Here’s When You Should Make a Deposit for Your Military Time
Do you have time served in the military but not enough to qualify for a full military pension? As you plan for your federal employee retirement, you may be able to receive retirement eligibility and annuity computation for years of creditable military service. Both CSRS and FERS employees have options when it comes to this benefit. But in order to receive this, action must be taken before retirement. Federal Educators shares why.
CSRS Employees
Anyone hired before October 1, 1982, falls under the CSRS retirement system that includes post-56 military service but has yet to make a deposit can still receive retirement eligibility, but their annuity may be subject to Catch 62. The Catch 62 rule applies to employees that have not paid a deposit towards their military service but will have the mandatory 40 credits needed for Social Security eligibility at age 62. It’s important to note that Catch 62 does not affect employees that do not have the required Social Security credits for eligibility at age 62. If you were first hired after October 1, 1982, and did not make a deposit, you will only receive retirement eligibility.
Because of these requirements, their CSRS annuity will be computed twice. First, at the employee’s initial retirement with military time included. Second, at age 62 without any military service included. As we mentioned above, if hired before October 1, 1982, without a deposit made, you will receive retirement eligibility but may be subject to Catch 62 with a reduction of 2% for each year of military service on your CSRS annuity. For example, if you have 3 years of military service and reach 62 years, your CSRS will be reduced by 8%. But, if you made your military deposit, there is no reduction and you receive full annuity and Social Security benefits.
FERS Employees
Employees under the FERS retirement system with post-56 (service 1/1/1957 and after) military service that has not made a deposit will not receive retirement eligibility or annuity computation. Only CSRS and FERS employees will receive these if a deposit has been made.
By paying for a period of employment when retirement deductions for FERS or CSRS were not being withheld from your salary, you are receiving credit in the computation of your annuity. Generally, this will waive any military retired pay as well. Contact the Office of Personnel Management (OPM) to waive your military retired pay and receive credit for service in your FERS or CSRS benefits. This deposit is not mandatory but if you decide to make a deposit for your active military service, you must do so prior to retirement. OPM will not settle your annuity if you delay making your deposit.
If you need additional information about this benefit, Federal Educators can provide you with the perfect combination of educational resources and a knowledgeable team. Call our St. Petersburg office at (813) 544-2908 to get started today.
