New Employees Often Miss These Key Benefits in Their First Year of Federal Work

Missy E
November 14, 2025

Key Takeaways

Many new federal employees miss critical benefit elections and opportunities in their first year, which can impact long-term retirement security.
Understanding the timeline for enrolling in programs like TSP, FEHB, and FERS can help you make informed decisions that shape your financial future.

Your First Year Matters More Than You Think

Joining the federal workforce opens the door to one of the most structured and generous benefits systems in the public sector. But the complexity of federal benefits often causes new employees to overlook important options—some of which are only available during your first year.

If you’re in your first 12 months of federal service or advising someone who is, now is the time to pay close attention. The choices you make—or fail to make—can have a lasting impact on your career, financial health, and eventual retirement.

Federal Employees Retirement System (FERS): Start With a Strong Foundation

All new federal employees hired after 1984 are covered under FERS. This system consists of three key components:

The Basic Benefit Plan (your pension)
Social Security
The Thrift Savings Plan (TSP)

From your very first paycheck, contributions to both the Basic Benefit Plan and Social Security are automatic. However, your decisions regarding TSP require action—and waiting too long can cost you growth.

Know When Your Contributions Begin

Automatic 1% agency contributions to your TSP begin after you are onboarded.
Agency matching contributions (up to 5%) only begin when you start contributing from your pay.

By not contributing from the start, you risk missing out on valuable matching dollars and compound growth.

TSP Enrollment: Delay Equals Lost Dollars

The Thrift Savings Plan is similar to a 401(k) but exclusive to federal employees. You’re automatically enrolled at a 5% contribution rate in 2025 unless you opt out. However, many employees are unaware they can and should make changes to their allocations.

What You Should Do:

Adjust your fund selection as soon as possible. Leaving your TSP in the default fund may not align with your risk tolerance or goals.
Maximize your agency match by maintaining at least a 5% contribution.
Explore Roth vs. Traditional TSP options to suit your tax strategy.

You can change your TSP contribution percentage at any time, but the first year sets the tone for long-term saving behavior.

FEHB Health Insurance: Open Season Isn’t the Only Time You Can Enroll

As a new hire, you have a 60-day window from your start date to enroll in the Federal Employees Health Benefits (FEHB) Program. If you miss it, your next opportunity won’t come until Open Season (typically mid-November to mid-December) or after a qualifying life event.

Why This Matters:

FEHB offers a wide range of plan types and networks.
The government pays roughly 70% of your premium.
Enrollment ensures you’re building eligibility for retiree health benefits later on.

Choosing the right plan involves evaluating costs, deductibles, coinsurance, and whether you plan to enroll in Medicare in the future.

Flexible Spending Accounts (FSAs): Use-It-or-Lose-It Savings

If you’re expecting out-of-pocket health or dependent care costs, an FSA is a tax-saving opportunity you shouldn’t ignore.

Here’s the Catch:

You must enroll during your first 60 days or wait until Open Season.
FSAs require you to estimate expenses for the year ahead.
Unused funds may not carry over (only a portion is allowed under carryover rules).

The 2025 contribution limit is $3,300 for healthcare FSAs, with up to $660 in allowable carryover.

Federal Employees Group Life Insurance (FEGLI): You May Have More Than You Realize

You are automatically enrolled in Basic FEGLI coverage unless you waive it, and you must elect additional coverage within 60 days of hire. Once that window passes, it becomes much harder to qualify without a life event or passing a physical exam.

Key Considerations:

Basic coverage is equal to your annual salary (rounded up) plus $2,000.
Additional Option A, B, and C coverage must be elected proactively.
Premiums increase every five years and can become expensive in retirement.

Your first year is your best chance to get life insurance at the lowest possible rate.

Federal Long Term Care Insurance Program (FLTCIP): Temporarily Suspended, But Know the History

While FLTCIP is suspended for new enrollees in 2025, it’s important to know that previously, new employees had 60 days to enroll with minimal underwriting. If the program reopens, expect the same limited-time opportunity.

Leave Accrual and Sick Leave: Time Off Is Earned and Banked

As a new full-time federal employee, you start accruing:

Annual leave: 4 hours per pay period (13 days per year) if you have less than 3 years of service
Sick leave: 4 hours per pay period, with no cap

Unused sick leave adds to your retirement service credit under FERS, potentially boosting your annuity. Don’t waste it—bank it.

Military Buyback: Don’t Miss the 3-Year Deadline

If you previously served in the military, you may be able to buy back your service time to count toward your FERS retirement.

Timelines That Matter:

You have up to 3 years from your federal hire date to make a deposit and avoid interest charges.
After that, interest accrues annually and can significantly increase your cost.

Buying back military service can add thousands to your future annuity—but only if done early.

Creditable Service: Your Work History May Count

You may be eligible for credit for prior civilian service (such as temp or seasonal positions), provided you make the required deposits. Your agency’s HR team can confirm what qualifies.

Make This a Priority:

The sooner you make your deposit, the less interest you’ll pay.
Delays may result in a permanent reduction in your retirement benefit.

Retirement Eligibility and Planning: Don’t Wait Until Year 25

Your first year should include at least a basic orientation to your retirement timeline:

MRA (Minimum Retirement Age): Ranges from 55 to 57 based on your birth year.
FERS eligibility: Often 30 years at MRA, or 20 years at age 60, or 5 years at age 62.
MRA+10 option: Allows retirement with 10 years at MRA but comes with a penalty.

Learning your trajectory early can help you make strategic decisions—like buying back service time or contributing more to TSP.

Beneficiary Designations: Don’t Leave It to Default

Your benefits don’t automatically go to your spouse or children. You must submit forms to designate beneficiaries for:

FERS Basic Annuity
TSP account
FEGLI coverage

Failing to file could lead to delays or disputes. Review your designations annually and update them after major life events.

Your Next Step Starts Now

You only get one first year. Many benefits have deadlines that are easy to miss—but impossible to undo later. Whether it’s TSP contributions, FEHB elections, or military buyback deposits, the decisions you make now create your retirement foundation.

Don’t leave your future to chance. Get the information you need, ask your agency’s HR team the right questions, and reach out for expert help.

For tailored retirement advice, get in touch with a licensed professional listed on this website.