Financial advisor for federal employees: planning around FERS, the TSP, and FEHB

Federal retirement is not a generic 401(k) plan with a government logo. Most civilian employees hired since 1987 are covered by the Federal Employees Retirement System (FERS), which combines three sources of retirement income — a FERS Basic Benefit annuity, Social Security, and the Thrift Savings Plan (TSP) — and the rules for carrying health and life insurance into retirement sit right beside them. The decisions that matter most are about timing: when you are eligible to leave, what each leg of the stool pays, and which benefits you keep. This page covers what makes federal-employee finances different, what a federal-benefits-aware advisor actually handles, and how to choose one.

This page is educational. It is not personalized investment, tax, legal, or insurance advice. Your agency benefits officer, the Office of Personnel Management (OPM), and TSP.gov are the sources of truth for your own records. Valora is not arranging advisor matches or introductions at this time.

Why federal-employee finances are different

Federal planning coordinates a defined-benefit annuity, Social Security, and a defined-contribution plan with its own rules. The income sources need not begin at the same time.

The annuity is formula-driven. OPM computes the FERS basic annuity from your length of creditable service and your "high-3" — the highest average basic pay earned in any three consecutive years, usually your final three (OPM computation). For most non-disability retirements the formula is 1% of high-3 per year of service, or 1.1% if you separate at 62 or older with at least 20 years. High-3 counts basic pay (including items like shift rates subject to retirement deductions) but not overtime or bonuses. Special-provision employees — air traffic controllers, firefighters, law enforcement officers and a few others — use a different formula and should rely on OPM and agency materials for their own figures.

Basic pay affects two retirement components. Because TSP agency contributions are percentages of basic pay and high-3 is built from basic pay, a promotion, step increase, or move between locality pay areas can affect both your TSP deposits and your eventual annuity. Locality payments vary by pay area under the General Schedule; OPM's pay tables are the place to confirm current figures. This page does not reprint locality tables or invent salary examples.

Benefits continuity has its own clock. Health (FEHB) and life (FEGLI) coverage into retirement depend on annuity timing, coverage history, and other continuation requirements, not just on reaching retirement age. A late-career job change or coverage gap can affect eligibility.

Cost-of-living increases are not automatic for everyone. OPM notes that most regular FERS retirees under 62 are not eligible for annuity cost-of-living adjustments until 62; exceptions include special-provision retirees, certain disability annuitants, and the CSRS component of a mixed annuity (OPM types of retirement). That shapes how a household bridges the years between leaving and 62.

What a federal-employee-focused advisor actually handles

Beyond portfolio construction, expect coordination on:

• TSP contribution pacing — reviewing the 5% contribution needed for the full agency match each pay period. If employee contributions stop early because you reach your applicable annual limit, later matching can be missed; eligible catch-up contributions can still receive matching. Review full-year pacing with payroll.
• Traditional versus Roth TSP education — how today's bracket compares with a realistic retirement tax picture, the new mandatory-Roth catch-up rule for higher earners, and whether the TSP's Roth in-plan conversion feature fits (with a tax professional: the taxable portion is income, taxes must come from outside funds, and conversions are irreversible and subject to TSP eligibility and minimum-balance rules).
• Retirement-timing scenarios — MRA+10 versus waiting for 60 with 20 years or 62 with 5; immediate versus deferred retirement; how postponing an MRA+10 annuity differs from deferred retirement for income and insurance eligibility.
• FEHB and FEGLI continuity checks — confirming annuity timing, required coverage history, and other continuation conditions with your agency before a retirement date is set; FEGLI optional coverage has additional requirements.
• Social Security coordination — FERS is designed with Social Security as one leg; claiming age interacts with the annuity and any FERS annuity supplement. SSA.gov holds your earnings record and estimates.
• Survivor-benefit elections — the annuity reduction for a survivor benefit and the household tradeoff behind it.
• Prior military service credit — working alongside your agency benefits officer on whether a service-credit deposit makes sense, using OPM's rules rather than rules of thumb.
• Coordination with a CPA for your return and an estate attorney for beneficiary and estate documents. An advisor connects the threads; they do not replace your agency benefits officer, OPM, or the TSP recordkeeper.

Career stages: mid-career, approaching MRA, and retirement

Mid-career

The mid-career plan is mostly about not leaving agency money or tax flexibility on the table.

• Capture the full match. TSP.gov's own table shows that contributing 5% of basic pay brings total contributions to 10% (your 5% plus the automatic 1% and a 4% match). Contributing less than 5% means a smaller match; stopping contributions stops matching but not the automatic 1%.
• Know your vesting. You are immediately vested in your own contributions and agency matching contributions. The automatic 1% and its earnings generally require three years of civilian service to keep if you separate — two years for certain positions (TSP Bulletin 15-1).
• Revisit traditional versus Roth as pay rises and household taxes change.
• Use Open Season deliberately. FEHB plan choice affects cash flow now and the coverage you will carry later.
• Note any prior uniformed service. Service credit rules live on OPM's FERS information hub (Military Retired Pay and Service Credit). Veterans moving into civilian federal work face enough distinct decisions that Valora plans a separate military-to-civilian transition page; this page does not estimate deposit costs.

Approaching MRA and retirement eligibility

OPM's minimum retirement age chart (eligibility):

If you were born	Your MRA is
Before 1948	55
1948	55 and 2 months
1949	55 and 4 months
1950	55 and 6 months
1951	55 and 8 months
1952	55 and 10 months
1953–1964	56
1965	56 and 2 months
1966	56 and 4 months
1967	56 and 6 months
1968	56 and 8 months
1969	56 and 10 months
1970 and after	57

Immediate retirement — a benefit that starts within 30 days of stopping work — is available at these age and service combinations:

Age	Years of service
62	5
60	20
MRA	30
MRA	10

At MRA with at least 10 but fewer than 30 years, OPM reduces the benefit 5% for each year under 62, unless you have 20 years and the benefit starts at 60 or later. OPM's computation page adds that postponing the annuity start date reduces or eliminates the age reduction.

Early retirement for qualifying involuntary separations or agency-authorized voluntary early retirement (VERA) is available at 50 with 20 years, or at any age with 25 years.

Deferred retirement is OPM's term for leaving federal service before you meet immediate-retirement requirements, with at least five years of creditable civilian service, and claiming the annuity later — at 62 with 5 years, or at MRA with 30 or 10 years (same MRA+10 reduction). Eligibility also requires that you did not take a refund of retirement deductions. A deferred annuity does not let you reenroll in FEHB or FEGLI on that basis. This differs from postponing an MRA+10 annuity when you already qualified at separation: if you met the continuation requirements, coverage may resume when that annuity begins, with a gap in between. Confirm your record before separating (OPM types of retirement). This uses OPM's term, not a separation-incentive program.

Disability retirement requires at least 18 months of FERS service plus specific medical and agency-accommodation conditions set out by OPM.

The FERS annuity supplement. OPM's CSRS and FERS Handbook, Chapter 51 describes a retiree annuity supplement paid until 62 to certain FERS employees who retire before 62 on an immediate annuity — an approximation of the Social Security value of FERS service. It is not available to MRA+10 retirees, deferred-annuity-only retirees, or disability retirees, and it can be reduced by outside earnings. That makes it a meaningful line in the "leave at MRA with 30" versus "MRA+10" comparison. Confirm current earnings-test figures with OPM in the year you retire.

Retirement

• Survivor elections. If you are married, OPM reduces your annuity for a survivor benefit unless your spouse consents to less: a 50% survivor benefit reduces the annuity by 10%; a 25% survivor benefit by 5% (OPM computation). That is a household insurance decision, not a paperwork default.
• TSP withdrawals and taxes. Traditional balances are taxed when withdrawn; qualified Roth withdrawals can be tax-free if IRS requirements are met. Later-life required distributions belong in the same plan — have a CPA confirm the rules for your birth year.
• Benefits that change. For an ordinary qualifying retirement, FSAFEDS coverage ends at retirement; dental and vision (FEDVIP) continue automatically if enrolled, with no five-year rule; long-term care (FLTCIP) coverage continues as long as premiums are paid (OPM).

The TSP: traditional versus Roth, and how the match works

How agency money arrives. For FERS participants, the agency contributes an amount equal to 1% of basic pay every pay period whether or not you contribute. Agency matching applies to the first 5% you contribute: dollar-for-dollar on the first 3%, 50 cents per dollar on the next 2%. Contribute 5% and the agency adds 4% in matching plus the automatic 1% — 5% total. Contributions above 5% are not matched (TSP.gov; 5 CFR 1600.19). Matching is calculated per pay period, so a pay period with no employee contribution earns no match.

2026 limits (TSP Bulletin 25-3, November 19, 2025):

Limit	2026	2025
Elective deferral (traditional + Roth combined)	$24,500	$23,500
Catch-up, ages 50–59 and 64+	$8,000	$7,500
Higher catch-up, ages 60–63	$11,250	$11,250
Annual additions (per employer, all sources excluding catch-up)	$72,000	$70,000

Agency automatic and matching contributions do not count against the elective deferral limit. The elective-deferral and catch-up limits apply across your civilian and uniformed-services TSP accounts, and deferrals to certain other employer plans may share those limits. The annual-additions limit is per employer and excludes catch-up contributions. Ask payroll or a tax professional about multiple-plan coordination (TSP contribution limits).

Front-loading and matching. If your employee contributions stop before the final pay period because you have reached your applicable annual limit, you can miss later matching. Eligible catch-up contributions can continue to receive matching. Review pacing across the full year with payroll (TSP contribution types; contribution limits). TSP.gov also flags the calendar year you turn 64, when the catch-up limit drops back to the regular amount and contribution pacing may need adjustment.

Traditional versus Roth. Both count toward the same elective deferral limit. Traditional contributions reduce taxable income now and are taxed on withdrawal; Roth contributions are taxed now, and qualified withdrawals can be tax-free. Agency contributions go to the traditional balance. The educational question is not which is "better" but which tax bill you would rather face — now, at your current bracket, or later, alongside your FERS annuity and Social Security, which are themselves taxable income streams for many retirees.

New in 2026: mandatory Roth catch-up for higher earners. Under SECURE 2.0 §603, starting January 1, 2026, if your prior-year FICA wages exceeded the IRS threshold — $150,000 for 2025 wages, adjusted annually — catch-up contributions must be Roth once your traditional contributions reach the $24,500 pre-tax maximum (TSP.gov; contribution limits). Only wages from TSP-eligible federal positions count, and your payroll office confirms whether the rule applies to you.

Also new: Roth in-plan conversions. Since January 28, 2026, eligible participants can convert vested traditional TSP money to Roth inside the plan through My Account, subject to the TSP's eligibility and minimum-balance rules (TSP.gov). The taxable portion of the conversion is income in that year; taxes must be paid from funds outside the TSP, and the conversion cannot be reversed. TSP itself strongly recommends consulting a tax advisor first — this is exactly the kind of decision to model, not to default into.

Fund choice in one sentence. The TSP offers five individual funds (G, F, C, S, I) and eleven Lifecycle (L) funds that blend them by target date (TSP Lifecycle funds). Which allocation fits you is a personal decision; this page does not recommend funds.

FEHB and FEGLI into retirement (educational)

FEHB. OPM says you are generally eligible to continue health coverage into retirement if both of these are true (OPM Guide Me):

1. You are entitled to retire on an immediate annuity under a civilian retirement system (OPM notes this includes FERS MRA+10 retirements); and
2. You have been continuously enrolled, or covered as a family member, in any FEHB plan for the five years of service immediately before your annuity starts — or for the full period since your first opportunity to enroll, if that is less than five years.

OPM notes some exceptions exist, and that TRICARE coverage can count toward the requirement if you are enrolled in an FEHB plan on the date you retire. A deferred annuity does not permit FEHB or FEGLI reenrollment. Postponed MRA+10 retirees who met continuation requirements may resume coverage when their annuity begins, with a gap in between. Confirm your record before separating; the FEHB Handbook Annuitants chapter explains the distinction.

FEGLI. Continuing Basic FEGLI generally requires an immediate annuity (beginning within 30 days), enrollment at retirement, no conversion to an individual policy, and coverage for the five years immediately preceding retirement or all periods it was available to you if shorter. Optional coverage requires eligibility for Basic plus its own coverage history and continuation requirements. Qualified postponed MRA+10 retirees may have coverage reinstated when their annuity begins (OPM FEGLI eligibility FAQ). Confirm your record and elections with your agency. Coverage levels and premiums after retirement involve elections described in the FEGLI Handbook; compare them with private term coverage and your household's actual need, ideally with a licensed insurance professional who is not selling you a replacement policy.

Postal employees and retirees should use OPM's Postal Service Health Benefits (PSHB) guidance for health coverage; this FEHB overview is not a substitute for those rules.

Dual-federal households. When both spouses are federal employees, decide deliberately which enrollment carries family FEHB coverage, how each spouse's coverage history supports the five-year rule, how two survivor elections interact, and how two TSPs and two annuities change the household's retirement tax bracket. Valora does not publish savings estimates for these choices — they depend on your records.

A note on CSRS

The Civil Service Retirement System covers a shrinking group of long-tenured employees; FERS replaced it for employees who first entered covered service on or after January 1, 1987 (OPM CSRS). CSRS employees generally pay no Social Security retirement tax on that service and receive no agency TSP contributions, though they may contribute to the TSP. Some employees who transferred to FERS have an annuity with both a FERS and a CSRS component. CSRS formulas are different, so do not apply FERS examples from this page to a CSRS record. One recent change worth knowing: the Social Security Fairness Act, signed January 5, 2025, ended the Windfall Elimination Provision and Government Pension Offset for benefits payable from January 2024 onward (SSA) — relevant for CSRS retirees and spouses whose Social Security benefits were previously reduced.

What to look for when choosing

Three filters can help assess fit and cost.

1. Fiduciary posture and clear pay. Ask whether the advisor acts as a fiduciary for this engagement, how they are paid (fee-only, commissions, hybrid), and get conflicts in writing. Moving TSP money out of the plan is a product decision with its own costs; ask how any recommendation to roll over compares with keeping the money in the TSP. Start with Investor.gov: How to Select an Investment Professional and the Form CRS hub.
2. Real federal-benefits fluency. Ask how many federal households they advise and press on specifics: MRA+10 reductions, the annuity supplement and its earnings test, FEHB five-year continuity, survivor-election math, and the 2026 Roth catch-up rule.
3. Records-first process. A useful first meeting works from your own documents — your leave and earnings statement, TSP statement, Social Security record, and an OPM or agency retirement estimate — not a product brochure.

Red flags: advice to move all TSP money out "because the TSP is too limited," with no cost comparison; omitting a comparison of TSP fees with proposed alternatives; guaranteed-income products pitched before your annuity estimate is in hand; inability to explain how stopping contributions at an applicable annual limit can lose later matching, including that eligible catch-up contributions can still receive matching; treating CSRS and FERS as the same system; and seminars that blur a benefits briefing with a sales pitch.

Questions to ask before you hire

• How do you get paid, and will you put fiduciary status and your total first-year cost in writing?
• How many federal-employee households do you advise, and across which career stages and agencies?
• How would you review full-year TSP contribution pacing, including matching on eligible catch-up contributions and any risk of contributions stopping at my applicable annual limit?
• Can you show MRA+10 versus waiting to 60 with 20 or 62 with 5, in an illustrative model built from my service history?
• How would you check my FEHB and FEGLI coverage history, annuity timing, and other continuation requirements before I set a retirement date?
• How do you work with my agency benefits officer and OPM's estimates rather than replacing them?
• If you would recommend moving money out of the TSP, how does the total cost compare with leaving it in?

The bottom line

Federal-employee finances are a timing problem with three moving parts: an annuity that depends on age, service, and high-3; a TSP whose match and tax choices reward steady attention; and health and life coverage with annuity-timing and coverage-history requirements. A records-based plan can help reduce mistakes such as missing later matching when contributions stop at the applicable annual limit, overlooking an MRA+10 reduction, or discovering an insurance gap after filing. Eligible catch-up contributions can still receive matching. Whether you hire help or build that checklist yourself, start years before your target date, and if you hire, hire for fiduciary posture, transparent fees, and real fluency in federal benefits.

Educational only. Not personalized advice. Valora does not arrange advisor matches or introductions at this time.