This Directive was Canceled June 23, 1999.
U.S. Department of Transportation
Federal Highway Administration
VOLUNTARY CONTRIBUTIONS TO THE CIVIL
SERVICE RETIREMENT SYSTEM (CSRS)
April 20, 1989
- 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.
- 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.
- 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.
- 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.
- The Federal Employees Retirement System (FERS) doesnot have a provision
for making voluntary contributions.
- 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.
- 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).
- 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
|Older, same age, or less than 5 years younger
|5 but less than 10 years younger
|10 but less than 15 years younger
|15 but less than 20 years younger
|20 but less than 25 years younger
|25 but less than 30 years younger
|30 or more years younger
- LUMP SUM PAYMENTS/REFUNDS
- 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.
- 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.
- 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.
- 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."
- 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.)
- 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.
Rosalie R. Wilson
Director, Office of Personnel
This Directive was Canceled June 23, 1999.
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