Reg Jones Expert's View

By law, any CSRS employee who separates from the federal service for at least 31 consecutive days or transfers to a job that’s not subject to deductions for CSRS or FERS can get his money back. All you need to do is apply for a refund of your retirement deductions to the U.S. Office of Personnel Management (OPM). The form to use is the SF 2802, Application for Refund of Retirement Deductions (CSRS).

Since this is the government we’re talking about, there are a few potential hurdles you may have to clear first. For example, if you have a spouse, you must notify him or her of your intentions to take a refund. The same goes a former spouse if you were divorced after May 6, 1985. (If you were divorced before that date or you marriage lasted less than nine months or you had less than 18 months of CSRS-covered service, you’re off this particular hook.)

Of course, there’s some bad news about taking a refund of your CSRS contributions. First, interest is paid only on contributions covering service of one to five years. And it’s only 3 percent. Second, if you withdraw your contributions for a period of service totaling five years or more, you won’t be eligible to receive a deferred annuity at age 62. Finally, if you return to federal service, you will have to redeposit what you took out plus interest to get credit for that time in your annuity calculation. That’s true for all refunds paid out after September 30, 1990. Refunds paid out before that date give you the choice of paying or receiving an actuarial reduction in your annuity.

The news about taking a refund of your FERS contributions is variable. The good news is that market-rate interest will be on your contributions. The bad news is that that service will be permanently lost to you. You will not be eligible for a deferred annuity at age 62 and, if you return to work for the federal government, that refunded service will not be counted when it comes time to retire. If you do want to get a refund of your FERS deductions, the form to use if the SF 3106.