Q – When can I retire from a CSRS covered position?
Q – How is time for CSRS retirement purposes credited?
Q – What is CSRS Refunded/Redeposit Service?
Q – How does Refunded/Redeposit Service Affect My CSRS Annuity?
Q – What is the amount of the CSRS redeposit?
Q – What Rate of Interest Do I Owe?
Q – How does refunded service affect my annuity if a redeposit is paid?
Q – What is deemed credit for refunded service?
Q – What is CSRS Nondeduction/Deposit Service?
Q – How does CSRS Nondeduction/Deposit service affect my annuity?
Q – How do I apply to make a deposit/redeposit for CSRS service?
Q – How is my post-56 military service credited?
Q – What is the amount of the CSRS military service deposit?
Q – Why the distinction of 1999 and 2000?
Q – When can I retire from a FERS covered position?
Q- How is time credited for FERS purposes?
Q – What is Refunded/Redeposit FERS service?
Q – How does Refunded/Redeposit Service Affect my FERS annuity?
Q – What is the amount of the FERS redeposit?
Q – What is Nondeduction/Deposit FERS service?
Q – How does Nondeduction/Deposit FERS service affect my annuity?
Q – What are the variable interest rates?
Q – How is my post-56 military service credited?
Q – What is the amount of the FERS military service deposit?
Q – Why the distinction of 1999 and 2000?
Q – What rate of interest is charged?
Q – Is there an interest-free period for FERS employees?
Q – How is my benefit computed?
Q – How is the High-3 Average Salary computed?
Q – What is the formula for computing the CSRS benefit?
Q – What is the formula for computing my FERS benefit?
Q – What do you mean when you refer to the Basic FERS benefit?
Q – How is the Annuity Supplement computed?
Q – Can I work when I am receiving the Annuity Supplement?
Q – Do my earnings over $22,320 (2024) wipe out the Annuity Supplement?
Q – Are my CSRS benefits adjusted for COLA?
Q – Is there a ‘best’ month to retire to collect the full COLA?
Q – Is my FERS basic benefit adjusted for COLA?
Q – Is the Annuity Supplement adjusted for COLA?
Q – What does this mean to me?
Q – What are the recovery periods?
Q – Where can I get more information on this?
Q – Do I pay state taxes on my annuity?
Q – When can I retire from a CSRS covered position?
A – There are several types of retirement that could apply to the majority of Federal employees, some that are in the law but must be offered or effectuated by the agency, others that once an employee meets the requirements they can retire. There are also “special retirement provisions” for certain categories of employees.
OPTIONAL: Voluntary, Immediate & Unreduced
An Optional retirement results in an annuity which accrues within 31 days of separation and which you may exercise at your discretion, once you have met the requirements – Age 55 – 59 with 30 or more years of creditable service, 60 – 61 with 20 or more years of creditable service, or age 62 with as few as 5 years of creditable service.
EARLY OPTIONAL: Voluntary, Immediate & Reduced
An early optional (early-out) is a management tool and is made available when your agency is undergoing a major reduction-in-force, major reorganization, or major transfer of function only if it would result in a significant number of employees being separated or taking reductions in pay. Once the early-out is offered you may decide to exercise it if you are at least age 50 with 20 years or more of service or any age with 25 or more years of service. If you are not age 55 when you exercise an early-out, there is a reduction of 2% of your annuity for each year you are under 55 (1/6th of 1% for each month). The reduction is permanent.
DISCONTINUED SERVICE RETIREMENT: Involuntary, Immediate & Reduced
If your job is abolished, your function is transferred or you are given a directed reassignment, which you decline and you did not sign a mobility agreement and you qualify for retirement under the Discontinued Service Retirement (at least age 50 with 20 years of service or any age with 25 or more years of service) you would be involuntarily retired on an immediate annuity.
If you are not age 55 when you are retired on a Discontinued Service Retirement there is a reduction in your annuity of 2% for each year you are under 55, (1/6th of 1% for each month). The reduction is permanent.
DISABILITY
A disability benefit is payable at any age with 5 years of creditable civilian service.
In order to qualify for a CSRS disability benefit you must:
♦ Be covered by the Civil Service Retirement System;
♦ Have completed 5 years of creditable civilian service;
♦ Have become disabled due to disease or injury (this does not have to be a work-related injury or disease) for useful and efficient service in your current position. (Useful and efficient service means fully successful performance of the critical job elements–or the ability to do so and satisfactory conduct and attendance.)
♦ You cannot decline a reasonable job offer at your same grade or pay level, within your commuting area and one in which you can render useful and efficient service. (Postal service employees are considered not qualified for reassignment if the reassignment is to a position in a different craft or is inconsistent with the terms of a collective bargaining agreement covering the employee.)
Deferred
If you resign from Federal employment after at least 5 years of service but before eligibility for an immediate annuity and leave your retirement contributions in the fund, you would receive a deferred annuity at age 62. You would apply for your deferred annuity through OPM 60 days prior to your 62nd birthday. If you are eligible for only a deferred annuity be aware:
♦ That your High-3 Average Salary is not increased between date of separation and age 62;
♦ That you can never carry your health or life insurance through the Federal Employees’ Health Benefits Plan or the Federal Employees’ Group Life Insurance program; and
♦ That you receive no credit for any unused sick leave.
SPECIAL RETIREMENT PROVISIONS
Certain types of employment require a young and vigorous workforce due to the stress and physical requirements of the position. As a result, there are specific retirement provisions and requirements.
Law Enforcement Officers/Firefighters
The requirements that must be met are:
♦ Your duties are primarily the investigation, apprehension or detention of individuals suspected or convicted of offenses under Federal Criminal Law or the control and extinguishment of fires or the maintenance and use of firefighting equipment or apparatus; or
♦ You transferred to a qualifying supervisory or administrative position from a qualifying first line position after 3 full years in the first line position with no break-in-service.
If you meet the above requirements you may receive an immediate annuity with at least 20 years of certified hazardous duty at age 50, or any age with 25 years of certified hazardous duty. There is a mandatory retirement age of 57 for firefighter and law enforcement personnel. There are exceptions to the mandatory retirement age depending on your age when you were hired into the hazardous duty position.
Air Traffic Controllers
The Air Traffic Controller special retirement provisions apply to you if you are actively engaged in the separation and control of air traffic, in providing preflight, inflight or airport advisory service to aircraft operators or as a 1st or 2nd line supervisor. The annuity will be computed as if it were a regular retirement but may not be less than 50% of the High-3 average salary, assuming that the contributions are in the retirement fund. There is a mandatory retirement age of 56.
National Guard Technicians
In order to hold a National Guard Technician position, you also must have active duty military status. If you lose your military status you would be eligible for retirement at any age with 25 years of service. The benefit will be computed as if it were a regular retirement, with a 2% reduction for each full year under age 55 (1/6th of 1% for each month). The reduction is permanent.
Q – How is time for CSRS retirement purposes credited?
Normally, full credit is allowed for all the time elapsed between the date of appointment and date of separation. There are some exceptions:
· Leave Without Pay (LWOP) – Credit is given for all LWOP time up to 6 months in a calendar year.
· Leave Without Pay-Uniformed Service (LWOP-US)– The use of LWOP-US was discontinued in 2010. Individuals who were hired on or after 10/1/82 and are placed in LWOP-US must make a military service deposit for that period of service; otherwise, the time is not creditable for retirement purposes. If you were first hired in a retirement-covered position prior to 10/1/82, you have the option of making the military service deposit. The deposit must be made even if the LWOP-US period was less than 6 months in a calendar year. The deposit is not required for periods of military service when military leave or annual leave were used.
· Workers Compensation – Upon recovery and return to a retirement-covered position all time spent receiving OWCP benefits is fully creditable.
· Part-Time Service is fully creditable for retirement eligibility, but is prorated for benefit computation.
· Intermittent or When Actually Employed Service – Credit is given only for the days actually worked. Prior to March 1, 1986 Intermittent or When Actually Employed Service is converted to creditable service based on a 260-day year. Intermittent and When Actually Employed Service performed on or after March 1, 1986 is converted to creditable service based on a 2087 hour work year.
Q – What is CSRS Refunded/Redeposit Service?
A – Refunded Service is Federal civilian service during which civil service retirement contributions were withheld but later refunded to the employee. Redeposit service is Federal civilian service for which civil service retirement contributions were refunded and later redeposited with interest into the CSRS fund.
Q – How does Refunded/Redeposit Service Affect My CSRS Annuity?
A – The treatment of refunded service depends on when the refund was requested. If you have an unpaid refunded period of service, which ended on or after 3/1/91, the period of refunded service is not used to compute the annuity.
If you have an unpaid refunded period of service, which ended before 3/1/91, it is creditable in computation of annuity but it is subject to an actuarial reduction.
Q – What is the amount of the CSRS redeposit?
A – The redeposit is the amount refunded plus interest compounded annually.
Q – What Rate of Interest Do I Owe?
A – If the application for refund was received by the agency or OPM prior to October 1, 1982, interest is charged at the rate of 4% to December 31, 1947, and 3% thereafter, compounded annually. No interest is charged during periods of separation beginning before October 1, 1956. If the application for refund was first received by the agency or OPM on or after October 1, 1982, interest is charged at 3% per year thru December 31, 1984 and at a variable interest rate, beginning January 1, 1985.
| 13.000% for 1985 | 4.375% for 2005 |
| 11.125% for 1986 | 4.125% for 2006 |
| 9.000% for 1987 | 4.875% for 2007 |
| 8.375% for 1988 | 4.750% for 2008 |
| 9.125% for 1989 | 3.875% for 2009 |
| 8.750% for 1990 | 3.125% for 2010 |
| 8.625% for 1991 | 2.750% for 2011 |
| 8.125% for 1992 | 2.250% for 2012 |
| 7.125% for 1993 | 1.625% for 2013 |
| 6.250% for 1994 | 1.625% for 2014 |
| 7.000% for 1995 | 2.000% for 2015 |
| 6.875% for 1996 | 2.000% for 2016 |
| 6.875% for 1997 | 1.875% for 2017 |
| 6.750% for 1998 | 2.125% for 2018 |
| 5.750% for 1999 | 2.750% for 2019 |
| 5.875% for 2000 | 2.250% for 2020 |
| 6.375% for 2001 | 1.375% for 2021 |
| 5.500% for 2002 | 1.375% for 2022 |
| 5.000% for 2003 | 1.875% for 2023 |
| 3.875% for 2004 | 3.750% for 2024 |
Q – How does refunded service affect my annuity if a redeposit is paid?
A – Full credit is granted for the service for eligibility and computation purposes.
Q – What is deemed credit for refunded service?
A – As a result of the Omnibus Budget Reconciliation Act of 1990, an employee, whose annuity commences after December 1, 1990 and the period of refunded service ended prior to March 1, 1991, can receive credit for refunded service when the redeposit is not completed.
You will receive credit in the benefit computation for the refunded service; however, the benefit will be reduced for the portion of your retirement contributions, which you have received as a refund. The correct Present Value Factor (based on your age at time of retirement) will be divided into the total that you owe at time of retirement (the refunded contributions and interest compounded annually to date of retirement) to create an actuarial reduction.
Q – What is CSRS Nondeduction/Deposit Service?
A – Nondeduction Service is Federal civilian service during which no civil service retirement contributions were withheld. The deposit is equal to the amount of money the employee would have contributed to the Civil Service Retirement System had he/she been covered by the CSRS Act, plus interest.
Q – How does CSRS Nondeduction/Deposit service affect my annuity?
A – Credit for nondeduction service for civil service retirement purposes depends upon the dates of service involved and whether or not a deposit was made to pay for the service.
If the nondeduction service was performed prior to 10/1/82 and the deposit is not paid, full credit is granted for eligibility and computation purposes but the annual retirement benefit is reduced by 10% of the unpaid deposit including interest.
If the deposit is paid, full credit is granted for eligibility and computation purposes without a reduction.
If the nondeduction service is performed on or after 10/1/82 and the deposit is not paid, credit is granted for eligibility only. No credit is granted for computation.
If deposit is paid, full credit is granted for eligibility and computation purposes.
Q – How do I apply to make a deposit/redeposit for CSRS service?
A – You can apply to make a deposit or redeposit by completing and submitting an SF 2803. Submit your application to make deposit or redeposit to your personnel office. Your personnel office will forward the application to OPM for processing after they have certified your service history. However, if you want to make a deposit/redeposit and are within six months of retiring, you should not submit an SF 2803. You will be given an opportunity to pay a deposit for nondeduction service performed on or after October 1, 1982 and a redeposit for refunded service, when OPM processes your retirement application. If you want to make a deposit for nondeduction service before October 1, 1982, you should attach a statement to that effect to your retirement application. OPM will then send you information on how to make this deposit when your retirement application is processed.
Q – How is my post-56 military service credited?
A – If you were first employed under CSRS prior to 10/1/82:
If you make the military service deposit, post-56 military service can be credited for civil service annuity purposes regardless of Social Security entitlement.
If you do not make the military service deposit, credit will be given for post-56 military service in the civil service annuity computation until age 62. At 62 if you are eligible for Social Security benefits (you do not have to apply for them) the military service time will be removed from the civil service benefit computation.
If you were first employed under CSRS on or after 10/1/82:
If you make the military service deposit before retirement, the military service will be credited for retirement computation and entitlement, regardless of eligibility for Social Security benefits.
If you do not make the military service deposit, the military service cannot be credited for retirement purposes (neither entitlement nor benefit computation). No consideration of Social Security eligibility is made.
Q – What is the amount of the CSRS military service deposit?
A – If the military service was performed any year other than 1999 or 2000 the deposit is equal to 7% of the basic military pay earned during post-56 military service plus interest.
Q – Why the distinction of 1999 and 2000?
A – In 1999 and 2000 all employees had to pay an increased contribution to the retirement fund. In 1999, .25%, and for 2000, .40%, resulting in a 1999 military service deposit amount of 7.25% and for 2000 a military service deposit amount of 7.40%.
Q – When can I retire from a FERS covered position?
Optional Voluntary, Immediate & Unreduced
If your year of birth is prior to 1948 you may retire at age 55 or later with 30 years of service; at age 60 and 61 with 20 years of service; or at age 62 with 5 years of service.
If your year of birth is 1948 or later, the age at which you may retire with 30 years of service will gradually increase:
YEAR OF BIRTH MINIMUM RETIREMENT AGE (MRA)
| Prior to 1948 | 55 years |
| 1948 | 55 yrs. 2 mos. |
| 1949 | 55 yrs. 4 mos. |
| 1950 | 55 yrs. 6 mos. |
| 1951 | 55 yrs. 8 mos. |
| 1952 | 55 yrs.10 mos. |
| 1953-1964 | 56 yrs. |
| 1965 | 56 yrs. 2 mos. |
| 1966 | 56 yrs. 4 mos. |
| 1967 | 56 yrs. 6 mos. |
| 1968 | 56 yrs. 8 mos. |
| 1969 | 56 yrs. 10 mos. |
| 1970 & beyond | 57 yrs. |
Once you have attained the MRA you may retire on a voluntary immediate unreduced annuity with 30 or more years of service.
Optional Voluntary, Immediate & Reduced Annuity
(Unique to FERS)
FERS allows you to elect a reduced annuity once you have attained the MRA and have at least 10 years of service but less than 30. The reduction will be 5% for each year (5/12ths percent for each month) you are under age 62 when you begin to receive the annuity. (If you are age 60 with 20 years or 62 with at least 5 years you are eligible for a voluntary unreduced benefit.) You may voluntarily postpone an immediate reduced annuity to minimize the reduction. Once you have elected the reduced annuity the reduction affects your annuity for life. If you are eligible for an immediate reduced annuity which you voluntarily postpone to minimize the reduction, you will be permitted to pick up your health and life insurance when you elect to receive the postponed annuity, if you meet all other requirements. However, if you were eligible for a reduced annuity at retirement and you postponed receipt of it to avoid the reduction you will never receive the annuity supplement.
Voluntary Early Retirement Authority (VERA)
Early-Optional (Early-Out) Voluntary & Immediate
If an early-out is offered and you wish to exercise it you may retire at age 50 with 20 or more years of service or at any age with 25 or more years of service. There is no reduction in the FERS basic annuity if you exercise an early-out. However, the annuity supplement would not be payable until you attain the MRA. This type of retirement must be offered to you by your agency before you can exercise an early-out.
In any circumstance, where your annuity begins to accrue to you within 31 days of your retirement, you may continue your health and life insurance, if you meet the requirements set out in the health and life insurance sections.
Discontinued Service Retirement (DSR), Involuntary, Immediate
Discontinued Service Retirement is an involuntary, immediate retirement at age 50 with 20 or more years of service or at any age with 25 or more years of service. (A Discontinued Service Retirement occurs when your agency retires you due to transfer of function, abolishment of position or directed reassignment without a mobility agreement and you decline.) There is no reduction in the basic annuity if you are retired as a result of Discontinued Service Retirement. However, the annuity supplement would not be payable until you attain the MRA.
In any circumstance, where your annuity begins to accrue to you within 31 days of your retirement, you may continue your health and life insurance, if you meet the requirements set out in the health and life insurance sections.
Deferred, Unreduced
FERS allows you to elect a deferred unreduced annuity payable when you reach the MRA if you resigned before attaining the MRA, left your retirement contributions in the fund, and had 30 years of service at the time of resignation. You may also receive your deferred unreduced annuity at age 60 with 20 or more years of service or at age 62 with 5 or more years of service. You would apply for your deferred annuity through OPM 60 days prior to the point at which you want it to begin. If you are eligible only for a deferred annuity you will not be allowed to participate in the health or life insurance through the Federal Employees’ Health Benefits Plan or the Federal Employees’ Group Life Insurance program.
Deferred, Reduced
FERS allows you to elect a deferred reduced annuity when you leave government employment prior to the MRA and leave your money in the retirement fund. It is payable when you have attained the MRA and have at least 10 years of service but less than 30. The reduction will be 5% for each year you are under 62 (.4167 percent for each full month) when you begin to receive the annuity. The reduction affects your annuity for life. You would apply for your deferred annuity through OPM 60 days prior to the point at which you want it to begin. If you are eligible only for a deferred annuity, you will not be allowed to participate in the health or life insurance through the Federal Employees’ Health Benefits Plan or the Federal Employees’ Group Life Insurance program.
Disability
If you meet the CSRS/FERS definition of disability you may retire at any age with as little as 18 months of service. The definition of disability is that you are incapable of performing your duties due to mental or physical incapacity and you have not declined a reasonable job offer that is at your grade and pay level, within your commuting area and one in which you can be expected to render useful and efficient service. (Postal service employees are considered not qualified for reassignment if the reassignment is to a position in a different craft or is inconsistent with the terms of a collective bargaining agreement covering the employee.)
You must also apply to Social Security for disability benefits. Social Security has a much different definition of disability: “the individual is so severely disabled (mentally or physically) that they cannot perform any substantial, gainful activity. The disability must be expected to last at least 12 months, have already lasted 12 months, or to result in death.” You do not have to qualify for a Social Security disability benefit in order to receive FERS disability benefits.
Law Enforcement Officers/Firefighters
The requirements that must be met are:
� Your duties are primarily the investigation, apprehension, or detention of individuals suspected or convicted of offenses under Federal Criminal Law, or the control and extinguishment of fires, or the maintenance and use of firefighting equipment or apparatus, or
� You transferred to a qualifying supervisory or administrative position with 3 full years in a qualifying first line position.
If you meet the above requirements you may receive an immediate annuity with at least 20 or more years of certified hazardous duty at age 50 or at any age with 25 or more years of certified hazardous duty employment. There is a mandatory retirement age of 57 for firefighter and law enforcement personnel. There are exceptions to the mandatory retirement age depending on your age when you were hired into the hazardous duty position.
Customs & Border Protection Officers (CBPO)
Section 535 of Public Law 110-161 (December 26, 2007) provided for enhanced benefits for CBPOs effective July 6, 2008. The CBPO retirement coverage is similar to that applicable to Law Enforcement Officers and Firefighters. It increases the retirement deductions and accrual of benefits. This law does not affect any other benefits, such as Thrift Savings Plan contributions, health benefits or life insurance. It does not affect overtime pay or premium pay. The new law defines a CBP Officer as an employee:
- who holds a position within the GS-1895 job series, or any further reclassifications of this position; and
- whose duties include activities relating to the arrival and departure of persons, conveyances, and merchandise at Ports of Entry.
Also included in this definition are employees within the Department of Homeland Security who transfer directly to secondary supervisory or administrative positions after performing the above CBPO duties for a period of at least 3 years.
Air Traffic Controllers
The Air Traffic Controller special retirement provisions apply to you if you are actively engaged in the separation and control of air traffic, in providing preflight, in-flight or airport advisory service to aircraft operators or as a first or second level supervisor. There is a mandatory retirement age of 56.
Military Reserve Technicians
In order to hold a Military Reserve Technician position, you must also have active military status. If you lose your military status you would be eligible for retirement at any age with 25 years of service. The benefit will be computed as if it were a regular retirement.
Q – How is time credited for FERS purposes?
A – Normally, full credit is allowed for all time elapsed between the date of appointment and the date of separation for which the retirement contributions are in the retirement fund. There are some exceptions:
· Leave Without Pay (LWOP) – Credit is given for all LWOP time up to 6 months in a calendar year.
· Leave Without Pay – Uniformed Service (LWOP-US) – The use of LWOP-US was discontinued in 2010. Individuals who are carried on LWOP-US must make a military service deposit for the period of military service, otherwise the military service is not creditable for any retirement purpose. If the individual uses annual leave or military leave, there is no deposit required for the period they were on paid leave.
· Workers Compensation – Upon recovery and return to a retirement-covered position all time spent receiving OWCP benefits is fully creditable.
· Part-time Service is fully creditable for retirement eligibility, but is prorated for benefit computation.
· Intermittent or When Actually Employed Service – Credit is given only for the days actually worked. Intermittent and When Actually Employed Service performed on or after March 1, 1986 is converted to creditable service based on a 2087 hour work year.
Q – What is Refunded/Redeposit FERS service?
A – Refunded Service is federal civilian service during which FERS retirement contributions were withheld and later refunded. As of 10/28/2009, periods of refunded FERS service may now be re-credited for all retirement purposes if a redeposit, with interest, is paid. Even if the redeposit is not made, the refunded service is creditable for determining an employee’s eligibility to retire, but it is not creditable for benefit computation.
Employees wanting to make a FERS redeposit may complete the FERS Application to Make a Deposit SF-3108.
Q – How does Refunded/Redeposit Service Affect my FERS annuity?
A – You receive credit for all the time which you have worked for the government and paid the retirement contribution. As a result of P.L. 111-84 which was signed on 10/28/09, FERS employees who had a break-in-service and received a refund of their retirement contributions are now allowed to redeposit the contributions, plus interest upon reemployment with the federal government and regain credit for the refunded service for benefit computation purposes.
Q – What is the amount of the FERS redeposit?
A – The payment will be the amount you received as a refund plus interest compounded annually at the variable rate. If the refunded service is certified as “hazardous duty” you would owe the additional .5%.
Q – What is Nondeduction/Deposit FERS service?
A – Nondeduction service is federal civilian service during which FERS retirement contributions were not withheld. The FERS deposit provisions apply only to nondeduction service performed prior to 1/1/89. Any FERS nondeduction service performed on or after 1/1/89 is not creditable for retirement purposes but it is included in the leave SCD.
Q – How does Nondeduction/Deposit FERS service affect my annuity?
A – Any nondeduction service performed prior to 1/1/89 is creditable for retirement purposes only after a deposit is made. The deposit is equal to 1.3% of your base pay during the nondeduction service plus interest compounded annually at the variable rates.
Q – What are the variable interest rates?
A – The variable interest rates are:
| 13.000% for 1985 | 4.375% for 2005 |
| 11.125% for 1986 | 4.125% for 2006 |
| 9.000% for 1987 | 4.875% for 2007 |
| 8.375% for 1988 | 4.750% for 2008 |
| 9.125% for 1989 | 3.875% for 2009 |
| 8.750% for 1990 | 3.125% for 2010 |
| 8.625% for 1991 | 2.750% for 2011 |
| 8.125% for 1992 | 2.250% for 2012 |
| 7.125% for 1993 | 1.625% for 2013 |
| 6.250% for 1994 | 1.625% for 2014 |
| 7.000% for 1995 | 2.000% for 2015 |
| 6.875% for 1996 | 2.000% for 2016 |
| 6.875% for 1997 | 1.875% for 2017 |
| 6.750% for 1998 | 2.125% for 2018 |
| 5.750% for 1999 | 2.750% for 2019 |
| 5.875% for 2000 | 2.250% for 2020 |
| 6.375% for 2001 | 1.375% for 2021 |
| 5.500% for 2002 | 1.375% for 2022 |
| 5.000% for 2003 | 1.875% for 2023 |
| 3.875% for 2004 | 3.750% for 2024 |
They are compounded annually.
Q – How is my post-56 military service credited?
A – If you were hired in a FERS covered position, you must make the military service deposit for post-56 military services; otherwise, the military service is not creditable for any retirement purpose.
Q – What is the amount of the FERS military service deposit?
A – If the military service was performed any year other than 1999 or 2000, the deposit is equal to 3% of the basic military pay plus interest compounded annually.
Q – Why the distinction of 1999 and 2000?
A – In 1999 and 2000 all employees had to pay an increased contribution to the retirement fund. In 1999, .25%, and for 2000, .40%, resulting in a 1999 military service deposit amount of 3.25% and for 2000 a military service deposit amount of 3.40% for FERS.
Q – What rate of interest is charged?
A – Interest rate is a variable rate set by the Department of Treasury and is compounded annually based on the fiscal year.
| 13.000 for 1985 | 4.375% for 2005 |
| 11.125% for 1986 | 4.125% for 2006 |
| 9.000% for 1987 | 4.875% for 2007 |
| 8.375% for 1988 | 4.750% for 2008 |
| 9.125% for 1989 | 3.875% for 2009 |
| 8.750% for 1990 | 3.125% for 2010 |
| 8.625% for 1991 | 2.750% for 2011 |
| 8.125% for 1992 | 2.250% for 2012 |
| 7.125% for 1993 | 1.625% for 2013 |
| 6.250% for 1994 | 1.625% for 2014 |
| 7.000% for 1995 | 2.000% for 2015 |
| 6.875% for 1996 | 2.000% for 2016 |
| 6.875% for 1997 | 1.875% for 2017 |
| 6.750% for 1998 | 2.125% for 2018 |
| 5.750% for 1999 | 2.750% for 2019 |
| 5.875% for 2000 | 2.250% for 2020 |
| 6.375% for 2001 | 1.375% for 2021 |
| 5.500% for 2002 | 1.375% for 2022 |
| 5.000% for 2003 | 1.875% for 2023 |
| 3.875% for 2004 | 3.750% for 2024 |
Q – Is there an interest-free period for FERS employees?
A – There was/is an interest-free period if the deposit was paid in full by 1/1/89, within 2 years of first employment under FERS or within 2 years of return from active duty, whichever is later.
Q – How is my benefit computed?
A – The amount of the benefit depends on:
· Your High-3 Average Salary, and
· Length of creditable service.
Q – How is the High-3 Average Salary computed?
A – Whether you are CSRS or FERS, there is a quick way of estimating your High-3 Average Salary. Average your rates of basic pay in effect during 78 consecutive pays. Under the quick method even if you have added the correct elements of pay your figure will always be high by roughly one half of the pay for one pay period. Basic pay does not include: bonuses, overtime pay, military pay, special allowances, cash awards for suggestions or superior accomplishment, holiday pay or other compensation given in addition to the basic pay of a particular position.
Basic pay does include: any part of your pay package that is being reduced by the retirement deduction.
The locality pay is part of the High-3 Average Salary for the number of the 78 consecutive pays in which it is actually received. Alaska, Hawaii, Puerto Rico, Guam, etc. have transitioned from geographic COLA to locality pay.
The High-3 Average Salary does not have to be the most current 78 consecutive pays, but usually is. Two or more separate periods of employment, which follow each other, may be joined to makeup the three consecutive years of service over which the average salary is figured. The average salary period may include a period of nondeduction and/or refunded service.
This is not the official method by which OPM and your personnel office compute your High-3 Average Salary. They use a time factor chart which allots credit for any period of time at a given rate of pay.
There are exceptions for CBPOs, LEOIs and BPAs.
Q – What is the formula for computing the CSRS benefit?
A – The actual formula is
1.5% x first 5 years
1.75% x next 5 years
2.0% (1/6th of 1% per month) x years& months over 10
% x High-3 Average Salary = Gross Annual Annuity
There is a quick and dirty way of estimating the benefit. It is years of service minus 2 and double the remainder.
For example:
30 years
– 2 years
28 X 2 = 56%
If you used the actual formula, the benefit for 30 years would be 56.25%.
Q – What is the formula for computing my FERS benefit?
A – The formula is
1% x years of service= replacement %
Replacement % x High 3 Average Salary = Basic FERS Gross Annual Annuity
There are some exceptions to this formula:
If you work until age 62 with 20 or more years of service the benefit will be computed as:
1.1% X years of service=replacement %
There is also a “Special Retirement Provision” formula for Law Enforcement Officers, Customs & Border Protection Officers, Fire Fighters and Air Traffic Controllers.
1.7% X 20 years of service=34% plus
1% X remaining years and months of service
(There is an additional exception for Air Traffic Controllers, under what is referred to as ATC MRA and 30 the 1.7% can be computed on any number of ATC years of service.)
Q – What do you mean when you refer to the Basic FERS benefit?
A – The retirement benefits provided by the Federal Employees’ Retirement System are paid from three sources. There is (1) a basic benefit, (2) an annuity supplement paid from retirement until age 62 when the Social Security benefit is payable, and (3) money from your Thrift Savings Plan. This formula applies only to the Basic FERS benefit.
Q – How is the Annuity Supplement computed?
A – The Annuity Supplement is computed as if it were a Social Security benefit. However, the Annuity Supplement may not be the same as the Social Security benefit for the following reasons:
1) The Annuity Supplement is based on your FERS covered wages only and;
2) After the Annuity Supplement is calculated it is prorated based on the number of years you were under FERS compared to a 40 year work lifetime.
Q – Can I work when I am receiving the Annuity Supplement?
A – The Annuity Supplement is earnings tested from MRA (56-57).
A – It means that you will have an earnings test applied to your Annuity Supplement. If in 2024 you were MRA and retired, you could earn only $22,320 before your Annuity Supplement was reduced.
Q – Do my earnings over $22,320 (2024) wipe out the Annuity Supplement?
A – No, the reduction is $1 in benefits lost for each $2 of earnings above $22,320.
Q – Are my CSRS benefits adjusted for COLA?
A – Yes, your CSRS retirement benefit is adjusted for COLA upon retirement based on the full Consumer Price Index (CPI).
Q – Is there a ‘best’ month to retire to collect the full COLA?
A – No, the COLA is always prorated in the first year of retirement based on the number of months in the COLA compounding period that the retiree received their annuity. A partial month is counted as a whole month in the prorating.
IF ANNUITY ACCRUES PORTION OF COLA
| December of Prior Year or Earlier | Full COLA |
| January | 11/12s of COLA |
| February | 5/6s of COLA |
| March | 3/4s of COLA |
| April | 2/3s of COLA |
| May | 7/12s of COLA |
| June | ½ of COLA |
| July | 5/12s of COLA |
| August | 1/3rd of COLA |
| September | 1/4th of COLA |
| October | 1/6th of COLA |
| November | 1/12th of COLA |
Q – Is my FERS basic benefit adjusted for COLA?
A – Yes, your FERS basic retirement benefit is adjusted for COLA beginning at age 62. Unless you are retiring from a “Special Retirement Coverage” position then the COLA becomes payable upon retirement but routinely it will be CPI minus 1%.
If CPI is less than 2% COLA will be equal to CPI.
If CPI is between 2% and 3% COLA will be 2%.
If CPI is 3% or more, COLA will be CPI minus 1%.
Q – Is the Annuity Supplement adjusted for COLA?
A – No, the Annuity Supplement is not adjusted for COLA.
A – Yes, you will claim as taxable income a majority of your CSRS or FERS Basic benefit each year and all of your Annuity Supplement. It is true that what you are paying into the retirement fund has already been taxed and you will recover it without paying taxes on it again. The IRS uses a life expectancy recovery, not an up-front recovery.
Q – What does this mean to me?
A – It means that you will recover your already taxed dollars over your lifetime. The recovery period will depend on whether you are retiring with a self-only annuity or a joint and survivor spouse annuity.
Q – What are the recovery periods?
A – If you are retiring on a self-only annuity, the recovery period is based upon your age at retirement:
RECOVERY PERIOD FOR SELF ONLY ANNUITY
| IF YOU ARE | NUMBER OF ESTIMATED PAYMENTS |
| 55 and under | 360 |
| 56-60 | 310 |
| 61-65 | 260 |
| 66-70 | 210 |
| 71 and over | 160 |
If you are retiring on a joint and survivor spouse annuity (any amount) you must add both ages together. If the combined ages are:
RECOVERY PERIOD FOR JOINT WITH SURVIVOR ANNUITY
| COMBINED AGE OF ANNUITANTS | NUMBER OF ESTIMATED PAYMENTS |
| Not more than 110 | 410 |
| 110 but not more than 120 | 360 |
| 120 but not more than 130 | 310 |
| 130 but not more than 140 | 260 |
| 140 and Over | 210 |
Q – Where can I get more information on this?
A – The IRS has an in-depth publication – IRS Publication 721 that deals with Federal benefits. You can download it from their website at www.irs.gov; pick it up at an IRS office or they will mail a copy to you.
Q – As a FERS retiree, I will receive the Annuity Supplement/Social Security benefits and money from my TSP, how will they be taxed?
A – Your Annuity Supplement will be treated as ordinary taxable income. Some of your Social Security benefit may be taxable. There is an IRS Publication 915, which explains how Social Security benefits are taxed. Of course, all of the money you receive from your tax-deferred TSP account will be treated as ordinary taxable income. If you have funded the Roth 401(k) TSP option, those withdrawals are tax free.
Q – Do I pay state taxes on my annuity?
A – You will have to comply with the tax laws of the state you are a resident of during that tax year. Where you earned your annuity has no bearing on how it is taxed.