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Federal workers’ money questions answered

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Protesters demonstrate in support of federal workers outside of the U.S. Department of Health and Human Services on Feb. 14, 2025 in Washington, DC.

Anna Moneymaker | Getty Images

On Feb. 11, Elizabeth Aniskevich, an attorney at the Consumer Financial Protection Bureau, received a notice that she was being terminated immediately.

“I was completely shocked,” said Aniskevich, 39. She had been with the CFPB for nine months and imagined spending her entire career in the federal government.

“I didn’t expect it to unfold this way,” she said.

More than a week later, she’s still scrambling for basic answers. “There’s no information about what’s going on with my benefits, or what I need to do with unemployment,” Aniskevich said.

She’s worried about how she’ll pay the mortgage on her Washington, D.C., apartment after her emergency savings runs out in a few months.

“I’ve worked really hard to be financially stable,” Aniskevich said.

Elizabeth Aniskevich.

Courtesy: Elizabeth Aniskevich

Aniskevich is one of thousands of federal workers laid off by the new Trump administration in recent weeks and thrown into financial and career uncertainty. President Donald Trump and Elon Musk‘s secretive government-slashing effort, the Department of Government Efficiency or DOGE, are working to shrink the federal workforce.

Losing one’s job is always difficult. But the suddenness and speed of the firings, which have affected offices from the Environmental Protection Agency to the U.S. Department of Education, have left workers especially in the dark about their rights and next steps, experts said.

“Most people would have selected the public sector because it has a reputation of being a more stable work environment than the private sector,” said Don Moynihan, a public policy professor at the University of Michigan. “But in this case, that stability proved to be an illusion.”

CNBC spoke with financial advisors and policy experts to get answers to some of the many important questions terminated federal workers likely have right now.

Workers may be able to appeal, take legal action

The Trump administration and Musk’s DOGE have largely targeted workers on a probationary status for cuts.

That’s because probationary workers, who have typically been in their position for a year or less, have fewer protections after they’re removed than do career civil servants, said David Eric Lewis, a political science professor at Vanderbilt University.

For example, probationary workers might not meet the requirements to appeal their termination to the U.S. Merit Systems Protection Board. The board reviews cases in which federal workers were laid off or suspended.

Still, there are limited cases when they can appeal, experts said. You should speak to an employment lawyer or your union representative for more details, experts recommend.

The name and logo for the Consumer Financial Protection Bureau (CFPB) is seen scraped off the door of its building in Washington, D.C., U.S., Feb. 20, 2025.

Brian Snyder | Reuters

“They can also seek legal relief,” Lewis said. Your union may help you file your lawsuit in federal court, he added.

It can be more effective to bring your legal challenge as a group, with other terminated federal workers, Lewis said.

“That’s what is happening,” he said. “There’s a hope that there is at least a stop to these orders.”

A federal judge Thursday denied bid by labor unions to block the mass layoffs across the federal workforce. The National Treasury Employees Union alongside four other groups filed a lawsuit against the firings on Feb. 12.

What to know about unemployment benefits

Federal workers can collect unemployment benefits through the Unemployment Compensation for Federal Employees (UCFE) program. Some government employees — including ex-military personnel discharged under honorable conditions and former members of the National Oceanographic and Atmospheric Administration — receive benefits through a separate program, known as the Unemployment Compensation for Ex-servicemembers (UCX).

The jobless benefits, which are supposed to arrive within two or three weeks after you apply for them, are nearly identical to those of private-sector workers, said Michele Evermore, senior fellow at the National Academy of Social Insurance. 

States — as well as U.S. territories and the District of Columbia — administer the payments. Workers must submit an application with the appropriate workforce agency. You should apply in the state or district where your last official duty station was located, Evermore said.

Those working remotely on a full-time basis likely need to file a claim in their state of residence, Evermore said.

Workers should apply for unemployment as soon as possible, experts said. Delays are likely amid the purge of government workers.

Those claiming UCFE benefits will likely need to include certain documents with their claim, including a SF-8, or a Notice to Federal Employee About Unemployment Insurance, as well as a SF-50, or a Notification of Personnel Action, according to the U.S. Labor Department.

Those applying for UCX benefits should have a copy of their service and discharge documents — DD-214 or a similar form, the Labor Department said

Federal employers are supposed to provide these forms to workers upon separation, but Aniskevich said the Consumer Financial Protection Bureau still hadn’t given her those documents as of Friday.

For now, she filed her unemployment application in Washington, D.C., without them.

“It’s stressful to have uncertainty about whether my claim can be processed given the lack of forms,” Aniskevich said.

Federal agencies appear to be citing lackluster performance as rationale for many job cuts in termination letters, experts said. Even so, workers should still apply for benefits, Evermore said. The cause must generally rise to the level of “gross misconduct” to prevent people from receiving aid.

This could delay benefits if the government contests a claim, however, experts said.

Health coverage for terminated workers

Meanwhile Chris, who worked as a transportation program specialist at the Federal Transit Administration, was laid off on February 14. Like Aniskevich, he was a probationary worker, and had been employed by the FTA for around nine months. (He requested to use his first name only, out of fear of retaliation from the Trump administration.)

Despite the financial stability usually associated with a federal job, he found himself with no protections.

“There was no severance pay,” said Chris, 33, who is based in the Los Angeles area.

Chris did learn that his health benefits will continue for 31 calendar days after Valentine’s Day.

Similarly, federal employees should try to determine the specific date their health coverage will end, experts said. While the timelines may vary, most probationary workers will need to find new health insurance soon.

Those who wish to continue with their current health care should look into the federal government’s Temporary Continuation of Coverage, experts say. Under this option, you’re able to extend your federal workplace plan for up to 18 months after termination. (It’s similar to COBRA, or the Consolidated Omnibus Budget Reconciliation Act, for private-sector workers.)

Keep in mind that, with TCC, you’ll be responsible for the full cost of your premiums, plus any administrative fees.

“It’s going to be [a] pretty big hike,” said Brennan Rhule, a Reston, Virginia-based certified financial planner who specializes in federal workers.

If the new premium cost is too high to shoulder under TCC, you may qualify for a special enrollment period of the Affordable Care Act marketplace, according to Kate Ende, leader of the policy team at the Consumers for Affordable Health Care, a nonprofit. The special enrollment period typically gives you 60 days to sign up for a marketplace plan after you lost your coverage.

Medicaid might also be an option, Ende said, and if you qualify you can enroll at any time for it.

Relief options for recurring bills

Federal workers concerned about staying current with their bills should reach out to their lenders and explain their situation, consumer advocates said.

For instance, contact your mortgage lender and ask about forbearance or deferment options, said John Breyault, vice president of public policy at the National Consumers League. If you’re a renter, landlords and property managers may offer temporary payment plans or deferments. 

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Some auto lenders allow deferments, too, especially if you have a good payment track record. Meanwhile, your auto insurer may be able to adjust your coverage and lower your costs if you will no longer be driving long distances to work, Breyault said. 

For utilities like electricity, water, gas, internet and phone service, see if your providers offer a grace period or deferred payments, Breyault said. 

Those with student loan bills can request an unemployment deferment with their servicer.

Keep in mind that such concessions and breaks can be helpful in the near-term, but read the terms thoroughly. There could be long-term costs associated, such as interest continuing to accrue or other fees. 

Watch out for ‘undoable’ retirement account missteps

Federal workers who find themselves unexpectedly out of work may be tempted to take money from their retirement plans. However, experts emphasize it is important to know the ins and outs of each plan’s rules to avoid unexpected costs.

“Before you do anything, make sure you talk to somebody who understands and can guide you,” said CFP Mark Keen, who is a federal benefits expert with the National Active and Retired Federal Employees Association.

“Make sure that you don’t make any mistakes that are undoable,” said Keen, who is also a partner at Keen & Pocock.

Federal workers generally have access to a pension through the Federal Employee Retirement System, or FERS, and to a defined contribution savings plan, known as the Thrift Savings Plan, or TSP.

FERS provides a guaranteed income stream once a worker reaches a certain age, a perk that’s mostly unavailable in the private sector, Keen said.

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Federal workers may withdraw their FERS contributions if they leave federal employment, but that may not be the best choice. It will take a while to build your pension back up if you return to federal service, said Katelyn Murray, a chartered federal employee benefits consultant and director of relationship management at Serving Those Who Serve.

If you leave the balance intact, you retain the years of service you’ve accumulated, Murray said. Having a FERS pension also allows retirees to continue health coverage through the Federal Employees Health Benefits, or FEHB, in retirement.

Even if you’re not sure you may return to federal work, you may want to think twice before cashing out, Murray said.

“It’s more about flexibility and keeping your options open,” Murray said.

Federal workers may have some flexibility with a Thrift Savings Plan that is like a 401(k) plan and allows employees to make contributions that are matched by government agencies.

Generally, participants who are at least age 59½ can make withdrawals without penalties.

In some cases, workers may qualify for the Rule of 55, which may allow them to take withdrawals from the TSP without having to pay a 10% early withdrawal penalty, provided they are at least age 55 when they leave their job (or age 50 for some public safety employees).

If you haven’t found another job yet, you can’t take a TSP loan, but you may be able to look at doing a hardship withdrawal, Murray said. Importantly, by doing so you may incur taxes and/or penalties, as well as delay your anticipated retirement date.

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Disability advocates sue Social Security and DOGE to stop service cuts

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A Social Security Administration (SSA) office in Washington, DC, March 26, 2025. 

Saul Loeb | Afp | Getty Images

A group of disability advocates filed a federal lawsuit against the Social Security Administration and the so-called Department of Government Efficiency on Wednesday aimed at stopping cuts to the agency’s services.

Recent changes at the Social Security Administration under DOGE — including staff reductions, the elimination of certain offices and new requirements to seek in-person services — have made it more difficult for individuals with disabilities and older adults to access benefits, the lawsuit argues.

The complaint was filed in the U.S. District Court for the District of Columbia.

The plaintiffs include the National Federation of the Blind, the American Association of People with Disabilities, Deaf Equality, the National Committee to Preserve Social Security and Medicare, the Massachusetts Senior Action Council and individual beneficiaries.

“The defendants’ actions are an unprecedented and unconstitutional assault on Social Security benefits, concealed beneath the hollow pretense of bureaucratic ‘reform,'” the complaint states.

In nine weeks, the new administration has “upended” the agency with “sweeping and destabilizing policy changes,” the plaintiffs claim, that have shifted agency functions to local offices while slashing telephone services.

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“The result is a systematic dismantling of SSA’s core functions, leaving millions of beneficiaries without the essential benefits they are legally entitled to,” the lawsuit complaint states.

The “mass restructuring” of the agency is unlawful and violates the Rehabilitation Act and the Administrative Procedure Act, the lawsuit argues. The changes also violate multiple constitutional provisions, including the First Amendment right to petition the government for redress of grievances, according to the plaintiffs.

With 1.1 million disability claims pending, the recent actions could also be life threatening to individuals who are dying or going bankrupt while waiting for decisions, they allege.

The Social Security Administration did not respond to CNBC’s request for comment.

“President Trump has made it clear he is committed to making the federal government more efficient,” White House spokesperson Liz Huston said in an email statement. “He has the authority to manage agency restructuring and workforce reductions, and the administration’s actions are fully compliant with the law.”

Lawsuit alleges reform is ‘administrative vandalism’

People hold signs during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025. 

Nathan Layne | Reuters

The Social Security Administration sends monthly checks to around 73 million Social Security and Supplemental Security Income beneficiaries.

DOGE, which is not an official government entity, has been tasked with cutting “waste, fraud and abuse” within the federal government. President Donald Trump issued an executive order creating DOGE on Jan. 20, the same day he was inaugurated.

Since then, the Social Security Administration has cut 7,000 employee positions and closed the Office of Civil Rights and Equal Opportunity and the Office of Transformation. The Office of Civil Rights and Equal Opportunity handled the agency’s equal employment opportunity and civil rights programs. The Office of Transformation was responsible for coordinating customer service-related initiatives like adding the ability to use digital signatures and electronic documents.

The Social Security Administration has also changed its identity proofing policies for claiming benefits and changing direct deposit information that is expected to require more individuals to visit the agency’s offices in person.

The agency has updated its policy, allowing individuals applying for Social Security Disability Insurance, Medicare, or Supplemental Security Income who cannot use a personal my Social Security account to complete their claim entirely over the telephone, starting April 14. 

The reforms amount to the dismantling of “core functions of SSA, abandoning millions of Americans to poverty and indignity,” according to the plaintiffs’ complaint.

“What the defendants frame as ‘reform’ is, in truth, administrative vandalism,” the lawsuit states.

Beneficiaries face long waits, overpayment issues

The plaintiffs include seven individuals whose experiences, including long customer service waits and, in some cases, demands to repay large sums to the Social Security Administration, are detailed in the complaint.

One plaintiff, Treva Olivero, who has been legally blind since birth, was informed in March 2024 that she had been overpaid Social Security disability insurance benefits for five or six years, prompting the agency to demand she repay more than $100,000, according to the complaint.

Olivero’s Medicaid coverage was also terminated soon after, which left her without income and health coverage. She has since been in an “ongoing struggle” to have her disability benefits reinstated, while also facing almost $80,000 in medical debt, according to the complaint.

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Another plaintiff, Merry Schoch, who received Social Security disability insurance for many years, returned to work to help pay for large medical bills after she was hit by a waste management truck in 2022. She reported her income to the Social Security Administration, and the agency made no changes to her benefit payments, according to the complaint.

Two years later, Schoch stopped working and reported her unemployment to the Social Security Administration. In August 2024, the agency then terminated her benefits and informed Schoch that she owed $30,000 for the disability benefit payments she received while working full time, according to the complaint.

Last September, Schoch was informed she could reapply for benefits. However, she has since struggled to get in touch with the agency over the phone, online and in person. 

Both Olivero and Schoch are members of the National Federation of the Blind, which is also a plaintiff.

The plaintiffs want the court to reverse the Social Security Administration’s recent reforms, including staff reductions, closures of certain offices and policies requiring in-person appointments.

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Amid trade turmoil, ‘you do not want to time the market’

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Pres. Trump unveils sweeping tariffs: Here's what to know

As President Donald Trump rolls out sweeping new tariffs on goods imported into the United States, Americans are growing increasingly pessimistic about their financial fate.

Consumers worry that the duties will cause inflation to flare up again, while investors fear that higher prices will mean lower profits and more pain for the battered stock market

As of Thursday morning, futures tied to the Dow Jones Industrial Average were down 1,200 points, or 2.8%. S&P 500 futures sank 3.4%, and Nasdaq-100 futures lost 4%.

But sharp drops — or sudden spikes — in the market are to be expected, according to Jean Chatzky, CEO of HerMoney.com and host of the podcast HerMoney with Jean Chatzky.

“With these volatile markets, you do not want to time the market,” she said of the old adage. “Timing the market doesn’t work — it’s time in the market.”

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Trade tensions, inflation and concerns about a possible recession have undermined consumer confidence across the board, several studies show.

Still, it’s normal for most Americans to feel unnerved during heightened volatility, Chatzky said.

“There’s very little doubt that consumers are feeling nervous, maybe more nervous than we’ve felt in quite some time,” she said.

Committing to setting money aside in a high-yield savings account, whether by scaling back on dining out or rideshare expenses, will help regain some financial control, Chatzky said.

Top-yielding online savings accounts currently pay 4.4%, on average, well beyond the savings account rates at some of the largest retail banks, which average just 0.41%.

“Taking action is the best way to feel more resilient,” she said.

It’s understandable why some may be hesitant to continue investing, however, when you are investing for the long term, a down market is an opportunity for dollar-cost averaging, which helps smooth out price fluctuations in the market, Chatzky said.

This is also a good time to check your investments to make sure you are still allocated properly and rebalance as needed, so you are not taking on more risk that you are comfortable with, she added.

Timing the market is a losing bet

Talk yourself down from making any sudden financial moves, Chatzky advised.

Trying to time the market is almost always a bad idea, other financial experts also say. That’s because it’s impossible to know when good and bad days will happen.

For example, the 10 best trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, often in close proximity to the worst days, according to a Wells Fargo analysis published last year.

And, although stocks go up and down, the S&P 500 index has an average annualized return of around 10% over the past few decades.

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How to file for a free tax extension if you can’t make April 15 deadline

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Galina Zhigalova | Moment | Getty Images

If you can’t file your taxes by the April 15 deadline, there’s a free, easy way to submit a federal tax extension online, experts say.  

Nearly 1 in 3 American admit that they procrastinate when it comes filing their taxes, according to a January survey of more than 1,000 U.S. filers from IPX1031, an investment property exchange service. In addition, about 25% do not feel prepared to file their taxes, the survey found.

As of March 21, the IRS received roughly 80 million individual returns of the 140 million expected this filing season, the agency’s latest reporting shows.

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Many natural disaster victims have an automatic tax extension, which varies by jurisdiction. Military members serving in a combat zone also have more time to file. 

However, the federal tax deadline for the majority of taxpayers is April 15. It’s possible to push that due date to Oct. 15 by filing for an extension.

But “it’s an extension to file, not an extension to pay,” said Jo Anna Fellon, managing director at financial services firm CBIZ.

“It’s an extension to file, not an extension to pay.”

After the tax deadline, you will start incurring the failure-to-pay penalty of 0.5% of your unpaid taxes for each month or partial month that your taxes remain unpaid. The failure-to-pay penalty has a maximum charge of 25% of your unpaid taxes.

That’s cheaper than the failure-to-file penalty, which applies when you don’t submit your return by the deadline. The failure-to-file penalty is 5% of unpaid taxes monthly, also limited to 25%.

But you’ll also owe interest on your unpaid balance, which is currently 7% and accrues daily after April 15.

You can estimate your taxes owed by creating a “pro forma return” — or mock version of your filing — using as many tax forms as possible, Fellon said.

The ‘easiest way’ to file an extension

There are a few free options to file a tax extension.

For federal taxes, you can complete Form 4868 and mail it to the IRS. But it’s better to file digitally to avoid processing delays amid the agency’s shrinking workforce, experts say. Paper filing can also increase fraud risk, they say.

The “easiest way” is by choosing “extension” when making a payment for 2024, which automatically submits Form 4868, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

“It takes all of five minutes,” and you can double-check the transaction via your IRS online account, he said.

IRS Direct Pay

Internal Revenue Service

Alternatively, you can file your extension for free online via IRS Free File, a public-private partnership between the IRS and several tax software companies.   

For the 2025 season, you can use IRS Free File for returns if your adjusted gross income, or AGI, was $84,000 or less in 2024. But there’s no income limit to file an extension, Lucas said.

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