People leave jobs all the time, for various reasons. Those who work in the federal government are no different. As with any job move, you must think about health insurance, 401k, annual leave, etc. While leaving federal service requires you to think about these as well, there are a couple more things to consider. All the following apply if you leave before you are eligible to retire.
Health Insurance
You will get an automatic 31-day extension of your health insurance. After those 31 days, you can convert to an individual policy or continue coverage for 18 months under a temporary continuation of coverage (TCC). The cost for this varies, but it’s your share plus the government’s’ share plus a 2 percent administrative fee. In both situations, no physical is required and there’s no ban on pre-existing conditions.
Life Insurance
This can be converted into an individual policy, but can’t be a term policy and must have level premiums.
Pension
If you leave retirement funds on deposit, you will be entitled to a CSRS/FERS pension later if you have at least 5 years of federal service.
Annual Leave
Any annual leave, credit hour and comp time balance will be paid to you in a lump soon after you leave. The exception here is sick leave. It will do you no good unless you return to service, in which case it will be credited back to you.
TSP
When you leave federal service, you are not required to withdrawal from your Thrift Savings Plan. You are still allowed to make inter-fund transfers. You can also transfer your TSP to an IRA or an employer tax-deferred retirement plan. If you choose to transfer your funds, make sure it’s a direct transfer to avoid any withholding. Another thing to keep in mind is if you separate from service before the year you reach age 55 and you withdraw money from you TSP before the age of 59 ½, you will be subject to a 10 percent early withdrawal penalty plus taxes.
If you plan on leaving federal service, especially now with all the furlough and reduction-in-force talks, make sure that you understand how that will affect your benefits.
One great option to federal employees who are struggling with a disability is Federal Disability Retirement. This benefit allows you to maintain your federal benefits like health and life insurance and the ability to gain creditable years of service. Schedule a FREE consultation to learn more.
