Most Americans with 401(k) plans have taken a big hit over the last couple of months. Thousands of federal and postal investors have moved money out of the slumping stock funds (C, S and I funds) into the super-safe treasury security G-fund of their Thrift Savings Plan.

Last week on our Your Turn radio show, financial planner Arthur Stein talked about what long-term and short-term investors should (and should not) be doing with their TSP accounts. That show is archived so you can listen to it anytime.

Today, at 10 a.m. EDT, Tom Trabucco, director of external affairs for the TSP will talk about what’s going on within the TSP. Your calls or e-mail questions (mcausey@federalnewsradio.com) are welcome. Listen live today at AM 1500 (in the Washington metro area) or click the Listen Live icon on ww.federalnewsradio.com.

Health Savings Accounts

HSAs are a great way to save money and reduce your taxes. So how do they work? Today on our Your Turn radio show Mary Beth Franklin, senior editor of Kiplinger Personal Finance, will explain how they operate, how to set one up and why you should probably have one.

Pay Raise or COLA?

For the first time in years, the January federal pay raise (3.9 percent plus locality add-ons) will be less than the Cost of Living Adjustment (5.8 percent for CSRS retirees, 4.8 percent for FERS retirees) due federal and military retirees. That fact has prompted many feds to ask if they can retire now so they can get the COLA. Others have asked if they can get both. Short answer: No!

To get the full January 2009 COLA you would have to have been retired by December, 2007. People retiring this month will get only 1.0 percent of the COLA in January. Those who retire next month will get only 0.5 percent of the COLA. For details on the pro-rating of the COLA, click here.

Nearly Useless Factoid

Internet editor Suzanne Kubota comes up with our daily NUF which is one of the most popular features on our webpage. The idea is to have a little fun while learning something. The other day her NUF was as follows:

“Teenagers are getting less intelligent. The (London) Independent reports ‘the most intelligent 14-year-old in 2008 is now only on a par with the brightest 12-year-old in 1976.’ Researchers think it might have something to do with computer games and watching television.”

The above prompted this response from John W. Allender who says “judging by my office, I would not say teens are getting less intelligent, they just are not getting any more intelligent. My guess is that the brightest 44 year old today is roughly on par with the brightest 12 year old from 1976… probably because they are the same person. Well, come to think of it, maybe they are regressing.” See, you learn something everyday.

Today’s NUF comes from Stan the Man, who points out “if you take the circumference of a Jack O’ Lantern and divide by the diameter, you’ll get pumpkin Pi.”

Father of FERS

Reader Dave Cooper asks “isn’t the just-convicted Sen. Ted Stevens (R-Alaska) the ‘father’ of the FERS retirement plan?”

Correct. Stevens is the “father” of FERS the way George Washington was the “father” of his country. Both had a lot of help. Stevens’ committee at that time handled civil service matters. Back in the 1980s, the government, like many private firms, decided it could no longer afford the defined benefit CSRS program. The Congressional Research Service was asked to design a replacement based on the best private sector pension plans. It came up with the model that became FERS. FERS workers contribute less to their civil service retirement, and get a smaller benefit. FERS employees can get a 5 percent government match (the equivalent of a 5 percent tax-deferred pay raise) to their 401(k) plan. And they qualify for Social Security too.

FERS is a better deal for the majority of federal workers (2/3rds of whom DO NOT retire from the government). CSRS, with its defined benefit and full COLA, is generally a better deal for the 1/3rd of feds who actually make government a full career.

More questions? More comments? Send them! mcausey@federalnewsradio.com

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