Despite these unsettled times, when many employees are hunkering down and giving thanks for having a job, I’ve been getting a lot of mail from other employees who are considering jumping ship to accept opportunities in the private sector. There’s only one problem. They aren’t eligible to retire. And they want to know what their options are if they leave anyway.

If you leave government before being eligible to retire, you have two choices: you can either ask for a refund of your retirement contributions or, if you have at least five years of creditable service under either CSRS or FERS, you can leave your money in the fund and apply for a deferred annuity at age 62 (age 60 if you were covered by FERS and had at least 20 years of service).

The consequences of taking a refund are different for CSRS and FERS. If you were covered by CSRS and later want to return to work for the government, you’ll be able to redeposit the amount you received, plus accrued interest, and get full credit for that time in determining you eligibility to retire and in your annuity computation. However, under current law, if you are covered by FERS and return to work, the period of service for which you received a refund will be treated as if it never existed for retirement purposes. (Note: Pending legislation would bring the FERS policy in line with the CSRS policy and allow redeposits.)

If you don’t take a refund, the size of your deferred annuity will depend on your years and full months of service and your highest three consecutive years of average salary (your high-3). The good news is that your annuity, regardless of its size, would be paid to you every month for the rest of your life. Further, if you elect a survivor benefit for your spouse and die before he or she does, your widow(er) will receive that benefit for as long as he or she lives.

Of course there are some downsides of leaving your contributions in the retirement fund and applying for a deferred annuity. First, you won’t have the use of that money. Second, while the formulas used to compute deferred annuities are the same ones used for computing regular annuities, your years of service and the high-3 used in the computation will be the ones you had on the day you left government. It won’t be increased by any pay raises or cost-of-living-adjustments that occurred after you left. As a result, the greater the distance between the day you leave and the day you are eligible for a deferred annuity, the more inflation will have taken its toll on your annuity benefit.

Third, if you were covered by CSRS when you leave, any unused sick leave hours you had to your credit won’t be added to your years of service when your deferred annuity is computed. That’s not an issue if you are covered by FERS, because you don’t get any credit for unused sick leave hours regardless of when or how you retire. Even if the law were to change, it would only affect the creditability of FERS sick leave for those retiring on an immediate annuity.

Finally, as a deferred annuitant you won’t be able to reenroll in the Federal Employees Health Benefits (FEHB) or the Federal Employees’ Life Insurance (FEGLI) programs, even if you were enrolled in one or both of them for the five consecutive years before you left.

If you are eligible for a deferred annuity, call 1-888-767-6738 or write OPM, P.O. Box 45, Boyers, PA 16017-0045 and ask for OPM Form 1496A (CSRS) or RI 92-19 (FERS). Or you can download a copy by going to www.opm.gov and clicking on Forms. Mail the completed form to OPM no earlier than two months before you reach age 62 (age 60 if you were covered by FERS and had at least 20 years of service). Your deferred annuity will begin on your birthday. If you apply after that, your annuity will be paid retroactively to the day on which you first became eligible for a deferred annuity.