If you will not be eligible for Social Security at 62 (or retirement, if later), no deposit is required and you will receive full credit for post-1956 military service with no future reduction.
If you are eligible for Social Security benefits at retirement or at age 62 and you pay a deposit, your post-1956 military service will be credited for title (eligibility for retirement) and computation of the annuity.
If you are eligible for Social Security benefits at retirement or at age 62 and you don’t pay a deposit, your post-1956 military service will be credited for eligibility for retirement. If you are not eligible for Social Security at retirement, but will become eligible at age 62, your post-1956 military service will be credited for computation of your annuity until age 62. At that time the credit for post-1956 military service is eliminated. This is the so-called “Catch-62.” Your annuity will be re-computed by subtracting the years of post-1956 military service from the total number of years of combined civilian and military service.
“Catch-62” example — If you do not make a deposit for your post-1956 service subject to CSRS rules, your annuity will be initially computed, assuming you retire before age 62, to include credit for the military service years.
Age at retirement — 55
Years of service — 30 (military and civilian)
Years of military service — 10 (post-1956)
However, at age 62, if you are eligible for Social Security, the annuity will be re-computed eliminating the 10 years of post-1956 service for which a deposit was not paid. With more than 10 years of service, the CSRS annuity formula uses 2 percent for each year over 10; therefore, the annuity in this example would lose 20 percent of the high-3 salary (2 percent x 10 years of military service).
If you are eligible for Social Security at the time of retirement (normally age 62 or older), the post-1956 service will not be used in the computation of your annuity.