Maximizing Your Retirement Benefits

Many federal employees have left the government, withdrawn their retirement contributions and then returned to work for the government. If they withdrew their FERS contributions, that time is lost forever for retirement purposes. It may not be reclaimed by making a redeposit.

However, if CSRS contributions were withdrawn, an employee can still count the time for meeting the minimum length of service requirement for an immediate annuity and for determining the high-3 average salary. However, that money plus any interest * must be repaid before that time can be used in the computation of the annuity.

There is one exception to this rule. If a refund was received covering a period of service that ended before October 1, 1990, an employee won’t have to pay the redeposit at retirement (unless the retirement is for disability).

If that redeposit is not made, full credit will be given for the refunded service in computing the annuity; however, the CSRS component of the annuity will be actuarially reduced based on age and the amount of the redeposit (plus interest) owed at retirement (see the Actuarial Reduction section).

Of course, the reduction can be avoided by paying the redeposit for that CSRS time. As with all deposits and redeposits, it’s a decision to be made based on the dollar impact it will have on current finances versus what will be gained though the annuity over time.