The roundup of news for federal workers. Learn about the SECURE Act 2.0, proposed legislation to equalize cost-of-living adjustments for FERS retirees, and what’s up with the potential shutdown?
This week’s overview of news for federal employees covers three important stories: the updated rules for Roth TSP contributions, a recently introduced bill that would bolster retirement income for FERS retirees, and a look the shutdown countdown not that Rep. Mike Johnson has become the speaker of the house.
Looming Government Shutdown
There is now a new Speaker of the House and work needs to get done. To prevent a government stoppage on November 17th, however, there will probably need to be another stopgap measure approved by the legislative branch. If a budgetary resolution is met, it is expected to hold until at most springtime, going until either January or April 2024. The Senate has backed an amendment to keep the government at current spending levels. Eight of the twelve appropriation bills that are needed seem to have been settled.
Don’t miss the latest webinars for federal employees-
It should be noted that the current speaker does not seem to want a shutdown, but unfortunately supports feds paying more for their health benefits, increasing the amount FERS employees contribute to their pension plan, and even a three year pay freeze for federal workers.
Catch-up Contributions, the Roth TSP, and the SECURE Act 2.0
When the SECURE Act 2,0 passed at the very end of 2022, it included a provision that instructed anyone earning $145,000 per year or more to put any catch-up contributions to a Roth 401(k) or TSP in a Roth account – “catch-up” deposits to traditional IRAs or 401ks would not be allowed. However, not all retirement plans offer a Roth option and therefore, this rule had to be pushed back to a 2026 effective date. The TSP’s governing body, the FRTIB (Federal Retirement Thrift Investment Board), confirmed the 2026 effective date for this rule.
Equal COLA Act
The Equal COLA Act was recently reintroduced in Congress. Currently, FERS annuitants receive less of a cost-of-living adjustment that their CSRS counterparts if the given year’s COLA is 2% or more for Social Security and CSRS. For 2024, CSRS retirees will receive a 3.2% COLA and same goes for social security retirement benefits, but FERS retirees will get an adjustment of 2.2%. Should the bill become law, it would remove the discrepancy between CSRS and FERS COLAs and both would equal the social security adjustment.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.