Retirees Short-Checked

If you want to get the attention of a retired government worker surprise them: Not with a Valentine’s Day card or gift. Make it more personal. Go for the bank account! Remove $20 to $50 from the anticipated annuity check. Then stand back to see if he or she notices.

Tip: He or she will notice!

Millions of retired feds (or their survivors) got a major jolt when they checked their bank statements to be sure the Civil Service annuity payment they had been expecting had been deposited. It had, but…

Thanks to foot-dragging by the lame duck Congress the retirees were hit with a surprise change in 2011 federal withholding. Although it had nearly two years to act, Congress waited until mid-December of last year to decide NOT to extend the Making Work Pay Act stimulus package into this year. Bottom line: More money was deducted from the retirees’ checks. That, coupled with higher health premiums for many, and a second year without a cost of living adjustment, meant reduced take-home payments for most retirees.

We covered the subject in what some might consider agonizing detail earlier last week.

Once retirees discovered their lighter annuity checks, they hit the telephones. Every congressional office got scores of calls or e-mails from frightened-to-furious retirees. The IRS was swamped with calls as was the Office of Personnel Management. To the point where it has set up a special hotline people can call if they want to make changes in their federal and state withholding to put more take-home money back in their payments.

Here’s an update the National Active and Retired Federal Employees Association has sent its members:

    “In response to high call volume, the Office of Personnel Management has established a new Tax Hotline that retirees can call to change the federal tax withholding on their monthly annuity payments. The number is 800-307-8298.

    “The increased call volume is a result of a change in federal tax withholding in 2011. Most federal annuitants discovered an increase in federal income tax withholding in their monthly annuity payments for 2011 starting with the February 1, 2011, annuity payment. This increased withholding along with increases in premiums for Federal Employees Health Benefits Program insurance premiums resulted in a substantial decrease in their net check.

    “Many annuitants and survivors want to change their federal tax withholding and have experienced busy signals and long waits calling the Office of Personnel Management’s (OPM’s) Retirement Information Office line. In response, OPM established the new Tax Hotline, 800-307-8298.”

Any retiree who wants to change his/her withholdings can do so by calling that number. But you might want to check with your tax advisor to be sure that in making the change you won’t increase your 2011 tax bite.

Bear in mind that this hotline is to make changes in your withholding. It is not (OPM hopes) supposed to be a complaint line. OPM knows you are unhappy and this is not the fault of OPM or the IRS.

Long Term Care

Could you afford $60,000 (or very likely much more) to help pay the expenses of a loved one (or yourself) requiring long term care? Does federal health insurance or Medicare cover LTC expenses (short answer, NO). From April 4 until May 27 the government will conduct an open season providing easy-enrollment for workers and family members at group LTC rates.

So who needs it? At 10 a.m. WFED’s For Your Benefit show will tap three experts in tax, benefits and insurance for information on LTC and life and disability insurance: Host Bob Leins, John Elliott and certified financial planner Arthur Stein. To listen live, tune in to 1500 AM in the DC area or anywhere in the world at You can also call in questions on air at 202.465.3080. This is a show that could save you a lot of money and/or a lot of grief.

To reach me:

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