Buyback.

Military Discussion.

Moderator: Aitrus

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ArrieS
Posts: 1072
Joined: Sun Aug 05, 2012 10:56 am

Re: Buyback.

Post by ArrieS »

meddian wrote:I'm really confused. I thought the reason to "BUYBACK" your time while working for the government was for me to get my 4 years of active duty added to my retirement plan-which would give me an SCD with 4+ years? Four years added to the FERS calculation adds up to additional monies for my FER retirement. I also thought that I didnt pay FICA with the miliatry and thats why I paid it back.


My idea is about TSP.

You can already buy back your time for retirement. But you're buying it back for a FERS retirement.

But the FERS retirement unlike the military retirement has three parts. TSP, Pension, Social Security.

You paid social security tax, so you have the Social Security part of your retirement. After you buy back your military time, you have your pension back. That's two out of three. A stool can't stand on two legs, needs a third.

My idea is to address the third part. The TSP, while serving you didn't get any matching contributions for your TSP. Matching contributions are an important part of the FERS retirement which you now have.

So I want to introduce legislation that would allow veterans that have bought back their time for a pension, also be able to get those matching contributions for their FERS retirement.

When you bought back you military service they computed how much you were paid and based your buyback amount on that. I would use that same amount for matching contributions of 5%.

I hope that clears it up.
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nnylfa
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Joined: Fri Oct 03, 2014 11:09 am

Re: Buyback.

Post by nnylfa »

ArrieS,
You can come up with a financially solid plan - and my family would greatly benefit - but it is unrealistic to think that it would get very far. In fact, it may backfire.

The reality of our current economic and business environment it is that we are in an era where public and private employment benefits are being cut and an extremely large percentage of workers are temporary workers/independent contractors without benefits. These folks, and their friends and families, would look with askance at a situation where a federal employee would obtain more benefits. The media love to bash federal spending and like to portray civilian workers as overpaid and underworked.

How would it backfire? The same conversation we are having here about current benefits would be held in the media and the public, journalists and politicians would debate those benefits and may even reduce them.

Secondly, since you wanted honest answers, your suggestion for the source of funding will not fly. From what it sounds like, you are proposing that all military members receiving BAH would no longer receive a mortgage deduction and their additional taxes would fund the formerly-military-now-civilian workers' TSP match. Why would the public support that? It negatively affects more people then it would benefit.

In addition, the more senior military people would end up providing most of the funds, since usually military people with less than 5 years don't purchase their homes.

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Kato
Posts: 49
Joined: Mon Jun 01, 2015 8:31 am

Re: Buyback.

Post by Kato »

Kato wrote:...it wouldn't do me any good unless they retro'd it.


ArrieS wrote:Really, just an example, even an extra $10,000 from the Government matching contributions in your account wouldn't do you any good at all?


Of course it would but you misunderstand. What I meant was, there was no TSP option for me when I was in the military. Unless the government was going to go ahead and give me the equivalent as if I had the option, it wouldn't do me any good.

Unless of course they go by the time you bought it back and not the time you were in, I'd be okay with that extra 10k 8-)
Veteran - Someone who, at one point in his/her life, wrote a blank check made payable to "The United States of America" for any amount, up to and including their life

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Kato
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Re: Buyback.

Post by Kato »

skiehawk11 wrote:ArrieS, I apologize for taking this thread on a tangent. I agree with your original premise. Playing devil's advocate here. :)


And I apologize for being his accomplice.
Veteran - Someone who, at one point in his/her life, wrote a blank check made payable to "The United States of America" for any amount, up to and including their life

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ArrieS
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Re: Buyback.

Post by ArrieS »

nnylfa wrote:Why would the public support that? It negatively affects more people then it would benefit.


Or the fact people are paying taxes to support BAH which is a tax free benefits that service members get to treat as taxed income.

Is it fair that the majority of Americans only get a tax deduction on the interest they pay fro their mortgage, while a service member has their whole mortgage payment tax free, and get to make a tax deduction for additional money?

kato wrote:...there was no TSP option for me when I was in the military. Unless the government was going to go ahead and give me the equivalent as if I had the option, it wouldn't do me any good.


You bring up an interesting point. If you are FERS than yes you would get treated to a TSP Match for your additional contributions because Matching TSP contributions is a part of the FERS retirement.

However, if you are under CSRS than I would suggest you not be eligible because matching TSP contributions is not a part of that retirement plan.
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. - Pudd'nhead Wilson's Calendar

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Nero
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Joined: Thu Jan 03, 2013 4:17 pm

Re: Buyback.

Post by Nero »

I just bought my 7.5 yrs back and it cost me $2600 for wages and $2800 interest. I can now add that 7.5 to my current 20 yrs and when I hit my minimum retirement age of 56 I can bail out if I want. Also found out about FERS Supplement Social Security and that is estimated at about $750 per month until full Social Security kicks in at age 62. Now the question is.....do I retire and give up my GS-12 annual salary and live on about 60% less than now? Dunno but having "Options" is nice.

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RGEN
Posts: 228
Joined: Sun Jan 27, 2013 12:12 am

Re: Buyback.

Post by RGEN »

I find that if I am not making money I am spending money. I vote "stay".
RGEN

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Buyback.

Post by crondanet5 »

Yes it is nice to have that option available to you if you must use it for, say, health reasons. But as a FERS employee Social Security is an important part of your retirement income. If you stay in your GS-12 position another 11 years can you imagine the difference in retirement income you would receive? Your quality of retired life would be way better and what would your TSP account balance look like? Stay.

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Kato
Posts: 49
Joined: Mon Jun 01, 2015 8:31 am

Re: Buyback.

Post by Kato »

I agree with RGEN and crondanet5, definitely stay. If your health will allow it that is. As long as you can work and the closer you can get to your full retirement age, the better your financials will be when you do retire.
Veteran - Someone who, at one point in his/her life, wrote a blank check made payable to "The United States of America" for any amount, up to and including their life

Danno
Posts: 10
Joined: Fri Jan 06, 2017 8:53 pm

Re: Buyback.

Post by Danno »

Bought back my 9 years a while back. Best thing I ever did!

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marine234
Posts: 54
Joined: Wed Nov 04, 2015 1:01 pm

Re: Buyback.

Post by marine234 »

Be interesting to see what happens with the possible upcoming changes to the FER's retirement plan. Looks like it will possibly effect anyone with less than 25 years and will greatly effect those with less than 5 years if the President goes with it. Might be a lot of changes coming to Federal employees. time will tell.

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galveston1
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Joined: Tue Aug 16, 2016 5:29 pm

Re: Buyback.

Post by galveston1 »

marine234 wrote:Be interesting to see what happens with the possible upcoming changes to the FER's retirement plan. Looks like it will possibly effect anyone with less than 25 years and will greatly effect those with less than 5 years if the President goes with it. Might be a lot of changes coming to Federal employees. time will tell.


I'm watching it closely. Even though I have about 34 years in FERS including the time I bought back from my active duty, this all makes me nervous. I still have 3 years before I'm eligible to retire at 56.
In investing, what is comfortable is rarely profitable

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maui21ice
Posts: 242
Joined: Thu Dec 05, 2013 8:45 pm

Re: Buyback.

Post by maui21ice »

I went from Active duty military (4 years) to federal orison work and was able to buy back my 4 military years within 2 1/2 years. I paid $50 a paycheck and I think overall owed $2985. So I definitely feel paying back that 3% of my military earnings was a small price to pay to gain back those years on the long run. Glad I avoided paying back the interest as well!

Best of luck to those making the decision to knock this out early in their careers if able to!

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Aitrus
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Re: Buyback.

Post by Aitrus »

I got off of active duty after 10 years of service and into a GS job. I bought back all 10 years, to the tune of about $4,700k. Now the civil service calculations show me working in my position since I was 18. Definitely worth it!
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