If you are considering electing FERS you must keep in mind that any CSRS Offset service will then change to FERS service. Since FERS pays a lower percentage of your "high 3" average salary, this could make a significant difference in the amount of your Federal retirement benefits.

You must have at least 5 years of non-Offset service to be eligible for an annuity with a component computed under CSRS rules -- in other words you must have at least 5 years of civilian service other than your Offset service. (Count all service, even it you didn't pay CSRS deductions or you received a refund.)

If you have less than 5 years of civilian service other than CSRS Offset at the time you transfer to FERS, all of that CSRS service will become FERS service. You can request a refund of the extra money you paid for CSRS and receive it plus interest. Employees whose CSRS service will become FERS service may also receive a partial refund of any military deposits they may have paid under CSRS rules.

Example 1: Susan had 6 years of CSRS-covered employment when she resigned and got a refund of her deductions in 1985. When she was reemployed in June 1998, she was covered under the CSRS Offset provisions. She transferred to FERS in November 1998. When Susan retires, the 6 years of CSRS service will be computed under CSRS rules. However, since Offset service is treated under FERS rules once you transfer to FERS, her service from June through November becomes FERS service.

Example 2: In contrast, Bob's employment history shows that he had 4 years of CSRS-covered employment, a break, 2 years of CSRS Offset service, and another break in 1986. When he returned to Federal employment, he was covered under CSRS Offset provisions until he transferred to FERS. Since Bob had less than 5 years of non-Offset service, all of his service is now subject to FERS rules. Bob is also entitled to a refund of the extra money he paid for CSRS since he didn't previously receive a refund for his first 4 years of service.

Bob thinks he has made a good decision because he is far from retirement, and he isn't sure he will stay with the Government. In addition, he is already contributing 5% of pay to the Thrift Plan, and switching to FERS gets him the full 5% Government matching contribution.

Example 3: Ed had 15 years of CSRS service, a 3-year break, and now has 12 years of CSRS Offset service. He chooses to stay in CSRS Offset because he does not want to lose CSRS credit for his Offset service. If he were to transfer to FERS, his Offset service would become subject to FERS rules. This means that, instead of getting 24% of his high-3 for this period of service under CSRS rules, he would only get 12% under FERS rules.

WARNING: Since all Offset service becomes subject to FERS when an employee transfers to FERS, it is particularly important that CSRS Offset employees give careful consideration to their first transfer opportunity. Even though your employment history may result in your having another opportunity to elect FERS at a later date, the more Offset service you have, the more you can lose by having waited to transfer to FERS. In addition, you will have missed out on the opportunity to get a government match on your Thrift Account for that service.

Updated 26 May 1998