Nest eggs, health insurance and sick leave 'insurance'

A Reader Writes:

Can a federal employee over 50 contribute both to the maximum level of the Thrift Savings Plan (TSP) catch-up contribution limits and to the catch-up limits for a regular nongovernment individual retirement account (IRA), or are we limited to choosing one or the other?

Milt Replies:

Not only can you make these larger contributions to your TSP, but you can also contribute more to your IRA.

Just as with the workplace savings plans (like the TSP), beginning this year you can take advantage of the larger "catch-up" contribution limits on traditional and Roth IRAs for people over 50 created by the Economic Growth and Tax Relief Reconciliation Act of 2001.

Couple these two savings increases together, and the new limits can really make a big difference in your retirement nest egg.

A Reader Writes:

I have been in the federal workforce for 31 years. After returning to a job with my agency from the worker's compensation program in December 1997, the amount of my payment for health insurance has never shown up on my leave and earnings statement (LES). I have had health insurance with the same company for 30 years. I have made many inquiries about this over the years since returning to work and have been told that the situation was being corrected, but it would take some time.

The matter came to a head when we were contracted out and I was forced to take an early retirement (I am only 53 and did not want to retire). I told them I would not agree to an early retirement until my health insurance problem was resolved so I could take my health insurance into retirement.

Today I was told that my health insurance payment will be on my next LES or the one after the next and I will be getting a letter about paying all of the payments from 1997 to the present. The amount will be about $12,000. Do you think I should responsible for all of this amount? I did use the service at times.

Milt Replies:

If you are saying that you had health insurance coverage for a number of years and used your benefits, but you never had premiums withheld, then yes, you should pay the premiums that weren't withheld. Just make sure it's for the correct amount, because it sounds like the payroll department isn't very efficient.

A Reader Writes:

The major concern of most Federal Employee Retirement System employees is that sick leave accrued over many years of service will have no value when they retire due to the fact that it cannot be used toward retirement or for anything else.

I started working for the Postal Service in May 1984. At that time, the Postal Service was converting from the Civil Service Retirement System plan to the FERS plan. My question is: My pay stub shows an amount of money that is adding up each month. This is supposed to be a mandated 1 percent under the old system. Am I a part of the CSRS and FERS programs too?

Anyway, on the issue of sick leave, I hope that at least we will be able to use some of it (25 percent to 50 percent) toward retirement in the future.

Your point about life insurance and sick leave is invalid ["Saving up sick leave, and more"]. I would be able to cash in a life insurance policy after 20 years for cash! At this point, with sick leave you receive zero!

Milt Replies:

As I've said before, sick leave is pure insurance with no cash value. If you get sick, your insurance (sick leave) pays off. If you're healthy, your insurance (sick leave) is there to protect you. Your comparison to a cash value life insurance policy isn't applicable. Compare sick leave to term life insurance. You can't cash that in!

And what's your complaint anyway? The government gives you free health insurance (sick leave) that you didn't pay a penny for, and you're grumbling!

As for your question, I can't tell which system you're in without additional information.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at milt.zall@verizon.net.