Ask The Experts: Retirement

By Reg Jones

CSRS Offset question

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Q: I have eight years prior federal service (1980-1988). Upon resignation, I received a lump-sum payout for my CSRS account.  Subsequently, I worked for 20 years in the private sector until I was laid off in 2009. Reinstatement eligible, I was hired in November as a “Term” employee, classified as “CSRS Offset.”  However, I was informed recently that the classification was incorrect, and is being changed to “FICA with option for FERS.” Is this correct?

A: It sounds like you were hired into what is called a temporary time-limited position. If that’s the case, then you would contribute to Social Security and Medicare, but would not be covered by retirement or life and health insurance benefits, nor would you be able to contribute to the Thrift Savings Plan. However, if you were to be converted to a permanent position down the road, you would be covered by CSRS Offset with the option of electing to transfer to FERS. If you stayed in CSRS Offset, you would get credit for your temporary service and be able to make a deposit to get credit for that time in your annuity computation. However, if you transferred to FERS, you would get no credit for that time. As for your earlier period of CSRS service, if you became a permanent employee, you’d get credit for that time in determining your total years of service. If you redeposited the money that was refunded to you, plus accrued interest, you’d get credit for that time in your annuity computation. If you didn’t, your annuity would be actuarially reduced based on the amount you owed and your age at retirement.

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Comments

  1. Ben Ehrlich Says:
    June 21st, 2011 at 3:38 pm

    I guess I’m still not convinced. It seems to depend on which HR expert I ask. As a “TERM” employee (item 24. Tenure – “3″ on the SF-50B), I am getting life and health insurance. When I hired on in November, a recently separated HR subject matter expert was adament that I should be CSRS Offset, even to the point of calling the current HR expert (who she trained) and telling her so. I never heard the outcome of that conversation, but it wasn’t until I called on another subject that the “mistake” was discovered. I’ve not received a new SF-50, showing the change to item 30 – Retirement Plan.