Retire2Enjoy : Good News for FERS and the TD Ameritrade Online Retirement Center; Notes on Hispanic Retirement per Hispanic Institute

Legislative Wins for the Feds, FERS, and Rare Birds

The Senate-House Defense Authorization Act contains three big legislative wins for working and retired feds.

The improvements include:

* Agreement to give employees under the Federal Employees Retirement System (FERS) (80 percent of the work force) retirement credit for unused sick leave. Workers under the older Civil Service Retirement System (CSRS) have long been able to count their unused sick leave as service time for retirement purposes. Now Congress has agreed to extend that benefit to all feds. They hope this will cure the so-called FERS flu, a condition that causes long-healthy feds to burn up sick leave in the last year on the job.

* Make it possible for retired feds with "rare bird' skills (ranging from intelligence and national-defense expertise to the ability to speak exotic languages or track terrorist money pipelines) to come back to government and get both full pay and pension. Under current rules (with some rare exceptions) these so- called "re-employed annuitants" must give up a big part of their federal pay because they are also receiving civil service retirement benefits. That dual compensation kicker does not apply to retirees from state and local governments, former federal contractors or other retirees.

*Elimination of the Bush administration's National Security Personnel System (NSPS), which covers about 200,000 Defense Department civilians. The NSPS was designed to give managers greater leeway to reward outstanding workers with bigger pay raises. It involved costly training, the elimination of GS grades in favor of broader pay bands, and other changes. Backers say it worked and was getting better each year. Opponents said it encouraged raises based on the old-boy/old-girl network, not performance.

President Obama is expected to sign the changes into law even though the administration initially opposed changing the FERS sick- leave system because it added costs to the retirement fund. The White House also originally proposed to modify, rather than scrap, the NSPS, but relented under pressure from federal unions and a bipartisan coalition in both the House and Senate.

Hispanic Retirement Challenges

A new report released by the Hispanic Institute demonstrates that Hispanic Americans face greater challenges in obtaining a secure retirement than the average population. Challenges include a general lack of retirement preparation, less access to employer-sponsored retirement plans, lower levels of personal savings, and inadequate financial literacy.

Significant findings of the study include:

• Only 41 percent of Hispanic workers say they have saved money for retirement.
• Only 25.6 percent of Hispanics are covered by employer-sponsoredretirement plans, compared to 42.5 percent of whites and 40 percent of African-Americans.
• Of the Hispanics receiving Social Security benefits, almost 80 percent rely on these benefits for at least 50 percent of their retirement earnings.
• Among people 65 and older receiving Social Security, on average Hispanics receive about $2,124 less in earnings than non-Hispanics.

Franklin Graham Makes a Sacrifice

Evangelist Franklin Graham has temporarily given up future contributions to his retirement plans from the two ministries where he's the CEO, saying his total compensation "looks terrible."

The Charlotte Observer reports that Graham receives two full-time salaries and two retirement packages -- one each from the Billy Graham Evangelistic Association and Samaritan's Purse. His total compensation from the two last year was $1.2 million

The newspaper said Graham, 57, asked the heads of the two ministries' compensation committees Tuesday to cut off contributions to his retirement plan "for the time being." He sent a memo about the request to employees Wednesday.

Lieberman’s Praise

The following information was released by Connecticut Senator Joseph I. Lieberman:

Four leaders of the Senate Homeland Security and Governmental Affairs Committee (HSGAC) Thursday hailed the Fiscal Year 2010 Department of Defense authorization conference report for containing several provisions to ensure that federal retirement system participants are treated fairly.

The provisions - three of which were reported out of HSGAC as stand-alone legislation and all of which are similar to provisions included in unsuccessful Senate amendments to the Family Smoking Prevention and Tobacco Control Act in June and to the National Defense Authorization Act in July - would:

- Replace the cost of living increases that federal employees in Hawaii, Alaska, and U.S. territories receive with locality pay that federal employees in the contiguous 48 states receive. COLAS are neither taxed nor applied toward retirement benefits. Locality pay is taxed and applies to retirement. This provision was approved by HSGAC as S.507

- Allow federal employees participating in the Federal Employee Retirement System (FERS) to apply their unused sick leave to their length of service for the purposes of computing the amount of retirement benefit. Federal employees under the older Civil Service Retirement System (CSRS) are already allowed to do so. This would bring equity to the two groups of employees and help reduce the absenteeism that results from the current "use it or lose it" FERS policy.

- Correct an injustice in calculating the retirement benefits and dates for non-judicial employees of the D.C. courts system. When these employees were converted to federal employees in the late 1990s, they had to start over in accumulating eligibility for retirement and retirement benefits. The provision would direct that the time served before these employees became federal employees counts towards their federal retirement eligibility.

- Allow former federal employees under the FERS who withdrew their contributions to the retirement trust fund, thereby waiving retirement credit for those years of service, to redeposit their earlier contributions, plus interest, upon reemployment with the federal government.

- Remove a retirement penalty that is imposed on long-time federal employees who choose to switch to part-time work at the end of their careers. The retirement annuity for these employees is determined based on the amount of salary they receive, which drops when they switch to part-time work. This leaves employees with little incentive to stay in a part-time role and many retire. The provision would direct annuities for these employees to be determined using the rate of salary, not the amount. This provision was approved by HSGAC as S.469.

- Authorize federal agencies to reemploy retired federal employees under certain limited conditions, without offset of an employees' annuity against their salary, and requires the Comptroller General to report on the use of this authority. This provision was approved by HSGAC as S.629.

TD Ameritrade Online Retirement Center

Investors looking for a straightforward approach to retirement planning now have access to a new, improved TD Ameritrade online Retirement Center. The newly enhanced site offers a more user-friendly platform, new retirement planning tools, and content tailored to distinct life phases. This comprehensive online resource can be found under the “Planning & Retirement” tab at TDAMERITRADE.com.

The following are some examples of the tools the site provides TD AMERITRADE clients:

* IRA Selection Wizard, a new tool that helps investors determine what type of IRA account they qualify for and better understand the potential advantages of each account type;

* WealthRuler(TM), an innovative tool that helps investors assess their retirement readiness;

* A new Small Business Retirement portal offering information and tools from third-party providers to guide small business owners though the retirement process.

The New Retirement Is Working

A new study released by Bankrate, Inc. shows that the vast majority of working Americans plan to work as long as they can during retirement age. This changes of plans reflects a redefinition of how Americans view traditional retirement plans.

New Survey Reveals Financial Crisis Has No Impact on Retirement Plans

Americans appear unfazed by the financial crisis and continue to have high hopes for retirement, according to new research by Allianz Global Investors. But they may need a more realistic approach to retirement planning and investing if their expectations are to be met.

A key finding of the survey: as stocks have regained their vigor, so has typical American optimism. Although investors say they lost an average 30 per cent of their retirement savings at the bottom, they are nonetheless overwhelmingly positive about the outlook for their retirements.

Population Growth, 65 and Older

The U.S. Census Bureau estimates there will be twice as many people age 65 or older in 2030 as there are today.

Where the Jobs Are

Art Koff, chief executive of RetiredBrains.com, says most of the opportunities for older Americans these days are project-based jobs, especially with former employers or companies in their field of expertise.

"My suggestion to people who are working into their late 50s or 60s is to talk with their employer before retirement and try to arrange something that will benefit both the employer and employee," he said. "Sometimes this is working a few days a week, sometimes flex-time, sometimes fill-in for employees who are sick or on vacation and sometimes it involves working out of one's home." In addition, he said mentoring programs that use older workers have also been of great benefit to the employer and could work well for employer and employee alike.

Besides talking to your current employer, Koff said those nearing retirement and interested in working in some capacity must maintain their network of contacts -- and even expand it if possible. "Many older workers have stopped attending conventions and trade shows and this is a mistake," Koff said. "These are excellent meeting/networking places and if the location is convenient and the cost is not great I would even suggest paying out-of-pocket a portion or even all of the expense to attend."

For those who can't find a job, Koff recommends starting your own business--easier said than done! In a number of cases these are franchises but a percentage have set up shop to work out of their homes. Not only does this provide some income, but it allows some small-business deductions that they could not take prior to owning a business.

Steve Vernon of Rest-of-Life Communications doesn't think you should plan on working in retirement -- at least not because you need the income. "I wouldn't count on working in retirement to bail you out," he said. "I recommend that you save enough and plan your retirement date such that your financial resources will be adequate to cover your expenses during retirement."

IRS Rulings

The U.S. Department of the Treasury has issued several Internal Revenue Service (IRS) rulings and notices intended "to make it easier for working families to save, particularly for retirement." Although none of the items breaks significant new ground, the various pieces of guidance provide helpful clarifications and updates in several areas.

The initiatives include:

• A ruling and notices providing guidance on 401(k) and SIMPLE IRA automatic enrollment and automatic contribution increase arrangements ( Rev. Rul. 2009-30, Notice 2009-65, Notice 2009-66, and Notice 2009-67);
• Rulings describing how unused vacation pay and pay for other leave can be contributed to a 401(k) plan ( Rev. Rul. 2009-31 and Rev. Rul. 2009-32);
• A notice providing a new model Internal Revenue Code ("Code") section 402(f) notice on rollover opportunities and tax rules following termination of employment ( Notice 2009-68);
• Enhancements to the IRS Web site directed at plan participants and sponsors;
• A new program allowing tax refunds to be directed to purchase U.S. Savings Bonds; and
• A reiteration of the Obama Administration's legislative proposals regarding automatic contribution IRAs and the expansion of the saver's credit.