We are in that time of year when Congress, the White House and others announce numbers for the next year. The number in which current employees are most interested was just announced – the “comparability increase” (aka your raise) will be about 2%. Let’s see how this raise compares with other numbers.
The FEHBP premium rates went up quite a bit more than 2%. The average increase was in the vicinity of 8% and the big dog, Blue Cross/Blue Shield delivered increases of up to 15% in its Standard Option, self-only plan.
Your life insurance premiums will likely go up as well. FEGLI basic life is based on your salary ($.15 per $1000 of coverage per pay period) so, if your salary increased, so will your basic FEGLI premium. In addition, if you had a nickel or dime birthday (i.e., advanced to an age that ends with a 5 or a 0) the premium for any optional FEGLI you have will go up. The older you are, the greater the increase will be.
If you are retired, you will receive no cost of living adjustment.
If you are planning for your retirement, you can’t put any more into either the TSP or an IRA than you could in 2009. The only exception to this is for those who will turn 50 in 2010. If you turn 50 any time next year, you become eligible to make “catch-up” contributions of $5,500 to the TSP and $1,000 to an IRA. You may begin the contributions on January 1st regardless of the date of your 50th birthday.
Speaking of turning 50, you will begin getting requests to join AARP and invitations to “free” lunch and dinner seminars that discuss financial planning for retirement.
The income limits for deducting your contributions to a traditional IRA and contributing to a Roth IRA went up in some instances. The 2010 limits are:
For deducting your contributions to a traditional IRA:
| Single filing status | Joint filing status (if your spouse is covered by a retirement plan at work) | Joint filing status (if your spouse is not covered by a retirement plan at work) |
| Full deduction if income is below $56,000 | Full deduction if income is below $89,000 | Full deduction if income is below $167,000 |
| Partial deduction if income is between $56,000 and $66,000 | Partial deduction if income is between $89,000 and $109,000 | Partial deduction if income is between $167,000 and $177,000 |
| No deduction if income is over $66,000 | No deduction if income is over $109,000 | No deduction if income is over $177,000 |
For being able to contribute to a Roth IRA:
| Single filing status | Joint filing status |
| Full contribution if income is below $105,000 | Full contribution if income is below $167,000 |
| Partial contribution if income is between $105,000 and $120,000 | Partial contribution is income is between $167,000 and $177,000 |
| No contribution if income is over $$120,000 | No contribution if income is over $177,000 |
The amount of earnings out of which Social Security taxes are taken remains unchanged at $106,800. Medicare taxes are still taken out of all of our income, no matter how high.
The Social Security earnings tests were also unchanged. For those between age 62 and the year in which they reach their full retirement age, their SS benefit is reduced by $1 for every $2 their income exceeds $14,160. For those who are in the year in which they reach their full retirement age or beyond, the reduction is $1 for every $3 their income exceeds $37,680. The limits are prorated for the year in which recipients turn 62 and turn their full retirement age. That earnings test ($1 reduction in SS for every $3 of earned income above $37,680) will end with the month you reach your full retirement age.
One more SS change: a credit (also called a quarter of coverage) is now earned with $1120, rather than $1090.
Medicare has increased many of their premiums, copays, etc.
- The Part A deductible is now $1100 per benefit period; up from $1068
- The Part A co-pays have gone up from $267 to $275 for days 61 through 90 and from $535 to $550 for days 91 through 150
- The Part B premiums are frozen at $96.40 per month for those who were on Medicare in 2009. Otherwise they are $110.50. In both instances, individuals with higher earnings may end up paying higher premiums.
Not all agencies have announced 2010 changes.
Social Security hasn’t announced a few numbers. And, of course, notoriously slow OPM hasn’t announced any changes to items like interest rates, the FERS death benefit and others. However, this year OPM has a great excuse. Congress and the President dumped so many changes on them that the understaffed agency is doing all it can to get implementing regulations out.
