- The Washington Times - Tuesday, November 26, 2002

Federal employees, postal workers and military personnel seeking to maximize their retirement or rainy-day fund should quickly take advantage of a new Thrift Savings Plan investment option.

Starting next year, TSP investors who are age 50 (or who will celebrate their 50th birthday anytime next year) can sock away an extra $2,000 on a tax-deferred basis. But you should act sooner, rather than later. Like now.

If you want to max out on your TSP contributions, step one begins now, during the open season that runs through Dec. 31.

The $2,000 catch-up contribution for the over-50 crowd is on top of the IRS' elective deferral limit (the amount any individual can put into a 401(k) plan, such as the TSP), which goes up to $12,000 next year.

The catch-up contribution limits rise to $3,000 in 2004, to $4,000 in 2005 and to $5,000 in 2006 and thereafter. They also are subject to any percentage limits imposed on investors by the plan.

Next year, workers under the old Civil Service Retirement System and military personnel will be able to invest 8 percent of base pay on a tax-deferred basis. Military investors also can put in 100 percent of other special pay, and bonuses.

Feds under the newer Federal Employees Retirement System (FERS) will be able to raise their tax-deferred contributions (which were 12 percent this year) to 13 percent starting in January. But both CSRS/military investors and FERS investors must make that election now if they want the higher percentage amounts taken out starting in January.

All this is proof that there is life (of a sort) after age 50.

Being able to put in an extra $2,000 to $5,000, especially over a long period of time, will do wonders for your retirement-years bank account. The money isn't taxable until you start using it and you may well be in a lower tax bracket. If not, so much the better.

Health plan help

If you don't like taking chances with your health, then don't follow the lead of 95 percent of enrollees in the Federal Employees Health Benefits Program, who remain in the same health plan year after year.

Loyalty is nice, but you aren't a cocker spaniel not when sniffing out the best health plan. Like it or not, you should shop around during the program's open season. It ends Dec. 9.

Here are some reasons why you can't afford not to check out your health plan's competition:

•Health insurance premiums have gone up about 30 percent in the last three years. You probably won't live long enough to see them go down.

•The number of plans available is shrinking. Low-cost, minimal-paperwork health maintenance organizations are disappearing (or consolidating) rapidly. But some of the best plans available in 2003 are strong HMOs.

•The "benefit changes" page of your health plan brochure can tell you a lot, and you need to know it before not after you see a doctor or go into a hospital.

•Some people buy a health plan because of its dental benefits. Not a good idea. Teeth are great, but none of the federal program's plans (or any other) have particularly good dental benefits, although the best are in HMOs. You want a plan that protects you from the costs involved in a catastrophic illness or injury. Some limit your liability to around $3,000. For others, it is $12,000 or more.

•See your doctor (and or dentist) before you pick a health plan. Run it by him or her (or somebody in the doctor's office) to see if it works for them, and if they are in the plan's network. Going out of network used to be a luxury. Now it can cost you an arm and a leg (no pun intended).

Some of the best information is on the Internet. The Office of Personnel Management's Web site (www.opm.gov) is excellent. Many agencies have contracted with the Consumers Checkbook Guide to provide free Internet access for employees.

Retirees have a tougher time. Many, probably most of them, aren't on the Internet yet. Members of the Alexandria-based National Association of Retired Federal Employees get excellent advice each year in the November and December issues of NARFE's Retirement Life magazine.

If you're a friend or relative of a retired fed (or survivor) or you are a computer-literate retiree, check out this free site: https://www.checkbook.org/healthplanratings/year03/.

Bottom line for health plan shoppers: Doing nothing is doing something. Staying with your old faithful health plan might be a great idea, but it shouldn't be done until after some comparison shopping.


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