Reg Jones Expert's View

If you are a government employee who once left, got a refund of your retirement contributions, and then returned to work for the government, you need to decide if it’s worth it to redeposit that money.

CSRS
If you don’t make the redeposit, you’ll still get credit for that time in determining your length of service. However, if that period of refunded service ended on or after March 1, 1991, you’ll only get credit for that time in your annuity computation if you pay the total amount you owe by the time you retire.

On the other hand, if that refunded service ended before March 1, 1991, you have a choice. If you make the redeposit, you’ll receive full credit for that service in your annuity computation. If you don’t, your annuity will be actuarially reduced based on your age and the amount of money you owe when you retire.

FERS
The rules are different for FERS employees. Until the law was changed in 2009, if you left government, got a refund of your retirement contributions, and returned to work for the government, you were barred from re-depositing that money and the time was treated as if it had never happened. Since that change in law, you can get credit for the time in determining your length of service but only if you redeposit that money.

Should you redeposit that money?
Whether you should make a redeposit depends on how much it will cost you. To find out how much you owe, you need to go to www.opm.gov/forms and download a copy of OPM’s Application to Make Deposit or Redeposit: SF 2803 (CSRS) or SF 3108 (FERS). Fill it out and send it to OPM. The address is on the form. They’ll let you know how much it will cost you. If you decide to redeposit the money, you can do it in installments. However, the redeposit needs to be completed before you retire.

Note: The sooner you redeposit the money the better. Each year that you delay doing that, the more it will cost you in accrued interest.

More on Redeposits for Service Credit CSRS and FERS at ask.FEDweek.com