Each pay period a percentage of basic salary is deducted and withheld as the employee’s contribution to the retirement fund.
The percentage of basic pay withheld changes based on the year.
Employees credited with civilian service prior to 1989 for which no retirement deductions were withheld may make a deposit for that service.
The amount of deposit for a period of service prior to 1989 during which no retirement deductions were withheld is 1.3 percent of the basic pay for the service plus interest. The 1.3 percent rate applies regardless of when the service was performed or whether deductions would have been taken at 1.3 percent if they had been taken at the time the service was performed.
An employee is not required to make a deposit for a period of nondeduction time prior to 1989. If no deposit is made, no credit will be given toward either eligibility to retire or the calculation of the annuity.
If an employee was at the time of death eligible to make a deposit, the employee’s survivor may make the deposit. A deposit cannot be made after adjudication of the survivor’s application for benefits becomes final.
Deposits require SF 3108, Application To Make Service Credit Payment For Civilian Service. SF 3108 must be routed through the Eagan ASC for proper certification and/or listing of service history and for transmittal to OPM. OPM computes the amount due and furnishes the employee with instructions on how to make payment.
Previously, employees who withdrew retirement contributions subject to FERS could never redeposit them, and the time represented was no longer creditable for any purpose. This applied to deductions made while subject to FERS, and also to deposits made for nondeduction service prior to 1989.
An employee who transfers to FERS with eligibility for a CSRS annuity component (at least 5 years of creditable civilian CSRS service, not counting any service with CSRS Offset coverage) may make a redeposit for refunded CSRS service that is included in the CSRS component. Refunds of CSRS contributions for service performed before the establishment of FERS may also be redeposited under FERS rules.
The National Defense Authorization Act for Fiscal Year 2010 permits redeposit of FERS retirement contributions, plus interest, for individuals who left federal service and were subsequently reemployed. The redeposit will allow the refunded service to be creditable for determining an employee’s retirement computation date (RCD) and for crediting an employee’s annuity computation date (ACD). If a redeposit is not made, the refunded service is creditable toward the RCD, but will not be used in the computation of the employee’s annuity.
To be eligible for a refund, the employee must be separated or transferred to a position not covered by FERS for at least 31 days and must not be eligible for an annuity. SF 3106, Application for Refund of Retirement Deductions, is required. In order to receive refunds, employees generally must notify their spouse and any former spouse(s) that they plan to file applications. Employees may be barred from receiving refunds if the refund would end the court–ordered right of any spouse or former spouse to future benefits based on employees’ service.
Interest is paid on the refund at a variable rate provided the period of service which the refund covers totals more than 1 year. No interest is paid if the refund period is for 1 year or less.
The National Defense Authorization Act (NDAA) for Fiscal Year 2010 permits payment of a FERS redeposit, plus interest, covered by a refund of FERS deductions and CSRS service (that is credited under FERS rules). This provision allows the refunded service to be creditable for determining an employee’s retirement eligibility (RCD) and for computing the amount of the employee’s annuity (ACD).
