CSRS Offset and Social Security Deductions

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By on March 16, 2015 in Q&A, Retirement with 2 Comments

Q: My husband’s personnel office just found out that he should have been in CSRS Offset after 21 years of coming from the DC Government and this is his first year in CSRS Offset so we have not seen what happens when he reaches his maximum Social Security tax. After his maximum SS tax was reached, his personnel office stopped the SS deduction but then the same amount was taken out for CSRS Offset contribution. In the past, after the maximum was reached he has received the SS contribution in his paycheck. Was this done correctly?

A: Yes, this was done correctly. An employee who is covered by CSRS (regular or offset) must have 7% deducted from their salary for retirement purposes each pay period. Someone who is under CSRS Offset normally has 0.8% of their salary taken out for CSRS Offset and 6.2% for Social Security. Upon hitting the annual Social Security tax cap ($117,000 for 2014), 6.2% is no longer withheld for Social Security. As 7% must be contributed, the 6/2% is now withheld for CSRS Offset.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

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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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