40+ Years of Service: What Happens to Those Extra Retirement Contributions?

By on March 2, 2015 in Retirement with 6 Comments

Q: I’m a CSRS employee with a total of 48.4 years within Civil Service. As I understand the 40.11 ruling; after you reach over 40.11 I’ll receive 80% of my High-Three years.

The question comes into play on the retirement contributions, I’m still paying retirement contributions. When I retire how will I receive the retirement monies that were taken out after working over 40.11 years? Will someone contact me or will they send me a check or some other method?

A: Congratulations on your long federal career!

As you note, deductions for CSRS retirement are being taken out of your salary even though you have completed 41 years and 11 months of service. Once you passed 41 years and 11 months of service, your CSRS pension was “frozen” at 80% of your high-three. (NOTE: any unused sick leave you have accrued can add to your length of service for pension computation purposes, resulting in a pension that is actually higher than 80% of your high-three).

These excess contributions of yours earn interest at the rate of 3% per annum. At the time of your retirement, the excess contributions are first used to pay any civilian deposits or re-deposits that may be outstanding (most CSRS retirees will have no such deposits or re-deposits). When OPM adjudicates your retirement claim, you will be given a choice of receiving a refund of any excess contributions, or of purchasing an additional annuity under the CSRS Voluntary Contributions Program.

For more on this topic, also see:

John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.

© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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