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In a recent speech, OPM Director Kiran Ahuja pledged to improve the tangle around submitting retirement applications and getting annuities figured out. As year end approaches and people think about retirement plans, we welcome a new regular guest for benefits, investment and retirement coverage here on the Federal Drive with Tom Temin. He’s the owner of AG Financial Services specializing in federal employees and a longtime retired federal employee, Abe Grungold.
Tom Temin: And we should let readers know that you were 36 years with the SEC. So you know whereof have you speak in long-term federal career work.
Abe Grungold: I was 36 years total with the government, I happen to have worked in four different agencies. Actually, the last one was with the United States Postal Service.
Tom Temin: Wow. So you did cover the gamut. All right. And this idea of submitting papers for retirement, it sounds like a cut and dried affair. It’s not cut and dried for OPM, it takes them forever to figure out annuities. You probably don’t have much control over that. But what’s your best advice for making sure that when you do file papers, it’s done in the most effective way?
Abe Grungold: Well, Tom, let me tell you, when I filled out my 14-page retirement application, I was planning to retire and I did this past February. But I started the process September of the previous year. So I spent several months going over that 14-page application with a fine tooth comb, making sure that every question was answered perfectly, you know, I dotted my I’s and crossed my T’s, because I know that my HR department is going to go over it as well with a fine tooth comb, and they’re going to have me correct any potential errors. And any errors in that application will end up costing me hundreds and probably thousands of dollars. So I took a great deal of time, making sure that I could prepare it as best as possible.
Tom Temin: Well, how does a mistake cost you is that because they might overestimate your annuity and then later discover you owe the money back?
Abe Grungold: Well, a very simple error is just forgetting to put one of your employers, one of the agencies that you worked for. So instead of having 36 years of federal service, I could have left one out, and it would have calculated only 30 years of service for an example. So any important piece of information that’s left out, will affect your annuity. And there are many, many decisions on that application that need to be made regarding life insurance, regarding long term care, regarding your annuity, regarding beneficiaries. And the most important decision is even though I’ve been married 23 years, I think they want to have a copy of your marriage certificate. So you need to provide that because it’s important that the spouse is aware that you’re retiring.
Tom Temin: Sure, at least only the second spouse is aware.
Abe Grungold: Yes, there are many federal employees that are divorced, and the former spouse needs to be aware, and there are federal employees that had been married several times. So it’s very important that the former spouse is alerted. And the court order has to be acknowledged of what a federal employee would owe that former spouse in the event they are entitled to something in the retirement process.
Tom Temin: And getting back to the question of whether you inadvertently leave out a place that you might have worked long ago, maybe only for a year or two, but even a year or two makes a difference in your annuity. They won’t go back and find that. Is that what you’re saying? That you’ve got to give it to them to OPM, they’re not going to double check and say, “Hey, Abe you missed the OPIC year, you know, in 1978.”
Abe Grungold: That’s correct. And my clients, I make sure that they take credit for every federal job that they had; part-time job, temporary position. It’s important to get credit for every work period that you had in a federal agency because it adds up.
Tom Temin: We’re speaking with Abe Grungold. He’s a 36 year federal employee, now proprietor of AG Financial Services, specializing in federal employees. And is there any way that you can fill out that form in such a way as to maybe grease the skids? So it goes through the whole OPM process any faster? Are there things to make sure that you do that will expedite it?
Abe Grungold: Well, it’s funny, even though I spent months preparing it, and then the HR department approves it, and they go over it as well, really, they’re just going over to make sure you answer every question. And you answered it, hopefully in a way that you wanted answered. But the application really doesn’t take effect until you actually terminate from federal employee. Because as a federal employee, you can change your mind on the very last day and say, “Look, I’m having second doubts. I don’t want to retire.” You notify HR and say, “Please pull back my retirement application,” because they do not submit it to OPM until you have officially gone out the door.
Tom Temin: Interesting. All right. So what other advice then? I mean, how extensive is that form? For people that may not have seen it? You mentioned 14 pages? It sounds like a lot of questions.
Abe Grungold: There are a lot of questions. It’s mind boggling when you first look at it, not just 14 pages, that’s 14 pages to fill out. Then there are other pages of instructions of how to fill the question out. And the application covers beneficiaries. It covers joint survivor annuity options, meaning your spouse can get 25% or 50%. Or they could get nothing. There are a lot of questions regarding life insurance, military service, if you’ve had any military service, if you were injured on the job, they want to know those occurrences. If you’ve been injured on the job, and whether you still collect workers’ compensation. So for many employees, some questions are a no or not applicable, but you still need to review them carefully.
Tom Temin: And you mentioned health care options and so forth that are choices people make throughout their working careers really, and it is Open Season. It’s about to be Open Season applies to retirees as well as current federal employees, any special considerations while we’re talking with respect to the upcoming Open Season for healthcare insurance.
Abe Grungold: In Open Season, every federal employee should take a look at the other available insurance plans that are offered because my insurance plan is going up $600 next year, and I even took a look to see what are my possible alternatives. Now, unfortunately, I have some health issues. So I need to still have certain types of coverage. And I need to make sure my plan provides me and my family with the coverage that we are looking for. But if you’re a healthy individual, you don’t need certain types of coverage in your plan. You can look to the other plans, they break them down by category of service, and you can find the plan and save yourself 500 to $1,000 a year. You know we get into a rut as federal employees that you know I’m comfortable with my health plan. I like the coverage that I have. I like everything about it. But there are so many available plans out there. It’s important to you as a consumer to evaluate your insurance. Whether you have homeowners insurance, or auto insurance, or health insurance, you should look to see if you can save some money on the premiums.
Tom Temin: All right, make sure you have brand new bulbs on that dining room chandelier and get to work. Abraham Grungold is a 36 year federal employee, now proprietor of AG Financial Services and a new regular here on the Federal Drive.