This Directive was Canceled June 23, 1999.

U.S. Department of Transportation
Federal Highway Administration

NOTICE

1. PURPOSE. To provide information oh how employees covered by the Civil Service Retirement System (CSRS), including CSRS Offset, may purchase additional retirement annuity by making voluntary contributions to the retirement fund. These optional contributions are in addition to the regular deduction of seven percent of the employee's biweekly basic pay. The additional annuity purchased with these contributions is added to the regular annuity the employee would normally receive upon retirement.

2. HOW CONTRIBUTIONS ARE MADE. Eligible employees may make voluntary contributions at regular intervals or whenever they wish. Each payment must be made directly to the Office of Personnel Management (OPM), and it must be in a multiple of from an employee's salary. Standard Form 2804, Application to Make Voluntary Contributions, is available from servicing personnel offices. Washington Headquarters employees may obtain a copy in room 4342.

3. LIMITATIONS

   1. Total contributions cannot exceed ten percent of the aggregate basic pay the employee has received for all civilian service. Since OPM cannot compute the limitation until the employee retires, any contributions made will be accepted and, when the employee retires, any amount found to be in excess of the limit will be refunded.

   2. Voluntary contributions may not be made by employees who owe a deposit for non-deduction service such as a temporary appointment, or a redeposit for refunded retirement deductions.

   3. The Federal Employees Retirement System (FERS) doesnot have a provision for making voluntary contributions.

4. INTEREST. Voluntary contributions earn a variable interest rate determined by the Treasury Department each calendar year, based on the average yield of new investments purchased by the credited to each voluntary contributions account is compounded annually on December 31. The 1989 interest rate paid on voluntary contributions is 9.125 percent.

5. AT RETIREMENT. The amount of additional annuity purchased with voluntary contributions and interest depends upon the employee's age at the time of retirement. Once fixed, it does not change as the annuitant grows older. For an employee who retires at age 55 or younger, each $100 in the voluntary account will purchase $7 a year of additional annuity. This additional annuity increases by 20 cents for each full year the employee is over 55 at retirement. Thus, retiring at age 60 will result in $8 a year additional annuity for each $100 in the voluntary contribution account. The additional annuity is payable for as long as the individual is retired, but it is not increased by cost of living allowances (COLAs).

6. ADDITIONAL SURVIVOR ANNUITY. At retirement, the employee may elect to share the additional annuity with a spouse or any other person. If this survivor election is made, the retired employee's own additional annuity will be reduced, and at his or her death, the person named as a survivor will be paid half of the additional annuity for the rest or his or her life. The reduction in the additional annuity will depend on the difference in ages between the annuitant and the person named, as shown in the following table:

   AGE OF PERSON NAMED IN RELATIONREDUCTION IN ANNUITY TO THAT OF RETIRING EMPLOYEE OF RETIRING EMPLOYEE

   	Percent
   Older, same age, or less than 5 years younger	10
   5 but less than 10 years younger	15
   10 but less than 15 years younger	20
   15 but less than 20 years younger	15
   20 but less than 25 years younger	30
   25 but less than 30 years younger	35
   30 or more years younger	40

7. LUMP SUM PAYMENTS/REFUNDS

   1. TO EMPLOYEE. Voluntary contributions plus earned interest may be refund to the employee, upon application to OPM, at any time before retirement and receipt of additional annuity. Once a refund has been made, voluntary contributions cannot be made again unless the employee is separated from the Federal service for more than three calendar days and is then reemployed in a position subject to the Civil Service Retirement law.

   2. IF DEATH OCCURS BEFORE RETIREMENT. If an employee dies in service, or after separation but before retirement, the voluntary contributions with interest are payable to the person or persons entitled in the standard order or precedence; e.g., the widow or widower, children, parents, etc., unless the employee has designated otherwise.

   3. DEATH AFTER RETIREMENT. If the retired employee and the survivor-annuitant both die without having together received in additional annuities the total amount of voluntary contributions with interest, the difference will be payable to the person or persons entitled in the standard order or precedence, unless a different beneficiary was designated.

8. DESIGNATION OF BENEFICIARIES. A separate Standard Form 2808, Designation of Beneficiary, should be completed if a different distribution is desired from the regular CSRS retirement contributions. A statement should be added to the form that the "designation is to cover voluntary retirement contributions only."

9. TAXES. If an employees takes a refund of voluntary contributions, any accrued interest is taxable in the tax year in which it is received. Any additional annuity that comes from voluntary contributions is taxed under the "General Rule." (See IRS Publication 721, "comprehensive Tax Guide to U.S Civil Service Retirement Benefits." A copy can be obtained by calling 800-424-3676.)

10. FOR FURTHER INFORMATION. Additional information on this as well as other retirement matters may be obtained from your servicing personnel office. Washington Headquarters employees may call the Personnel Benefits Unit at 366-4031 or come to room 4342.

This Directive was Canceled June 23, 1999.

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