OPM’s Shocking Letter to Some Annuitants

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By on March 7, 2017 in Retirement with 0 Comments

Image of a 3D couple with a torn edge in between them depicting a divorce situation

Going through a divorce can be extremely draining, both financially and emotionally. Once the divorce is finalized, getting your new financial house in order can be challenging and adjustments may need to be made.

Imagine fifteen years after your divorce getting a letter from OPM that you owe your ex-spouse $28,000 and you are going to begin paying it back immediately.

That’s exactly what happened to Fred Smith (name has been changed to protect privacy). Fred had retired eight years ago, and during January 2017 received a letter that OPM was going to adjust what is being paid to his ex-wife so that his FERS annuity supplement would be treated the same way as his FERS annuity.

Since this had not been paid he needed to pay back $28,398.96, to be withheld from his monthly annuity in 94 monthly installments of $300.00. The letter stated that he could request reconsideration of their decision within 30 days from the date of the letter. However, the money was withheld from his annuity payment in February, which was less than the 30 days.

Fred shared with me that he was already struggling financially and that this would put him over the edge. The sad thing is that this was so unexpected. Fred was not given any time to make adjustments to his lifestyle and finances.

Fred is not the only one affected. OPM has identified 595 annuitants that are currently receiving the FERS Annuity Supplement and are subject to OPM’s recent interpretation of Title 5 of the United States Code Section 8421(c).

But why now? Since the inception of FERS, OPM has not apportioned the FERS Supplement, unless the court order stated that a portion of the FERS Supplement was to be awarded to the former spouse. It is mind boggling that OPM made a “policy change” without any advance notice to annuitants being affected, nor was this change published in the Federal Register for comment.

I find it very disturbing the way this change was handled, and am saddened for the retirees being affected. The threat of cuts to the federal workforce sadly is continuing in retirement. Last year many retired feds saw virtually no increase in COLA, but had significant increase to their healthcare, and for those enrolled in the federal long term care program, faced premium increases as high as 120%. Those that are going to retroactively pay for a FERS Supplement that was not in their Divorce Degree is just wrong.

© 2019 Carol Schmidlin. All rights reserved. This article may not be reproduced without express written consent from Carol Schmidlin.

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About the Author

Carol Schmidlin, Certified Financial Fiduciary®, MRFC® is the President of Franklin Planning and has been advising clients on how to grow and preserve their wealth for 25 years. In addition to her financial planning practice, she is the founder of FedSavvy® Educational Solutions, which provides Financial and Retirement Literacy Programs for Federal Employees. She is passionate about helping families with all phases of Wealth Management and is a member of Ed Slott’s Master Elite IRA Advisor Group. Her practice maintains a home office in Sewell, NJ along with a satellite office in Washington, DC. Carol can be reached at (856) 401-1101.

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