Feds see paychecks shrink with payroll tax hike

By Kellie Lunney ; January 4, 2013

Federal employees will see less money in their first 2013 paycheck because of the end of the payroll tax holiday.

The payroll tax holiday officially expired on Jan.1, and Congress did not renew it as part of the final compromise on the fiscal cliff. The government reduced the payroll tax funding Social Security for individuals from a rate of 6.2 percent to 4.2 percent in 2010 and 2011 to help stimulate the economy. For individuals, the rate has now reverted to 6.2 percent of annual wages up to $113,700, which means most Americans will see their paychecks shrink this year. Employers and individuals each pay 6.2 percent, with the combined 12.4 percent going to finance Social Security. Continue reading “Feds see paychecks shrink with payroll tax hike”

A Look Back

Retirement PlanningRetirement Planning

Advice on how to prepare for life after government.

A Look Back

With all of this talk of cliffs and cuts and chains, it’s no wonder some federal employees are beginning to panic. While it’s still not clear what changes might come in the federal retirement world in 2013 as Congress and the White House seek to seal a deficit reduction deal, I thought we could at least take a look back at some of the things that happened in 2012.

Let’s start at the beginning, almost a year ago.

January

Civil Service Retirement System retirees (including survivor annuitants), Social Security recipients and military retirees received a 3.6 percent cost-of-living adjustment. CSRS retirees whose benefits began between Jan. 1, 2011 and Nov. 30, 2011, received a portion of this COLA based on the number of months they were retired before Dec. 1, 2011.

Federal Employees Retirement System retirees, eligible survivor annuitants and members of special groups such as law enforcement officers and firefighters received a “diet COLA” of 2.6 percent. FERS retirees who were entitled to the COLA, but whose benefits began between Jan. 1, 2011 and Nov. 30, 2011, received a pro-rated COLA. Continue reading “A Look Back”