While CSRS employees continue to dwindle in number with each passing year, most of those who are left have piled up a considerable number of years of service. And based on the number of questions I get, many of them have reached or exceeded the legal earned annuity limit: 80 percent of their high-3.

Most commonly, they reach that limit when they have 41 years and 11 months of creditable service. Because of a more generous annuity computation formula, CSRS-covered law enforcement officers, firefighters, and Congressional employees can reach that limit even earlier.

Contrary to popular opinion – and common sense – retirement contributions will continue to be taken out of your pay. So, what happens to those excess contributions when you retire? You’ll be given a choice. You can either accept a refund of those contributions, plus accrued interest, or you can purchase additional annuity, which isn’t subject to the 80 percent limit. If you accept a refund, only the interest will be taxable. That’s because you already paid taxes on those contributions while you were working.

The alternative is to purchase additional annuity with that money. The amount your excess contributions will buy depends on your age and is based on tables established for the Voluntary Contributions Program. Under that program. anyone retiring at age 55 or younger can get $7 of additional annuity for every $100 in his account. The amount of annuity that $100 can buy increases by 20 cents for each full year over 55 at retirement.

For example, if you were age 60 when you retired, each $100 would buy you $8.00 more per year in your annuity. At age 62, it would be $8.40 more. At age 65, $9.00. And at age 70, $10.00. The older you are when you retire, the more additional annuity you’ll get. However, the choice is yours. You can either buy additional annuity or pocket the refund.

Oh, one more thing to keep in mind. If you have any unused sick leave on the books when you retire, it won’t be subject to the 80 percent limit. The more you have, the greater the increase in your annuity will be. Every 174 hours of sick leave would bump it up by one-sixth of one percent. If you had a full year’s worth (2,087 hours), your annuity would be increased by 2 percent. And so on. The more sick leave you have in the bank the bigger the payoff.