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Federal employee retirement advisors discuss potential impacts of proposed “Trump” accounts for children. Get insights on retirement planning for federal employees.
What Federal Employee Retirement Experts are Advising Regarding “Trump” Savings Account (plus more Federal Retirement News)
It was recently announced from the White House that will be starting savings accounts for American babies born in 2025 or later with a “free” $1000 initial deposit. We’re going to look at how this affects financial planning for federal employees, what federal employee retirement experts are advising, and other FERS retirement news.
Federal Employee Retirement Planning: Strategy for “Trump” Newborn Accounts
Technically, these accounts are called MAGA accounts, with the acronym standing for “Money Accounts for Growth and Advancement.” And regardless of how you feel about the name, if you’re planning to have a baby in the near future or recently had a newborn child, it’s hard to ignore a $1000 investment deposit for your kid’s future. Let’s review the rules around eligibility, possible tax complications, and what financial planners for federal employees are advising when it comes to these new accounts.
Rules and Eligibility for New Child Investment Accounts from US Government
Here’s what is known about these MAGA accounts, every US citizen who has a child between 2025 and 2029 will be eligible to receive one with a starting balance of $1000. This can be invested in accordance with the parent’s wishes, but only in “eligible” investments like mutual funds. Outside cash, up to $5000 per year, can also be added to it, and another pre-tax amount up to $2500 can be contributed by the parents’ employer as a benefit. The funds can be withdrawn when the child reaches the age of 18, although it will be taxed as ordinary income. but it is unclear what exactly happens to the cash if the beneficiary passes away with an account balance.
Retirement Benefit Specialists Initial Take Regarding MAGA Accounts for Children
If you are a federal employee considering opening one of these accounts, the answer is probably yes. Take the $1000 and allow it to grow during your kid’s childhood. Should you add to this account instead of contributing to the TSP, a Roth IRA, or even a 529 college savings account? In almost all cases the answer no, not until is clear what type of taxes, such as capital gains tax, will be due at the time of withdrawal. For now, a Roth IRA, UTMA, or a 529 would likely be the best route for growing savings for your child’s future, both of which come with unique tax advantages. Need to discuss financial planning for you and your family? Meet with a Fed-Expert.
News Updates on Federal Employee Retirement and Benefits
As federal employees approach their retirement years, staying informed about the latest news regarding the federal employee retirement system is important regarding planning for retirement, particularly for those covered by FERS (Federal Employees Retirement System) and CSRS (Civil Service Retirement System). The Office of Personnel Management (OPM) has been actively updating guidelines on retirement eligibility and processing of retirement applications. For FERS employees, the retirement annuity is based on years of service and employee contributions. On top of that, there’s optional contributions to the Thrift Savings Plan (TSP), which can significantly enhance retirement savings.
Need help calculating your FERS annuity? Try the federal retirement calculator for those covered under FERS.
Different Types of Retirement from Federal Service in Play: DSR, VERA, and the Deferred Resignation Program
Other than the typical FERS retirement eligibility situations, there are three categories of retirement that are receiving significant attention during this first year of the second Trump administration. There’s the Discontinued Service Retirement (DSR) for those subject to a Reduction in Force (RIF), VERA offers for those who voluntarily accept an early retirement offer, and then completely unique to 2025 – there are those who are eligible for retirement that accepted the Deferred Resignation Offer from earlier this year. After retiring from federal service, it is crucial that federal employees understand their employee benefits, including the TSP, social security, and the CSRS or FERS annuity.
| Retirement Coverage | Eligibility – Period of Federal Civilian Employment, Service Years and Age | Special Retirement Notes |
| FERS – regular | MRA+30, 60+20. and 62 + Years | Normal requirements for an immediate unreduced pension |
| Discontinued Service Retirement (DSR) | 25 years at any age, 20 years of service at age 50 or older | For when involuntarily separated, FERS retirement system administrated by OPM |
| VERA/VSIP | 25 years at any age, retirement coverage begins also at 50 with 20 or more years of service | Accepting a Voluntary Early Retirement Authority offer with possible VSIP (voluntary separation incentive payment) – handled by agency. |
| Deferred Resignation Offer | The “Trump Buyout” offer does not affect retirement eligibility. But for employees who have an effective retirement date before the 9/30 or 12/31 deadline, the processing of your retirement application will override the resignation declaration | If immediate retirement is not option, contributions to FERS can be refunded. There are also deferred and postponed options if not eligible for immediate pension. |
Attend an online FERS seminar to learn more about Social Security Retirement Benefits, employees covered by FERS, and the Thrift Savings Plan (TSP).
Reach Out to Us!
If you have additional federal benefit questions, contact our team of Chartered Federal Employee Benefits Consultants (ChFEBC℠), CERTIFIED FINANCIAL PLANNER™ (CFP®), and Accredited Investment Fiduciary (AIF®). At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars through our online schedule. Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting with us.
