Some federal employees leave the government, withdraw their retirement contributions, and then return to work for the government. In those cases, the prior service time is counted toward years of service for determining retirement eligibility and the salary paid is counted for the high-3 calculation if pertinent. However, for that service to count in the calculation of an annuity or a survivor annuity, a redeposit with interest must be made, except as noted below.
A redeposit can be made in installments but must be made before the final adjudication of an annuity. Survivors of employees who die in service also can make a redeposit before the final adjudication of their survivor annuity in order to capture service credit in that calculation (for survivors of retirees, the survivor annuity is based on the calculation that produced the retiree’s own benefit, which included credit for redeposit service as pertinent).
CSRS/CSRS Offset Redeposits
With one exception, anyone separating from service and receiving a refund of CSRS contributions must repay that money, plus any applicable interest, before the period of time covered by the refund can be credited in the computation of annuity benefits.
The exception is that instead of paying the redeposit, anyone who received a refund covering a period of service that ended before March 1, 1991 can choose to have their annuity actuarially reduced based on their age and the amount of redeposit, including interest, owed at the time of retirement. See Actuarial Reduction, below.
FERS employees with CSRS service always have been allowed to make redeposits of withdrawn CSRS contributions to recapture credit for that time toward the CSRS portion of a mixed FERS-CSRS benefit. However, until passage of PL 111-84 effective October 28, 2009, if you withdrew FERS contributions, that time was forfeited and could not be recaptured for purposes of a FERS benefit. Since enactment of that law, FERS employees may make redeposits with interest to count that time in their FERS benefit calculations.
If you have a CSRS component and you received a refund covering a period of service that ended before March 1, 1991, to recapture that service time you have the choice of either making the redeposit for that service or having the CSRS component of your annuity actuarially reduced, as described above.
Deemed Deposits and Redeposits
Alternative Form of Annuity
If you are eligible for the alternative form of annuity when you retire and elect one, any unpaid redeposit and most deposits for service that you owed at that time are deemed to have been paid.
Periods of Nonpay
Full credit is given without deposit for periods of furlough or leave-without-pay that do not exceed six months in any calendar year. The entire period an employee is receiving benefits from the Office of Workers’ Compensation Programs due to an on-the-job injury is credited without deposit if the employee later returns to federal service.
An actuarial reduction for purposes of the alternative form of annuity or to recapture service in lieu of making a redeposit in certain circumstances (see above) is calculated using “present value factors” set by the civil service retirement fund, based on life expectancy. To determine the monthly reduction, the factor that corresponds to the person’s age by retirement system is divided into the amount.
These figures are subject to minor periodic changes.
Owed redeposit or lump-sum payment of $16,000
Retiring at age 62
Present value factor, CSRS/FERS: 226.7/213.9
Monthly reduction, CSRS/FERS: $70.57/$74.80
Retiring at age 65
Present value factor, CSRS/FERS: 206.0/195.4
Monthly reduction, CSRS/FERS: $77.67/$81.88
These same factors also are used to reduce an annuity to provide a survivor benefit in the case of a marriage after retirement.
CSRS / FERS Redeposits and Interest Rates
Deposits for service performed before October 1, 1982, and redeposits for refunds applied for prior to October 1, 1982, are subject to an interest rate of 4 percent per year up to December 31, 1947, and an interest rate of 3 percent per year after 1947, compounded annually.
Deposits covering employment on or after October 1, 1982, and redeposits of refunds applied for on or after that date, are subject to an interest rate of 3 percent per year through December 31, 1984, and, thereafter, at a yearly rate equivalent to the rate of interest earned by new Retirement Fund investments as determined by the Secretary of the Treasury, compounded annually.
Employees wishing to make either a deposit or redeposit must file a Standard Form 2803 with their current personnel office. Staff there will estimate the amount actually owed and explain further how future retirement benefits may be affected by any outstanding deposit or redeposit.