By Reg Jones
April 29th, 2012 | RETIREMENT
In my April 2 column, I laid out some of the rules for getting credit for active-duty military service time in your federal civilian annuity. This time, I’ll explain how you can make a deposit to the Civil Service Retirement Fund — if you decide it’s to your advantage to claim any credit you are due.
For most of you, the decision about making or not making a deposit to gain military service credit in your annuity will be a matter of dollars and cents. You’ll have to compare the amount you owe to the retirement fund against what you would gain in increased retirement benefits over your projected lifetime.
The amount of the deposit is equal to a percentage of your military base pay, not including differentials and allowances. The percentage depends on the retirement system you are in and when the military service was performed.
If you are covered by the Civil Service Retirement System, the deposit is 7 percent of basic pay for periods of active duty before Jan. 1, 1999; 7.25 percent during 1999; 7.40 percent during 2000; and 7 percent after Dec. 31, 2000. If you are covered by the Federal Employees Retirement System, the deposit is 3 percent, 3.25 percent, 3.40 percent and 3 percent for the same periods.
If you have more than one period of service, you can pick the period or periods for which you want to make a deposit. However, to get credit in your civilian annuity, you have to complete the deposit before you retire.
In most cases, deposits are made to your agency.
If you pay your deposit within three years of being hired, you won’t be charged any interest on the deposit you owe. That same grace period applies if you are called to active duty or even if you leave your job to enter military service. When you return, a new three-year grace period begins for that specific period of service.
If your deposit is not paid within three years of your beginning or returning to civilian service, you will pay interest on the deposit you owe. Interest rates are set by the Treasury Department and have ranged from 13 percent in 1985 to 2.25 percent this year.
To find out how much you owe, fill out Form RI 20-97, Estimated Earnings During Military Service, which you can get from your personnel office or download at www.opm.gov under Find Form(s). Attach a copy of your DD-214, Report of Transfer or Discharge, or its equivalent, and mail to the finance office for your branch of service, which will verify your active-duty earnings.
If you don’t have a DD-214, fill out SF-180, Request Pertaining to Military Records, available from your personnel office or from the National Personnel Records Center website at www.archives.gov/ st-louis/. Send the form to your branch of service, which will send you a new DD-214 or its equivalent. You can attach a copy of that to a completed RI 20-97 and mail it to the finance office for your branch of service, which will send you an estimate of your earnings.
Once you have your earnings estimate, take it to your local payroll office, along with a copy of your DD-214 or equivalent, and a completed SF- 2803 (CSRS) or 3108 (FERS), also available from your personnel office or the OPM website.
Your payroll office can determine how much you owe, including any accrued interest. If the time since you left active duty has been years rather than months, the accrued interest may exceed the principal you owe.
If you do decide to make a deposit, you don’t have to make it in a lump sum. It can be made in amounts as small as $50. And it can be made through payroll deduction.