When we do a seminar we always get questions about the codes on the Postal paycheck. The government does a really good job of complicating the most basic things and your paycheck is one of them. We’ve put together the most common questions and answers below – pass them along to your friends in case they have the same questions.
1) What is the number in the bottom right hand corner of my paycheck?
Both FERS and CSRS employees contribute to their pension. When we say pension we are talking about the annuity you receive when you retire (not the TSP). The government contributes most of the money but you still contribute as an employee.
The number in the bottom right hand corner of your check is the TOTAL you have contributed to your pension. The government has to disclose this number to you because it is your money. Technically, you could pull these funds out at retirement but because these funds are coming from the retirement bucket it would reduce your pension. This is why almost no one takes the money out. CSRS employees will have fairly large numbers where FERS employees will have much less because their pension is smaller.
2) Where do I see what I am contributing to the Thrift Savings Plan?
This is an area where you need to be absolutely certain. Employees who do not understand what they are contributing sometimes find out when they are about to retire when it is too late.
Locating your TSP contribution is very easy. Look in your deduction section of your check stub where all the taxes come out and you will see a TSP. Next to the TSP you will see a number of 01-30 which will be what percentage of your income you contribute. If you are contributing a whole dollar amount instead of a percentage you will see TSP$ and then the amount you are contributing. Let’s assume an employee is contributing $75.00 a pay period to the TSP. The code would read TSP$75.
If you are a FERS employee it is very important that you are contributing at least 5% to get the full match from the government. DO NOT CONTRIBUTE A DOLLAR AMOUNT—MAKE IT A PERCENTAGE. If you are contributing a percentage as you get raises you will ensure you are getting the full 5% match.
3) What is the Insurance Income on my checkstub?
This is another area where we get a lot of questions. The answer lies in IRS regulations. Under IRS rules you are able to receive $50,000 of free life insurance from your employer without any tax consequences. For Postal employees the free life insurance is your Basic Life Insurance. The math on calculating Basic Life is your base pay rounded up plus $2,000. When you do the math this puts many employees over the $50,000 limit. The government then takes the premium the Post Office pays on your behalf for the amount over $50,000 and reports it as income to the IRS. It never adds up to much, but it is good to understand why this happens.
4) I have a code that looks like this IN4Z3 in the deduction section of my check, what is it?
This code represents your Postal Life Insurance that you elected to pay for when you first hired on with the Postal Service. The code tells us what coverage you have, and what age group you are in. If you are uncertain as to what coverage you have you can contact us and we can review the information with you. For more information on how your Postal Life Insurance works check out What Postal Employees Need To Know About FEGLI.
5) What does the code HP mean?
The HP code is your Health insurance premium.
6) I have a deduction that says Retire 1 or Retire 8, what is that?
If you will remember when we were talking about the number in the bottom right hand corner of your check we said that every employee contributes something to their pension and that the number in the bottom right hand corner was the total you have contributed over your whole career. Well, the Retire deduction is the amount you contribute each pay period to the number in the bottom right hand corner. The number in the bottom right hand corner only changes once a year so you won’t see it change every pay period.
We hope this article helps you understand your check a little more. Do your friends a favor and post the link on Facebook or email it to them so they will have the benefit of the information. Be safe out there!