CSRS Deposit

[tozz]

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?

 

[popyee]

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.

 

[JohnP]

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

 

[tozz]

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? 

 

[JohnP]

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

 

[Mr._johngalt]

accomplished bureaucrat  

Is that oxymoronic?

JG

 

[tozz]

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