Glossary of Terms & Frequently Asked Questions >Terms CSRS FERS Trans-FERS Survivor Benefits Thrift Savings Plan FEGLI CSRS 1. The Civil Service Retirement System (CSRS) is a defined benefit contributory retirement system. Employees share in the expense of the annuities to which they become entitled. 2. CSRS benefits are based on the employee s high-3 average pay and the years of service. Under the general formula, 30 years of service provides 56.25% of high-3 average salary. 3. CSRS covered employees contribute 7, 7 ½, or 8 % of pay to CSRS, and while they generally pay no Social Security retirement, survivor and disability (OASDI) tax, they must pay Medicare tax. The employing agency matches the employee s CSRS contributions. 4. CSRS employees may contribute up to 10% of their basic pay for their creditable service to a voluntary contribution account. Accounts earn a market rate of interest. The employee may withdraw the funds from the account at any time or use them to purchase an additional annuity at retirement. The additional annuity is $7 a year for each $100 in the account, plus $.20 for each full year the person is over age 55 at retirement. 5. CSRS employees may contribute up to the IRS limits of pay to the Thrift Savings Plan. There are no Government contributions. 6. CSRS-Offset employees are covered by Social Security benefits because they were separated from CSRS Federal Employment for more than one year and returned to a position in which they were covered by CSRS after 1983. For these employees, their OASDI withholdings and CSRS contributions are the same as for employees who have CSRS coverage only. 7. When CSRS Offset employees retire, they receive full CSRS benefits until they are eligible for Social Security benefits, generally at age 62. At that time the CSRS benefit is offset by the portion of their Social Security benefit that represents the period of time they were covered by both CSRS and Social Security. FERS 1. The Federal Employees Retirement System (FERS) is a three-tiered plan consisting of Social Security, a basic FERS annuity and the Thrift Savings Plan. 2. Employees under FERS are covered by full Social Security taxes.
3. The basic FERS annuity is based on the employee s length of service and the high-3 average pay. For most employees, the formula for computing the annual annuity is 1% of average pay for each year of creditable service. 4. Employees may contribute up to the maximum IRS limits of their pay to the Thrift Savings Plan. These contributions are tax-deferred. The Government contributes 1% of pay and matches a portion of the employee s contributions. The maximum Government contribution is 5% of pay. Trans-FERS 1. Employees transferring to FERS from CSRS can take advantage of both retirement systems. These employees keep the benefits they already earned and build on them. 2. All CSRS service is creditable toward eligibility for death and disability benefits, as well as retirement, so that there is no gap in protection. 3. If the employee transfers, the past CSRS service and all future FERS service will be added together to determine retirement. Instead of the CSRS retirement rules, the employee will follow the FERS retirement rules. Survivor Benefits Benefit paid to an individual entitled to a benefit based on the service of a deceased federal employee or annuitant. Thrift Savings Plan A retirement savings plan and investment plan established by Congress in the Federal Employees Retirement System Act of 1986 to provide Federal employees savings and tax benefits similar to those offered by many private corporations. It is a defined contribution plan administered by the Federal Retirement Thrift Investment Board. CSRS employees can also contribute but receive no agency match. FEGLI 1. Federal Employees Group Life Insurance (FEGLI) program was established August 29, 1954. It is the largest group life insurance program in the world, covering several million Federal employees and retirees, as well as many of their family members. 2. FEGLI provides group term life insurance. As such, it does not build cash value or paid-up value. FEGLI consists of Basic life insurance coverage and several additional options that can be elected. In most cases, if you are a new federal employee, you are automatically covered by Basic life insurance and your payroll office automatically deducts premiums from your paycheck unless the coverage is waived. In addition to the Basic plan, there are three forms of optional insurance that can be elected. Basic insurance must be in effect in order to elect any of these additional options. Unlike Basic, enrollment in Optional insurance is not automatic, one must take action to elect these coverage s.
3. The cost of Basic insurance is shared between you and the Government. You must pay 2/3 of the total cost and the Government pays 1/3. Your age does not affect the cost of Basic insurance. You pay the full cost of Optional insurance, which cost is dependent on age. 4. The Office of Federal Employees Group Life Insurance (OFEGLI) is a private entity that has the contract with the Federal Government, which claims are processed and paid under FEGLI program. Frequently Asked Questions? TSP Is there a minimum age needed to participate in the catch-up program? Participants must be age 50 or older during the calendar year in which the catch-up contributions are made What are my withdrawal options? The TSP provides several ways to withdraw from your account: 1. A partial withdrawal of account in a single payment 2. A mixed withdrawal which is a full withdrawal of an account by any one, or combination, of the following methods: Single payment Series of monthly payments Life annuity Social Security What is the windfall provision? If you will receive a pension from a job where you did NOT pay Social Security taxes and have earned enough Social Security credits to be eligible for retirement or disability benefits, a modified formula may be used to calculate your benefit amount. This modified formula will lower your Social Security benefit, but will not affect existing pensions. How does an employee become eligible for social security benefits? 1. Through employment under Social Security before entering civil service. 2. While employed as a temporary employee, with deductions taken from pay for Social Security. 3. Through part-time employment under Social Security, while a full time career federal employee. 4. By operating a personal business apart from full time federal employment. 5. Through employment or self-employment under Social Security after retirement or separation from a civil service position. How much Social Security benefits can a divorced spouse receive? A person who is divorced after at least 10 years of marriage keeps certain benefit rights on their former spouse s Social Security record. In order to receive these benefits, a divorced spouse must be at least age 62 and the former spouse must be eligible for
benefits, but not necessarily receiving them. The maximum benefit is 50% of the benefit the worker would receive at full retirement age. However, benefits paid prior to full retirement age of the spouse are reduced based upon his/her age at the time benefits are received. FERS Are employees required to contribute to the basic annuity? Yes, automatic contributions of.8 percent of basic pay are made for all FERS employees to the retirement fund. Special group employees contribute ½ percent more. Is it to the employees advantage to make a FERS deposit? Generally, yes. Payment should be made if an employee will not receive credit for the periods of service in determining eligibility to retire or in computing the basic annuity. If a CSRS employee transfers to FERS, what happens to the CSRS service performed prior to the date of transfer? If the transferee has a CSRS component, all service included in the CSRS element is computed under CSRS general formula. A transferee has a CSRS factor if; He or she has five or more years of CSRS CSRS only service or a combination of CSRS CSRS only and FICA service CSRS Offset and CSRS interim service are not included in the CSRS component. Military service cannot be used to determine if a transferee qualifies as a CSRS service element. May an employee make a deposit after retirement? A deposit cannot be made after final adjudication of an annuity claim. However, an employee need not postpone filing an application for retirement because a deposit is due. OPM automatically contacts retirees who owe FERS deposits to advise on the amount of deposit due and the potential effect on their annuity if one elects not to pay the deposit amount. If a retiree wishes to make payment, he or she may do so at this time. When is an employee considered covered under the special group provisions of law enforcement officers and firefighters? An employee is covered under the special group provisions if he or she occupies a position classified as rigorous for at least 3 years. The employee may be transferred to an administrative or supervisory position in either law enforcement or firefighter functions and still be covered under special provisions. CSRS What is the CSRS Offset Plan? The CSRS Offset Plan is essentially the Civil Service Retirement System, modified for rehired employees who remain in CSRS, but who must be covered by Social Security. Who is covered by the Offset Plan? Employees rehired into Federal Service on or after January 1, 1984, who have break in covered service exceeding 1 year, and who meet one of the following tests:
Had a break in service after 1/31/86, had at least 5 years of creditable civilian service as of last break in service, and have at least 1 day covered by CSRS, or Had 5 years of creditable civilian service as of 12/31/86, regardless of leave after that date Are CSRS annuities adjusted for inflation after retirement? Retiree annuities are adjusted according to the Consumer Price Index (CPI) formula. If inflation, as measured by CPI, increases by 3 percent in one year, all CSRS retirees will receive a cost-of-living adjustment (COLA) in that amount. Do law enforcement officers, firefighters and air traffic controllers have mandatory retirement age? Yes, LEO or firefighters must retire at age 57 if they have 20 years of law enforcement/firefighter service. Air traffic controllers appointed by Department of Transportation after May 15, 1972 or appointed by Department of Defense after September 11, 1980, must retire at age 56. What happens when a special group employee does not meet the service requirement upon reaching the mandatory retirement age? A LEO or firefighters who have reached the mandatory retirement age without completing the 20 years of service may remain in their position until the service requirement is completed. (They must be separated no later than the end of the month in which the necessary 20 years of service is reached) However, an air traffic controller is subject to mandatory separation even if he or she has not acquired sufficient years of air traffic controller service to qualify for retirement under the special provisions. FEGLI What happens to my FEGLI coverage if I leave Federal employment and then decide to come back? Upon return to Federal employment after a break in service of less than 180 days, your human resources office will automatically enroll you in the same coverage that was held before departure of your prior position. In order to elect other coverage, standard qualifications will need to be met (open season, physical exam or life event). What is my life insurance is converted into a private plan when I leave Federal service? Any insurance product purchased under the conversion privilege is a private business transaction between you and the insurance company. The cost of the individual policy is determined by the insurance company and is based on your age and risk classification. If you return to Federal Service and previously converted your FEGLI coverage (including as a re-employed annuitant), you do not have to cancel your conversion policy. You can continue the conversion policy and have FEGLI coverage as an employee. What happens to my insurance when I go into a leave without pay status (LWOP)? Life insurance coverage continues for up to 12 months in a LWOP or non-pay status. You do not have to pay any premiums while you are on LWOP unless you are receiving benefits for the Department of Labor, Office of Workers Compensation Programs. The
life insurance ends at the end of the 12 months with a 31-day extension of coverage and a right to convert to an individual policy. What is the 31-day temporary extension of coverage? When life insurance is terminated, except when stopped voluntarily by cancellation, the coverage automatically continues for 31 days after the termination date. Premiums are not paid during this time. Can I convert Option C when I no longer have any eligible family members? No. Option C cannot be converted when family members lose eligibility. Option C can only be converted when you separate from service. If you do not want to convert the coverage when you separate, your family members covered under Option C are eligible to convert their coverage to an individual policy. Eligible family members can also convert their coverage upon your death.