Pay and Benefits Watch: Getting ready to retire

Summertime is vacation time for many feds. The week you spend at the ocean may get you thinking of your post-retirement plans-moving to Key West to spend your days golfing and your evenings sipping frozen drinks at the beach-side bar.

Before you become a full-time Arnold Palmer, however, there are a few federal retirement-related administrative tasks you'll need to take care of.

The Office of Personnel Management has published a list of retirement responsibilities on its Web site at www.opm.gov/retire/html/faqs/faqs.htm. The list includes things you should do five years from retirement, one year before retirement, six months out and two months out.

At the five-year point, for example, you need to be covered under the federal health and insurance plans to carry them into retirement. One year out, OPM recommends making sure your personnel folder includes all the documentation necessary for retirement. You'll also want to make sure all the information in the folder is correct, such as the beginning and ending dates of employment and your designated beneficiaries.

Two months out, OPM recommends you pick the specific date of your retirement. You'll likely have already done this, considering the impact that decision can have on your retirement benefits, such as payment for accrued leave.

In addition to the OPM guide, feds with their thoughts on retirement should check out IRS Publication No. 721, "Tax Guide to U.S. Civil Service Retirement Benefits." Your contributions to Uncle Sam will, of course, continue into retirement.

Not all states, however, tax federal pensions. The National Association of Retired Federal Employees has put together a list of states that will leave your pension alone.

Those states that don't tax civil service annuities are: Alabama, Hawaii, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New York and Pennsylvania (and for retirement before 1998, Kentucky).

Another nine states-Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming-don't tax any personal income.

So you can keep Key West on your list of potential retirement spots, though Maui looks pretty attractive as a tax haven as well.