Legislative Lottery

Federal employees have heard plenty of discussion about pay freezes and limits on bonuses and benefits. But a few civilians working on Defense Department projects this year still will be eligible for higher pay caps and continued reservist benefits.

In a memo sent last week to agency heads, Office of Personnel Management Director John Berry outlined a number of provisions affecting federal employee pay that were hidden in the 2011 National Defense Authorization Act. Several groups of employees will see new or continued pay advantages:

Premium pay cap for civilians overseas: Some federal employees working abroad in support of military or emergency operations will have their premium pay cap waived through Dec. 31. Civilians in areas covered by U.S. Central Command, as well as those formerly of CENTCOM now under U.S. Africa Command, will be eligible for basic and premium pay up to $230,700 for the year, which falls above normal pay limitations. Any additional pay employees receive as a result of the higher cap cannot be used to calculate retirement benefits or lump-sum payments for accumulated and accrued annual leave, however. According to Berry's memo, every agency should establish a policy for using the waiver for its employees.

Pay for reservists on active duty: The Reserve Income Replacement Program, a Defense initiative that provides income replacement payments for reservists on extended or frequent active duty, will extend through Dec. 31. The legislation also clarifies that civilian employees serving in a reserve unit cannot receive payments if they also are entitled to a reservist differential, or any similar benefit paid to workers who take leave from their job for active-duty service.

Overtime pay for Navy employees: Under a new authority that the legislation created, Navy employees deployed to Japan to support nuclear aircraft carrier work are eligible for overtime pay at one and one-half times the hourly basic pay rate. The provision will expire on Sept. 30, 2014.

TSP and Taxes

As tax season reaches full swing, Thrift Savings Plan participants should keep in mind some of the benefits and restrictions of their retirement contributions.

Employees who contributed to the TSP in 2010 might be eligible to claim the Retirement Savings Contributions Credit, available to participants whose modified adjusted gross income for 2010 is not more than $55,500 if married filing jointly; $41,625 if head of household; or $27,750 if single or married filing separately, or as a qualifying widow or widower.

Federal workers age 70½ or older who left government service in 2010, as well as those who already were retired but turned 70½ last year, must begin withdrawing from the TSP by April 1 to prevent their accounts from being abandoned. The Internal Revenue Service also requires participants to receive their first 2010 required minimum distribution by April 1. On March 1, the TSP issued checks to those participants who had not met that minimum.

Participants in 2011 can contribute up to $16,500 in tax-deferred money to the TSP. For service members, that limit increases to $49,000 in tax-deferred and tax-exempt money. Federal employees 50 or older this year who expect to reach the $16,500 cap also can add up to $5,500 in catch-up contributions.