I worked for the Government before I came under a retirement plan. I made payments to OPM so I could get retirement credit for that time. If I change retirement plans under FERCCA, what happens to those payments?

It is possible that because of a retirement coverage error, you paid either too much or too little for service you performed before you had retirement coverage.

Under FERCCA, if you paid too much, you can receive a refund, plus interest, of any money that you paid over the amount needed to pay for the service.

Also, if you now owe more for service you performed before you had retirement coverage, you can get credit for that service by taking an actuarial reduction instead of having to pay additional money. If you die before retiring, we will apply the actuarial reduction to your survivor's benefit.

I was in the military. I made payments to my agency so I could get retirement credit for my military service. If I change retirement plans under FERCCA, what happens to those payments?

It is possible that because of a retirement coverage error, you paid either too much or too little for your military service.

Under FERCCA, if you paid too much, you can receive a refund, plus interest, of any money that you paid over the amount needed to pay for your military service.

Also, if you now owe more for your military service, you can get credit for your military service by taking an actuarial reduction instead of having to pay additional money. If you die before retiring, we will apply the actuarial reduction to your survivor's benefit.

I was in CSRS. That was a mistake. I belonged in FERS. My agency corrected my retirement coverage to FERS a while ago. Under FERCCA, I can choose between FERS and CSRS Offset. If I choose CSRS Offset, the deposit I owe for the time I worked before I came under a retirement plan will be a lot greater than what I owe under FERS. Can I get credit for that time by taking an actuarial reduction?

Yes, if you choose CSRS Offset coverage, you can get credit for that deposit service by taking an actuarial reduction. That's because the nature of the service changes from FERS to CSRS time when you elect CSRS Offset coverage. If you remain in FERS, you will have to pay a FERS deposit before you can get credit for the service time. You would not be eligible for the actuarial reduction.

Before you're asked to choose retirement plans, OPM will give you information about your benefits under both CSRS and FERS. They will tell you how much you owe under both. They will also explain how payment of a deposit and the actuarial reduction will affect your benefit.

What is an actuarial reduction?

An actuarial reduction allows you to receive benefit without having to pay an amount due in a lump sum. OPM reduces your annuity in a way that, on average, allows the Retirement Fund to recover the amount of the missing lump sum over your lifetime. The actuarial reduction becomes a permanent reduction in your benefit. The amount of the actuarial reduction depends on your age and the amount of the lump sum you would otherwise have to pay at the time you retire. To compute an actuarial reduction, OPM divides the lump sum amount by the present value factor for your age at retirement.

I'm retiring soon and I owe a deposit for the time I worked before I came under a retirement plan. How much I owe depends upon which retirement plan I choose. My agency told me to wait until I choose retirement plans before paying a deposit. I don't want to pay more interest on my deposit then I have to. What should I do?

Wait. Interest on a deposit does not accrue beyond your retirement date. Under FERCCA, you will not be harmed financially if you have to wait until you choose a retirement plan before you can pay your deposit.

I'm retiring. My agency says I'm in the wrong retirement plan. Under FERCCA I'll be able to choose which retirement plan I want. I need to pay my military deposit before I leave. My agency doesn't know whether to compute a CSRS or FERS military deposit. What do I do?

Wait until you choose retirement plans to pay the military deposit. You'll have an opportunity to pay your military deposit once you've received detailed information about your benefits options and made your choice. It won't matter that you're a retiree, and no longer a Federal employee. Before you're asked to choose retirement plans, OPM will give you information about your benefits under both CSRS and FERS. They will tell you how much you owe under both. They will also explain how payment of a deposit will affect your benefit, and let you know whether you will be able to receive credit for the service by taking an actuarial reduction in your annuity.

If, in the meantime, you want to know how much you'll owe so you can put the money aside, ask your agency to estimate the deposit under both CSRS and FERS rules.

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