Federal Employee Retirement System (FERS)
FERS began in 1987 and was a replacement retirement system for CSRS. The components of the FERS retirement are a defined contribution plan, defined benefit pension, and Social Security. FERS employees can contribute $20,500 to their TSP if under age 50. FERS employees can contribute up to $27,000 per year to the Thrift Savings Plan if age 50 or older. Unlike CSRS, employees covered under the Federal Employee Retirement System can receive TSP matching contributions. The annual limit for TSP matching contributions is 5% of the employee's salary. To receive the full employer match, employees must save a minimum of 5% into the TSP each pay period. FERS employees contribute 0.8% of salary towards FERS and 6.2% to Social Security. In recent years, FERS has gone through several changes including the development of FERS-RAE program which requires new Federal employees to contribute a higher percentage of their salary towards their FERS benefits. Special planning considerations include:
- CSRS vs. FERS: Older isn’t necessarily better.
- TSP contributions and matching
- FERS Annuity Supplement
- FERS Transfers
- Social Security optimization
- Withdrawals from TSP before age 59.5 if retired at age 55 or older.