10% pay cut to go from contractor to govie? (2015, health insurance)

[Gzagenius]

So it sounds like 4.4% being taken out of my paycheck if post-tax and essentially goes into a black hole? I don't reap the benefits until retirement. What happens to all that money contributed if I leave the federal service after a few years? I imagine the TSP portion can be kept or rolled over, but what about the FERS-FRAE portion? I'm getting confused.

[Carlingtonian]

You're welcome.

[airjay75]

Originally Posted by Gzagenius

So it sounds like 4.4% being taken out of my paycheck if post-tax and essentially goes into a black hole? I don't reap the benefits until retirement. What happens to all that money contributed if I leave the federal service after a few years? I imagine the TSP portion can be kept or rolled over, but what about the FERS-FRAE portion? I'm getting confused.

I wouldn't say the money goes into a black hole - I believe it is actually invested primarily in government securities specially issued for purposes of the FERS pension system. Unlike other pension systems, it is not allowed to be used for other government spending. But, no, you don't reap the benefits until retirement. If you leave federal service before becoming eligible for retirement, you can have your contributions returned to you. Of course, if you stayed at least 5 years, your pension would have vested and it would probably be better to just collect the pension once you retire since they're not going to be giving you the amounts the government paid for you.

[gomason]

I recently had a TSP account returned to me in a lump sum check. They automatically withhold 20% of it for taxes.

[Old Guard]

Originally Posted by airjay75

Personally, I put more faith in the stock and bond markets than I do our Congressional leaders -

Originally Posted by Carlingtonian

Amen to that.

I thought "Wall Street" was the bad guy? I need to keep up on my evil rankings.

[ChristineVA]

Originally Posted by gomason

I recently had a TSP account returned to me in a lump sum check. They automatically withhold 20% of it for taxes.

The poster was asking about the FERS annuity portion, though. The TSP is returnable. FERS annuity contributions are different. The 4.4% contribution is nothing to take likely, especially after already taking a cut in pay.

[lqda4]

OP,

Take the job. 2 years terms is still better than possibility of losing your current contracted job (and could be lower pay as you pointed out). You can start looking for another job once you reach your first year anniversary. Get your foot in the door - other opportunities will come.

[Gzagenius]

Originally Posted by ChristineVA

The poster was asking about the FERS annuity portion, though. The TSP is returnable. FERS annuity contributions are different. The 4.4% contribution is nothing to take likely, especially after already taking a cut in pay.

Thanks, Christine. Yea, I'm not taking the 4.4% contribution lightly. 4.4% immediately taken out of my paycheck seems like a lot.

Now I'm getting word that the prospects of getting my contract renewed is looking good, but it would still be a 1 year contract then another re-compete.

[ameridreamNoT]

A GS position is considered an opportunity of a lifetime, your loss if you don't take it. Two years of GS position is good, and if they get you to another year, you're vested in your TSP as well as can transfer to other GS positions within the Fed. 10% is not significant of a difference in salary and you can climb up pretty quickly with two more steps in to years.

[kiplingif]

Originally Posted by airjay75

I wouldn't say the money goes into a black hole - I believe it is actually invested primarily in government securities specially issued for purposes of the FERS pension system. Unlike other pension systems, it is not allowed to be used for other government spending. But, no, you don't reap the benefits until retirement. If you leave federal service before becoming eligible for retirement, you can have your contributions returned to you. Of course, if you stayed at least 5 years, your pension would have vested and it would probably be better to just collect the pension once you retire since they're not going to be giving you the amounts the government paid for you.

Is it 3 years to vest for TSP, or is that 5 also?

Goodness, this stuff gets complicated fast. So if I quit my federal job tomorrow (I have less than 5 years in), all the withdrawals for my FERS would be returned?

Also, this pension seems rather awful. I pay in 3.1% of my income for 30+ years only to get back 1% or 1.1% back per year of service? It seems I'd have to live quite a long time in retirement to make that initial investment back.