity roll.
If you are a FERS retiree, you’ll have only received that 1.7 percent COLA (also subject to prorating for those on the rolls less than a year through last November) if you:
• are age 62 or older,
• retired under the special provisions for law enforcement officers firefighters and air traffic controllers, or
• are a disability annuitant.
FYI. If you are a FERS retiree who has a CSRS component in your annuity, your CSRS component will be increased under CSRS rules. As noted above, you’ll get the full COLA on the CSRS portion regardless of how old you are.
Thrift Savings Plan elective deferral limit
For 2015 the maximum amount you can contribute to your TSP account is $18,000. However, if you are 50 or over, you can make tax-deferred “catch-up” contributions from your basic pay to your TSP account. These are a supplement to your regular employee contributions and don’t count against the Internal Revenue Code’s elective deferral limit. However, the catch-up contribution has its own limit. In 2015 that’s $6,000.
Next week, I’ll fill you in on changes in Social Security benefits and the FERS special retirement supplement.