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CSRS Deposit
Old 12-03-2005, 11:54 AM   #1
 
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CSRS Deposit

This is a quick question for Federal CSRS types (or anyone).* I retired a couple of months ago.* I worked a variety of civil service jobs during and after college.* These were all temporary appointments, and Social Security was deducted rather than CSRS.*

OPM allows you to deposit the amount that would have been deducted for CSRS, plus interest, in order to increase your annuity permanently.* The rule that applies to me is as follows:

For nondeduction service performed before October 1, 1982, you will receive credit toward your retirement annuity.* Your annuity will be permanently reduced by 10% of the amount due as a deposit.* For example, if a deposit of $600 is required and it is not paid, the annuity is permanently reduced by $60 a year (or $5 a month).* On the other hand, if a deposit of $600 is made, it will increase the annuity by $60 a year.

Both my previous employer's retirement counselor, and a couple of OPM specialists have told me that practically nobody chooses to deposit for time "early in their career."* I am having trouble understanding why not.* Now, I am more than a little irritated because my previous employer advised me OPM would give me one last chance to deposit for my temporary service.* However, my OPM claim has now been adjudicated, and I am seeing at least some guidance that I am no longer allowed to deposit for temporary service since my claim has reached "final adjudication."

We're not talking a huge amount of money here, less than $500/year for about a $5000 deposit.* Before I decide to lock horns, churn out paper, and probably ultimately lose, can anyone explain why most people would choose not to deposit?* Does anyone have any experience with either a CSRS deposit or redeposit?
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Re: CSRS Deposit
Old 12-03-2005, 02:41 PM   #2
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Re: CSRS Deposit

I ran the numbers and decided not to deposit for a year early in my career. I no longer have the spreadsheet but a 4% withdrawal was much better than depositing the funds with the interest.
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Re: CSRS Deposit
Old 12-03-2005, 07:32 PM   #3
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Re: CSRS Deposit

Tozz -

I had 4 years of military time before entering CSRS in '72.* The interest added three times the CSRS contribution that I would have paid in those 4 years. When I retired I was strongly encouraged to make the deposit;* those 4 years added 8% of my high three base to the yearly pension.* The deposit I made was returned in just over a year.*

I consider the deposit to have been an excellent investment.* Make the deposit quick if you still can.

JohnP
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Re: CSRS Deposit
Old 12-04-2005, 04:36 AM   #4
 
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Re: CSRS Deposit

Thanks John and Popyee.* I submitted the application.* We will see what happens.* Even this accomplished bureaucrat is having trouble penetrating OPM's customer service perimeter in order to reach someone who can actually answer a simple question:* in OPM's example above, would you have to deposit $600 plus interest to receive the $60 annuity increase per year?* Or does the $600 include interest?*
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Re: CSRS Deposit
Old 12-04-2005, 05:58 AM   #5
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Re: CSRS Deposit

Tozz -

Good luck to you - sounds like you are in the category of "Nondeduction Service: Credits and Deposits" - I just read all about it in my federal almanac and still don't understand... Good luck to you!

JohnP
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Re: CSRS Deposit
Old 12-04-2005, 07:49 AM   #6
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Re: CSRS Deposit

Quote:
Originally Posted by tozz
accomplished bureaucrat *
Is that oxymoronic?

JG
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Re: CSRS Deposit
Old 12-04-2005, 10:48 AM   #7
 
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Re: CSRS Deposit

Dunno about that oxymoronic stuff, but I used proudly count myself among the cream of the mediocre.
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