FERS and Reservist TSP

[JJJJ2018]

I’m a PGY3 planning to start as a VA hospitalist in July. I am also an Air National Guard flight doc, with 18 years of military service, 12 of those years active duty.

1) As I understand it, I am limited to $18,500 combined between FERS TSP and reservist TSP, right?  Also, I see a note about contributing 100% of incentive pay, but this would be subject to the same limitations?

2) Am I limiting potential retirement tax protection by taking a VA position?  Ie, would reservist TSP and non-VA 401k/403b be more protection - I understand there’s no matching on the military TSP side.  I’m set on the position, but good to know.

3) Should I reach pension minimums for both Military and the VA, would I receive both pensions and social security?

Thanks, sorry if this is not very generalize-able, but was having a hard time finding answers online.

[DMFA]

JJJJ2018 wrote:

I’m a PGY3 planning to start as a VA hospitalist in July. I am also an Air National Guard flight doc, with 18 years of military service, 12 of those years active duty.

1) As I understand it, I am limited to $18,500 combined between FERS TSP and reservist TSP, right?  Also, I see a note about contributing 100% of incentive pay, but this would be subject to the same limitations?

2) Am I limiting potential retirement tax protection by taking a VA position?  Ie, would reservist TSP and non-VA 401k/403b be more protection – I understand there’s no matching on the military TSP side.  I’m set on the position, but good to know.

3) Should I reach pension minimums for both Military and the VA, would I receive both pensions and social security?

Thanks, sorry if this is not very generalize-able, but was having a hard time finding answers online.

Click to expand...

1. $18,500 in elective deferrals combined to all qualified plans: 401(k), 403(b), TSP. [457(b) doesn't count toward this limit if you have one.]

2. There is TSP matching now for military, up to 5% of base pay.

3. Reserve pension is lousy (low percentage and doesn't start until 60), and in order to receive credit for VA for military, you'd have to forfeit your military pension and "buy" your military time/retirement points towards FERS.  The best retirement is the full active duty military retirement; the reserve one just isn't quite as good because it is delayed.

http://militarypay.defense.gov/Pay/Retirement/reserve/

https://www.opm.gov/retirement-services/fers-information/computation/

[Hank]

DMFA wrote:

JJJJ2018 wrote:

I’m a PGY3 planning to start as a VA hospitalist in July. I am also an Air National Guard flight doc, with 18 years of military service, 12 of those years active duty.

1) As I understand it, I am limited to $18,500 combined between FERS TSP and reservist TSP, right?  Also, I see a note about contributing 100% of incentive pay, but this would be subject to the same limitations?

2) Am I limiting potential retirement tax protection by taking a VA position?  Ie, would reservist TSP and non-VA 401k/403b be more protection – I understand there’s no matching on the military TSP side.  I’m set on the position, but good to know.

3) Should I reach pension minimums for both Military and the VA, would I receive both pensions and social security?

Thanks, sorry if this is not very generalize-able, but was having a hard time finding answers online.

Click to expand…

1. $18,500 in elective deferrals combined to all qualified plans: 401(k), 403(b), TSP. [457(b) doesn’t count toward this limit if you have one.]

2. There is TSP matching now for military, up to 5% of base pay.

3. Reserve pension is lousy (low percentage and doesn’t start until 60), and in order to receive credit for VA for military, you’d have to forfeit your military pension and “buy” your military time/retirement points towards FERS.

Click to expand...

Not true.  You can "double-dip" on reserve retirements and civil service retirements.

You said you have a dozen years of active duty time.  Is there any chance that you can get to the 18 year safe harbor point for an active duty retirement?  (I suspect the answer is no, but it doesn't hurt to ask.)

Get with DFAS and start that ball rolling to calculate your time in the military and your buy-back to apply your active duty time towards a FERS retirement.  You need at least five years of civilian time in civil service in order to lock in your FERS retirement.  It sounds like you would have at least twelve years on top of that, plus however many active duty years your points for the other six years would give you.

The delay until age sixty to draw the reserve retirement definitely is less desirable than the immediate annuity for active duty retirement.  However, combat deployments and campaign ribbon eligible time will reduce the age at which your reserve retirement starts.  A co-worker of mine didn't spend all that much time deployed, yet will draw her reserve retirement at age 57 instead of age 60 due to credit for time deployed that was covered by campaign ribbons.

You don't mention where you did undergrad.  If it was at a federal service academy (USAFA, West Point, Annapolis) you can buy back your academy time as creditable years towards your FERS retirement.  It still won't count towards your military retirement, but getting four years of credit multiplied by $200K+ salary for the VA is better than a kick in the teeth.  In order to buy back military time, you have to repay 3% of base pay.  E1-E4 and cadet time is dirt cheap.  Heck, most pay below O4 is dirt cheap, especially when you multiply it against MD pay with the VA.  You need to start repaying your military time before the start of your third year in civil service in order to avoid interest.  You need to pay back at least $25 per pay period in order to avoid interest.  You have to fully pay back your military time prior to retiring from federal service.  As a physician, I'd recommend cutting a check for the whole amount just to be done with it.

The ANG TSP and the VA TSP don't play nicely with one another.  You're limited to only $18.5K in annual employee contributions total to these plans.  (Not $18.5K per plan.)  The match will be better for your VA job.  However, if you get activated with the Guard and deployed to a combat zone, then you can put $10K towards the Savings Deposit Program (SDP) for a risk free guaranteed 10% return.  You also can contribute tax free excess employee contributions up to the 2018 limit of $55,000.

This is a complicated topic.  Guard and reserve pay and benefits are that much more complicated.  See if some of the more senior docs in your Guard unit are up to speed with this stuff.  The medical detailer (personnel guy) for the Navy is a blogger who's contributed a guest post to WCI within the last month or so too.  Look for knowledgeable folks who are in a similar situation to you.  The wheat to chaff ratio is unfavorable with this.  I know just enough to be dangerous, so double check with primary sources.  Best of luck and thank you for your continued service!

[JJJJ2018]

Thank you for the thoughtful reply!

• I am a USAFA grad, and I didn’t know I could buy back those years as well


• I am not familiar with the safe harbor rule, but will look into it - doubt I qualify presently


• I think the double dip is correct, whether you buy back military time or not, but will look into it


• Re: “tax free excess employee” contributions, can I add combat zone pay to the TSP beyond the 18,500 limit up to the $55?


• I agree, I think the key will be to find someone smart on this at the VA to help me navigate, but I appreciate your comments

[DMFA]

Hank wrote:

Not true.  You can “double-dip” on reserve retirements and civil service retirements. You said you have a dozen years of active duty time.  Is there any chance that you can get to the 18 year safe harbor point for an active duty retirement?  (I suspect the answer is no, but it doesn’t hurt to ask.) Get with DFAS and start that ball rolling to calculate your time in the military and your buy-back to apply your active duty time towards a FERS retirement.  You need at least five years of civilian time in civil service in order to lock in your FERS retirement.  It sounds like you would have at least twelve years on top of that, plus however many active duty years your points for the other six years would give you. The delay until age sixty to draw the reserve retirement definitely is less desirable than the immediate annuity for active duty retirement.  However, combat deployments and campaign ribbon eligible time will reduce the age at which your reserve retirement starts.  A co-worker of mine didn’t spend all that much time deployed, yet will draw her reserve retirement at age 57 instead of age 60 due to credit for time deployed that was covered by campaign ribbons.

Click to expand...

Good point.  I glossed over the "Under the provisions of Chapter 1223, Title 10, U.S.C. (pertaining to retirement from a reserve component of the Armed Forces)" line in there.  Thanks for catching that.

See also https://www.opm.gov/retirement-services/fers-information/service-credit/

 

[Hank]

Good morning JJJJ2018,

Sorry for the delay, but here's a little more info on buying back military academy time.  There's an OPM decision that shows that you can buy back time at a federal service academy for purposes of leave, retirement, and service computation dates.  You still can't apply academy time to a military retirement and you still need at least five years of civilian time in order to lock in the FERS retirement.  See https://www.opm.gov/policy-data-oversight/pay-leave/claim-decisions/decisions/2008/06-0018.pdf

[Anne]

Just a small tip: if you do buy back your military time make sure you keep the receipt showing you did so. I scanned mine, backed it up, and keep the original copy in my fireproof safe. A tip passed on to me by an older colleague who bought back his time and then was asked to prove it come retirement time (of course, the amount you paid to buy it back is listed on each pay stub, but apparently they still wanted more proof!?!). Agree with Hank on just buying it back in one lump sum.

[Hank]

My pay off letter is in the fire safe as well. I also scanned it and emailed it myself, my spouse, my Yahoo junk mail account, and some random people I met at a Holiday Inn Express (just kidding on the last one).

There’s no chance that OPM is going to duck out on paying me because I lost my paid in full buyback letter.