Can I still opt into the blended retirement system?
The blended retirement system, introduced in 2018, represents a significant change in the way federal employees can retire. This system combines the best features of the old defined benefit (DB) and the new defined contribution (DC) retirement plans. If you’re a federal employee, you might be wondering if it’s still possible to opt into this system. Let’s delve into this topic and explore the current options available to you.
Understanding the Blended Retirement System
The blended retirement system allows federal employees to choose between two retirement plans: the traditional defined benefit plan and the new Thrift Savings Plan (TSP), which is a defined contribution plan. The traditional DB plan provides a guaranteed retirement benefit based on your salary and length of service, while the TSP is similar to a 401(k) plan, where you contribute a portion of your salary and it grows tax-deferred.
Eligibility for Opting into the Blended Retirement System
If you were a federal employee on or after January 1, 2018, and you are not yet covered by the blended retirement system, you may still have the opportunity to opt into it. However, there are specific eligibility requirements you must meet:
1. You must be a federal employee who was not covered by the DB plan before January 1, 2018.
2. You must have at least five years of civilian service before your retirement eligibility date.
3. You must have not already opted into the blended retirement system.
How to Opt into the Blended Retirement System
If you meet the eligibility requirements, you can opt into the blended retirement system by completing and submitting Form BRS-1 to your agency. This form must be submitted within the first 120 days of your employment. It’s essential to consult with your agency’s human resources department or a retirement benefits specialist to ensure you understand the implications of this decision.
Considerations Before Opting into the Blended Retirement System
Before deciding to opt into the blended retirement system, consider the following factors:
1. Your retirement benefit will be a combination of the DB and TSP benefits, which may be less than what you would receive under the traditional DB plan.
2. The TSP offers investment options, but you are responsible for managing your investments and ensuring they align with your retirement goals.
3. The blended retirement system may provide more flexibility in terms of when you can retire, as you have the option to choose between the DB and TSP benefits.
Conclusion
In conclusion, if you’re a federal employee who meets the eligibility requirements, you can still opt into the blended retirement system. It’s crucial to weigh the pros and cons before making this decision, as it will impact your retirement benefits. Consult with your agency’s resources to ensure you understand the implications and make an informed choice.
