Some of you have worked in federal jobs where retirement contributions weren’t taken out of your pay. Others of you who left the service, took a refund of your contributions, and then returned to work for Uncle Sam. Now you’re wondering how that time will be treated when you retire. Will you get credit for it in determining your eligibility to retire or in your annuity computation? Let’s find out.
CSRS Non-deduction rules
If you had any creditable service before October 1, 1982, where no CSRS deductions were made, you’ll get full credit for that time; however, you annuity will be reduced by 10 percent of the amount you owe, plus accrued interest, unless you make a deposit for that time.
If you performed such service after September 30, 1982, you’ll get credit for that time in determining your eligibility to retire; but unless you make a deposit plus interest, it will not be used in computing your annuity.
FERS Non-deduction rules
Any non-deduction service performed before January 1, 1989 will not count for eligibility or computation purposes unless you make a deposit plus interest. Further, in most cases, you can’t make a deposit to get credit for any such service performed after December 31, 1988. That time is rarely creditable for retirement purposes.
CSRS Redeposit rules
If you took a refund of your retirement contributions before October 1, 1990, you can either repay that amount or elect to have your annuity actuarially reduced. The amount of the reduction depends on the amount you owe plus interest and your age at retirement.
If you took a refund after September 30, 1990, you’ll get credit for the time in determining your eligibility to retire but it won’t be used in the computation of your annuity unless you repay the amount of the refund plus interest.
FERS Redeposit rules
Here’s the really bad news. If you took a refund of your FERS retirement contributions and return to work for the government, you may not make a deposit to reclaim that time. It is permanently lost for retirement purposes.
If you are one of those who had a period of non-deduction service or took a refund of your retirement contributions, are eligible to make a deposit or redeposit, and want to find out how much you would have to pay to get full credit for that time, you need to fill out a form and send it to OPM. If you are covered by CSRS, you need to use Standard Form 2803; if covered by FERS, it is the SF 3108. You can download a copy by going to www.opm.gov and clicking on Federal Forms in the lower left hand corner.
In my next article, I’ll tell you about a new feature developed by OPM that allows those who have gotten a service credit statement from OPM to make a request for an update on the amount they owe by phone or e-mail.