Refund of Retirement Contributions

• If you were covered under the Federal Employees Retirement System (FERS
• If you are covered under the Civil Service Retirement System (CSRS)
• Procedures for having your retirement contributions refunded to you
• Interest payable on the lump sum payment of your retirement contributions
• Taxability of refund payment
• Rollover of refund payment to IRA or Employer Sponsored Plan

If you were covered under the Federal Employees Retirement System (FERS) and you leave your Government job before becoming eligible for retirement

Options

• you can ask that your retirement contributions be returned to you in a lump sum payment, or
• you can wait until you are retirement age to apply for monthly retirement benefit payments. This is called a deferred retirement.  For detailed information about deferred retirement, click on the following link:  FERS Deferred Retirement

Payment of a refund of your FERS deductions will permanently eliminate your retirement rights for the period of service that the refund covers.  You will not be permitted to pay the money back, even if you are later reemployed in the government.  The refunded FERS service cannot be used in computing annuity benefits that you may later become entitled to receive under FERS and it cannot be used in determining the length of service for future annuity eligibility purposes.  Refer to information about retirement eligibility.

If you transferred to FERS and also have service under the CSRS retirement system-

When you apply for a refund, OPM will refund all retirement deductions to your credit under both FERS and CSRS.  Unlike your FERS refund, you can pay back the amount of the CSRS deductions, plus interest, if you are later reemployed in the Federal Government.  When you apply for the refund, you can specify that you only want a refund of your CSRS deductions.

If you are covered under the Civil Service Retirement System (CSRS) and you leave your Government job before becoming eligible for retirement

Options

• You can ask that your retirement contributions be returned to you in a lump sum payment, or
• If you have five or more years of civilian service, you can wait until you are retirement age to apply for monthly retirement benefit payments.  This is called a deferred retirement.  For detailed information about deferred retirement, click on the following link:  CSRS Deferred Retirement

If you get a refund of your retirement contributions now, you will no longer be eligible to receive monthly payments when you reach retirement age, unless you are later reemployed subject to the Civil Service Retirement System or the Federal Employees Retirement System.  Refer to information about CSRS retirement eligibility.

Procedures for having your retirement contributions refunded to you

If you are leaving your Federal job and want a refund of your retirement contributions, you can get an application from your personnel office, complete it, and return it to them.  If you are no longer in the Federal service, you can acquire the appropriate application from our website.  Click on the link shown below:

• If you are covered under FERS, use Application for Refund of Retirement Deductions (FERS), Standard Form (SF) 3106 [415 KB]
• If you are covered under CSRS, use Application for Refund of Retirement Deductions (CSRS), Standard Form (SF) 2802 [1 MB]

If you have been separated for 30 days or less, submit your application to your servicing personnel office.  If you have been separated more than 30 days, submit your application to the Office of Personnel Management (OPM).

U.S. Office of Personnel Management
Retirement Operations Center
Post Office Box 45
Boyers, PA 16017

Interest payable on the lump sum payment of your retirement contributions

For service under the Federal Employees Retirement System (FERS), you will get interest on the refund of those contributions if you worked more than one year.  Interest is paid at the same rate that is paid for government securities.

For service under the Civil Service Retirement System (CSRS), interest will be included in the refund of those contributions if you have more than one but less than five years of service.  Interest is paid at three percent.

Taxability of refund payment

Your retirement contributions are not taxable, but interest included in the payment is taxable.  You should contact the Internal Revenue Service for additional tax information.

Rollover of refund payment to IRA or Employer Sponsored Plan

You can roll over lump sum payments representing your retirement contributions, including voluntary contributions, and applicable interest.  An eligible payment can be paid either to you or directly to an individual retirement account or other employer sponsored plan.  Your choice will affect the amount of taxes you owe.  We are required to withhold Federal income tax from taxable payments over $200 at the rate of 20 percent.  However, you may choose to take all or part of these payments in a direct rollover to an individual retirement account or an employer-sponsored retirement plan that accepts rollovers.   The taxable portion can be rolled over into the Thrift Savings Plan.   If you make this election, we will not withhold the Federal income tax from the taxable payments.

You can open an individual retirement account to receive a direct rollover.   You must contact the individual retirement account sponsor to find out how to have your payment made to your account.  If you are unsure of how to invest your money, you may wish to temporarily establish an account to receive the payment.  However, you may wish to consider whether or not you may move any or all of the monies to another account at a later date without penalties or limitations.
If you choose to have the payment made to you and it is over $200, the taxable portion is subject to the 20 percent Federal income tax withholding.  The payment is taxed in the year in which it is received unless within 60 days after receiving it, you roll it over to an individual retirement account or retirement plan that accepts rollovers.  You can roll over up to 100 percent of the eligible distribution, including the 20 percent withholding.  To do so, you must replace the 20 percent withholding within the 60 day period. You will be taxed on any amount that you do not roll over.  For example, if you roll over only the 80 percent of the distribution, you will be taxed on the remaining 20 percent.

You can find more information about the taxation of payments from qualified retirement plans from the Internal Revenue Service website:

• IRS Publication 575, "Pension and Annuity Income",
• IRS Publication 590, "Individual Retirement Arrangements",
• IRS Publication 721, "Tax Guide to U.S. Civil Service Retirement System Payments", and
• Form 4972 , "Tax on Lump Sum Distributions".

We will not withhold any amount for Federal income tax if your total taxable lump sum is less than $200.  We will request a rollover election when you are eligible for a payment of $200 or more.