Ask The Experts: Retirement

By Reg Jones

Deposits and redeposits, part 1

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Based on the mail I’ve been getting, there’s a lot of confusion about the rules governing deposits and redeposits to get credit for prior service in determining your eligibility to retire and having that time used in your annuity computation when you retire. In this column, I’ll deal with the rules that apply to Civil Service Retirement System and CSRS Offset employees. In my next column, I’ll do the same for Federal Employees Retirement System employees.


The term “nondeduction service” applies to any period of federal government employment where retirement deductions weren’t taken from your pay. If you are a CSRS and CSRS Offset employee, you can make a deposit to get credit for that nondeduction service. The deposit equals the amount of the contributions you would have made to the Civil Service Retirement and Disability Fund if your job been covered by CSRS, plus accrued interest.

Retirement eligibility

If you are covered by CSRS or CSRS Offset when you retire, most kinds of federal government employment that aren’t covered by CSRS count toward the years of service needed to be eligible to retire. That includes federal government employment where only Social Security deductions were taken from your pay. It also includes employment covered by another federal retirement system, such as the Foreign Service, as long as you aren’t receiving any benefits for that time under the other system.

Annuity computation

When you performed that nondeduction service has a significant effect on the way it will be treated.

If you had any nondeduction service before Oct. 1, 1982, you’ll get credit for that time in determining your eligibility to retire; however, unless you make a deposit, your annuity will be reduced by 10 percent of the amount you would have paid into the fund, plus interest.

If you had any nondeduction service on or after Oct. 1, 1982, it, too, will be creditable for determining your eligibility to retire; however, if you don’t make a deposit to get credit for that time, it won’t be used in the computation of your annuity.


With one important exception, if you ever separated from the federal government, took a refund of your CSRS retirement contributions, and later returned, you’ll have to redeposit that money, plus accrued interest, before the time can be used in the computation of your annuity. However, if you don’t make the redeposit, you will still get credit for the time in determining your length of service for retirement, as well as for determining your “high-3.” Your high-3 is the average of your three highest consecutive years of pay, regardless of when they occurred in your career.

Here’s the exception: If you received a CSRS refund covering a period of service that ended before Oct. 1, 1991, you won’t have to pay the redeposit if you don’t want to. You’ll receive full credit for it in your annuity computation (unless you retire on disability). However, your annuity will be actuarially reduced based on your age and the amount of the redeposit you owe, including interest, on the day you retire.

Contribution rates

Beginning with the first pay period in January 1970, the contribution rate for CSRS has been 7 percent (7.5 percent for law enforcement officers and firefighters beginning with the first pay period in January 1975). If the nondeduction service you performed was before that date, the contribution rate will be lower.

Interest rates

Interest for nondeduction service earned before Oct. 1, 1982 (and refunded service if the application for a refund was made on or after that date) equals 3 percent. Interest for nondeduction and refunded service on or after Oct. 1, 1982 equals 3 percent through Dec. 31, 1984. Thereafter, a variable rate is applied. (In 1985 the rate reached an all-time high of 13 percent. In 2014 it’s at an all-time low of 1.625 percent, the same as it was in 2013.)

If you owe any deposits or redeposits, go to and download a copy of Standard Form 2803, Application to Make Deposits or Redeposits. Once you’ve filled it out, take it to your personnel office. When they tell you how much you owe, you can decide if it’s worth the cost.

To help you make that decision, use the following formula: 0.015 x your high-3 x 5 years of service, plus 0.0175 x your high-3 x 5 years of service, plus 0.02 x your high-3 x all remaining years and full months of service.

As you can see, if you have over 10 years of actual CSRS service, each additional month of credit your get by making a deposit or redeposit is worth 1/6 percent. That’s 2 percent per year.

If you decide to make the deposit, you can pay it in a lump sum or set up a payment schedule, with payments as low as $50 a month. Just remember. The longer you wait to complete the payment, the more you’ll have to pay in interest.

Reg Jones was head of retirement and insurance programs at the Office of Personnel Management. Email your retirement-related questions to, and view his blog at federal-retirement.

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Years of service and deferred annuity

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Q. I’m 49 with 30 years and one month of federal service. If I sign Standard Form 52 and resign, will I be able to collect my retirement at age 62?

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Military and federal retirements

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Q. I retired from the Marine Corps after 21 years of service in 2002, and I’m working with the State Department. I have 10 years of service with the department and plan to do 20 years and retire from the department at 59. Can I earn separate retirements, or do I need to combine my military time with foreign service time when I retire from the department?

A. Yes, you can earn two separate retirements.

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Interrupted government service and pension

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Q. I am 54, with five years under FERS. I am taking a job in the private sector but would like to return to federal employment for three to five years. If I do nothing, can I apply for a deferred pension at age 62? If I do return to government service, do the total number of years accumulate? So, for example, if I return and work another five years, is my pension based on 10 years, even though they were interrupted?

A. As long as you don’t take a refund of your retirement contributions when you leave, you could apply for a deferred annuity at age 62. Also, if you left that money in the fund and returned to government employment, you’d be able to pick up where you left off, and all that time would count for determining your length of service and your annuity computation. If you did take a refund and returned to government service, you’d have to repay that amount plus accrued interest to get credit for that time.

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Calculating years of federal service

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Q. I don’t understand the years and months of federal service for the annuity calculation. Would a year be 12 months, thus, say, 20 years and six months = 320 months, or 20+6 = 26? I get the 0.011 and the high-3 methodology, just stuck on the above.

A. Using your example, 20 years and six months would be 20.5 years.

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Military and federal service and retirement

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Q. I am on active duty. If I leave active duty and buy back my time to work at another federal job and at the same time do time with a National Guard component, will I be eligible to receive two retirements once I turn the right age?

A. If you work for the federal government, you can make a deposit to get credit for that time. If you are eligible for reserve retired pay, you can receive that pay and the annuity of your civilian position. If you are eligible for military retired pay, you’ll have to waive that pay.

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Social Security and federal and military retirement

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Q. I’m 54 and have been working for the government for the past nine years. I’m planning on staying for 20 years but already spent 22 years in military and am receiving my monthly pension faithfully. If and when I’m done, do I receive a separate check or do they combine them as one, and do I still get my Social Security benefit at the proper age?

A. You will receive separate payments for you military and civilian service. When you apply for a Social Security benefit, you will receive that as a separate payment. In the last case, if you apply for that benefit before you reach your full Social Security retirement age, you’ll be subject to the Social Security earnings test.

Since you were born in 1958, your full retirement age is 67.

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Active-duty and National Guard time and federal benefits

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Q. I was in the active Air Force for five years and in the Pennsylvania Air National Guard for 18 years. I am retired and am receiving benefits. I also have two years as a federal employee in the VA health system. I am considering a job with VA. How do I determine my status regarding years of service and how this affects benefits while working and at retirement? What office gives the definitive answer?

A. OPM is the ultimate source of definitive answers; however, your own agency personnel office should be able to give you the same answers. They are the ones I’ll give you now.

To be vested in the civilian retirement system, you’ll have to have five years of full-time service under FERS. If you make a deposit for your active-duty service, that time will be used in determining your total years of service and in your annuity computation when you retire.

Doing so will not affect your entitlement to reserve retired pay.

Whether or not you make a deposit, you should be able to get credit for your active-duty service in setting your annual leave accrual rate. Check with your personnel office to be sure. Note: Time spent in the reserves is never creditable for any civilian purpose unless you are called to active duty.

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Using federal service toward military retirement

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Q. I worked one year at the veterans hospital in Palo Alto, then joined the Navy. I am exploring retirement from the Navy after 26 years of good service. Can I link my federal service toward military retirement? Every year of military service means 2.5 percent more toward retirement. Most people are asking about the opposite.

A. No.

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Leaving federal service, intending to return

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Q. I have been employed with the Department of Homeland Security in the Transportation Security Administration for just under five years. I am planning to leave federal service to obtain field experience in the private sector with ambitions to return to the federal system with the FBI.

1. Are there any specific impacts of leaving service before the five-year milestone?

2. Are there specific do’s and don’t’s when leaving with intent to return to service?

3. Will the time I have invested stay with me when I rejoin the system?

4. Do I need to resume service within a certain time?

Some information that may be needed: I joined DHS on Jan. 6, 2008. I plan to leave before my five-year mark, probably around October. I contribute to a TSP and plan to make a 100 percent withdrawal or roll that into my private sector’s retirement plan if possible. I plan to return to federal service within three to five years, hoping to be employed with the FBI. I am 25.

A. If you leave before you have five years of service, you won’t be vested in the retirement system; therefore, you wouldn’t be entitled to any benefit if you didn’t return. If you did return to federal employment and had left your retirement contributions in the fund, you’d pick up right where you left off. If you had taken a refund, you’d have to redeposit that money to get credit for your previous service.

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Buyout and taxes

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Q. I have more than 24 years’ federal service, am 65 and recently was offered a $20,000 buyout. When I received the printout for the buyout, it showed I had two exemptions not considered or computed for the federal tax and I was charged the full 25 percent federal tax, $5,000. The normal state tax with two exemptions, along with Social Security and Medicare, were taken out at the usual rate with two exemptions. Should my two exemptions have been figured into and deducted from the deduction?

A. The 25 percent federal tax deduction is automatic and is taken from every buyout payment.

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Receiving pay for home leave

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Q. I retired from federal service in September. While I was working in Europe, I earned home leave, and it has remained on my leave and earnings statement since I returned to the continental Unites States in 2004. Will I receive pay for it when I retire?

A. As a rule, home leave may be taken only during service abroad or within a reasonable period after you return from service abroad and are expected to return to service abroad immediately or on completion of an assignment in the U.S. Since home leave is grated at the discretion of an agency, you’ll have to check with yours to see how it’s handled.

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Annual leave and prior federal service

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Q. I worked for the Department of Justice for 18 months, then transferred to the Department of Veterans Affairs. I have served three years of federal service. Am I entitled to begin receiving six hours of annual leave per pay period, or did my service time start over when I transferred?

A. Yes. Your prior service time transferred with you.

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Payback of retirement contributions

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Q. In 1985, after 16 years of federal service with the Department of Defense, I withdrew all my retirement contributions. I am now 64. How can I compute the amount of payback necessary to draw a pension, or is that possible?

A. It would be possible only if you returned to work for the federal government.

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Federal time applied to military retirement?

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Q: I know there is a military time buy back process so military time can apply toward civilian retirement. If I have federal time, can I apply that toward a military retirement if I join the military? Or does it only go one way?

A: No, you can’t apply your federal civilian time toward a military retirement. It only goes one way.

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Returning to service, repaying annual leave

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Q: Mr. Jones answered a question on Dec. 2 (“Annual leave and returning to federal service”) pertaining to lump-sum payment for annual leave for one returning to federal service. The answer was: “As required by law, you will have to return every penny you received for annual leave that hasn’t expired between the time you retired, and the time you return to work.”

Two questions: Can you provide citations to statute and/or regulations that require this result? And what does “hasn’t expired” mean? The leave year typically ends in early January. If you retire in July and return to work in November of the same year, do you have to repay because you are within the same leave year, and leave “hasn’t expired”?

A: The answer to your questions will be found at Just scroll down to “Return to Federal Service.”

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