Just Sharing . . .No Word Yet on Phased Retirement . . . While agency budgets continuing to look tight in the years ahead under the recent budget deal—although not as tight as they otherwise would have been—many employees continue to express interest in phased retirement. Under such an arrangement, with the agreement of both the worker and the agency, a retirement-eligible employee could switch to half-time work and receive both a proportionate annuity and a proportionate salary, without offset. The authority was enacted into law in mid-2012 in part because it would produce budgetary savings when compared with keeping the employee on the job full-time, but it still is not in effect. OPM put out proposed rules last June but hasnt yet finalized them despite setting a goal of doing so by the end of 2013. Phased retirement was proposed by the administration itself as benefiting both the employee and management. . . . Or on Roth TSP Conversions . . . Another retirement-related issue that many employees are watching involves the potential for converting traditional TSP account balances into Roth balances. The fiscal cliff law enacted early last year authorized, but did not require, the TSP among similar tax-favored retirement savings plans to allow investors to make such conversions. Traditional balances are made with pre-tax money but are taxable on withdrawal along with their associated earnings; Roth balances are made with after-tax money but are tax-free on withdrawal, as are their associated earnings as long as certain conditions are met. The TSP has said only that it is studying whether to put that authority into effect. The IRS recently put out guidance on how such conversions would work in the context of an employer-sponsored savings plan. In the context of IRAs, such conversions have potentially severe up-front tax consequences to the account holder, although with the potential for significant tax savings later when money is withdrawn. That guidance could help speed a decision by the TSP, but its governing board tends to move slowly on such issues. Even if it decided to go ahead, putting the authority into effect likely would be a long-term project.
Posted on: Thu, 13 Mar 2014 02:25:10 +0000
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