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Rose Fleet
GSA Inc., Legislative and Policy, Chair |
OTHER INFORMATION |
FEDERAL NEWS
2003 Pay Raise
Still Unsettled:
Congress hopes to make a final decision soon on whether the 2003 federal pay
raise will remain the 3.1 percent across-the-board amount, with no increase in
locality pay, that took effect by default this month or whether to boost it by
an additional percentage point, with the additional amount to be divided up as
locality pay. Leaders are hoping to reach a resolution before the first week of
February, when the budget cycle for the next fiscal year is to start.
Pay
Continuation for Activated Employees Proposed: Legislation
(HR-217) has been offered in the House by Rep. Robert Wexler, D-Fla., to
maintain the salaries of federal employees who are activated for National Guard
or Reserve military service, a reintroduction of a bill that was offered last
year but that did not progress through the legislative process. Currently,
activated employees receive only their military pay, which in many cases is much
lower than what they receive as federal workers. The bill would make the
combined military and civilian pay equal to an individual’s regular salary.
ARMED FORCES
PERSONNEL AND RETIREES: You can sign up for FREE weekly email
delivery of Armed Forces News, the free weekly email newsletter for armed forces
personnel & retirees. Every week, it will be automatically emailed to your home
or office (or both!). Simply go to:
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Valuable resource of information on benefits, promotions, insurance, TRICARE,
etc.
Scholarships
Available to Help Feds with Tuition:
Applications for the 2003-2004 Federal Employee Education and
Assistance college scholarship program are now available. FEEA, a 17-year-old
nonprofit organization that helps federal employees and their families in need,
provides annual scholarships to help federal employees or their dependents pay
for college tuition. Scholarships range from $300 to $1,500 per student,
depending on the amount of federal employee donations received by FEEA through
the Combined Federal Campaign.Applicants can be high school seniors, full-time
college students or graduate students with a minimum 3.0 grade point average.
Federal employee applicants may be part-time students, but must have at least
three years of experience as a civilian federal employee or postal worker.
Potential applicants can find more information and download an application at
FEEA's Web site http://www.feea.org/. Applications must be postmarked by March
28, and awards will be announced in August in time for the start of the academic
year. To receive an application by mail, send a self-addressed, stamped
business-size envelope to: FEEA Scholarships 8441 W. Bowles Ave., Suite 200
Littleton, Colorado, 80123-9501.
Troops Get
Some Income Tax Relief for Combat Zone Service:
Depending upon rank, eligible service members can exclude from
federal income tax either all or some of their active duty pay -- and certain
other pays -- earned in any month during service in a designated combat zone.
According to the Internal Revenue Service's Armed Forces' Tax Guide for 2002, "a
combat zone is any area the President of the United States designates by
Executive Order as an area in which the U.S. Armed Forces are engaging or have
engaged in combat." Current combat zones are Afghanistan, specified parts
of the Kosovo area and the Persian Gulf region. The tax guide defines the
qualifying areas. Some members providing direct support for military operations
within a designated combat zone or qualified hazardous duty area may also be
eligible for income tax exclusions. While military members can use the tax
guide in preparing their 2002 federal tax returns, those who have specific
questions about designated combat zones should contact their unit personnel or
pay officials or unit tax assistance officer.
LEGISLATION PASSED
Senate
S. 704
By Mrs. Collins - to increase the amount of the death gratuity
payable with respect to deceased members of the Armed Forces
S. 711
By Mr. McCain - Selected Reserve Bonus
Delay Alleviation to alleviate delay in the payment of the Selected
Reserve reenlistment bonus to members of Selected Reserve who are mobilized.
S. 712
By Mr. McCain - to provide Survivor Benefit Plan annuities for
surviving spouses of Reserves not eligible for retirement who die from a cause
incurred or aggravated while on inactive-duty training
S. 718 By Mr. McCain - Troops Phone
Home Free Act of 2003 monthly allotment of free telephone calling time to
members of the United States armed forces stationed outside the United States
who are directly supporting military operations in Iraq or Afghanistan
Tax Fairness Act Nears
Completion – UPDATE: Both
the Senate and the House have passed similar versions of the Armed Forces Tax
Fairness Act of 2003. Because of minor differences between the two bills, they
must be reconciled in a joint House-Senate conference before a combined bill can
be sent to the President. Under the measures, a home owner transferred by
military orders or ordered into government quarters would have more than five
years to meet the two-year residency requirement for a capital-gains tax
exclusion on home-sale profits. The bills also would provide a tax deduction
for Reservist and Guard expenses for overnight travel related to drills, and
would raise the tax exemption for active-duty death gratuities from the existing
$3,000 exemption.
Get Professional Investment
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consultation to our readers regarding your investment portfolio and retirement
planning. These questions could range from very simple to extremely
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team specifically for armed forces readers and are fully prepared to answer some
of most important questions regarding Thrift Savings Plan Allocations and
Alternatives, Analysis of Taking a Pension/Annuity Versus an IRA Rollover, TSP
Distribution Issues, How to Measure and Rate Your Portfolio Returns, How to
Efficiently Handle Your Estate Planning, etc. Whether nearing retirement or are
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in the upper left hand corner of the page. Smith Barney's professional
associates will review your question and email you back a detailed answer to
your investment or portfolio
question/problem.
Airline Luggage Weight
Limits Changed: Northwest Airlines, American Airlines, United Airlines and
Delta Airlines have changed their checked baggage policy concerning weight
limits and excess charges for luggage on domestic flights. Continental Airlines
also has announced it will make similar changes on April 15. The carriers will
still accept luggage up to 100 pounds per piece but will charge significant fees
for luggage weighing in the upper limits. Most airlines allow two pieces of
luggage, 50 pounds maximum each, to be checked free of charge. Bags exceeding 50
pounds but less than 70 pounds will be assessed an excess-baggage fee of around
$25 per bag. Bags between 70 and 100 pounds will be charged about $80 per bag.
Waivers are available to military members on official orders, including active
duty, Guard, Reserve and Coast Guard. The waivers do not apply to family members
or to Defense Department civilians.
Partial Tax
Exemption Okayed For Home Sales:
Under the law, service members who sell a home must have resided
in it for at least two years out of the previous five to qualify for a capital
gains tax exemption (up to $250,000 for an individual and $500,000 for a
couple). However, an IRS regulation of Dec. 24 allows members and others who are
transferred 50 miles or more from their residence before reaching the two-year
threshold to qualify for prorated exemptions. The amount will be based on how
many months or days of the two-year requirement have been met. For example, one
year of residence would merit 50 percent of the tax exemption, which would mean
an exemption of up to $125,000 for an individual and $250,000 for a couple.
Space-A Travel:
DoD begins this month to test the expansion of Space-A privileges for
dependents traveling within CONUS. Under the
year-long test:
Dependents of active duty and retired military
people will be able to travel Space-A
aboard military flights in CONUS when accompanied by
their sponsors.
Dependents will assume the same category of
travel as their sponsors.
Retirees may sign up for the test program 60
days in advance.
Active duty people must be in leave or pass
status to register for Space-A travel, remain in a leave or pass status while
awaiting travel and be in a leave or pass
status the entire period of travel.
The test runs through April 31, 2004.
Jobless Benefits Measure First Bill Cleared in 108th
Congress: The House cleared the first bill of the 108th Congress, a measure
that would provide a 13-week extension of unemployment benefits. President Bush
is expected to sign the bill today. The bill would provide 13 weeks of
federally funded benefits, in addition to 26 weeks of state assistance, to
laid-off workers who apply for the extra aide by the end of May.
* New
Contracting Policies Draw Opposition. The revisions to the
government's contracting-out policies under Office of Management and Budget
Circular A-76 have drawn opposition from several directions, including suits
filed separately by the two largest federal employee
unions, the American Federation of Government Employees and the National
Treasury Employees Union. Meanwhile, legislative proposals are pending to slow
down the contracting-out programs at agencies including the Agriculture and
Interior departments, and no action has
been taken on a Veterans Affairs department request for funds needed to conduct
job competitions there. In its letter to Congress on possible restrictions
on contracting-out, Office of Management and Budget director Clay Johnson III
said: "Despite the claims being made by
some about the initiative, the goal of competitive sourcing is not to get rid of
federal employees. Nor is it designed to give work to the private sector. To the
contrary, we want to attract, develop and retain talented people to work in the
government.
* Premium Conversion Measure Moves. The House civil service
subcommittee has cleared legislation (HR-1231) to allow federal retirees to
participate in the "premium conversion" arrangement that allows active employees
to pay Federal Employees Health Benefits program
premiums with pre-tax money. The measure now moves to the full Government Reform
Committee, where prospects also are
considered good since the chairman, Rep. Tom Davis, R-Va., is the bill's main
sponsor. After that, however, prospects
for the bill are much more doubtful, since it then will be sent to the House
Ways and Means Committee, which has proved
to be the measure's graveyard since premium conversion for employees, but not
retirees, was made available nearly three years ago.
* Prescription
Drug Measure No Panacea. Although the House has passed a bill
(HR-2631) to protect retiree prescription drug benefits, the measure does not
provide as wide a protection as some retirees apparently are hoping. The measure
specifies that prescription drug
coverage for retirees must remain the same as that for active employees. The
provision is a reaction to concern that once a prescription drug benefit is
created in Medicare, employers including the federal government will cut back on
prescription drug coverage for their retirees. The
House-passed bill in effects assures that there will be no current employee drug
plan as opposed to a retired employee plan, according to chief sponsor Rep. Tom
Davis, R-Va. A counterpart bill is pending in the Senate (S-1369).
* Retirement
Crediting Guidance Issued. The Office of Personnel Management has sent
guidance to agencies regarding employees who perform active military duty while
in a leave without pay status who receive civilian pay--for example by using
military leave or annual leave--
subject to retirement deductions during their active military duty. When those
employees return to work and apply to pay a military deposit so that the time is
credited toward their retirement benefits, they will only owe a deposit for the
period of military duty not covered by civilian pay and retirement deductions,
OPM said. Employees who receive civilian pay during active military duty from
which retirement deductions were withheld must include
documentation of their civilian pay with their application to pay the military
deposit, it added.
1. Major Breakthrough on Concurrent Receipt on
Oct. 16, House Majority Whip Roy Blunt, R-Mo., Armed Services Committee Chairman
Duncan Hunter, R-Calif., and Veterans Affairs Committee Chairman Chris Smith, R-N.J.,
announced a final agreement on concurrent receipt with Senate
leaders and the White House. Details:
Full concurrent receipt for military retirees who are rated 50 percent or more
disabled by the VA will be phased-in over a period of 10 years beginning Jan. 1,
2004.
Combat Related Special Compensation will be expanded, effective Jan. 1, 2004, to
include all retirees with combat and combat-related disabilities regardless of
percentage of disability.
In both cases, Guard and Reserve retirees, including those with less than 7,200
retirement points, will be eligible.
All provisions of the agreement will be part of the fiscal 2004 Defense
authorization bill.
2. COLA and Medicare
Adjustments Begin Jan. 1. Effective Jan. 1, 2004, cost of living
adjustments of 2.1 percent will kick in for Social Security payments, military
and federal retired pay, VA disability compensation and SBP annuities. This will
mean $19 more per month for an average
Social Security retiree, or a rise from $903 monthly to $922 for an individual,
and from $1,492 monthly to $1,523 for a married couple. Meanwhile, the premium
for Medicare Part B (Medical Insurance) will jump 13.5 percent, for a $7.90
monthly hike to $66.60. Because military retirees and spouses
must be enrolled in Medicare Part B to be eligible for Tricare for Life, this
represents an increase in the cost of participating in TFL.
Military Family Tax Relief Act
of 2003 - Legislation signed by President Bush on Veterans Day increases the
death gratuity payment to $12,000 and provides that the full payment is
tax-free.
That portion of the Military Family Tax Relief Act of 2003 is retroactive to
Sept. 10, 2001, to provide for service members who died in the terrorist attacks
the following day and in the ongoing global war on terror, said Army Lt. Col.
Janet Fenton, director, Armed Forces Tax Council.
"If you are killed on active duty, regardless of whether you're in theater, or
in a training accident or die from disease, your family receives $12,000 death
gratuity that is not taxed," she added. "And that's a big change. In addition
any future increases to the death gratuity will remain tax free."
The death gratuity has been $6,000 since 1991, with half of it being taxed, said
the director. "It just didn't seem to be fair for the military family who was
left grieving for their service member to get hit with a tax bill," she added.
Capital gain exclusion for home sales is one of the most common areas people
were looking for tax relief in, said Fenton. "This act will allow members to
suspend the period of time which they have to sell their home and take the tax
exclusion so they won't have to pay that capital gains," said Fenton. "It's
retroactive to 1997 so military members who have sold their homes since 1997
have one year from Nov. 11, 2003, to request a refund for any tax they did
pay."
Since 1997, when the law was previously changed, if service members who owned a
home got reassigned more than 50 miles from that home or was ordered to move on
post, they were no longer able to roll over the gain from that sale to the next
home they purchased.
Also since 1997 individuals could exclude up to $250,000 ($500,000 for married
couples) of gain from the sale of a home if they resided in the home for two of
the five years preceding the sale. Under this act military and Foreign Service
personnel can suspend (for up to 10 years) the time transferred away from home
on official extended duty for purposes of applying the five-year portion of the
two-out-of-five-year rule.
The 2003 act also includes above-the-line deduction for overnight travel
expenses of military reservists and National Guardsmen who have to travel more
than 100 miles to attend drills or meetings.
"The act allows for an above-the-line, which means you don't have to itemize
your taxes to take advantage of this deduction," said Fenton. She added that
service members will "be able to deduct unreimbursed travel expenses such as
lodging, 50 percent of meals and any transportation costs." This part of the act
is retroactive to Jan. 1, 2003.
When the tax code changed in 1986, it said any military benefit existing in
September 1986 would remain tax-free, said Fenton. However, it was always
unclear whether military child care was included in that, she added. "This act
merely makes it clear that those provisions of child care were intended to be
tax-free to military members."
The tax act also provides for extra tax-filing time for troops serving in
contingency operations. The internal revenue code allows service members who are
serving in combat zones or hazardous duty areas to have an extension of time -
usually 180 days from the time the person leaves the combat zone -- to file
taxes.
"A lot of military operations don't rise to the level of being declared by the
president as 'combat,'" said Fenton. "But there are several contingency
operations where service members are outside the continental United States."
The act also includes modifying eligibility criteria of tax-exempt veterans
organizations; tax-free treatment of homeowners' assistance program payments;
suspension of tax-exempt status for designated terrorist organizations; and
extension of victims' tax relief to astronauts who die on space missions.
House Studies SBP Changes:
The House armed services and budget committee staffs are considering ways to
improve the Survivor Benefit Plan. The Military Coalition, with some 34
veteran-oriented groups, has proposed a phase-out of the current 36 percent
reduction in SBP benefits that hits survivors at age 62. TMC also
wants to repeal the dollar-for-dollar offset in annuities for survivors who
receive dependency and indemnity compensation from the Department of Veterans
Affairs. In addition, it proposes ending premium payments this year instead of
in 2008 for retirees who have paid for 30 years or more. And TMC would allow SBP
payments for active-duty deaths to be paid to children if a surviving spouse
remarries, as is done for retirees. A report is due to Congress in March from
the Defense Department and the General Accounting Office that will compare SBP
benefits with private sector and commercial life insurance death benefits.
Part B Late Enrollment Relief
Stalled:
The Medicare prescription drug act authorizes 90,000 Medicare-eligible military
retirees to enroll in Part B at any time during calendar year 2004 without a
late enrollment penalty, thus becoming eligible for Tricare for Life. However,
the only action taken by Centers for Medicare & Medicaid Services
as of Feb. 9 was to issue a policy document. Thus, Social Security offices are
still not enrolling eligible retirees or waiving late-enrollment penalties for
qualified members already enrolled.
Reserves Get Temporary Health
Benefits:
The Department of Defense is implementing the "2004 Temporary Reserve Health
Benefit Program" for eligible Reserve Component sponsors and their family
members. The program includes three TRICARE benefit provisions which will last
until Dec. 31, 2004. One authorizes TRICARE medical and dental coverage for
Reserve component sponsors activated for more than 30 days and their family
members. Eligibility begins either on the day the sponsor
receives delayed-effective date active duty orders or 90 days prior to the date
the active duty period begins, whichever is later. A second provision extends
TRICARE benefits to 180 days for Reserve component sponsors who separate from
active duty status during the period Nov. 6, 2003 through Dec. 31, 2004, and
their eligible family members. The third provision extends TRICARE medical
benefits to Reserve component sponsors and family members who are either
unemployed or employed but not eligible for employer-provided health coverage.
LES Changes to Reduce Identity
Theft:
Over the next several weeks, the Defense Finance and Accounting Service will
drop the first five digits of a person's Social Security number from all pay
statements and checks to guard against identity theft. Since individuals
affiliated with the military services are already accustomed to listing the last
four digits of their Social Security number on sign-in sheets and other forms,
the absence of the first five may largely go unnoticed. The Social Security
Administration also has taken the same step of eliminating the first five Social
Security digits its checks.
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