- The Washington Times - Tuesday, June 10, 2003

If you are expecting any kind of financial windfall in the near future, such as a child-credit-tax refund or the lump sum payment for the retroactive 1 percent federal pay raise, don’t spend it just yet.

Reason: You may need the money so that you can continue to eat, pay rent and buy clothing during the latter half of the year when an array of valuable, but costly, pretax perks open up to feds.

The good news is that many government workers will soon be able to set up pretax Flexible Spending Accounts of $250 to $2,000 and be able to use the money to pay for uncovered medical or dental bills.

They also can create a dependent FSA account ($250 to $5,000) to use for dependent care. And, if you are 50 or older this year, federal and military personnel can put an extra $2,000 into their Thrift Savings Plan.

All the money is pretax (meaning it will lower your tax bite), and all of it must be made by payroll deduction — from your paycheck. The signup period for the $2,000 catchup contributions for 50-plus TSP investors will be held next month, with the deductions starting in August.

The Defense and Energy departments, the National Aeronautics and Space Administration, the National Science Foundation, the Executive Office of the President, the Office of Management and Budget and the National Security Agency will start their FSA programs Sept. 1.

The Department of Veterans Affairs and the Government Printing Office will wait until January, and the Navy Sealift Command program begins Aug. 1. Other agencies are either planning to start July 1 or will come in with a later date.

The not-so-good news is that the benefits (and the withholding) won’t begin until July 1 in some agencies and September in others. That means anything you want to put into your FSA account must come out of the remaining pay periods when the program starts.

A 50-year-old fed who chose to max out on all three options would have to contribute $10,000 — via payroll deduction — during the final months of the year.

Only medical bills incurred after your account is established can be paid out of the FSA account. And you can’t use the money to pay FSA, Long Term Care or Federal Employees Health Benefits Program premiums.

Defense takes the Hill

Politicians normally demand rather lengthy legislative foreplay when suitors come asking them to outlaw or legalize a pet project. But when a war hero returns asking for love ASAP, it’s tough to say no.

That’s where Congress finds itself now, more than halfway through the process of yielding to Pentagon demands for a new personnel system for its 700,000 civilians.

The Defense Department took the House in less time than it took to seize Baghdad. It got all it wanted, including the right to speed up hiring and firing procedures; change last-hired-first-fired layoff rules; and to put feds into wide pay bands where approval from the boss, not time-in-grade, would determine who gets a raise.

The Defense plan also mandates that unions negotiate national contracts on key issues determined by the secretary of defense, replacing small local bargaining units of about 1,300.

Defense would be to the regular civil service what a pit bull is to a toy poodle. Similar, and yet …

Opponents of Defense’s quick march (which includes the General Accounting Office and pro-fed Washington area politicians and unions) hope the Senate will balk at many of the proposals. They are part of the Defense Authorization Bill that has been approved (in different forms) by the House as well as the Senate.

Chances are Defense won’t get all it wants — as contained in the House bill — from the Senate.

But even if it has to settle for half a legislative loaf, it will be a major step in the administration’s long-range plan for civil service “reform.” The administration wants to privatize more jobs and eliminate the regular 3 percent longevity raise that one in three feds gets every year.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@ederalnewsradio.com.

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