Retirement Benefits

Voluntary contributions may only be made if you do not owe a deposit or redeposit to the retirement fund.

If you are one of the relatively few CSRS or CSRS-offset employees remaining in the federal workforce, you still have an opportunity not available to FERS employees, the voluntary contributions account.

Those accounts allow you to contribute up to 10 percent of your total lifetime earnings while working for the government and earn interest on those deposits. In 2019, they earn 2.75 percent.


When you retire you can buy additional annuity with that money. Here are the rules. If you retire at age 55 or earlier (and very few CSRS employees are that age or younger), you’ll get $7 of additional annuity for every $100 in your account. For example, if you had $10,000 in your account, you could buy $700 of additional annuity. For every year you are over age 55 at retirement, the amount would increase by 20 cents. So, if you retired at age 60, each $100 in your account would buy you $8 of additional annuity. An extra benefit is that, you could also purchase a survivor annuity for whomever you chose.

Any annuity you purchase will continue to be paid to you for the rest of your life (or your survivor’s, if you elect a survivor benefit). VCP-purchased annuities aren’t increased by COLAs but they also don’t count against the 80 percent maximum annuity under CSRS.

Few contributors to VCP do it in order to increase their annuity. Instead they most commonly use it as a tax-favored investment—earnings aren’t taxed until withdrawn—beyond the allowable maximum investment amount to their TSP accounts. However, unlike the TSP which requires regular payroll withholding, the VCP program allows you to stash away lump-sums. That could be a consideration if you want to park a sum of money from an inheritance, proceeds of a sale of assets or from other source and shield it from taxes while earning a competitive guaranteed rate.

If you are one of those who would like to contribute to the VCP but who doesn’t want to buy additional annuity, you can – whenever you want to, before or after retirement – close out your account and take a penalty-free withdrawal. However, if you do that, you won’t be able to reopen it unless you leave government and come back later on to a CSRS-covered position.

If you do close out your account, taxes will only be due on the accumulated interest. However, you can roll either the interest or the entire amount of your VCP account into an IRA to postpone payment of those taxes to a later date.

CSRS and CSRS Offset employees may make voluntary contributions to the retirement fund and earn market interest rates (of around 2 percent in recent years) tax-deferred. However, voluntary contributions may only be made if you do not owe a deposit or redeposit to the retirement fund.
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