AP/Sue Ogrocki
Buyout season without buyouts
October was the unofficial start of the federal buyout system. The catch, this year, is that there are no buyouts, or at least very few.
Oct. 1 (the beginning of the new fiscal year) is unofficially the start of the buyout open season.
Getting employees — especially high-grade workers — off the agency payroll saves money. It’s most cost-effective between October and January. At least that’s how it worked in the past. Earlier this year, most of the buyout speculation focused on the Environmental Protection Agency and the Interior and the State departments. But that was more talk than action.
While most agency buyouts are still limited to a maximum of $25,000 before deductions, the Defense Department can pay selected employees up to $40,000 to depart. There have been efforts to raise the buyout maximum for the Veterans Affairs Department, the Internal Revenue Service and other agencies. But for now, they are capped at $25,000, which, depending on your federal tax bracket, home state taxes and other deductions, can really cut into a buyout.
So where are the buyouts?
There have been a few, as in very few, in Defense. The National Treasury Employees Union says the only place the IRS has authorized buyouts is in Covington, Kentucky. Last year, the IRS said it would close its submission processing operations following the 2019 filing season.
If the buyouts come, they may disappear quickly. Which means you need a plan B in case you get an offer. Benefits expert Tammy Flanagan says many long-time feds can build their own buyouts of up to $10,000 or more if they save up some annual leave and if they retire on one of the best dates. For many, that is late December or the first three days in January. Retiring then means most of the annual leave you carry over into the new year will be paid at the new higher (1.9 percent) pay level. And since it is received in 2018, it won’t be taxable as part of 2017 income.
Then there is the question of Medicare Part B. Should you take it? Is it worth it? The answer depends on a number of things. And Tammy will be talking about them today on our Your Turn radio show at 10 a.m.
Are you out of the woods yet?
In approving the Senate version of reconciliation, the House (at least for the time being) has dropped proposals to whack federal retirement benefits, raise employee contributions and maybe even scuttle the FERS retirement plan. But Sen. Ben Cardin (D-Md.) is warning that when the GOP tax plan comes out — maybe as early as today — it will leave big gaps in revenue that may have to be filled, maybe by revisiting some of those retirement cuts. Tammy and I will be talking about those proposals in detail during the show. That’s 10 a.m. on FederalNewsRadio.com or 1500 AM in the D.C. area. The show will be archived on the Your Turn show page.
Nearly Useless Factoid
On Nov. 1, 1938, Seabiscuit defeated War Admiral during a match race considered horse racing’s “match of the century.”
Source: Wikipedia
Read more of Mike Causey’s Federal Report.
Copyright © 2024 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.
Mike Causey
Mike Causey is senior correspondent for Federal News Network and writes his daily Federal Report column on federal employees’ pay, benefits and retirement.
Follow @mcauseyWFED
