Interview transcript:

 

Terry Gerton We’re sitting here after weeks of uncertainty and missed paychecks during the government shutdown and a lot of people are probably feeling kind of anxious about their finances. How does that stress from just day-to-day situations spill over into how people make decisions about investments?

Art Stein Well, stress and emotion make a big difference in how people make their investments. And with the TSP, it makes a big difference in how much people are putting in the stock funds, which are the C and the S and the I funds, and then how much they’re putting in, well, especially the G fund, which is a short-term bond fund, really, it’s more of a cash account. And you know, what I’ve seen time and again for 30 years is that when the stock market crashes, federal employees and retirees tend to get disgusted and move money into the G fund. And the problem with that is, there’s never a good time to take it out of the G fund and reinvest. Usually they’ve made that move after the market has declined and frequently don’t get back in until it’s gone back a lot. So really what we caution our clients to do is to set an investment plan. And part of the investment plan is to know what you’re going to do when the stock market does crash. Because inevitably it’s going to. We don’t know when. Stock market crashes average about one every four years or one every seven years, depending upon the time period, or somewhere in between. But they are a regular part of the market cycle. And what we mean by a stock market crash is that a particular stock market like the S&P 500, which is the basis for the C fund, goes down 20% or more from a previous high. And that’s also called a bear market. A bull market is when, let’s say, the S&P 500 increases more than 20% from a previous high. And people really avoid investing in stocks or putting too much money in stocks because they fear the bear markets, they fear the crashes, they don’t like the volatility. But we’re always having volatility in any market except a bank account or the G fund. Volatility is just a fluctuation in value. Now stocks are more volatile than bonds, that’s clear. But what investors should do is trying to determine appropriate allocation between stock investments and bond investments and bank accounts. And the TSP, that means what percentage of your investments do you want in the G and the F funds, which are bonds and cash accounts, and what percentage do you want in stocks, which are C, S and I? And once you choose that percent, stick with it unless there’s a good reason to change. And the stock market crash is not really a good reason to change. And if the stock market crashes, especially for employees, that’s an opportunity. They’re investing money every two weeks. And of course they’d rather buy shares in the C and the S and the I funds when those are down and cheap than when they’re high and expensive. So just being able to stick to it really makes a difference.

Terry Gerton It’s really hard to imagine that the market is going to crash anytime soon. It’s been on such a steady upward climb for so many months. And yet you talk about when that correction, which is impossible to predict exactly, but pretty possible to predict generally happens, people do the opposite of standard recommendation. They sell low and then try to buy again high instead of buying low and selling high. Talk to us again about what kind of planning can help people avoid the emotional response to that sort of occurrence.

Art Stein Well, I think it’s very important to one, know and admit to yourself and take into account that the market’s going to crash. I mean, it’s going to happen. And it’s not unusual. It’s typical. And two, especially for employees, don’t change your investment allocation if the stock markets crash, unless you’re increasing your percentage allocation of your biweekly investments into the TSP fund. If you’re increasing the percentage going into the stock funds, that would make sense. And, you know Terry, when we speak to TSP millionaires, one consistent theme is that they had most of their investments going to the stock funds. And they did not change that when the stock markets crashed. They just kept investing. They accepted that. It was a long-term investment. And they just stuck with it.

Terry Gerton I’m speaking with certified financial planner Art Stein of Arthur Stein Financial. Art, we’re talking about a disciplined, non-emotional approach to investment here, but we’ve just come out of the longest government shutdown in history. And the current continuing resolution only goes through the 30th of January, about two and a half months from now. So how should feds think not just about their investments, about building up or building back their emergency savings if they had to dip into it during the shutdown?

Art Stein Well, this shutdown was horrible, as we know. People were living on credit card debt in many cases. It shows how important it is to have an emergency fund, three to six months of expenses in a bank account, or maybe the G fund. And what we sometimes have to recommend to people, we don’t like doing it, is to reduce your contributions to the TSP to 5%. Because in many cases, Terry, we’re speaking to people who are maxing out their contributions. But no, if you don’t have an emergency fund, that’s a mistake. Reduce it to 5%. Don’t go below that because you want to get the full 5% match from the federal government. Take that extra money that you were investing and use it to build up a bank account, three to six months of expenses. And especially, you know, this is so crazy. We’ve gone through this long shutdown, and then they had this big victory. But when you look at the victory, it only funded the government for two and a half months. I mean, how short term is that? So now is a good time. Just get on the TSP website and reduce your contributions to 5% and build up some cash. I mean, I’m praying and hoping that they won’t do another shutdown on you know, January 30th, but as we all know, things are not good with these negotiations.

The post An objective, unemotional investment strategy for your TSP, easy to say but hard to do in uncertain times first appeared on Federal News Network.

• Most funds in the Thrift Savings Plan saw minimal growth in November, with 15 of 16 coming in higher than where they finished in October. But no fund saw an increase greater than 0.64% for the past 30 days. And only the S fund saw a month over month decline, dropping 0.45%. The I Fund remains the biggest winner for the year with a total increase of 28.54%, while four L Funds also produced returns of greater than 20% in 2025.
  (TSP returns slow in November, but remain mostly positive - TSP)
• The Postal Service’s new delivery vehicles are rolling out on routes across the country. USPS said more than 35,000 of those vehicles are out on the road. That’s about a third of its new fleet. More than 100,000 vehicles will be deployed by 2028 and nearly half of them will be electric vehicles. Congress gave USPS $3 billion in 2022 to buy more electric vehicles than it could afford to buy on its own.
  (USPS is delivering its new fleet - USPS)
• The Trump administration is taking down yet another government program tailored toward early-career employees and talent development in the federal workforce. The Office of Personnel Management will soon sunset the Federal Academic Alliance. This is a governmentwide program that let federal employees access advanced degree opportunities at reduced tuition costs. The agency attributed its cancellation decision to a low participation rate, as well as more internal training options becoming available to employees over time. Employees currently in the program have until Jan. 19 to enroll into programs using the benefits through the end of their current academic term. OPM will shut the program website and other assets down by Jan. 30.
  (OPM sunsets ‘Academic Alliance’ - Office of Personnel Management)
• The Department of Health and Human Services faces a months-long backlog of reasonable accommodation requests from its employees. HHS said it will centralize the processing of reasonable accommodation requests on behalf of its component agencies. HHS said it’s taking on a backlog of more than 3,000 requests from the Centers for Disease Control and Prevention. It’s not clear how long it will take HHS to review each individual request. But the department said it will need about six to eight months to clear the backlog. A CDC memo said telework “should not be given as an interim accommodation,” while a reasonable accommodation request is under review.
  (HHS faces a months-long backlog of reasonable accommodation requests - Federal News Network)
• The Coast Guard is at risk of more cost overruns on one of its newest class of ships. That new warning comes from the Government Accountability Office, which said the service is pressing ahead with plans for its Offshore Patrol Cutter without a stable design. GAO said moving ahead with the second stage of the acquisition program too quickly could mean a repeat of some of the missteps the service suffered during the program’s first phase. In stage one, starting construction before designs were stabilized wound up leading to expensive rework.
  (Coast Guard risking cost overruns for Offshore Cutter - Government Accountability Office)
• The Defense Department is putting more than $400 million toward immediate barracks repairs. Defense Secretary Pete Hegseth said the department is also launching more than $800 million in critical barracks renovations. Hegseth recently stood up a “barracks task force,” which he said has completed wall-to-wall assessments of facilities across the Navy, Marine Corps, Air Force, Space Force and the 18th Airborne Corps, with Reserve and National Guard inspections expected to wrap up by the end of January. “In our first 30 days, we've purchased new furnishings and mattresses for 81 barracks, reaching more than 15,000 service members, and we've executed $101 million of quality of life improvements since October 27 that includes new door locks in 10 barracks, affecting over 6,000 war fighters, new security systems in 13 barracks, which is peace of mind for another 1,500 plus service members. I'm getting monthly reports to confirm the work is actually getting accomplished.”
  (DoD to invest $400 million in immediate barracks repairs - Defense Secretary Pete Hegseth on X)
• The Marine Corps is encouraging qualified Marines to move into counterintelligence and human intelligence roles. The Corps’ Manpower and Reserve Affairs has identified these positions as a critical specialty. The service said the demand for Marines in counterintelligence and human intelligence roles will remain high for the foreseeable future. Officials say Marines selected for these roles will receive extensive training and have opportunities to support Joint Forces and interagency partners. Marines who make the switch could earn over $100,000 in bonuses.
  (Marine Corps ramps up effort to fill counterintelligence, human intelligence roles - MARADMIN message)
• The Defense Department wants to shake up how it works with value-added resellers. The Pentagon is considering placing a 5% cap on most fees charged by resellers starting with a specific special item number, or SIN, for IT products. A draft memo obtained by Federal News Network said this cap would only apply to IT products bought through GSA's schedule contract. The initial focus of this reseller cap would focus on SIN 33411, which is for the purchasing of new electronic equipment, including desktops, laptops and servers. DoD said it spent about $2 billion in fiscal 2024 through the GSA schedule on these technology products.
  (Draft memo details DoD's plans to cap most reseller fees - Federal News Network)

The post Thrift Savings Plan returns mostly positive in November first appeared on Federal News Network.

Eric White We’re coming close to the end of the year. It’s been a shaky end as usual, and you’ve got open season tackling in and everything like that. You know, tell me why this is the perfect time to be thinking about taxes next April.

Thiago Glieger I know, this is the topic nobody likes to think about, especially not early and before we have to, right? But smart federal employees are looking at their income year to date, and they’re looking at things like tax withholding. If there were any major changes this year, like a promotion or a bonus, or maybe your spouse retired, something like that, your withholding might be off. And then there’s a variety of other things too, that you’ll want to incorporate, like making sure that you don’t wanna incorporate some kind of charitable giving. A lot of people do that at the end of the year. There’s RMDs that come in. So there’s a lot of little things that, if we start paying attention to now, all of it affects taxes. So we wanna get ahead of those things.

Eric White Yeah, so let’s get into it rather than actually saying let’s get ahead of it. How do you actually go about doing that?

Thiago Glieger Yeah, so one of the biggest things we tell federal employees to be aware of, Eric, is to make sure that they are actually maximizing their TSP contributions, if they can afford to do so. Obviously, this is an interesting time to be doing that, given that, you know, people aren’t being paid, but the idea of maxing out the TSP helps you to save on taxes if you’re using pre-tax contributions. So before the end of the year, you want to try and get as much as you can in there. So the contribution for 2025, the limit is $23,000. If you are over 50, it’s $7,500 additionally. So if you’re behind on contributions and you actually want to get all of those paychecks in there, you can actually adjust some pay periods so that you do a little bit more and get yourself caught up. Okay, now for 2026, this is where some of the big changes are going to come to the TSP contributions. First, we’re going to start getting the normal inflation adjustment for the contribution limits. The amount that you can contribute under 50 goes up by a thousand and then catch-up goes up by another 500. But the biggest change is how that catch-up contribution is going to happen. So for people who are over 50 and they’re going to be earning $145,000 or more as a federal salary, they can no longer do that pre-tax deduction. What does that mean? That means you’re going have to pay taxes on all of that catch-up contribution. So. This is a pretty big thing as people start thinking about taxes for next year. Your taxable income could actually be going up and you might actually owe a little bit more in tax.

Eric White Yeah. Are there any changes coming down the pipeline that you’re hearing regarding TSP contributions? Are those amounts going to go up again in the backdrop of that? This is a very strange time to be talking about this.

Thiago Glieger Yeah, Eric, each year we see a little bit of an inflation adjustment where the … IRS actually will come out and say, hey, everyone participating in a 401k type of plan like the T.S.P. Now you can put a little more each year. It Just helps you stay on top of saving a little but more. And so we’re definitely going to see that. Of course, for anyone over 50, you have that additional catch up contribution. And then for people who are a little older than that, there’s the special catch up contribution as well. So, lots of ways to get more money in the Thrift Savings Plan, and again, if you’re already thinking about taxes for next year, you want to consider whether or not you’re going to be forced to do Roth contributions for the catch-up, because that means you have to pay the tax up front, and so that’s a big change both in the amounts and in how you’re contributing that’s coming to the TSP next year.

Eric White I’m talking with Thiago Glieger, private wealth advisor for RMG advisors. On those TSP contributions, we’ll get a little bit more into the investment side of things, but during this time that we had mentioned, a lot of folks aren’t getting their paychecks regularly. The idea of borrowing against your TSP plan is now a plan that most folks are going to have to result to. What can you tell us about what they should be on the lookout for if it comes down to that.

Thiago Glieger Yeah, Eric, this is just such a hard time for federal employees and it’s really unfortunate that we are down to these last little solutions of trying to borrow against ourselves. But the idea of borrowing from ourselves instead of borrowing another type of creditor like a bank or a financial institution means that you’re going to be paying yourself the interest if you borrow from the TSP and it forces you as soon as you start getting paid again. It forces you to start repaying yourself back each paycheck. So it really allows you to be very disciplined and not overspending, taking the money and then not ever paying it back. The reason that that’s very nice is because it gives you access to liquidity immediately. And if you have to put food on the table, you have make a bill payment, you have pay your mortgage, that’s a really good way to get cash very quickly — which the TSP is still functioning. A lot of people think that the government is shut down, people can’t access the TSP. That’s not true. You can actually go in there and get that. There’s different types of TSP loans. You can get up to $50,000 for a GenPurpose one. And you can see the information. The TSP has a really nice page that talks about the loans and how they work and how much you can get. If you’ve tapped it before, then obviously there’s going to be some limitations there. But if you’re in a dire situation and you’re looking at, you know, not being able to make a mortgage payment or having to put some huge bill on a credit card and possibly start down this rabbit hole of credit card debt, the TSP loan can be a really good option for you.

Eric White Let’s look at farther down the future here. As far as capital gains and avoiding the tax bill that can sometimes come when you’re looking for liquidity fast and easy from selling some of your holdings, what is it that people should keep in mind if they go that route?

Thiago Glieger The big thing, Eric, with capital gains is that people who own non-retirement accounts, so brokerage accounts, right — they are going to be subject to any sort of capital gains taxes. And there’s a lot of things that you can do to help reduce those taxes, one of which is called tax-loss harvesting. So this is something that as the markets go up and down, you can take use of that volatility and create tax savings for yourself throughout the year. So it is something you want to do year round, but you can always look at this time of the year and go back and see is there anything in my portfolio that I could sell that could help me to create some tax savings. If you have additional tax loss beyond any of the gain that you’re realizing you can actually offset up to $3,000 of your salary in these capital losses as well. So if you think about salary income, that’s the highest form of tax that we have. And if you can reduce $3,000 worth of that salary for tax purposes, then you’re actually saving several hundreds of dollars in taxes simply by doing a very simple strategy in your portfolio.

Eric White And the length of holding those positions also has an effect on that. Do I have that correct?

Thiago Glieger That’s right. If you’re going to be realizing gains or losses, depending on how long you held it, the IRS treats that differently. So the key number we want to be aware of is 12 months or more. Anything that’s 12 months is considered long-term, right? And anything that’s less than 12 months, is considered short-term. The only other time horizon thing that you want to be aware of too, Eric — that I think you were alluding to — is this idea of a wash sale. So if you’re creating tax savings from a loss in your investments, you gotta be really careful about not to rebuy the same stock within a period of time, not have sold it prior to the sale. There’s some rules around there that you gotta be real careful [about].

Eric White All right, and this time of year, and a lot of people going through some hardship right now. Another way is through some charitable giving. How can you — well, you know, it sounds bad to look out for yourself when you’re trying to be helpful — but what can you do to maximize really the way that it can benefit you as well when making a charitable donation.

Thiago Glieger The best way that you can give philanthropically or to any charity is if it benefits both them and you. That’s a situation where everybody wins and who doesn’t like that? There’s a couple of really smart ways that people will do these kind of charity and donating. The first is if someone is looking at their RMDs. So this time of the year, we have required minimum distributions that are gonna be applicable to anybody over a certain age. So typically that’s 73 for most people these days. And the good news is the TSP is gonna take that money out of your thrift savings account automatically. But the bad news is you pay taxes on that whole distribution. Wouldn’t it be nice if you could instead, if you are a regular contributor to a charity of sorts, maybe give some of that RMD to the charity directly. So that’s a strategy that people could do. Unfortunately, you can’t do that within the TSP, but you can do that with an IRA. But you don’t pay the taxes on it, the charity doesn’t pay taxes on, and you satisfy your RMD all at the same time. So that’s a really helpful tip that a lot of federal employees have been able to do. Key age for that is 70 and a half, okay? So this is not something that’s available to everybody. But frankly, if you’re coming up on RMDs and worried about that, you’re gonna be probably a little older anyway, so that’s big one.

Eric White Anything else that people should keep in mind as the year ends out here and looking towards next year and what is probably going to be another up and down one?

Thiago Glieger Yeah, we’ve got open season coming up here in about a month or so, Eric, right? And so I think that it would be smart for federal employees to look at some of the tools within your benefits package, because those can help save taxes as well. So, for example, if you’re not using the FSA, which is a flexible spending account, you need to go to FSA feds and really consider using that tool. You can put a few thousand dollars in it. I want to say something like $2,000 or $3,000 as a family every single year. And listen, everybody has some kind of medical expense. Even if you’re going to the doctor just once a year, you can use that money. It’s fully tax deductible. And then if you use that money for a qualified medical expense, you don’t pay any taxes on that money either. So it’s like getting tax-free healthcare services. And the important detail with the FSA is that you are going to lose the bulk of it if you don’t use it. So you always wanna make sure maybe you don’t contribute too much of it into it. Or you can use the money for all kinds of interesting qualified expenses. I’ll give you an example. Some of our clients have purchased — they had a couple of thousand bucks still left in an FSA, they were gonna lose it — they purchased a defibrillator, an AED for their household using those funds and they got it completely tax-free. You can buy Band-Aids, you can buy aspirin, all kinds other stuff, and you can see what’s qualified and what’s not online. So that’s a really nice benefit to look at for taxes at yearr end.

Eric White I think I’d buy one of those CPR dummies they look like they’re fun to play with a little

Thiago Glieger I bet you it’s probably qualified.

The post When paychecks stop and tax season looms, what moves should federal employees make? first appeared on Federal News Network.

Eric White We’re talking about the new [Online Retirement Application (ORA)] system, or I guess, is it “Or-uh” system? I’ll let you … Correct my pronunciation for federal retirees. Obviously, that system is going to get used a lot over the next coming months, if what has been happening recently is any sign of what’s to come. Tell me about what’s going on with this system and what feds are saying — of the ones that have been using it — about it.

Thiago Glieger Yeah, Eric, this new system — so we call it O-R-A; I think that’s how most people are calling it, as you said — this is a brand new system. And honestly, it’s been confusing a lot of people … it’s replacing the old paperwork that a lot federal employees had to fill out — really the SF-3107 — as they were going to retire from their agencies. But I think the big problem here, Eric, is they’re finding that a lot of the HR departments are just simply overwhelmed … We had a lot of people [who] were leaving, we have bottlenecking of a lot people that are leaving on [the] [deferred resignation program (DRP)] as well, and so they just can’t provide the kind of support that they used to before. So a lot of these questions start to pile up. It’s a brand new system and there’s not enough people in place to help answer those questions. Retirement is already a pretty stressful process for people, right? So then on top of that, not having a clear process or information about a new system only adds to the anxiety … When it was first launched everyone hoped that OPM was going to say, this is going to be faster, it’s going to be smoother, it’s going to require less people. And OPM actually said the opposite. They said, at first, it might actually take longer … They are very hopeful that over time this is gonna be a good system but right now there [are] a lot of moving parts that have to come together for all of that efficiency to really start showing up. And as you guys have seen, Eric, there’s tens of thousands of federal employees retiring. We just had the first wave here on 9/30. We’re gonna have another wave here 12/31. And so it’s really, really tough for people to get answers to the system.

Eric White Yeah, sort of a “ready, fire, aim” approach that we love here in the USA. Walk us through what a federal employee should expect when they decide to retire under this new system. What are some of the major changes from the old system? Not that anybody retires more than once, hopefully, but you know, what exactly are they looking at from a landscape perspective?

Thiago Glieger Yeah, so what it used to be is that a lot of agencies would run the [Government Retirement and Benefits (GRB)] platform retirement estimator for federal employees retiring. And the GRB platform was effectively a repository of your federal service, and it would give you information on what retirement could look like, estimates of your pension, things like that. So then we run into problem number one: a lot agencies cut GRB. So now federal employees are saying, well, what does my retirement estimate look like? How many credible years do I have? That system is no longer there. So then agencies are not even able to provide that information. But presuming you’re still gonna move forward with the actual retirement process, [the] first step is you have to notify your HR office that you’re ready to retire. You can send them an email, generally, and say, I believe I’m eligible; I’d like to start the retirement process. And this is because the HR group has to initiate the ORA system in most cases. Every agency has a little bit of a different process, but this is what the majority of the groups are doing … You have to remember what’s different here is now HR is swamped. There’s tons of people retiring. There’s less of them around to be able to do this, which is causing some of the bottleneck. Once HR begins the ORA process, you’re given access to it. And again, this is gonna replace the SF-3107, which is the retirement form. And so now it’s actually easier because instead of filling out a government form, you’re just going through a system online and it’s asking you questions one by one. Everyone has filled out those kinds of forms before. So it’s actually pretty easy, as we’ve seen with some of our clients. And what it does is it takes your answers and pre-fills the form for you, which is a nice service. Once you submit that part, it’s really important that a federal employee stay alert because a lot of times, HR — they may kick it back if they need additional information — there’s something that’s missing, so you have to check to make sure you don’t need to do additional work on the ORA system for that. That’s when it moves to payroll. Once it moves to payroll, they finalize all of your hours, which can take a month to a month and a half just at payroll itself, before it goes to OPM. So if you think about it, we’re talking a month at payroll, [that] could be a month before HR actually gets around to being able to initiate the system for you. We’re At 2 months so far. Once it hits OPM, that’s when the official clock starts, as OPM likes to describe it. And there’s some uncharted waters here because OPM has not really handled, A, this new system before, and B, this many federal employees retiring all at the same time. So they release information — there is some congressional report that gets put out there that talks about how many applications are coming into the system and what is the average processing time month over month. We’ve been seeing that go up and up and up over the last three months. I expect it’s going to continue to get worse, right? So we’re talking three months at the agency level plus … whatever time OPM is going to need for themselves.

Eric White We’re talking with financial planner Thiago Glieger. So, other than those long timelines — well, we can call them unknown timelines, as you say — what are some of the other issues that federal employees are seeing so far with the system? It sounds like it is going through some growing pains, but are there any fundamental flaws with it that people are just not liking?

Thiago Glieger I think some of the challenging questions that the system asks them are things like, how much withholding do you want to do on your taxes? Or, what do you wanna do about life insurance? And before there was some guidance in the forms [about] how to be thinking about some of these things. The system is a little bit more streamlined and it just asks you the question. Well, if you haven’t gone through the process of creating a financial plan, how do you know how much insurance do you need? What kind of tax liability are you expected to have? So federal retirees are called upon to make these decisions in real time as they’re filling out the form and they don’t really have the information to be able to answer those questions. Okay, the other issue that we are running into, and this one hasn’t been too much, is that sometimes people don’t get the notification of additional action that they need. Sometimes it gets stuck in their spam email. So this is something that, again, it’s those bumps that they’re trying to pull together. There are a lot of systems in the background that have to coordinate with each other and, as any brand new system that gets launched, there’s always stuff that’s going to break. So I’m sure some of that’s gonna be a problem too.

Eric White Gotcha. All right. And so what can folks do if they are looking to retire? You’re a financial planner. I guess we’re talking to the right person. How can they financially prepare for any delays that might occur because … some of those dates don’t line up and you don’t want to be caught in-between paychecks, as they say, and without anything coming in? What sort of precautions can those looking to retire take?

Thiago Glieger Yeah, that’s a really good point, Eric. I think the first thing that federal retirees should remember is that you will get your annual leave lump sum. Okay, so that comes pretty quickly in our experience with clients, right after you leave. So you get your final paycheck and then shortly thereafter you get your lump sum, so depending on how many hours you have, you’re gonna get a big check that’s gonna help you to meet your expenses between when you leave and no longer have an income and when the pension actually fully starts. There [is] also, in most cases, an interim payment, where it’s a portion of your final pension; not the exact amount. But again, we don’t wanna count on that because there’s cases where people don’t get it. So the biggest thing is that, let’s say you’re planning to retire December 31st, now is the time to start boosting your cash reserves. So what do I mean by that? Cash in the bank is gonna be really important here. So … This might mean, and it sounds a little counterintuitive, but might mean maybe don’t put as much in the Thrift Savings Plan for the rest of the year, if you know you’re gonna retire, okay? Yes, you have access to the TSP if you are retiring within a certain age, the age is 55 for most people, but cash in the bank is that much easier to access … it’s already been taxed in most cases. So if you reduce your TSP contribution, that means your take-home pay goes up and you get to start accumulating that cash. I would also think about what kind of expenses maybe you have coming up, right? The general guide for people is we like around six months-worth of your monthly expenses in cash in the bank at all times. And because we might be looking at delays on your pension starting, you might wanna increase that a little bit more. So if you’ve got big renovations you were planning to do on the home, maybe postpone that for a little but until you get greater clarity around OPM’s timeline for the stuff. And the last one — and this one’s a little bit controversial as well, but it depends on how old you are — if you leave prior to the age of 55, which a lot of people have done this year, you technically don’t have access to the TSP funds un-penalized, unless you are law enforcement or special provisions, 1811s, things like that. So what you can look at is a potential TSP loan. You can get up to $50,000 and that comes without that 10% early withdrawal penalty, which is kind of nice because you can put that in your bank account, use it or don’t use it, but at least it creates extra cashflow for you. Of course, check with your financial professionals, make sure that this is something that is feasible within your plan, but that’s been a really solid one to help bridge people over.

Eric White Uncertainty is the word of the day for a lot of federal employees, particularly those that are retiring, even so. Any advice on handling that aspect of things? You’re already going through the anguish of entering into a new stage of your life, having all of this in the background of shutdowns and potential furloughs and things of that nature. What can you tell people that are going through this right now?

Thiago Glieger I would say for folks to rely on your planning. This is something that creates great peace of mind, just knowing what you’re gonna do in which scenario. So if this happens, if it takes longer, if the markets crash in the middle of your waiting for your pension, all of these things, if you can think ahead of what those potential problems may be and what you are gonna do if those things happen or what you gonna do in preparation to hedge some of those risks, that gives you great peace mind. We have to be careful about watching the economy and the news around the markets. The markets are very volatile and you always have different opinions and people talking about what the markets are gonna do next. We have to careful cause that creates a lot of anxiety for retirement. And I think too, the more information you have, the better. OPM has a really, really helpful retirement quick guide, which we can give you guys the link [to] … You can put it in the show notes. The OPM retirement quick guide is super helpful, [it] walks you through the process so you know what to expect. And in fact, there is one additional resource that is actually your benefits officer directory. This is something that OPM maintains pretty regularly and it’s the HR person in charge at your office. In case the process is just stuck and if you can’t get answers, you can get anywhere, this is a place you can look for to find out who’s in charge of your agency to get the answers you need.

The post When paychecks stop and tax season looms, what moves should federal employees make? first appeared on Federal News Network.

For federal employees it means-

• Resumption of Contributions: The most significant change is that for active federal employees, Thrift Savings Plan (TSP) contributions, including the agency matching contributions (for FERS employees), resume with the return of paychecks. During a shutdown, these contributions are typically paused, which can affect long-term growth.
• Back Pay and Benefits: Furloughed employees receive retroactive pay for the missed period. This resolves immediate financial hardship and ensures that the “high-3 average pay” used to calculate future annuities is unaffected.
• Processing of Paperwork: Delays in processing retirement applications at the Office of Personnel Management (OPM) and individual agency HR departments should end. This is good news for those who retired or were planning to retire around the time of the shutdown, as it means their full annuity payments will be finalized sooner, and they will move from interim payments to full payments.
• Access to Services: Normal access to HR support, retirement counseling sessions, and other planning resources is restored.

For current federal retirees and the general public it means-

• Annuity and Social Security Payments: For individuals already retired and receiving a federal pension (Civil Service Retirement System or Federal Employees Retirement System) or Social Security benefits, payments generally continue uninterrupted even during a shutdown because they are funded differently. The government being back in action ensures these operations continue normally without any threat of future disruption.
• Market Stability: A resolved shutdown can reduce the political uncertainty that sometimes causes short-term volatility in the stock market, which can indirectly affect the balance of market-based retirement savings plans like the TSP’s C, S, and I funds.

A federal civil service career may not be a way to get rich. Yet after decades of performing meaningful and satisfying work, you can look forward to a financially secure and dignified retirement.

Since the late 1980s, federal retirement has consisted of three basic components. Feds who qualify for full retirement can expect their pension, known as their annuity or Basic Benefit, calculated by the Office of Personnel Management at the time of retirement. Civil service reform of that era added a Social Security benefit to compensate for the larger annuities of the earlier Civil Service Retirement System. You don’t have much control over the specific eventual payouts of these two components; they derive from standard calculations based on salary and time.

When it comes to the third component of retirement – your Thrift Savings Plan – actions throughout your career can greatly influence the account you retire with. Small adjustments in strategy early in a career can magnify to significant gains later on, thanks to the historically long-term gains of the stock market.

But it doesn’t happen automatically. In this article, I’ll outline important steps you can take to help ensure you’ll be able to afford those European river cruises after you’ve left your full-time career.

Put enough in

It sounds obvious: The more you contribute to the TSP, the more you’ll have later. Yet too many federal employees fail to take a basic step; namely, contributing enough to earn the maximum match the government makes to your TSP.

The government contributes 1% automatically to your TSP account each year. It will increase that contribution by 1% increments for each additional 1% you contribute, up to an additional 4%. That is, if you contribute 5% of your salary each pay period, the government will keep matching.

A couple of important details about matching contributions:

• For the first 3% of your salary you contribute, the government will match it 100%.
• If you contribute another 2% (for a total of 5%), the government will match half of that. In other words, if you contribute the full 5%, the government will add another 4%.
• You may contribute more than 5% (up to the maximum allowed), but government matching ceases beyond that.

Also keep in mind that your contribution to the TSP is vested the moment you make it. So is the government’s match – with the important exception of the automatic 1%. That’s subject to a 2-year or 3-year vesting period depending on your position. That means you’d have to forfeit the 1% should you leave government service before the vesting period.

Note that tax law puts a limit on yearly contributions to tax-deferred individual retirement accounts. This year it’s $23,500. To max out your TSP, simply divide that number by the number of pay periods to determine the per-period contribution.

It’s wise to spread out your contributions evenly over the year. That way, you’ll max out the government matching contribution.

And keep this in mind: If you are 50 or older, you can take advantage of a provision known as catch-up contributions. Check with TSP for your own eligibility and catch-up max, but this year FEBA estimates you’ll be able to catch up by as much as $7,500. Those between the ages of 60 and 63 can likely contribute up to $11,250 in catch-up savings.

Pay taxes now?

Most federal employees stick with traditional TSP contributions; those made with pre-tax dollars. This presumes that, once you retire, you’ll fall into a lower tax bracket and thus pay less taxes on withdrawals than you would have on the same income dollars when you were working.

For a myriad of reasons, that’s not always the case. For example, retired senior executives or those with highly technical jobs often find themselves working in industry at or past the age at which they must make required minimum distributions from their TSP accounts. That typically puts them in a higher tax bracket.

This is where the Roth option comes in. A Roth account consists of TSP contributions using after-tax dollars. You therefore don’t pay taxes on eventual withdrawals. (Roth IRAs get their name from former Sen. William

Roth, sponsor of the legislation that enabled this form of retirement savings account.)

TSP statistics show that of the more than 7 million accounts, only about a third are Roth. If you have only a traditional TSP, consider adding a Roth option as a strategy to give you more flexible tax approaches in the future. The TSP offers a way to convert some or all of your TSP to a Roth. Because such a transfer entails taxes now, only do this after consulting with a qualified tax expert who can work through your individual situation.

Timidity = loss

Many TSP participants feel safe by investing most of their dollars in the TSP’s G-Fund. Because it consists of government bonds, the G-Fund never shrinks, meaning you get a basically guaranteed positive return on your investments. But that growth is almost always below the rate of inflation.

The result? Over time your savings have ever less real buying power.

A related mistake is retreating to the G-Fund when the stock market goes through a period of gyration with big swings down and up. No one can time the market, so nervous investors often end up selling low, then buying high as they chase the inevitable upswings.

Over the course of a 25- or 30-year career, the difference between a pure G-Fund investment and a diversified one that includes stock funds can add up to hundreds of thousands of dollars. It can determine whether you join the ranks of those with at least $1 million in their TSP.

Alternative strategies include contributions aggressively to the C fund. True, the C, S, and I correlate, meaning they move in the same direction at the same time and carry relatively the same risk. But the C fund has a much larger long-term rate of return.

Keep in mind, TSP now automatically puts new hires into the appropriate L fund based on their date of birth. A L-Fund customized such that the “conservative” portion is all G fund and the “aggressive” portion all C-Fund has historically produced a higher return and with lower fees than the standard-issue L-Fund.

Other ways to enhance

Several other practices can help your TSP investment help you. These include:

• Staying on top of your intended beneficiaries, such as after divorce and you don’t want your ex to remain the beneficiary. The TSP lets you manage beneficiaries online.
• Letting the funds stay put unless you have a dire, potentially life-changing need to take a loan against your TSP investment. TSP loans can go as long as 5 years (15 years for real estate). They are not considered withdrawals if they are in good repayment standing. However if you default on the loan you will get a taxable disbursement and the 10% penalty if under 59 ½.
• Making careless withdrawals, such as a large lump sum the minute you hit 73. You’ll end up overpaying taxes.

Finally, consider whether to leave you funds in the TSP after you retire, versus rolling them over into a standard IRA. True the TSP has low fees and a good record of funds management. On the other hand, an IRA gives you access to a vastly larger universe of investment options. You also get more withdrawal flexibility with an IRA. The TSP only lets you make withdrawals proportionately over the funds you’re in. And, unlike the TSP, an IRA lets you make a tax-free qualified charitable donation, or OCD, once you reach the age of 70½.

Regardless of the many possible strategies you choose, contributing to your TSP to the maximum and managing it carefully will go a long way to ensuring you’ll achieve the retirement you hope for.

The post The government shutdown is over- What that means and best practices to maximize your Thrift Savings Plan first appeared on Federal News Network.

• Federal employees will be able to contribute more to their Thrift Savings Plan accounts next year. The IRS increased the maximum annual contribution limit to $24,500, which is a $1,000 increase over 2025. Additionally, employees aged 50 or older can save more money through their catch-up contributions. And if employees are aged 60 to 63, they can save even more with a higher catch up contribution of $11,250.
  (IRS increases annual TSP savings limit for 2026 - IRS)
• A new bill would put a hold on some 8(a) contract awards. Sen. Joni Ernst (R-Iowa) wants to stop all no-bid awards under the 8(a) Small Business Program until the Small Business Administration completes a detailed audit. The chairwoman of the Committee on Small Business and Entrepreneurship's Stop 8(a) Contracting Fraud Act would put any new sole source 8(a) contracts on hold until the report is submitted to the committee in 2026. Ernst said the 8(a) program is broken and needs to be reformed. The bill comes after two high-profile examples of 8(a) contractors allegedly committing fraud. Agencies make more than 5,700 8(a) sole source awards a year.
  (Sen. Ernst wants to put freeze on 8(a) sole source awards - Sen. Joni Ernst (R-Iowa))
• Veterans Affairs said service members forced out of the military for refusing a COVID vaccine are once again eligible for GI Bill education benefits. More than 8,000 service members refused to comply with the Biden-era vaccine mandate and separated from the military. More than half of them received a less-than-honorable discharge. That may have made them ineligible for GI Bill benefits. The VA said nearly 900 veterans are once again eligible for those benefits under the Trump administration, and that thousands more could regain eligibility.
  (Trump EO reinstates GI Bill benefits to Veterans discharged for refusing COVID vaccine - Department of Veterans Affairs)
• A majority of House lawmakers want a vote on a bill to end the Trump administration’s rollback of collective bargaining for federal employees. A bipartisan bloc of 218 House lawmakers signed onto a discharge petition forcing the House to vote on the Protect America’s Workforce Act. The bill would restore collective bargaining rights for tens of thousands of federal employees, if approved by Congress. Rep. Mike Lawler (R-N.Y.) was the most recent lawmaker to back the bill. President Donald Trump signed an executive order in March that barred unions from bargaining on behalf of federal employees at many agencies, on the grounds that those agencies work primarily in national security.
  (House majority forces vote on bill to restore collective bargaining for most federal employees - Federal News Network)
• The acting chief of the Federal Emergency Management Agency resigned on Monday. David Richardson stepped down from performing the duties of the FEMA administrator after six months on the job. Richardson’s tenure was marked by major staff departures and program cuts. He also faced criticism over FEMA’s response to deadly floods in Texas over the summer. FEMA Chief of Staff Karen Evans will take on the duties of FEMA administrator starting December 1st.
  (FEMA acting chief David Richardson departs after six months on the job - Associated Press)
• The Federal Communications Commission is moving to reverse some recently issued cybersecurity requirements. The FCC will vote on Thursday to rescind cybersecurity rules for telecommunications providers. Those rules were put in place late in the Biden administration in response to the sweeping Salt Typhoon hacks that infiltrated telecom networks across the world. U.S. officials have attributed that campaign to Chinese government-backed hackers. But the current FCC leaders said the rules were unlawful and ineffective from a cyber standpoint. They point to cyber improvements that telecom providers say they have made on a voluntary basis.
  (FCC to vote on reversing cyber rules adopted after Salt Typhoon hack - Federal News Network)
• The Defense Department is failing to address the security risks created by the massive amount of publicly accessible digital information about its personnel and operations. The Government Accountability Office found that digital activity from personal and government devices, online communications and defense platforms generate traceable data, which puts DoD personnel, their families, operations and national security at risk. GAO said the department needs to conduct a comprehensive review of its security policies and guidance to identify gaps in how it manages risks in the digital environment.
  (Massive digital footprints put troops, missions at risk, watchdog finds - Government Accountability Office)
• The Defense Department has released a new list of critical technology areas. Undersecretary of Defense for Research and Engineering Emil Michael has reduced the number of research-and-development priorities to six areas of focus. The list includes artificial intelligence, contested logistics technologies and scaled hypersonics. “When I stepped into this role, our office had identified 14 critical technology areas; while each of these areas holds value, such a broad list dilutes focus and fails to highlight the most urgent needs of the war fighter. Fourteen priorities in truth means no priorities at all,” Emil Michael said.
  (DoD narrows down list of critical technology areas - LinkedIn)

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