For a number of federal employees and retirees alike, there are two important deadlines that are just around the corner this spring.
The first of these is for employees and retirees born between July 1st, 1949 and December 31st, 1949, specifically individuals who own traditional IRAs and/or former qualified retirement plan (401(k), 403(b), or 457 retirement plans) participants.
April 1st, 2022 is the deadline for retirees and federal employees to take their first required minimum distribution (RMD) out of their traditional IRAs and/or any of qualified retirement plans they might have once participated in.
This date follows the passage of the SECURE Act, which went into effect on January 1st, 2020. The SECURE Act states that any individual born after June 30th, 1949 who also owns a traditional IRA and/or was a qualified retirement participant must take their first RMD no later than April 1st following the year they reach age 72.
Important to note: The Thrift Savings Plan (TSP) is not included in the list of qualified retirement plans subject to the RMD deadlines. This is due to the fact that while typically TSP is subject to RMD rules and RMD deadlines, the TSP will never allow a TSP participant to miss an RMD deadline.
This is because the TSP would have sent the TSP participant (or directly deposited) a check for the RMD amount within one month of the deadline. TSP works for you.
The second deadline is March 31st, 2022 and will be important for any federal retiree past age 65 who has not enrolled in Medicare Part B when first eligible to do so. March 31st, 2022 is the end of Medicare’s General Enrollment Period (GEP) which began on January 1st, 2022. Any person eligible to enroll in Medicare may do so during a GEP.
The majority of federal retirees enroll in Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) in their initial enrollment period (IEP). This is a seven-month period that begins three months before the month an individual reaches age 65. Moreover, it stops at the end of the third month after the month the individual becomes age 65. However, not every federal retiree signs up for Medicare during his or her IEP for a few reasons explained below.
Luckily, the federal retirees that miss their seven-month IEP Medicare enrollment window can simply enroll during a GEP. The current GEP started January 1st, 2022 and will stop on March 31st, 2022. Individuals who enroll in Medicare during the GEP, Medicare Part A and Medicare Part B coverage is effective beginning on July 1st, 2022.
It is important to note that federal employees who enrolled in Medicare Part B in the GEP could be subject to late enrollment penalties, unless they qualify for an exception, for example, coverage under a workplace group health insurance plan (such as the Federal Employees Health Benefits health insurance plan).
Remember: There is no late enrollment penalty for Medicare Part A because practically all individuals do not pay a monthly premium for Medicare Part A. There is however a late enrollment penalty for Medicare Part B, which is equal to 10 percent for each full 12-month period without the Medicare Part B coverage, that could have begun earlier.
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