Delivered on: Thursday, June 26, 2025

To Watch on YouTube, CLICK HERE

 

From File to Finish: Your Federal Retirement Package

What to expect as your CSRS/FERS retirement is being processed

• TIMELINE: The average processing time (and what can make it longer)
• PAY: How you will be paid after you leave service but before your retirement is finalized
• BENEFITS: What happens to the benefits you've elected to keep in retirement
• CHANGES: Modifications you can make within a brief window after separating
• TO-DO'S: A checklist of items to do before you leave federal service

Download Handouts: CLICK HERE

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Find a comprehensive retirement workshop for your area: FedImpact.com/attend

For an introduction to a financial professional in our network: FedImpact.com/request-to-meet

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Prefer to read instead? A Transcript of this Webinar is Below:

Welcome everyone to today's Fed Impact Webinar, From File to Finish, Your Federal Retirement Package. With the flurry of retirement activity that's happened over the last few months because of all of the reductions in force and just the overall downsizing of the government, even by voluntary measures, there has been a lot of questions swirming around about how the retirement package process works and ultimately what people can expect.

Nobody loves to be surprised when they step into retirement, and so today's webinar is to help make this as smooth of a transition as possible with respect to the paperwork, the actual package that you're submitting, and what to expect from that point. So all about that CSRS and FERS Retirement, how it's being processed, and what you can do to influence it to make it be smoother.

You guys know me, I'm Chris Kowalik, the founder of ProFeds and the developer of the Fed Impact Retirement Workshop. We get to go around all over the place, all over the country, and even Korea, Germany, all these other special places to be able to do retirement training for U.S. federal employees. And so we're delighted to be able to break out this special section today to dive a little bit deeper into the retirement package process so that you can really get a good handle on how all of this works. So, delighted to be with you today.

What this webinar will NOT cover

What this webinar will not cover. When we think of something like submitting a retirement package, this is a loaded topic. There is so much that goes into knowing when is the right time to be able to retire, what are the decisions that I need to make, and not just what they are, but which decision should I make? Today's session is not going to get into all of that nitty-gritty.

But don't worry. If you've got questions like that, we will be linking to the other resources that we've already prepared for those topics. If you feel like you need a deeper dive into those specific topics as you're trying to make decisions on your retirement paperwork, then by all means, we're going to have some great resources for you.

We will put those right on the slides. You'll have them in your handouts, and that way as you discover those things that you need a little bit of help on, that you've got a great next step to be able to take.

Agenda

For today's agenda, we're going to cover five main things. These will not be covered in order, per se, but kind of the underpinning of the slides that we're going to be showing today. The first topic is timeline. We obviously need to know the average processing time and what can make it longer and frankly what you can do to not make it longer than it needs to be.

Next is pay. This is probably the number one thing that you're concerned about at this time. How do you know when you're going to get paid? And are there particular things that are going to happen for a short period of time versus once OPM finalizes everything? We will talk through those details.

Then, we have benefits. What happens to the benefits that you've elected to be able to keep in retirement, and how all those things can be modified within a very brief window after you've separated. That's the changes portion of this bullet.

And then lastly, like I mentioned, we've got some to-dos. We've got a couple of checklists of items for you to do before you leave federal service, and some even if you don't plan to leave, right?

We're obviously in a RIF environment for many agencies, and so, we've got a checklist for you as well to make sure that if you're unexpectedly out of work, that you have taken some measures to be able to protect yourself with respect to the information that you're going to need to step into retirement or a separation with everything that you're going to need to make that happen.

Timelines To Expect

Let's start with timelines. What to expect in the timeline of retiring or exiting federal service. Most agencies ask for about a six-month notice that you plan to retire. We're in a little bit weird of an environment right now where we've got RIFs and VERAs, and all this stuff happening.

And so, your agency might not need six months, or they may not give you six months to decide like on a VERA. But in normal circumstances, an agency requests about six months warning. And that way, they can do their part to prepare your retirement package and close out your employment record.

There are specific things behind the scenes that you don't even know about that your agency is doing to close down that employment record and prepare everything to ultimately go to OPM.

You want to make sure that within that timeframe where you've notified your agency and you're starting this process, that you work really closely with them or as closely as they're able to do right now with the volume of everything going on, but that you work really closely with them to make sure that your package is accurate and complete. You want to pay special attention to things like including all the forms that they're asking for.

Did you sign in all the places that you're supposed to? Did you initial anywhere that was necessary? Did you get a notary if one was required? And are there any court orders that grant benefits to a former spouse that you need to be sure to include?

OPM's processing time is going to vary. It's going to vary by a number of things and we're going to get into some more of these details, but I'll tell you, you can speed it up by eliminating errors and omissions on your part. We can't do anything about what your agency's going to do or what OPM is going to do or how many people got in line before you at OPM.

But what we can do is make sure that when they actually open up the folder that has all of your retirement package in there, that everything they see is correct. Because remember, for the most part, OPM does not receive your retirement package until after you leave federal service.

You're going to submit your retirement application about six months in advance. Again, assuming that you're not a VERA and all of that. In normal circumstances, six months in advance, your agency is going to put you in the queue to be able to do their part. Hopefully, they're doing some retirement counseling with you like they're supposed to. They're certifying your service. They're doing all the things, and then you end up leaving federal service on your separation date. And at that point, they put the bow on top and they send it to OPM.

Many of you are probably wondering, “What's changed here recently with OPM?” Don't worry, we're going to get into that, but I want you to have an appreciation that your package doesn't get worked on by OPM until after you've already left federal service.

There's a whole order of operations here, and so, it's not like the earlier you submit your retirement notice to your agency, the faster OPM is going to get your retirement package. That's not the way this works at all. Most agencies hold onto that package until after you've left, because frankly you can change your mind and then it's a whole hassle to request it back from OPM. But even if it does go to OPM prior to your separation date, they can't start working on it until that date has passed.

OPM can be a frustrating organization if I'm being really honest. Sometimes their material isn't terribly clear. But they did release a retirement quick guide a while back, at least a year ago, probably a little further back than that. And it's actually quite a helpful document that I hope that you'll download.

To make it really easy, we just put a redirect on our site, so it'll take you right to the OPM site, but if you go to FEDImpact.com/OPM-Guide, it will take you to this three-page PDF that OPM has put together, and it does break down a pretty good timeline.

I'm not sure how accurate the timeline is. We tend to find for most people it's a little bit longer than what OPM is putting out, but they're doing their best. They've obviously got tides of feds that come in at certain times of the year that make this a little bit more difficult.

And so I think this is put out in good faith where they're trying to give everybody a pretty good understanding of the steps that happen, at least at the high level as you're walking through that first few months of retirement and how everything's going to work.

I encourage you to download this, have it handy. It's got some areas where you can just monitor that progress and jot down some important things as they are coming to you as a new retiree.

Federal Retirement Package

This next section that we're going to talk about is the actual retirement package. There are a number of different forms that you're going to use based on the retirement system that you are leaving from, whether it's CSRS or FERS. Obviously, we've got some other people as well with different types of agencies that don't specifically fall under CSRS or FERS, but similar agencies like the State Department and that kind of thing. But the same concept will hold true for everybody of the different documents, the styles of documents that you're going to be completing.

OPM’s “Online Retirement Application” (ORA)

Like I mentioned, OPM has recently launched a new online retirement application that they're referring to as ORA. This launched in June, so earlier this month, and agencies are being phased into this new process based on the payroll processor that they use.

There are seven different payroll processors that various agencies work with, and based on which processor your agency happens to be with will determine how they get folded into this ORA process. But starting July 15th, at least as of right now, OPM will not accept paper retirement packages anymore. They must be done through the ORA Portal or a similar portal that OPM will provide to certain payroll processors.

You don't necessarily need to know all those details, but you're going to follow whatever your agency is asking of you with respect to their process. But don't be surprised if your agency says, “Okay, go ahead and submit a paper retirement application,” that it ends up getting kicked back to you to go through this other system. Just knowing that your agency is waiting on guidance as well on what they're supposed to do.

If you want a little bit of a peek behind the curtain of this ORA Portal, you can go to FEDImpact.com.ORA-Help. And that will redirect you right to the OPM ORA Help Page. If you're kind of curious what this is all going to look like, they even have some things that I'm frankly not sure are intended for federal employees to be able to see.

It's really intended for HR specialists and payroll processors, but you can get a peek at what these screens look like and what you're going to be navigating through when it's finally opened up to you.

Your Retirement Package

Your retirement package itself, once you give your agency an indication that in fact you do plan to retire, they're going to have to do some special things in that ORA program to basically invite you to retire. They have to push a special button to be able to give you an email that says, “Great, we're happy to start your retirement package,” and then it gives you the prompts of what to do.

I won't go into too many of those details because, frankly, I think a lot of that is probably going to be changing over the next few months as they work out any bugs and user interface issues and that kind of thing. But the general end product is that the government is going to have all the information that they're going to need to be able to process your retirement application electronically.

For those of you who watched on the news as OPM was obliterated with respect to their underground mine and all this paper that existed in it, and that here in 2025 we're still processing retirement applications on paper, that obviously has been modified.

But anytime new technology is released, there's always bugs, there's always challenges there that they have to work out. And so, don't be too surprised if this feels a little janky right here at the beginning, but they'll work those things out and get that smoothed out for the majority of you, I'm sure.

Based on which retirement system you are in CSRS or FERS, you're going to have a particular set of questions that will ultimately electronically be populating the SF2801 or the SF3107. You're not going to be physically filling out those forms anymore, but all the questions that are being asked of you in the online portal are going to go to populate these documents.

If you had any military service, you're going to be asked to provide your DD214. If you have a court order that grants any benefits to a former spouse, like a portion of your pension while you're living, a portion of your pension when you die, whatever that might be, you're going to need to submit a copy of that court order along with your retirement application.

Next is your tax withholding form. This is the W-4P. This is just a special document that is similar to what you have while you're working, but it's intended for pensions and annuity payments. Of course, that's what your CSRS or FERS pension is going to be. And it just indicates to the government, to OPM, how your withholdings should be set for those pension payments that you are receiving.

And then lastly, we have the FEGLI Continuation of Coverage. This is the life insurance that you have through the federal government. On this form, you are going to be indicating how much of that benefit you wish to keep, if any of it, in retirement. We'll talk a little bit more about the FEGLI election here as we move through today's material. Overall, these are very normal things that would be included in your retirement package.

What Can Slow Your Federal Retirement Package Down?

OPM has been very direct to say, “Listen, if you have a court order, you're going to go to a completely different branch, and OPM is going to have a special group of people who are reviewing the divorce decree or the property settlement agreement or whatever it might be that was handed down by the court.”

And that's mostly to make sure that whatever the court has indicated, has been awarded in that order, is properly done by OPM and not perhaps overlooked or misinterpreted. They've got a team there that handles that, and so that will naturally slow down your process of retiring. You're still going to be able to leave federal service on the date that you've indicated, but it's going to slow down OPM being able to finalize your retirement package.

Next, if you happen to be a special employee or have certain service types throughout your career, so any of our special category employees, law enforcement, firefighters, air traffic controllers, those are our normal ones. Then we have Capitol Police, Supreme Court Police or the nuclear materials couriers.

Those are all very unique, special categories of employees that are going to require a second look at OPM, because of the nature of the types of service that has to be certified with respect to the special categories that you've been serving in.

If you have any past or active workers' comp claims, that is always going to delay this because there's all sorts of things that have to be done to de-conflict those programs. And so, a special group will be working on your package. And then, if you had any experience as a part-time employee or as an intermittent federal employee, again, they've got to reconcile all of that to make sure that the pension comes out correctly.

And then, lastly, if you had federal service at multiple federal agencies where you hopped around lots of different places, that can complicate matters. It should frankly be relatively clear to OPM, because all of that service should be certified by your agency from your record, but they're certainly going to need to do a double check at that and make sure that all the appropriate service has been credited to you.

These are all things unfortunately that you really can't control. And so, this is just the nature of the process and some things that naturally slow you down.

But there are administrative things that you can take care of that will keep your package from being slowed down. The first one is, missing documents and forms. If the government asks you for a document, give it to them. If they don't ask you for a document, don't give it to them.

I share that with you, because sometimes we have employees who will read the retirement application and it says, “Do you have a court order that grants benefits to a former spouse?” And they say, “Well, I have a court order but no benefits are awarded. Maybe I should just include the court order just in case.”

No, you shouldn't. That's going to put you in the long line at OPM. And if there is in fact no benefit being awarded in that court order, you should not include that document along with your retirement application. You will unnecessarily go to the long line, and that will delay this whole process.

Next is incomplete or incorrect information in your retirement application. If you put the wrong date, if you fail to check boxes, whatever that might be, it is going to slow things down. Many times, those things are going to be kicked back to you by your agency before you even step into retirement.

But if something passes your agency and gets all the way to OPM that is either incomplete or incorrect, it's going to be kicked back to you and that will produce all sorts of other delays in this process.

Lastly, moving without updating your address with OPM. If they need to provide anything to you, and they're going to do so by mail, you want to make sure that that address is correct, especially if you're moving to a different state, which obviously has state tax implications and all of that. We want to make sure that they know exactly where you are living so that they can communicate with you properly. Again, these are all things that you can control in this process.

Completing Federal Retirement Paperwork

Next up, completing the retirement paperwork. Again, you're going to do this electronically, and we don't fully know what all that's going to eventually look like once they make all the user interface changes that are likely, but you are going to first choose your retirement date.

That is the date that you're planning to finally be separated from the government, and you can change this date all the way up until the time that you are separated. There are some times that an agency is able to reject your rescission of your retirement date if they've already hired someone for your position, that type of thing. T

hey can certainly decline you pulling that retirement date back. But the idea here is that you are able to make those changes up until the time that you separate.

You're also going to be selecting your tax withholding for your pension, so that's part of that W-4P document that I mentioned where you're going to indicate how you'd like those tax withholdings to be made. You'll also be confirming your eligibility to keep some of your benefits like health insurance, life insurance, dental and vision, and the federal long-term care program.

You're going to answer some questions, and then your agency is also going to answer some questions based on your record and the information that they're seeing. The government's not just going to take your word for it that you are eligible to keep these benefits. They're going to make your agency verify, in fact, that you do qualify.

The next thing you're going to be making a decision on is your life insurance coverage. How much of that FEGLI do you wish to keep in retirement? This is one of those areas where that's a loaded question in and of itself, because it's complicated and it depends on your situation.

I would encourage you, watch that webinar replay. You can see the details at FEDImpact.com/ Webinar-FEGLI. And you'll be able to see all of the details that we go into on that particular topic. We've got the basic, Option A, B and C.

What can happen with each one of them? How does it work? How quickly do they decline in coverage? What do the premiums look like? We're going to show you all of that right there in that webinar.

The next decision that you're going to make on your retirement application is electing to protect some of your pension for your spouse. This is in the event that you die. This is called the Survivor Benefit Program. It is simple, kind of.

But once you start getting into the weeds of the Survivor Benefit Program, it starts to get a little bit more complicated based on your situation. Again, I encourage you to watch that webinar replay at FedImpact.com/Webinar-SBP and you'll be able to see all of those details as well.

Interim Pay

You've submitted your retirement application, you've walked out the door. Now the question is, what happens to your pay? Well, we know your pay as an employee will stop once you get your final paycheck, but what happens to your pension check? Well, these things called interim payments are going to start to kick in.

The Transition Period

During this transition period, from the time you leave federal service to the time OPM finalizes your retirement application, this is going to take several months. OPM claims it's three to five months. We claim it's longer than that, because we're looking at people who get into some of those longer lines, and with the rate of divorce and all of that, we're just starting to see more and more and more people having those court orders that just cause a much longer process for finalizing the retirement package.

During this time, no matter how long it takes, if it's 3 to 5 months, like OPM says, if it's 8, 9, 10, 12 months, whatever it might look like, during that period of time, you are going to receive between 60 and 70% of your gross pension. And the only thing that will be withheld from that is federal income tax.

I've got to say, we use this slide in our retirement workshops or a little bit of a version of this slide, and we always show 60 to 70%. OPM's documentation shows 60 to 80%. I will share with you very, very rarely do we ever see 80% being paid out. I would rather err on the site of 60 to 70% knowing that if it happens to be a little bit more that you are receiving during that interim period, then that's great.

I also want to share with you that you will not receive the special retirement supplement while you are in the interim status. You might be entitled to the special retirement supplement based on your service and the nature of your retirement. But while you are in this interim status where OPM's trying to figure everything out, you're not going to receive your special retirement supplement payments. We'll talk about how they make that right for you here in just a bit.

Benefits Payable From Your Retirement Payments

There's a lot that's going to go on on this slide, so I'm just going to break it out incrementally here. I want to talk about benefits payable from your retirement payments. On the far left-hand side, we have all these obligations, right.

Taxes, survivor benefit, if you're going to protect some of your pension, all the insurance programs, life insurance, health insurance, dental and vision, and long-term care. That next column says, “Paid from initial interim payments.” And like I mentioned in the previous slide, the only thing that is taken from your interim payments are federal income taxes.

If you are in a state that has income tax, you are going to need to pay out of pocket directly to the state from your checking or your savings account because it will not be coming out of your check. Most states do not want to wait until April 15th for you to true up your tax obligation.

They want to see you making quarterly estimated taxes. If this thing really drags on for a good period of time with OPM, you're going to need to make sure that you're right with your own state. Check with your CPA or of course your state's income tax laws to see how you need to go about doing that and how do you know how much to pay?

We're going to skip down to the bottom. You'll see dental and vision and the long-term care program, FEDVIP and FLTCIP, and these are programs that you're going to need to pay out of pocket as well. All this is still in force, but you're paying directly to your dental and vision provider or directly to the federal long-term care program.

Why they've done this, I don't know, because it sure does complicate things for a lot of people, but this is just the way that it is. They didn't ask me and they didn't ask you. These are the current rules that we have to be able to work with. Again, this is while you are receiving those interim payments, 60 to 70% of your expected pension. This is what's happening.

Once OPM Finalizes Your Numbers

Once the interim period is over and we look to the pool of money that OPM has held for you for all these benefits, that 30 to 40% that they've held from your pay, it's going to be used to pay for three specific benefits that you have, the Survivor Benefit Program, the life insurance, and your health insurance. A couple of things that I want to share.

The first is, what we have next to the asterisk, which is Survivor Benefits, FEGLI and FEHB coverage during this time is all still in force. Even though it doesn't look like you're paying for it, there are agreements that the government has with each of these providers so to speak, that they'll make up the difference and everybody will be happy. All these benefits are still in force.

The key though is, how much of these benefits did you elect? Did you have the full survivor benefit, the full life insurance, you've got it maxed out and you want to try to keep all of it in retirement? You have a pretty nice FEHB program, the high option family plan that's really expensive.

It's possible that that 30 to 40% that was withheld from your pay won't be enough to pay all of those premiums. We'll circle back to that here in a moment, but we need to understand what is really happening here with respect to the survivor benefits, FEGLI and FEHB with this money that's being withheld.

Eventually, once all that's sorted out, your normal retirement check will go forward once OPM has finalized everything. And all of these obligations can then come out of your retirement check. But in the meantime, things are a mess. You're not really sure what you're supposed to do.

You've heard that, “Oh, your FEHB premium isn't being paid to Blue Cross,” and so you're trying to call Blue Cross and figure out if you're supposed to pay them directly. And you're stressed out about it and they're like, “No, no, it's okay. OPM will eventually pay us.”

And meanwhile, you forgot about your dental and vision and you go to get your teeth cleaned and you realize you don't have any coverage. This can be a total mess if you're not paying attention to what needs to happen during this time. Keep this checklist handy as far as what's really happening during that interim pay period so that you know what you're supposed to do.

Once OPM finalizes your numbers, like I said, that 30 to 40% that was withheld from your pay will be used to pay for most of the benefits that you elected that were not withheld during that time. Survivor Benefits, FEGLI and FEHB. If there's any money left over in that pool of 30 to 40% that they held, it will be refunded to you in lump sum.

If it so happens that there was not enough money withheld, meaning you had lots of coverage, high plans, all of that, and it just wasn't enough, you're going to owe the remaining balance of that. We have to understand just the mechanics of what's happening.

And I will tell you, this whole process of interim payments came from the idea that OPM is going to be in receipt of your retirement package, but they haven't done anything with it yet, but they need to get you paid something.

And if they were to pay you all of your pension, and not know which benefits they're supposed to be withholding payments for, we will now be in a situation that you had all this money in your checking account, you spent it because you thought you could. And then they come back 3, 5, 6, 12 months later and say, “Oh, by the way, you owe X number of dollars,” and now we're in a pinch, we're in a bad spot.

It's kind of like when you file your taxes and you didn't overpay, you underpaid, and now you spent it all, and you're trying to scrounge to figure out how to pay the tax bill. That's what OPM is trying to avoid in this process. But in the process of doing so, it sure does make things a little bit more complicated.

I mentioned the first special retirement supplement. If you are entitled to that program while you are in interim status, you are not going to receive any of your supplement payments. From a cash flow standpoint, we have to be prepared not to receive that. If there are any missed payments, and there will be, OPM will pay those to you in lump sum.

Let's say it takes OPM five months to process your retirement. They're going to pay you five months of FERS supplement payments in one big check. And then from that point, once OPM has finalized everything, then future regular payments of the supplement will begin at that time.

Changes to Elections

What happens if you filed your retirement application, you've stepped into retirement, OPM has done their part to get things rolling or maybe even finalized, and you realized that you made a decision that you didn't mean to on your retirement application or you're just trying to change some things up, what happens then? Are there any do-overs available for you for those elections?

Changes Allowed to the Elections Made in Your Package

Well, there are two really important decisions that you are making on that retirement application with respect to your benefits. We've already talked about them a couple of times now. The first is survivor benefits. Let's talk about that one first. This is, as a reminder for everybody, a way for you to protect a portion of your pension for a surviving spouse in the event that you die before them.

If you are within 30 days of your “first regular monthly annuity payment,” which is when OPM finalizes your package and sends you your correct annuity payment, if you're within 30 days of that, you can do a number of things. You can increase your survivor benefit protection for your spouse, you can decrease it with their approval, or you can cancel a survivor election, again with their approval.

If there are changes, you have some freedom to be able to do that within that first 30 days after OPM has finalized everything for you. If you happen to be between 31 days and 18 months of your first regular monthly annuity payment, you can do two things.

You can add survivor benefit coverage, or you can increase the survivor annuity for your spouse. The difference between this, it sounds like those are the same words, adding coverage, meaning you didn't have any survivor benefit elected at all. You said, “I want to protect 0% of my pension,” and now you've decided you want to add that on top.

You can do that and really make that election to begin the survivor benefit. Or, let's say you selected the 25% survivor benefit to protecting 25% of your pension for a surviving spouse and you decide you want to increase it to the 50% maximum, you can do that as well.

After the 18-month point, there are two ways that you can modify coverage. If you marry or remarry in retirement, you can make a new election for your new spouse.

From that point, you're able to make the election, there's going to be some back premiums you're going to need to pay and all that, and I'm not going to be able to get into those details, but if you go to that SBP webinar that I linked to a few slides back, you're going to be able to see all of those details.

The other way is divorce, but it's not just as easy as saying, “Oh, if you get divorced, you can just cancel coverage.” It's based on what the court order tells you that you're allowed to do.

The court order, if in that court order it says you must maintain the full survivor benefit or the amount that you originally elected, then OPM is not going to allow you to reduce or cancel that coverage. Very important that we see the verbiage in the court order to know exactly what you're allowed to do. That's for the Survivor Benefit Program, protecting the pension in the event that you die.

The next decision that you're making is the FEGLI benefit. This is your life insurance through the federal government, and there are very limited opportunities for you to adjust how your FEGLI coverage gradually declines in retirement. There are options to keep most of that coverage in full force where it doesn't decline.

But here's how this works. For the basic coverage, you're only allowed to reduce coverage in the future. You can never go the opposite way. You can never add life insurance because you feel like it. There will not be any opportunity for you to increase life insurance through the federal program once you are already retired.

Option A, there are no changes allowed to Option A. There are very specific things that happen to that program or there's an automatic reduction to that. There's not a choice one way or another. For Option B, you're only allowed to reduce coverage for Option B.

The only difference is, if you happen to make a decision prior to the age of 65, I won't say you can increase coverage, but you can maintain the coverage in a level way. But again, that decision has to be made before you're 65. It's unusual that these changes are actually made, but a small little window for you to be able to do that. And then Option C, you can only reduce coverage.

On all these that say you can only reduce coverage, this implies that you've chosen at the time of retirement to keep more of your life insurance in force in retirement. And later you're like, “Oh, I don't actually need all this coverage or it's too expensive. I'm going to actually tell the government to go ahead and reduce the coverage.” And that of course, decreases your premium as well.

You always have the ability to cancel coverage at any time. If you just need to strip away whole sections of this coverage, like, you want to do away with your family coverage under Option C, you can always cancel it. There's no open season, like regular open season FEHB.

You always have the chance to be able to go back and just cancel it outright. But all of these other benefits, Basic, A, B and C, have a gradual decline in retirement based on the choices that you've made and how quickly it declines is up to the election that you are making in this document.

Again, this gets way more detailed in the webinar that we did on FEGLI. Please, pop back a couple of slides in your handouts, go to that webinar and watch that because you're going to see how that coverage decreases.

Annual Leave Payout

The next question that we get about transitioning from being an employee to a retiree is, “What happens to my annual leave and how's it going to be paid out?” Your annual leave is paid out in lump sum by your agency. Most of the time, they're able to get it out within a couple to a few weeks of retirement.

Once you step into retirement, you're going to receive your annual leave payment either as a separate check or as part of your last paycheck. It just depends how fast your agency's able to process this.

With respect to how this payment is taxed, this is going to be taxed as ordinary income just like your regular pay is. And agencies can choose to use one of two methods. They either have a flat tax, like 20%, or they treat the annual leave payment the same way that they treat your bi-weekly paycheck.

And I'm not sure really what the rhyme or reason is of why certain agencies choose certain tax methods, but you can consult with your HR and get a sense of what that looks like for them. But all in all, at the end of the tax year when you go to file your taxes, you're going to be able to get really to the bottom of that, and it will all come out in the wash at the end.

But how much is withheld from you at the beginning, may be a little bit of an unknown for you until you consult your agency.

Next up, let's talk about withholding. A lot of people ask, “Well, what comes out of that annual leave lump sum check?” There are certain things that absolutely are withheld and others that are not.

As far as what is withheld, you will have federal, state, and any local taxes that you are normally paying right now, just like with your regular paycheck. And then we'll have FICA. That's a combination of Social Security and Medicare withholdings.

The things that you're probably most curious about are the things that don't come out of that annual leave payout. So no contributions to CSRS or FERS, TSP contributions, any insurance premiums like your life insurance, health insurance, dental and vision, and long-term care. They certainly treat this payment in a very specific way.

We don't want there to be any confusion of what's going to be held from your annual leave payout. Just like we've done on all these other topics, we have a webinar that we did specifically on annual leave and sick leave because there's a lot of confusion between those two programs of how things work.

In one webinar we talk about the differences and then how each of them work. Some of you might ask, “What kind of annual leave can be paid out in lump sum? How much of it might I have? How's the calculation made?” All of that is in this webinar on leave. So go to FEDImpact.com/Webinar-Leave, and you'll see all of those details.

Your Exit Checklists

Next up, let's talk about your exit checklists. I'm a big fan of checklists. I think it keeps us straight. It's more of an objective way of making sure that we have all of our ducks in a row. There are two checklists that have become really helpful for a lot of federal employees here in the last few months of working in federal service.

The first is, 12 things to do to prepare for an unexpected exit from federal service. You can see that 12 point checklist at FEDImpact.com/12-Things. The number 12-Things. And this is where we're talking about, if one day you show up to work and the door's locked and they tell you, “Sorry, we've closed down your office.”

What are the things that you wish you would've done before you no longer had access to your computer system, before you no longer had access to anything in your physical office? Those types of things.

Downloading your EOPF, making sure that you saved any emails that were very important. For instance, if you got your military deposit receipt by email from DFAS, if it's in your government email, you're not going to have access to that anymore. Just trying to think ahead of all the things you wish you would've done had you known that was going to be your last day.

But the 10 must-do steps to retire from federal service, this is more the strategic aspect of the things that you need to be thinking about before you step into a known retirement. We've had this 10 step checklist for a long time, the 12 things we built based on RIF and the DOGE reduction of force and all those pieces. And so, both of them are helpful, but they're intended for very different purposes.

You can download both of them today. Very important that you're really thinking about all these items. And you might come through this and be like, “Oh, well that one was obvious. I've already done those three things.”

But you might find some other things that you're like, “Oh, I hadn't even really thought about that.” So it's a great… If nothing else, you're confirming that you've done all the right things. Definitely encourage you to pop over and take a look at those.

Wrap-Up

Our wrap-up for today, your careful and I would say meticulous attention to the retirement process will help it go smoothly. We don't want this to be a complete mess as you step into retirement. We want this to be as smooth as possible. And we also, in that vein, want you to be prepared not to receive your correct pension amount for many months.

Again, OPM says 3 to 5 months. We tend to be much longer than that as far as the recommendation of financially what to be prepared for. But whatever number you want to look at, we just don't want there to be any surprises.

We don't want you to go so long without receiving the correct amount of money that you start to make bad decisions financially, high interest loans, lines of credit, credit card debt, those types of things, because you weren't quite prepared.

Next, the elections that you make in your retirement package are relatively final. There are small, little windows that you're able to make some adjustments in certain circumstances. Really put a lot of thought into the decisions that you are making. Knowing that the do-over button is really hard to find in retirement.

And I know I mentioned this on one of our previous slides, but there's a lot that you can't control in this process, but control what you can. You have control over you signing all the places that you're supposed to and submitting the documents that are asked of you and doing your part.

You can't control the other parts, but you can do your part really well and give yourself the best fighting chance to have a great, smooth transition into retirement.

“When you know your numbers, your decisions become more obvious.”

And here's the deal. We share this all the time. This is one of our training mottoes and one that I think just kind of cuts through the noise, “When you know your numbers, your decisions become more obvious.”

If you know how much you need to live on in retirement, and you know what you're going to be bringing in from your federal income, what your bills are going to be to run your household, along with the cost of maintaining the government benefits that you're wishing to keep, you're going to have a pretty good idea of how close your pension is going to be to meeting the need that you have.

If you don't know any of those numbers, you're kind of spitting in the wind and don't know how all this is going to shake out. Do yourself a favor, get super clear on your numbers, and then, everything else tends to fall in place once you start honestly looking at the numbers that you have.

The very best way that we can help federal employees get that clarity so that they can retire with confidence is to attend one of our in-person retirement workshops. These sessions are full-day sessions. They're at no cost to you. These are sponsored sessions, and you are able to attend at no cost.

It doesn't matter which federal agency that you are in, you have an opportunity to come here. Your agencies can allow you to attend on the clock with pay to attend this session. And we're going to cover all the federal benefits topics and those decisions to be made so that you can get the clarity that you're needing to feel great about these decisions.

After the workshop, there is one-on-one help available for anybody who requests it. You're going to have a benefits report that will clearly articulate all of your numbers. To my earlier point, when you know your numbers, your financial decisions become more obvious.

If you're wondering, “How do I get all this right? How do I know what my numbers are so that I know if this is the right time to go?” This is your way to be able to find that and have some one-on-one help to be able to answer the questions that are most important to you. You can see all of those details by going to FEDImpact.com/Attend.

There are many of you on today's session who have already attended a workshop in the past. Maybe it was a couple years ago, maybe everything that's happened here recently has accelerated your retirement timeline maybe against your wishes.

Now is a great time to cycle back into that retirement workshop with a different lens on, that we're going to be looking at things a little bit differently given the circumstances. And you can get yourself refreshed and even be able to refresh those numbers in the benefits report to get that clarity that you're looking for.

Again, you can go to FEDImpact.com/Attend. You'll see all of the in-person sessions that we have all over the country, even some overseas if you happen to be there, and we'd be delighted to help you.

Well, I want to thank you for being with us today. I know in light of everything going on in the federal workforce, there's a heightened level of awareness of retirement and exiting from federal service.

And I'm delighted that you are with us today to be able to, I hope, get some clarity and some additional resources to be able to help you in a lot of the decisions that you have on your plate.

Remember to find a workshop to attend, you can go to FEDImpact.com/Attend. To find the next webinar and the vault of all the other webinar replays that we have, you can go to FEDImpact.com/Webinar.

Thank you all so much. We'll see you next month.

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