Table of Contents

Subchapter 21A CSRS

Part 21A1 General Information

Section 21A1.1-1 Overview	1

A.	Introduction	1

B.	Topics Covered	1

C.	Cross References	1

D.	Organization of Subchapter	2

E.	Statement of Authority	2

Section 21A1.1-2 Definitions	3

A.	Deposit or Nondeduction Service	3

B.	Deposit	3

C.	Refund	3

D.	Redeposit	3

E.	Redeposit Service	3

Part 21A2 Deposit Service

Section 21A2.1-1 Introduction	4

A.	General Principles	4

B.	Who May Make a Deposit	4

C.	When Deposit May Be Made	4

D.	Cross References	5

Section 21A2.1-2 Amount of Deposit	6

A.	Amount of Deposit	6

B.	Interest	7

C.	Special Rules: Peace Corps/VISTA Service	9

D.	Interest on Peace Corps/VISTA Service Deposits	9

E.	Where Deposit for Volunteer Service is Made	10

F.	When Deposit Was Already Made	10

Section 21A2.1-3 Effect of Paying a Deposit	11

A.	General	11

B.	Service Before October 1, 1982	11

C.	Example: Service Before October 1, 1982	12

D.	Service Performed After September 30, 1982	12

E.	Example: Service Performed After September 30, 1982	13

Part 21A3 Redeposit Service

Section 21A3.1-1 Introduction	14

A.	General Principles	14

B.	Who May Make a Redeposit	14

C.	When Redeposit May Be Made	14

D.	Cross References	14

Section 21A3.1-2 Amount of Redeposit	15

A.	Amount of Redeposit	15

B.	Interest	15

Section 21A3.1-3 Effect of Making a Redeposit	17

A.	General	17

B.	Refunded Service Ending Before October 1, 1990	17

C.	The 80-Percent Maximum Annuity	18

D.	Refunded Service Ending After September 30, 1990	18

E.	Example: Paying and Not Paying the Redeposit	19

F.	Partial Redeposits	20

Part 21A4 Procedures for Making Service Credit Payments

Section 21A4.1-1 Procedures for Making Service Credit Payments Before Retirement	22

A.	General Procedures	22

B.	Completing the SF 2803: Agency Action	23

C.	Advantages	23

Section 21A4.1-2 Procedures for Making Service Credit Payments at Retirement	24

A.	Eligible for Alternative Annuity Election	24

B.	Not Eligible for Alternative Annuity Election	24

C.	Advantages	24

D.	Disadvantages	25

Section 21A4.1-3 Advice to Employee	26

A.	Deposits/ Redeposits Are Generally Optional	26

B.	Estimating the Amount of the Deposit/ Redeposit	26

C.	Effect of Not Making the Deposit/ Redeposit	26

D.	When Deposits/ Redeposits May Not Increase the Annuity	26

E.	Alternative Annuity	27

F.	Actuarial Reduction	27

G.	Payment After Death of Employee	27

H.	Application of Installment Payments to Multiple Deposit/ Redeposit Periods	28

Subchapter 21B FERS

Part 21B1 General Information

Section 21B1.1-1 Overview	29

A.	Introduction	29

B.	Organization

of Subchapter	29

C.	Statement

of Authority	29

Section 21B1.1-2 Definitions	30

A.	Deposit or Nondeduction Service	30

B.	Deposit or Service Credit Payment	30

C.	Refund	30

Part 21B2 Deposit Service

Section 21B2.1-1 Introduction	31

A.	General Rules	31

B.	General Rule: Transferees	31

C.	Special Rule: Peace Corps/VISTA Service	32

D.	Who May Make a Service Credit Payment	32

E.	When a Payment May Be Made	33

Section 21B2.1-2 Amount of Service Credit Payment	34

A.	Amount of Deposit	34

B.	Interest	34

C.	Special Rule: Peace Corps/VISTA Service	35

D.	Interest on Peace Corps/VISTA Service Deposits	36

E.	Where Deposit for Volunteer Service is Made	36

F.	When Deposit Was Already Made	36

Section 21B2.1-3 Effect of Making a Service Credit Payment	37

A.	General Rule	37

B.	Example	37

Part 21B3 Refunded Service

Section 21B3.1-1 Introduction	38

A.	General Rule	38

B.	General Rule: Transferees	38

C.	General Rule: Non-Transferees With Prior CSRS Service	38

Section 21B3.1-2 Effect of Making a Deposit for CSRS Refunds	39

A.	Paying the Deposit	39

B.	Not Paying the Deposit: Service Treated Under FERS Rules	39

C.	Example	39

Part 21B4 Procedures for Making Service Credit Payments

Section 21B4.1-1 Procedures for Making FERS Service Credit Payments Before Retirement	41

A.	General Procedures	41

B.	Completing the SF 3108: Agency Action	42

C.	Advantages	42

Section 21B4.1-2 Procedures for Making FERS Service Credit Payments at Retirement	43

A.	General Procedures	43

B.	Advantages and Disadvantages	43

Section 21B4.1-3 Advice to Employee	44

A.	Payments Are Optional	44

B.	Estimating the Amount of the Payment	44

C.	Effect of Not Making the Payment	44

D.	When Payment May Not Increase the Annuity	44

E.	Alternative Annuity	44

F.	Payment of Deposit After Death of Employee	45

G.	Payment of Multiple Deposits	45

Subchapter 21C Job Aids and Forms

Section 21C1.1-1 Job Aids	46

AGENCY CHECKLIST FOR A CSRS SERVICE CREDIT APPLICATION	47

AGENCY CHECKLIST FOR A FERS SERVICE CREDIT APPLICATION	49

Subchapter 21A CSRS

Part 21A1 General Information

Section 21A1.1-1 Overview

A.	Introduction

Employees can make deposits for creditable service during which no retirement deductions were made. Chapter 20, Creditable Service, discusses the types of nondeduction employment for which a deposit can be made.

Employees may also redeposit any CSRS deductions that were refunded to them during a qualifying break in service. Refunds are discussed in Chapter 32, Refunds.

Depositing or redepositing deductions is a voluntary action on the part of the employee. Payment generally affects the amount of the retirement annuity.

B.	Topics Covered

This subchapter covers --

•	The rules that govern deposits for nondeduction service;

•	The actuarial reduction in annuity in lieu of making a redeposit for service ending before October 1, 1990;

•	The rules that govern redeposits for refunded service ending after September 30, 1990;

•	The alternative form of annuity in lieu of making service credit deposits; and

•	The procedures for making service credit payments for civilian service.

C.	Cross References

For information about service credit for leave, reduction-in-force, and other purposes, see The Guide to Processing Personnel Actions (formerly FPM Supplement 296-33).

For information about deposits for post-1956 military service, see

Chapter 23, Service Credit Payments for Post-1956 Military Service.

Section 21A1.1-1 Overview (Cont.)

D.	Organization of Subchapter

The CSRS subchapter has four parts.

Part	Name of Part	Page	21A1 General Information	1	21A2 Deposit Service	4	21A3 Redeposit Service	14	21A4 Procedures for Making Service Credit Payments

22

NOTE:	Subchapter 21B about service credit payments under FERS begins on page 27.

E.	Statement of Authority

This subchapter and its contents are based on the law and regulations cited below.

•	United States Code: 5 U.S.C. 8334

•	Code of Federal Regulations: 5 CFR Part 831, section 105 and Subpart C

Section 21A1.1-2 Definitions

A.	Deposit or Nondeduction Service

Any period of creditable civilian service during which retirement deductions are not taken is called deposit or nondeduction service. Generally, this is noncareer time such as temporary or indefinite service.

However, it also can be service that was not considered Federal employment at the time it was performed, but for which a subsequent change in the law now allows credit for retirement annuity computation purposes.

B.	Deposit

A sum of money paid into the Civil Service Retirement and Disability Fund (hereafter "the Fund") by an employee or survivor to cover a period of service during which deductions were not withheld from pay.

C.	Refund

The withdrawal from the Fund by an individual of his or her lump-sum credit under conditions that entitle him or her to receive a refund. Payments made when the individual is not entitled (or loses entitlement) to receive the refund are erroneous payments that are collected as discussed in Chapter 4, Debt Collection.

D.	Redeposit

A sum of money paid into the Fund by an employee or survivor to cover a period of service during which deductions were withheld but later refunded under CSRS provisions.

E.	Redeposit Service

Any period of civilian service for which an employee received a refund and owes a CSRS redeposit.

Part 21A2 Deposit Service

Section 21A2.1-1 Introduction

A.	General Principles

Nondeduction service is creditable toward eligibility for a CSRS annuity.

Generally, nondeduction service performed before October 1, 1982, is creditable in the annuity computation; however, if the employee does not make a deposit to cover the service, the annual annuity is permanently reduced by 10 percent of the deposit due. (See Chapter 20 for information about service for which a deposit must be paid before an employee receives any credit for it.)

Nondeduction service performed after September 30, 1982, is not creditable for computation purposes (other than average salary) unless the employee pays the deposit.

If a retiring employee is eligible and chooses an alternative form of annuity, any redeposits are deemed to have been paid. (See Chapter 53, Alternative Annuity Elections, for a detailed discussion of alternative annuities.)

B.	Who May Make a Deposit

Deposits for nondeduction service may be made only by:

•	An employee who currently is covered by CSRS and CSRS Offset;

•	A separated employee who is entitled to an immediate annuity;

•	A former employee whose annuity has not been finally adjudicated, who retains retirement rights based on a separation from a position in which retirement deductions were properly withheld and remain (or have been fully or partially redeposited) in the Fund;

•	The spouse of a deceased employee who is entitled to a survivor annuity (see Chapter 70, Spouse Benefits - Death of an Employee); or

•	The former spouse of a deceased employee who is entitled to a survivor annuity (see Chapter 74, Former Spouse Survivor Benefits).

C.	When Deposit May Be Made

With the exception of service described in Chapter 20 to which special rules apply, a deposit may be made at any time prior to the final adjudication of the individual's application for retirement or survivor benefits.

Section 21A2.1-1 Introduction (Cont.)

D.	Cross References

See Chapter 20 for civilian service that is creditable for retirement eligibility.

See Chapters 70 and 74 regarding the entitlement of surviving spouses or former spouses to annuity benefits.

Section 21A2.1-2 Amount of Deposit

A.	Amount of Deposit

The amount of a deposit is the sum of the deductions that would have been withheld from an employee's basic pay during the period of nondeduction service had the employee been covered by the retirement system, plus interest.

The deductions are based on a percentage of basic pay. The percentages that apply for different periods of service are shown in the table below.

If the Service Was Performed... Then the Percentage Deductions from Basic Pay Are... Before August 1920	none From August 1, 1920, to June 30, 1926	2.5% From July 1, 1926, to June 30, 1942	3.5% From July 1, 1942, to June 30, 1948	5.0% From July 1, 1948, to October 31, 1956	6.0% From November 1, 1956, to December 31, 1969	6.5% From January 1970	7.0%

NOTE 1:	For nondeduction law enforcement or firefighter service after December 31, 1974, the applicable deduction from basic pay is 7.5 percent. When entering the employee's service history on the SF 2803, the agency should show the effective date and percentage changes in retirement deduction rates for nondeduction service. Different deduction percentages also may apply to nondeduction service performed by Congressional employees, Members of Congress, bankruptcy judges, U.S. Magistrates, and judges of the Court of Military Appeals. See 5 U.S.C. 8334.

Section 21A2.1-2 Amount of Deposit (Cont.)

A.	Amount of Deposit (Cont.)

NOTE 2:	For CSRS Offset employees, the amount of the deposit is calculated using the appropriate rate listed in the preceding table.

B.	Interest

Unless there is a specific statutory provision to the contrary, interest is computed on the deposit, as explained below, from the midpoint of each period of nondeduction service.

1.	Interest for nondeduction service performed before October 1, 1982, accrues daily and is charged at the following rates, compounded annually;

•	4 percent through December 31, 1947; and

•	3 percent from 1948 through the date the deposit is made or to the commencing date of annuity, whichever is earlier.

NOTE 1:	No interest is charged for periods of separation that began before October 1, 1956.

NOTE 2:	Additional interest does not accrue if payment is made in full within 30 days after OPM issues the billing statement.

2.	Interest for nondeduction service performed on or after October 1, 1982, accrues annually and is charged at the following rates, compounded annually on December 31 of each year:

•	3 percent through December 31, 1984; and

•	A variable rate determined annually by the Department of the Treasury beginning January 1, 1985. The variable interest rate for any year equals the overall average yield to the Fund from retirement securities during the preceding fiscal year.

Section 21A2.1-2 Amount of Deposit (Cont.)

B.	Interest (Cont.)

The variable rates charged through 1998 are as follows:

Variable Interest Rates

Year	Interest

Rate

Year	Interest

Rate	1985

1986

1987

1988

1989

1990

1991

1992	13 .0%

11 .125%

9 .0%

8 .375%

9 .125%

8 .75%

8 .625%

8 .125%	1993

1994

1995

1996

1997

1998

All future

periods	7 .125%

6 .25%

7 .0%

6 .875%

6 .875%

6 .75%

To be determined by the Department of the Treasury

3.	To avoid additional interest charges on all or part of a civilian service credit account balance, payments must be physically in the possession of the OPM official or agent authorized to receive service credit payments by the close of business on the last regular business day of the calendar year. The postmarked date for deposits sent by mail does not constitute the date of payment. Payments are posted to the individual's account as of the day they are received by OPM.

NOTE 1:	No interest is charged for a year when payment in full is received by close of business on the last regular business day of the year.

NOTE 2:	When interest begins during a year, it accrues for the remainder of that year.

NOTE 3:	If nondeduction service spans the October 1, 1982 date, OPM does two interest computations. The first goes from the beginning of the period through September 30, 1982, using the rules in effect through September 30, 1982.

The second is from October 1, 1982, to the ending date, using the rules that apply to service performed on or after

October 1, 1982. The sum of the two amounts is the interest owed for the period.

Section 21A2.1-2 Amount of Deposit (Cont.)

C.	Special Rules: Peace Corps/VISTA Service

Public Law 103-82, the National and Community Service Trust Act of 1993 and Domestic Volunteer Service Act Amendments of 1993, modified the treatment of Peace Corps and VISTA volunteer service so that it is similar to that of military service. In the past, if an employee or his or her survivors were entitled to old-age or survivor benefits from Social Security, credit for Peace Corps/VISTA volunteer service was eliminated from the annuity computation, even if a deposit was made for the service. Now, payment of the deposit guarantees that the employee and his or her survivors will continue to receive credit for the volunteer service, regardless of their Social Security entitlement.

The deposit is equal to 7 percent of the readjustment allowance paid to the employee or Member under title VIII of the Economic Opportunity Act of 1964 or section 5(c) or 6(l) of the Peace Corps Act or the stipend paid to the employee or Member under part A, B, or C of title I of the Domestic Volunteer Service Act of 1973, for each period of service as a volunteer or volunteer leader. That has not changed, but the interest rules are different.

D.	Interest on Peace Corps/VISTA Service Deposits

For current employees, and former employees who separated after September 30, 1993, interest begins to accrue on deposits for volunteer service on October 1, 1995, or 2 years after the date on which the individual first becomes an employee or Member, whichever is later.

Public Law 103-82 provides a 2-year interest-free grace period on Peace Corps/VISTA volunteer service deposits. After the 2-year period, interest is accrued and compounded annually at the variable rate beginning on the date of the expiration of the 2-year period.

Example: For employees first employed before October 1, 1993, interest started accruing October 1, 1995. The earliest possible interest posting for an unpaid deposit is October 1, 1996.

NOTE:	Because interest accrues annually, there is, in effect, a 3-year interest-free period if the deposit is paid in full before the first interest accrual date. However, interest will accrue during the year following the 2-year grace period on any amount not deposited before the first interest accrual date.

Like the deposit for post-1956 military service, interest on these deposits accrues and compounds annually on the employee's personal interest accrual date. Because the interest accrual period will not generally coincide with the calendar year, two interest rates may apply. (See Section 23A3.1-5 in Chapter 23 for more details on computing interest.)

Section 21A2.1-2 Amount of Deposit (Cont.)

E.	Where Deposit for Volunteer Service is Made

Like other deposits for nondeduction service, deposits for Peace Corps/VISTA service must be paid to OPM following the procedures outlined in Part 21A4.

F.	When Deposit Was Already Made

Individuals who have not separated, but who have previously made a service credit deposit for their volunteer service under the old rule, will be deemed to have made a deposit under the new rule.

Section 21A2.1-3 Effect of Paying a Deposit

A.	General

The effect on retirement benefits of a deposit for nondeduction service depends on whether the nondeduction service was performed before October 1, 1982, or after September 30, 1982. It does not matter whether an employee has only CSRS coverage, or CSRS Offset coverage.

However, in some death and disability cases, paying a deposit does not increase the annuity because it is computed under the minimum basic annuity formula with or without payment of the deposit. See Chapters 60 and 70 for additional information.

B.	Service Before October 1, 1982

1.	Except as provided in 2 below, if the employee does not pay the deposit prior to the final adjudication of his or her retirement claim or if the employee is eligible to do so, but does not choose to have it deemed paid by electing the alternative form of annuity:

•	The nondeduction service counts toward eligibility for retirement; and

•	The nondeduction service is used to compute the annual annuity; but

•	The annual annuity is reduced by 10 percent of the total deposit owed (including interest).

2.	If the employee has performed service with the Cadet Nurse Corps, has certain pre-January 1, 1969, service as a National Guard technician, or performed service under a personal services contract prior to November 5, 1985, that is creditable under section 110 of Public Law 100-238, the employee must make a deposit according to the requirements stated in Chapter 20 before credit will be allowed for such service in the annuity computation.

Section 21A2.1-3 Effect of Paying a Deposit (Cont.)

C.	Example: Service Before October 1, 1982

SUMMARY:

A 55-year-old employee has 30 years of creditable civilian service. The high-3 average salary is $30,000.

WORK HISTORY:

•	Hired May 10, 1959, on an indefinite appointment with no retirement coverage.

•	Converted to a career appointment May 10, 1964, and served continuously in a covered position for the next 25 years.

•	The total deposit owed for the 5 years of indefinite service is $10,000.

RESULT:

1.	The employee is eligible for optional retirement whether or not the deposit is made. The 5 years of indefinite service are creditable for determining retirement eligibility.

2.	If the employee makes a deposit for the indefinite service, the annuity will equal 56.25 percent of the high-3 average salary or $16,875 annually.

3.	If the employee does not make the deposit, his or her annuity will equal $16,875 minus 10 percent of the deposit owed (10 percent of $10,000 is $1000) or $15,875 annually. However, if the alternative form of annuity is available, the employee may elect an alternative annuity at retirement and have the deposit deemed paid. (See Chapter 53.)

D.	Service Performed After

September 30, 1982

If the employee does not pay the deposit prior to the final adjudication of his or her retirement claim:

•	The nondeduction service counts toward eligibility for retirement; and

•	The nondeduction service may be used for high-3 average salary purposes; but

•	The nondeduction service is not used in determining total creditable service for computation purposes.

•	If the employee is eligible to do so and does elect an alternative annuity at retirement, the deposit may be deemed paid. (See Chapter 53.)

Section 21A2.1-3 Effect of Paying a Deposit (Cont.)

E.	Example: Service Performed After September 30, 1982

SUMMARY:

A 55-year-old employee has 30 years of creditable civilian service. The high-3 average salary is $30,000.

WORK HISTORY:

•	Hired May 10, 1959, under a career appointment.

•	Separated May 9, 1979.

•	Rehired November 5, 1982, with an indefinite appointment.

•	Converted to a career appointment with CSRS Offset coverage November 5, 1987.

•	Worked next 5 years in a covered position.

•	The total deposit owed for the 5 years of indefinite service is $10,000.

RESULT:

1.	This employee is eligible to retire whether or not the deposit is made. The 5 years of indefinite service count in determining retirement eligibility.

2.	If the employee makes the deposit for the 5 years of nondeduction service, the annuity equals 56.25 percent of the high-3 average salary or $16,875 annually.

3.	If the employee does not make the deposit, the 5 years of nondeduction service is not used in computing the annual annuity. As a result, the employee's annuity is based on 25 years of service and equals 46.25 percent of the high-3 average salary or $13,875 annually. However, if the employee is eligible to elect an alternative annuity at retirement, and does so, the deposit will be deemed paid. (See Chapter 53.)

Part 21A3 Redeposit Service

Section 21A3.1-1 Introduction

A.	General Principles

Redeposit service is any period of creditable civilian service, including creditable service performed under another eligible retirement system for Federal employees, for which retirement deductions were taken and later refunded in accordance with law and regulation upon an employee's separation from service.

Payment of a redeposit is not required for the service to be used in determining eligibility to retire. However, payment of a redeposit may be required for the service to be used for annuity computation purposes.

B.	Who May Make a Redeposit

Payments for CSRS redeposit service may be made only by:

•	An employee who currently is covered by CSRS or FERS;

•	A separated employee with title to an immediate annuity;

•	A former employee with title to a deferred annuity;

•	A spouse of a deceased employee who is entitled to annuity benefits (see Chapter 70) or

•	A former spouse of a deceased employee who is entitled to annuity benefits (see Chapter 74).

C.	When Redeposit May Be Made

A redeposit may be made at any time prior to the final adjudication of an individual's claim for retirement or survivor benefits.

D.	Cross References

•	See Chapter 20 for civilian service that is creditable for retirement eligibility.

•	See Chapters 70 and 74 for provisions regarding annuity benefits for surviving spouses and former spouses.

Section 21A3.1-2 Amount of Redeposit

A.	Amount of Redeposit

The amount of a redeposit equals the amount of the refund received plus accrued interest.

CSRS Offset employees who are making redeposits for CSRS Offset service also pay the amount of the refund (generally based on deduction of 1.3 percent of pay in 1984, 1985, 1986 and 1987; .94 percent of pay in 1988 and 1989, and .80 percent beginning in 1990) plus interest.

B.	Interest

1.	If the refund was based on an application received by the employing agency or OPM before October 1, 1982, interest on the redeposit accrues daily beginning on the date the refund was paid and is charged at the following rates, compounded annually:

•	4 percent through December 31, 1947; and

•	3 percent from 1948 through the date the redeposit is made, or to the commencing date of annuity, whichever is earlier.

NOTE 1:	No interest is charged for periods of separation that began before October 1, 1956.

NOTE 2:	Under the pre-October 1, 1982 rules, additional interest does not accrue if full payment is made within 30 days after the billing statement is issued. (See discussion in section 21A2.1-2.B.3.)

2.	If the refund was based on an application received by the employing agency or OPM after September 30, 1982, interest is charged on the redeposit, beginning on the date the refund was paid, at the following rates, compounded annually:

•	3 percent through December 31, 1984; and

•	A variable rate determined by the Department of the Treasury beginning January 1, 1985. The variable rates are as follows:

Section 21A3.1-2 Amount of Redeposit (Cont.)

B.	Interest (Cont.)

Variable Interest Rates

Year	Interest

Rate

Year	Interest

Rate	1985

1986

1987

1988

1989

1990

1991	13 .0%

11 .125%

9 .0%

8 .375%

9 .125%

8 .75%

8 .625%	1992

1993

1994

1995

1996

1997

1998

All future

periods	8 .125%

7 .125%

6 .25%

7 .0%

6 .875%

6 .875%

6 .75%

To be determined by Department of the Treasury

NOTE 1:	For refunds after September 30, 1982, interest is not charged for a year when payment in full is received by close of business on the last regular business day of that year.

NOTE 2:	When interest begins during a year, it accrues for the remainder of that year.

Section 21A3.1-3 Effect of Making a Redeposit

A.	General

The effect of making a redeposit for refunded retirement contributions, including those from another eligible retirement system for Federal employees, depends on whether the refunded service ended before October 1, 1990; and whether the employee's nondisability annuity commences after December 1, 1990. The effect of the redeposit for nondisability annuities commencing after December 1, 1990, is explained in the sections below. All disability annuitants and all annuitants ineligible for the election of an alternative annuity whose annuity commences before December 2, 1990, must pay the redeposit to receive credit for the service in the annuity computation.

B.	Refunded Service Ending Before October 1, 1990

If the refunded service ended before October 1, 1990, and the employee's nondisability annuity commences after December 1, 1990, the employee -including an air traffic controller - does not have to make a redeposit to receive credit for the refunded service. Full credit will be allowed for the length of the refunded service, but the annuity will be actuarially reduced by an amount equal to the reduction for an alternative form of annuity lump sum in the amount of the redeposit. The reduction will be computed using the same actuarial factors used to determine the alternative annuity reductions.

Section 21A3.1-3 Effect of Making a Redeposit (Cont.)

C.	The 80-Percent Maximum Annuity

In cases involving the 80-percent maximum annuity benefit, if any unpaid deposit or redeposit is owed, the excess retirement deductions must first be applied to pay those amounts before the annuitant is paid (see Handbook Chapter 50, Computation of Annuity Under the General Formula, section 50A3.1-2C).

EXCEPTION:	If the redeposit is owed for refunded service that ended before October 1, 1990, excess deductions are not applied to that redeposit. The refunded service is credited as explained in paragraph B.

D.	Refunded Service Ending After September 30, 1990

If the refunded service ended after September 30, 1990, the employee must still pay the redeposit in order to receive credit for the service in the annuity computation. However, those who still qualify for, and elect, the alternative form of annuity will continue to be eligible to have all civilian service credit deposits and redeposits other than "mandatory" deposits such as the deposit for Cadet Nurse Corps under Public Law 99-638, deemed paid.

NOTE:	In the case of a single refund covering multiple periods of service, any discrete service period ending before October 1990, and followed by a break in service of more than 3 days, is still subject to the actuarial reduction. Any period that overlaps October 1, 1990, or that is entirely after that date is not subject to the actuarial reduction and a redeposit must be paid to use the service in the annuity computation, unless a redeposit may be deemed paid under an allowable alternative form of annuity election. In this instance, the two types of service may be divided for redeposit purposes.

Section 21A3.1-3 Effect of Making a Redeposit (Cont.)

E.	Example: Paying and Not Paying the Redeposit

SUMMARY:

A 55-year-old employee has 30 years of creditable civilian service. The high-3 average salary is $30,000.

WORK HISTORY 1:

•	Hired August 17, 1962, with CSRS coverage.

•	Separated August 16, 1969, and received a refund of all retirement deductions totaling $7,000.

•	Rehired March 25, 1972, with CSRS coverage; worked another 23 years, retiring at age 55. The redeposit due at the time of his or her retirement is $12,000.

RESULT:

1.	The employee is eligible for optional retirement and the 7 years of refunded service count for determining retirement eligibility without making the redeposit.

2.	If the employee makes the redeposit, his or her annuity is 56.25 percent of the high-3 average salary, which is $16,875 annually or $1,406 monthly.

3.	If the employee does not make the redeposit, his or her annuity is still based on all service performed including the refunded period. However, his or her monthly annuity is actuarially reduced as follows:

$12,000, divided by

212.6, present value factor for age 55

yields $56.44 rounded up to $57.00

$57.00 subtracted from $1,406 yields

$1,349 monthly

Section 21A3.1-3 Effect of Making a Redeposit (Cont.)

E.	Example: Paying and Not Paying the Redeposit (Cont.)

WORK HISTORY 2:

•	Hired August 17, 1975, with CSRS coverage.

•	Separated August 16, 1995, and received a refund of all retirement contributions.

•	Rehired December 25, 1995, with CSRS coverage; worked another

10 years.

RESULT:

1.	The employee is eligible for optional retirement whether or not he or she makes the redeposit. The 20 years of refunded service count for determining retirement eligibility.

2.	If the employee makes the redeposit to recredit the refunded service, the annuity is 56.25 percent of the high-3 average salary or $16,875 annually.

3.	If the employee does not make the redeposit, the 20 years of refunded service are not used in computing the annual annuity. As a result, the employee's annuity will be based on 10 years of service and provide 16.25 percent of the high-3 average salary or $4,875 annually. (However, if the alternative annuity option is available, he or she may elect an alternative annuity and have the redeposit deemed paid. See Chapter 53.)

F.	Partial

Redeposits

An employee who wants or needs to complete payment of the redeposit(s) to get full annuity benefits for the refunded service, must do so before final adjudication of his or her retirement claim. Before retirement, an employee may pay the redeposit in installments. However, if the employee does not redeposit all refunds before final adjudication of his or her retirement claim, OPM applies the payments as outlined below.

Two or more refunds:

•	The refund or refunds that the employee specified when the payments were made.

•	If the employee did not specify how to apply the money and there were two or more refunds, OPM will apply the money toward payment of the refund plus the applicable interest for a full period of service. Generally, OPM will try to obtain the highest annuity rate possible under the circumstances.

Section 21A3.1-3 Effect of Making a Redeposit (Cont.)

F.	Partial Redeposits (Cont.)

One period of service:

1.	If the employee has refunded service ending after October 1, 1990, and the amount paid does not complete repayment of any one refund, OPM refunds the partial payment to the employee.

2.	If the employee made a partial redeposit for refunded service ending before October 1, 1990, OPM will not pay a refund of such redeposit payments made before November 5, 1990. The individual may only get a refund if he or she is eligible for a refund of his or her total lump sum credit or is eligible for and elects to receive the alternative form of annuity.

3.	Normally, when a redeposit is needed, the total amount of each refund, plus interest, must be redeposited to include the service in an annuity computation, even though the refund may cover more than one period of service. The employee may elect to redeposit one or more of the refunds, but he or she cannot elect to repay only a portion of a specific refund to cover a period of service in that refund. However, when an employee has a single refund covering two discrete periods of service, one of which ended before October 1, 1990, the two periods of service may be divided for redeposit purposes. (See section 21A3.1-3C).

EXAMPLE 1:	Mr. Smith received a refund of $10,000 in 1991 covering three periods of service: 1958-1963, 1966-1979, and 1989-1991. Since Mr. Smith's refund covered two periods of service ending before

October 1, 1990, he does not have to make a redeposit to have the service included in the annuity computation. The portion of the refund covering the service from 1989-1991 would have to be redeposited, however, to be used in the annuity computation.

EXAMPLE 2:	Mr. Jones receives a refund of $5,000 in 1998 covering three periods of service: 1982-1991, 1992-1994, and 1995-1998. Since Mr. Jones' refund covers three periods of service, he must repay the $5,000 plus interest to receive any credit in his annuity for any of the three periods of service. He cannot pay part of the money and receive credit for one or two of the periods of service. On the other hand, however, if

Mr. Jones had received a separate refund each time he left Federal service, he could repurchase credit for one, two, or three periods of service.

Part 21A4 Procedures for Making Service Credit Payments

Section 21A4.1-1 Procedures for Making Service Credit Payments Before Retirement

A.	General Procedures

The following table shows the general procedures to be followed by the agency and the employee to make deposits or redeposits to OPM before retirement.

Step Action	1 Employee obtains an SF 2803, Application to Make Deposit or Redeposit, from his or her personnel office. NOTE:	The agency must advise the employee that an SF 2803 should be filed only when the employee intends to make payment. An employee should not file an SF 2803 if he or she is within 6 months of retiring. OPM will give the opportunity to make payment at retirement.	2 Employee completes the front of the SF 2803 and returns the application to the personnel office.	3 Agency completes the back of the SF 2803. (See paragraph B of this section for further details.)	4 Designated certifying officer certifies the application to make deposit or redeposit. The certifying officer notes and initials any change or erasure on the back of the SF 2803.	5 Agency consults "Agency Checklist for a CSRS Service Credit Application" (RI 36-56) to ensure that all procedures for filing a service credit application have been followed properly. A copy of the checklist is included in subchapter 21C, Job Aids and Forms.

NOTE:	Send the checklist to OPM along with the employee's application.	6 Agency forwards the application to the Office of Personnel Management, Retirement and Insurance Service, Retirement Operations Center, P.O. Box 45, Boyers, PA 16020.	7 Employee pays OPM in full or in installments of at least $50.00 after receiving the official bill.	8 When employee makes a full or partial payment, OPM sends the employee a receipt showing the new balance due (including updated interest or payment in full, as appropriate).

Section 21A4.1-1 Procedures for Making Service Credit Payments Before Retirement (Cont.)

A.	General Procedures (Cont.)

NOTE:	Employees may not make payments to OPM by payroll deduction. Except as provided in the circumstances specified in Chapter 20, agencies may not accept payments for civilian service.

B.	Completing the SF 2803: Agency Action

In completing the SF 2803, the agency furnishes the data available through official agency records. If the Individual Retirement Record (SF 2806) or some other official record is available that includes verified service from other agencies, the agency records the data in section B3 of the SF 2803.

NOTE:	When it is more convenient for the agency, a photocopy of the official Individual Retirement Record (SF 2806) may be submitted instead of completing item 3 on the back of the SF 2803.

If the employee claims service in Part A of the SF 2803 that is not documented in the employee's OPF or MRPF, the agency must attempt to verify the service prior to sending the SF 2803 to OPM. Do not use the service credit process to document unverified service. (See The Guide to Processing Personnel Actions (formerly FPM Supplement 296-33) for instructions about verifying service.)

C.	Advantages

The advantage of making deposits or redeposits before retirement include:

•	The employee has less total interest to pay on the deposit/redeposit;

•	The retirement application may be processed faster if the deposit/redeposit is already paid; and

•	The employee can make installment payments (of $50.00 or more) to lessen the financial strain of paying large deposits or redeposits.

Section 21A4.1-2 Procedures for Making Service Credit Payments at Retirement

A.	Eligible for Alternative Annuity Election

During the requirement adjudication process, a separated employee eligible for the alternative annuity election (see Chapter 53) receives a letter from OPM showing the amount of any redeposit due and the amount of any deposit due for nondeduction service.

If applicable, the election letter explains:

•	The effect paying the deposit or redeposit has on benefits, and offers the employee the opportunity to pay the redeposit and/or deposit in full; and

•	The effect of the actuarial reduction, if he or she does not elect the alternative annuity or make the redeposit for service ending before October 1, 1990.

If the employee elects the alternative annuity, the redeposit and/or deposit (for both pre-October 1, 1982, and post-September 30, 1982, nondeduction service) is deemed paid.

B.	Not Eligible for Alternative Annuity Election

If the employee is not eligible to elect an alternative annuity, OPM automatically sends him or her an election letter showing --

1.	The amount of the annuity --

•	if any redeposit is paid; and

•	with the actuarial reduction for any pre-October 1, 1990, refunded service;

•	if any deposit for nondeduction service after September 30, 1982 is paid;

2.	The amount of the redeposit and/or the deposit for post-September 30, 1982, nondeduction service; and

3.	The instructions for making payment.

C.	Advantages

If making a deposit or redeposit is desirable, the advantages of waiting until retirement are:

Section 21A4.1-2 Procedures for Making Service Credit Payments at Retirement (Cont.)

C.	Advantages (Cont.)

•	The employee may gain financially by investing his or her money in other ways until retirement;

•	There is less overall administrative workload on the Government and the employee if payments are made at retirement;

•	If eligible, the employee may elect an alternative annuity at retirement and have the deposit or redeposit deemed paid (see Chapter 53); and

•	The employee knows the exact effect on annuity before paying.

D.	Disadvantages

The disadvantages of making deposits and redeposits at retirement are:

•	Claims processing may take a little longer;

•	There is no guarantee that the alternative annuity election option will be available;

•	Interest on deposits and redeposits is charged until the deposit or redeposit is paid (see section 21A2.1-2) or the date of retirement, whichever comes later. Delaying payment of the deposit and/or redeposit increases the amount of interest payable; and

•	The employee may not want to have the payment deemed paid as part of an alternative annuity computation because of the Federal tax implications. (See the current edition of IRS Publication 721, Comprehensive Tax Guide to U.S. Civil Service Retirement Benefits, for information on taxes.)

Section 21A4.1-3 Advice to Employee

A.	Deposits/ Redeposits

Are Generally Optional

The decision to make a service credit payment rests solely with the employee. The agency does not advise the employee on whether or not to make a deposit or redeposit. However, the agency must provide the employee with the information necessary to make an informed decision. This information is discussed in the following paragraphs.

NOTE:	If the employee has performed service with the Cadet Nurse Corps, has certain pre-January 1, 1969 service as a National Guard Technician under Public Law 99-661, or performed service under a personal services contract prior to November 5, 1985, that is creditable under section 110 of Public Law 100-238, the employee must make a deposit according to the requirements stated in Chapter 20 before credit can be allowed for such service in the annuity computation.

B.	Estimating the Amount of the Deposit/ Redeposit

It is an agency responsibility to estimate the amount of a deposit or redeposit an employee owes.

However, retirement counselors must stress to employees that the agency calculations are only estimates. OPM determines whether the service claimed is creditable, computes the amount due, and tells the employee the amount due and the manner and method of making payment.

C.	Effect of Not Making the Deposit/ Redeposit

The agency must explain to employees how their retirement rights are affected by not making service credit payments.

When an employee is preparing to retire, the agency should provide annuity estimates that assume payment for the deposit or redeposit service and estimates that do not.

D.	When Deposits/ Redeposits May Not Increase the Annuity

In certain situations, making a deposit or redeposit does not increase the amount of the annuity. Agencies should inform employees that service credit payments do not increase benefits payable when:

•	Employees have performed service in excess of the years and months required to provide the 80-percent maximum annuity. OPM withholds any deposits and redeposits due from any excess contributions.

•	Employees retire on disability or die in service and the minimum basic annuity is payable whether or not the service credit payment is made. It is necessary to calculate the benefit with and without the payment to determine if this applies.

Section 21A4.1-3 Advice to Employee (Cont.)

D.	When Deposits/ Redeposits May Not Increase the Annuity (Cont.)

EXAMPLE:	Jane is retiring on disability. She has 12 years of creditable service for which deductions remain in the Fund, and 6 years of service for which she received a refund of retirement deductions. She will be 60 years old in 7 years.

If Jane pays a redeposit, her annuity will be based on 18 years of service. Since 40 percent of average salary is less than an annuity based on her service projected to age 60 (25 years), she will receive the 40-percent minimum basic annuity if she pays the redeposit.

However, if Jane does not pay the redeposit, her annuity will be based on 12 years of service. The annuity based on service projected to age 60 (a total of 19 years) is less than 40 percent of her average salary. Therefore, her annuity will be the minimum basic annuity based on service projected to age 60 if she does not pay the redeposit.

In this case, it is to Jane's advantage to pay the redeposit. However, it was necessary to do two computations to determine this.

•	The only annuity payable is to children, whose rates are not affected by deposits and redeposits.

E.	Alternative Annuity

The agency must explain to eligible nondisability retiring employees that the alternative annuity election is a means of receiving full retirement credit for their unpaid deposit or redeposit service. For additional information about the alternative annuity election, see Chapter 53.

F.	Actuarial Reduction

Agencies must explain to employees whose nondisability annuities begin on or after December 2, 1990, and who retire owing a redeposit of a refund for service that ended before October 1, 1990, that they will no longer be required to pay the redeposit in order to receive credit for the refunded service. Full credit will be allowed for the service in computing the annuity, but the monthly rate will be actuarially reduced based on the amount of redeposit owed.

G.	Payment After Death of Employee

A deposit or redeposit may be completed after the death of an employee by a surviving spouse or former spouse who is qualified to receive annuity benefits.

Section 21A4.1-3 Advice to Employee (Cont.)

G.	Payment After Death of Employee (Cont.)

NOTE:	Just as employees retiring on a disability annuity, survivors of deceased employees are not eligible for the actuarial reduction. When an employee dies in service, the survivor only has the opportunity to elect to pay the redeposit or not. Any partial redeposit paid before the death of an employee is refundable under the normal order of precedence for lump sum payments, should the survivor elect not to complete the redeposit.

H.	Application of Installment Payments to Multiple Deposit/ Redeposit Periods

If an employee has more than one period of deposit and/or redeposit service, OPM applies payments in the following order of precedence.

1.	Redeposits of refunds paid on applications received on or after October 1, 1982.

2.	Redeposits of refunds paid on applications received before October 1, 1982.

3.	Deposits for noncontributory civilian service performed on or after October 1, 1982.

4.	Deposits for noncontributory civilian service performed before October 1, 1982.

This payment scheme usually provides the most beneficial result for the employee.

The employee, at time of payment or retirement, may specify a different order in which to apply the service credit payments.

Subchapter 21B FERS

Part 21B1 General Information

Section 21B1.1-1 Overview

A.	Introduction

Subchapter 21B contains the rules and procedures that apply to service credit payments for civilian service under the Federal Employees Retirement System (FERS).

B.	Organization

of Subchapter

The FERS subchapter has four parts.

Part	Name of Part	Page	21B1 General Information	29	21B2 Deposit Service	31	21B3 Refunded Service	38	21B4 Procedures for Making Service Credit Payments

41

C.	Statement

of Authority

This subchapter is based on the laws and regulations cited below.

•	United States Code: 5 U.S.C. 8411(f)

•	Code of Federal Regulations: 5 CFR Parts 841, 842, and 846

Section 21B1.1-2 Definitions

A.	Deposit or Nondeduction Service

Any period of civilian service performed before 1989 during which FERS deductions are not taken but which will be credited under FERS rules is called deposit or nondeduction service.

Under FERS, nondeduction service includes service now credited under FERS rules for which deductions were made under another retirement system for Federal employees, such as CSRS, and were refunded before the employee first acquired FERS coverage. (See Chapter 20 for a discussion of credit for service under another retirement system.)

NOTE:	See Chapter 10, Coverage, for an explanation of the 5-year rule for determining whether or not an employee has automatic FERS coverage. See Chapter 33 for the 5-year rule for determining if a transferee has a CSRS component in a future annuity.

B.	Deposit or Service Credit Payment

A sum of money paid into the Fund by a FERS employee or survivor to cover a period of service during which deductions were not withheld from pay or for which a refund was paid before the employee became covered by FERS.

C.	Refund

The withdrawal from the Fund by an individual of his or her lump-sum credit under conditions that entitle him or her to receive a refund. Payments made when the employee is not entitled (or loses entitlement) to receive the refund are erroneous payments and are collected as discussed in Chapter 4.

Part 21B2 Deposit Service

Section 21B2.1-1 Introduction

A.	General Rules

1.	A FERS employee may make a deposit to credit nondeduction service performed before January 1, 1989. Nondeduction or deposit service performed before January 1, 1989, does not count for eligibility or computation purposes unless the employee pays the deposit prior to the final adjudication of his or her retirement claim or, when eligible, elects an alternative annuity and has the deposit deemed paid. (See Chapter 53.)

2.	Nondeduction service performed on or after January 1, 1989, generally is not creditable under FERS for any purpose.

3.	A FERS employee may not redeposit a refund for FERS service that he or she received after becoming covered by FERS. All service of an employee who was automatically covered by FERS is treated under FERS rules even though it may have been under a different system (for example, CSRS) when performed.

4.	Service performed on or after January 1, 1989, under another retirement system for Federal employees is not creditable under FERS for any purpose. The exception is service that is creditable under the Foreign Service Pension System (FSPS), provided that the employee:

•	Waives credit for the service under the FSPS; and

•	Makes a deposit for the service.

B.	General Rule: Transferees

For an employee who transfers from CSRS Offset to FERS:

1.	The CSRS Offset service becomes subject to the FERS service credit rules in this subchapter, and

2.	If, as of the date of the transfer to FERS, the employee has

performed --

•	less than 5 years of civilian service creditable under CSRS rules (not counting the Offset service), the non-Offset service also becomes subject to FERS service credit rules in this subchapter. Employees who were subject to full CSRS deductions are entitled to a return of any deductions that exceed the appropriate FERS deduction. See Chapter 33, Return of Excess Contributions, for more information.

Section 21B2.1-1 Introduction (Cont.)

B.	General Rule: Transferees (Cont.)

If, as of the date of the transfer to FERS, the employee has

performed --

•	5 or more years of civilian service creditable under CSRS rules (not counting the Offset service), the non-Offset service remains subject to the CSRS service credit rules in subchapter A.

For an employee who transfers from full CSRS coverage to FERS:

1.	If, as of the date of the transfer, the employee has performed --

•	less than 5 years of civilian service creditable under CSRS rules, all of the service becomes subject to the FERS service credit rules in this subchapter. Employees are entitled to a return of any CSRS deductions that exceed the appropriate FERS deductions required for the period. See Chapter 33, Return of Excess Contributions, for more information.

If, as of the date of the transfer to FERS, the employee has

performed --

•	5 or more years of civilian service creditable under CSRS rules, all of the service performed before the effective date of the transfer remains subject to the CSRS service credit rules in subchapter A.

C.	Special Rule: Peace Corps/VISTA Service

Public Law 103-82, the National and Community Service Trust Act of 1993 and Domestic Volunteer Service Act Amendments of 1993, modified the treatment of Peace Corps and VISTA volunteer service so that it is similar to that of military service.

Under the new provisions, current FERS employees, separated employees, and FERS retirees may make a deposit to credit their volunteer service regardless of when the service was performed (whether before or after January 1, 1989). However, for those already retired, any annuity increase is effective on November 1, 1993.

D.	Who May Make a Service Credit Payment

Service credit payments may be made only by:

•	An employee who is subject to FERS;

Section 21B2.1-1 Introduction (Cont.)

D.	Who May Make a Service Credit Payment (Cont.)

•	A retiree who is entitled to an immediate annuity whose annuity has not been finally adjudicated;

•	A former employee whose annuity has not been fully adjudicated, who is eligible for a deferred annuity because he or she had at least 5 years of paid civilian service (or a CSRS component) upon leaving the Federal government;<

•	The spouse of a deceased employee who is entitled to a survivor annuity (see Chapter 70);

•	The former spouse of a deceased employee who is entitled to a survivor annuity (see Chapter 74);

•	The surviving spouse of a deceased former employee who is eligible for a survivor annuity (see Chapter 72, Spouse Benefits -- Death of a Former Employee); or

•	The surviving former spouse of a deceased former employee who is eligible for a survivor annuity (see Chapter 74).

E.	When a Payment May Be Made

Payment may be made at any time prior to the final adjudication of the individual's retirement claim.

Section 21B2.1-2 Amount of Service Credit Payment

A.	Amount of Deposit

The deposit is 1.3 percent of basic pay earned during the nondeduction service, plus interest. The 1.3 percent applies regardless of when the service was performed or whether deductions would have been taken at 1.3 percent if they had been taken at the time the service was performed.

EXAMPLE 1:	Tina was employed under CSRS from 1961 to 1963. She resigned, applied for, and received a refund of her 7 percent CSRS deductions. She returned to Federal service in 1988 and was automatically covered by FERS. Since her service from 1961 to 1963 is now credited under FERS rules, her service credit payment is 1.3 percent of her basic pay, plus interest.

EXAMPLE 2:	The FERS employee contribution rate for 1988 is .94 percent of basic pay. However, the service credit payment rate is 1.3 percent. Therefore, a temporary employee whose basic pay in 1988 is $30,000 would pay 1.3 percent of $30,000, plus interest, if he or she subsequently becomes covered by FERS and makes the service credit payment. On the other hand, if this same employee had been covered by FERS in 1988, he or she would have paid employee contributions of .94 percent of $30,000 because of the lower employee contribution rate.

B.	Interest

Unless there is a specific statutory provision to the contrary, interest charges are computed as stated below. Interest is charged from the midpoint of each period of nondeduction or refunded service. Interest accrues annually on the outstanding balance on December 31 of each year and is compounded annually until the outstanding balance is deposited. Interest is charged to the date of deposit or the commencing date of annuity, whichever is earlier. The rates are assessed as follows:

•	4 percent through December 31, 1947;

•	3 percent from January 1, 1948, through December 31, 1984; and

•	A variable rate determined by the Department of the Treasury beginning January 1, 1985. The variable rates charged through 1998 are listed in the table on the following page.

Section 21B2.1-2 Amount of Service Credit Payment (Cont.)

B.	Interest (Cont.)

Variable Interest Rates

Year	Interest

Rate

Year	Interest

Rate	1985

1986

1987

1988

1989

1990

1991

1992	13 .0%

11 .125%

9 .0%

8 .375%

9 .125%

8 .75%

8 .625%

8 .125%	1993

1994

1995

1996

1997

>	1998

All future

periods	7 .125%

6 .25%

7 .0%

6 .875%

6 .875%

6 .75% <

To be determined by the Department of the Treasury

NOTE 1:	No interest is charged for periods of separation that began before October 1, 1956.

NOTE 2:	No interest is charged for a year when payment in full is received by close of business on the last regular business day of the year. (See section 21A2.1-2B3 for a discussion of when payment is received.)

NOTE 3:	When interest begins during a year, it accrues for the remainder of that year.

C.	Special Rule: Peace Corps/VISTA Service

Public Law 103-82 changes the way deposits for Peace Corps/VISTA volunteer service are computed and guarantees that the individual and his or her survivors will continue to receive credit for the service even after they become eligible for old age or survivor benefits from Social Security. The deposit rules are similar to those for post-1956 military service.

The deposit is equal to 3 percent of the readjustment allowance paid to the employee or Member under title VIII of the Economic Opportunity Act of 1964 or section 5(c) or 6(l) of the Peace Corps Act or the stipend paid to the employee or Member under part A, B, or C of title I of the Domestic Volunteer Service Act of 1973, for each period of service as a volunteer or volunteer leader.

Section 21B2.1-2 Amount of Service Credit Payment (Cont.)

D.	Interest on Peace Corps/VISTA Service Deposits

For both current and former employees, interest begins to accrue on deposits for volunteer service on October 1, 1995, or 2 years after the date on which the individual first becomes an employee or Member, whichever is later.

Public Law 103-82 provides a 2-year interest-free grace period on Peace Corps/VISTA volunteer service deposits. After the 2-year period, interest is accrued and compounded annually at the variable rate beginning on the date of the expiration of the 2-year period.

For employees first employed before October 1, 1993, interest started accruing October 1, 1995. The earliest possible interest posting for an unpaid deposit is October 1, 1996.

Example: Jane was a Peace Corps volunteer from 1990 to 1994. She accepted a career conditional appointment with the Department of the Army on April 1, 1996. Interest will not start accruing on her deposit until April 1, 1998. If the deposit is not paid in full by April 1, 1999, one year's interest will be added to the unpaid deposit.

NOTE: Because interest accrues annually, there is, in effect, a 3-year interest-free period if the deposit is paid in full before the first interest accrual date. However, interest will accrue during the year following the 2-year grace period on any amount not deposited before the first interest accrual date.

Like deposits for post-1956 military service, interest on these deposits accrues and compounds annually on the employee's personal interest accrual date. Because the interest accrual period will not generally coincide with the calendar year, two interest rates may apply. (See Section 23A3.1-5 in Chapter 23 for more details on computing interest and interest accrual dates.)

E.	Where Deposit for Volunteer Service is Made

Like other deposits for nondeduction service, deposits for Peace Corps/VISTA service must be paid to OPM following the procedures outlined in Part 21B4.

F.	When Deposit Was Already Made

Any individual who has previously made a service credit deposit for Peace Corps/VISTA volunteer service under prior law does not need to take any further action to ensure that he or she will have the service credited upon attainment of Social Security eligibility. As long as a service credit deposit was completed, the service will be deemed paid.

Section 21B2.1-3 Effect of Making a Service Credit Payment

A.	General Rule

Nondeduction service credited under FERS rules and performed before January 1, 1989, does not count for eligibility or computation purposes unless the employee makes the service credit payment prior to the final adjudication of his or her retirement claim or, when eligible, elects an alternative annuity and has the deposit deemed paid. (See Chapter 53.)

B.	Example

SUMMARY:

A 59-year-old employee has 30 years of civilian service.

WORK HISTORY:

•	Hired October 23, 1987, under a temporary appointment.

•	Converted to a career appointment October 23, 1988, and served continuously in a covered position for the next 29 years.

RESULT:

The 1 year of temporary service is creditable for eligibility and computation purposes only if a deposit is made. Thus, if the employee does not make the deposit he/she will not receive credit for the service in the annuity computation and will receive an MRA + 10 annuity reduced for age (see Chapter 42, MRA + 10 Retirement) instead of an unreduced annuity.

Part 21B3 Refunded Service

Section 21B3.1-1 Introduction

A.	General Rule

An employee who receives a refund of FERS retirement contributions may not make a redeposit. All credit for FERS refunded service is lost for both eligibility and computation purposes.

B.	General Rule: Transferees

An employee who transfers to FERS with eligibility for a CSRS annuity component (at least 5 years of creditable civilian CSRS service, not counting any service with CSRS Offset coverage) may make a deposit for refunded CSRS service that is included in the CSRS annuity component. (See applicable CSRS rules in part 21A3.) Refunded CSRS Offset service becomes FERS service regardless of when performed. An employee must use the FERS service credit application (SF 3108) to apply to pay for service that will be in a CSRS component.

C.	General Rule: Non-Transferees With Prior CSRS Service

An employee:

•	Who received a refund of contributions for prior CSRS service;

•	Who fell under the FERS automatic coverage rules outlined in section 10A1.3-4, paragraph B (Chapter 10, Coverage); and

•	Who received the refund based on an application filed before FERS coverage began, must make a deposit to receive credit under FERS for the prior CSRS service. The deposit must be made under FERS rules. Employees must use the FERS service credit application (SF 3108) and follow FERS service credit application procedures. (See part 21B4.)

NOTE 1:	The provisions in section 21B2.1-1 that specify who can make a FERS deposit and when the deposit must be made apply to deposits made in this situation.

NOTE 2:	Since the prior CSRS service is treated as FERS service, a refund based on an application filed after a transfer to FERS would be a refund of FERS contributions and therefore the service would not be creditable.

Section 21B3.1-2 Effect of Making a Deposit for CSRS Refunds

A.	Paying the Deposit

If the employee makes the deposit prior to final adjudication of his or her retirement claim, the service for which the employee received the refund counts for eligibility and computation purposes.

B.	Not Paying the Deposit: Service Treated Under FERS Rules

If the employee does not make the deposit prior to the final adjudication of his or her retirement claim, the service for which the employee received the refund will not be creditable for eligibility or computation purposes under FERS.

C.	Example

1.	SUMMARY:

A 60-year-old employee has 21 years of civilian service.

WORK HISTORY:

•	Hired August 22, 1973, under a career appointment and covered by CSRS.

•	Separated August 21, 1977, and withdrew retirement contributions.

•	Rehired under a career appointment April 1, 1988, and automatically covered by FERS retirement deductions. Remained in a Covered position for the next 17 years.

RESULT:

The 4 years of prior CSRS service are now credited as FERS service. They are creditable for eligibility and computation purposes only if a deposit is made or the payment may be deemed made when alternative annuity rules apply. (See Chapter 53.) If the deposit is not made or deemed made, the employee will receive credit for 17 years of service and will receive an MRA + 10 annuity reduced for age (see Chapter 42) instead of an unreduced annuity.

Section 21B3.1-2 Effect of Making a Deposit for CSRS Refunds (Cont.)

C.	Example (Cont.)

2.	An employee has the following service.

WORK HISTORY:

•	Hired June 1, 1970, under a career appointment and covered by CSRS.

•	Separated May 15, 1975, and withdrew CSRS contributions.

•	Rehired January 15, 1984, under CSRS Interim/Offset provisions.

•	Resigned January 14, 1990, and received a refund of CSRS Interim/Offset contributions.

•	Rehired June 1, 1991, and transfers to FERS.

RESULT:

Upon transferring to FERS, the employee's Offset service becomes FERS service. The CSRS service from 1970 to 1975 also becomes FERS service because the employee has less than

5 years of non-Offset service. Consequently, the service credit payment due is 1.3 percent of basic pay, plus interest, for each period of service. The employee will receive no credit for the service unless payment is made or deemed made.

Part 21B4 Procedures for Making Service Credit Payments

Section 21B4.1-1 Procedures for Making FERS Service Credit Payments Before Retirement

A.	General Procedures

The following table shows the general procedures to be followed by the agency and the employee to make deposits before retirement.

Step Action 1 Employee obtains an SF 3108, Application to Make Service Credit Payments for Civilian Service, from his or her personnel office. Note:	The agency must tell the employee that an SF 3108 should be filed only when the employee intends to make payment. An employee who anticipates retiring within 6 months should not file a service credit application because OPM will give the employee an opportunity to pay when his or her annuity is computed. 2 Employee completes the front of the SF 3108 and returns the application to the personnel office. 3 Agency completes the back of the SF 3108. 4 Designated agency certifying officer certifies the application to make service credit payment. 5 Agency consults "Agency Checklist for a FERS Service Credit Application" (RI 95-1) to ensure that all procedures for making a service credit payment have been properly followed. A copy of the checklist is included in subchapter 21C, Job Aids and Forms.

Note:	Send the checklist to OPM along with the employee's application. 6	After certification, the agency forwards the application to the Office of Personnel Management, Retirement Operations Center, Boyers, PA 16017. 7 Employee submits payment(s) to OPM after receiving the official bill. The deposit may be made in a single lump sum or in installments no smaller than $50.00. 8 When employee makes a full or partial payment, OPM sends the employee a receipt showing the new balance due (including updated interest or payment in full, as appropriate).

NOTE:	Employees may not make payments to OPM by payroll deduction. Employees may not make payments to the employing agency.

Section 21B4.1-1 Procedures for Making FERS Service Credit Payments Before

Retirement (Cont.)

B.	Completing the SF 3108: Agency Action

In completing the SF 3108, the agency furnishes only the data available through official agency records. If the Individual Retirement Record

(SF 3100), or some other official record, is available that includes verified service from other agencies, the agency records the data in the schedules.

NOTE:	When it is more convenient for the agency, a photocopy of the official Individual Retirement Record (SF 3100--and the SF 2806 for transferees) may be submitted instead of completing the schedules on the back of the SF 3108, provided all of the information requested on the SF 3108 is shown.

If the employee claims service in Part A of the SF 3108 that is not documented in the employee's Official Personnel Folder, the agency must attempt to verify the service prior to sending the

SF 3108 to OPM. The SF 3108 is not used to document unverified service. (See The Guide to Processing Personnel Actions (formerly FPM Supplement 296-33) for instructions about verifying service.)

C.	Advantages

The advantages of making a service credit payment before retirement noted in section 21A4.1-1, paragraph C, apply under FERS.

Section 21B4.1-2 Procedures for Making FERS Service Credit Payments at Retirement

A.	General Procedures

Generally, if it is to an employee's advantage to pay for service, he or she is automatically given an opportunity to make payment before final adjudication of a retirement claim.

Service is deemed paid automatically when an eligible employee elects to receive the alternative annuity.

For employees who are not eligible for the alternative annuity and who have CSRS service performed before October 1, 1982, during which no retirement deductions were made (excluding service that is creditable as FERS service for annuity computation purposes), the procedures in the table below must be followed to make a deposit at time of retirement.

Step Action	1 Employee attaches a note to the retirement application stating his or her desire to make a deposit.	2 OPM sends the employee an election letter showing the amount of annuity with and without the payment.	3 Employee completes the election letter and follows the instructions in the letter to pay the amount due before final adjudication of his or her retirement claim.

B.	Advantages and Disadvantages

The advantages and disadvantages of making a service credit payment at retirement noted in section 21A4.1-2, paragraphs C and D, apply under FERS.

Section 21B4.1-3 Advice to Employee

A.	Payments Are Optional

The decision to make a service credit payment rests solely with the employee. The agency does not advise the employee whether to make a deposit. However, the agency must provide the employee with the information necessary to make an informed decision.

B.	Estimating the Amount of the Payment

Retirement counselors must stress to employees that the agency calculations are only estimates. OPM determines whether the service claimed is creditable, computes the amount due, and tells the employee of the amount due and the manner and method of making payment.

C.	Effect of Not Making the Payment

The agency must explain to employees about how their retirement rights are affected by not making service credit payments, emphasizing that payment must be made for both eligibility and computation purposes. If payment is not made, it is as if the service never existed.

When an employee is preparing to retire, the agency should provide annuity estimates that assume payment for the service and estimates that do not.

D.	When Payment May Not Increase the Annuity

In some situations, making a deposit does not increase the monetary amount of the annuity. Agencies should inform employees that service credit payments may not increase an annuity when:

•	An employee retires on disability. However, the service credit payment will make a difference when the employee's annuity is redetermined at age 62 or in the survivor benefit;

•	An employee dies in service with between 18 months and 10 years of service, and there are less than 10 years of creditable service with or without paying the deposit; or

•	The only survivor annuity payable is to a child.

E.	Alternative Annuity

The agency must explain to eligible nondisability retiring employees that the alternative annuity election is a means of receiving full retirement credit for their unpaid deposit service. For additional information about the alternative annuity election, see Chapter 53.

Section 21B4.1-3 Advice to Employee (Cont.)

F.	Payment of Deposit After Death of Employee

If a deceased employee owed a deposit and payment of the deposit would increase survivor benefits payable to a spouse or former spouse, OPM withholds the deposit from the lump-sum death benefit. (See Chapter 70.)

G.	Payment of Multiple Deposits

An employee who has several distinct periods of deposit service can specify the order in which his or her service credit payments are to be applied. A distinct period of nondeduction service is civilian service that is not interrupted by a break in service of more than 3 days. However a deposit is not considered to have been made for any distinct period of service unless the total amount due for the period has been paid in full.

Subchapter 21C Job Aids and Forms

Section 21C1.1-1 Job Aids

This section contains copies of the following OPM job aids for local reproduction.

Number	Name

RI 36-56	Agency Checklist for a CSRS Service Credit Application

RI 95-1	Agency Checklist for a FERS Service Credit Application

AGENCY CHECKLIST FOR A CSRS SERVICE CREDIT APPLICATION

FOR USE ONLY WITH CIVIL SERVICE RETIREMENT SYSTEM (CSRS) APPLICATIONS

A.	Name of Applicant: ________________________________________________________________________

Date of Birth: ___________________________________	SSN: _______________________________

B.	PERSONNEL and PAYROLL OFFICES: This checklist addresses the proper completion of Standard

Form 2803, "Application to Make Deposit or Redeposit," which must be submitted to the Office of Personnel Management (OPM) in order for the amount owed for civilian service to be calculated. The checklist also incorporates questions to aid in the proper completion of the submission, thereby reducing delays in processing. Although the questions in Section A of the application are to be answered by the applicant, you must check the information in this section. Of course, you must also ensure the accuracy of the information you provide in Section B of the application. Generally, service credit deposits and redeposits cannot be made through payroll deductions or reported on the SF 2812 (Report of Withholdings and Contributions for Health Benefits, Life Insurance and Retirement).

Send this checklist to OPM along with the individual's records.

SF 2803, Application to Make Deposit or Redeposit (CSRS)

(Current version dated 3/87; previous versions are not usable.)

THE FOLLOWING QUESTIONS PERTAIN TO SECTION A OF APPLICATION:

SECTION A BLOCK NUMBER	REQUIREMENT	YES	NO N/A Has the proper application been completed? Required in all cases.	□	□	NOTE: FERS applicants must use SF 3108. For civilian service covered by systems other than CSRS or FERS, be sure to verify eligibility to make service credit payment for the service. Block 2:

If the applicant has used more than one name during Federal employment, or formally used a variation, such as initials, have those other names been listed? If applicable.	□	□ □ Block 3:

Is the applicant's correct birthdate provided? Required in all cases.	□	□ Blocks 4:

Is the applicant's address current and complete? Required in all cases.	□	□ Blocks 5, 6, 7 and 8:

Are the questions about current employment answered? Required in all cases.	□	□	NOTE: Applicant's Social Security Number must be provided. In addition, all periods of Federal civilian service must be listed, and all requested information provided for each period of service. Block 9:

Is the question about current deductions answered? Required in all cases?	□	□ □	If the answer in Block 9 is "Yes," supply correct withholding rate in the space next to the "NO" box. For most CSRS employees, the deductions are 7%. For qualified House, Senate, firefighter or law enforcement employees, the deduction is 7.5%. For regular employees covered by CSRS OFFSET, the deduction rate after 1989 is .8%. For House, Senate, firefighter or law enforcement employees covered by CSRS OFFSET, the deduction rate after 1989 is 1.3%.

U.S. Office of Personnel Management	(THIS FORM MAY BE LOCALLY REPRODUCED)	RI 36-56

March 1990

CSRS SERVICE CREDIT CHECKLIST	PAGE 2 of 2

Name of Applicant: _____________________________________ SSN: _____________________________

STANDARD FORM 2803, Application to Make Deposit or Redeposit (CSRS)

QUESTIONS PERTAINING TO SECTION A OF APPLICATION (Continued)

SECTION A BLOCK NUMBER	REQUIREMENT	YES	NO N/A Block 10:

If the answer to Block 9 is "No," is the date of separation from CSRS given? If applicable. □	□ □ Has the applicant signed the application in ink? Required in all cases. □	□ Is the applicant's daytime telephone number provided? Required in all cases. □	□ Is the application dated? Required in all cases. □	□

THE FOLLOWING QUESTIONS PERTAIN TO SECTION B OF APPLICATION:

SECTION (B) BLOCK NUMBER	REQUIREMENT	YES	NO N/A Block 2:

If the answer to block 1 is "Yes," is the beginning date of CSRS deductions given? If applicable. □	□ □ 1.	Is Block 3 completed?

2.	Are all pay rates/changes for temporary service shown?

3.	Is the tour of duty or actual days worked shown for all part-time or intermittent service?

4.	Are earnings for all part-time or intermittent service shown? If applicable.

If applicable.

If applicable.

If applicable. □	□ □

□	□ □

□	□ □

□	□ □ Has the application been properly certified and a complete address and telephone number been provided by an agency official? Required in all cases. □	□

***PERSONNEL OFFICE REVIEWER***

PERSONNEL SPECIALIST:

TELEPHONE NUMBER: ( )

***PAYROLL OFFICE REVIEWER***

PAYROLL OFFICE CONTACT:

TELEPHONE NUMBER: ( )

U.S. Office of Personnel Management	(THIS FORM MAY BE LOCALLY REPRODUCED)	RI 36-56

March 1990

AGENCY CHECKLIST FOR A FERS SERVICE CREDIT APPLICATION

FOR USE ONLY WITH FEDERAL EMPLOYEES RETIREMENT SYSTEM (FERS) APPLICATIONS

A.	Name of Applicant: _____________________________________________________________________________

Date of Birth: ___________________________________	SSN: ________________________________________

B.	PERSONNEL and PAYROLL OFFICES: This checklist addresses the proper completion of Standard Form 3108, "Application to Make Service Credit Payment for Civilian Service," which must be submitted to the Office of Personnel Management (OPM) in order for the amount owed for civilian service to be calculated. The checklist also incorporates questions to aid in the proper completion of the submission, thereby reducing delays in processing. Although the questions in Section A of the application are to be answered by the applicant, you must check the information in this section. Of course, you must also ensure the accuracy of the information you provide in Section B of the application. Generally, service credit deposits and redeposits cannot be made through payroll deductions or reported on the SF 2812 (Report of Withholdings and Contributions for Health Benefits, Life Insurance and Retirement).

Send this checklist to OPM along with the individual's records.

STANDARD FORM 3108, Application to Make Service Credit Payment for Civilian Service (FERS)

THE FOLLOWING QUESTIONS PERTAIN TO SECTION A OF APPLICATION:

SECTION A BLOCK NUMBER	REQUIREMENT	YES	NO N/A Has the proper application been completed?

Required in all cases.	□	□	NOTE: FERS-covered employees must use SF 3108 even if they are applying to make a service credit payment for CSRS service. CSRS-covered employees must use SF 2803 instead. For civilian service covered by systems other than CSRS or FERS, be sure to verify eligibility to make service credit payment for the service. (See the CSRS and FERS Handbook for Personnel and Payroll Offices, Chapter 21.) Block 2:

If the applicant has used more than one name during Federal employment, or formally used a variation, such as initials, have those other names been listed? If applicable.	□	□ □ Block 3:

Is the applicant's correct birthdate provided? Required in all cases.	□	□ Blocks 4:

Is the applicant's address current and complete? Required in all cases.	□	□ Blocks 5, 6, 7 and 8:

Is the applicant's address current and complete? Required in all cases.	□	□	NOTE: Applicant's Social Security Number must be provided. Block 9:

Are the questions about previous address answered? Required in all cases?	□	□

U.S. Office of Personnel Management	(THIS FORM MAY BE LOCALLY REPRODUCED)	RI 95-1

March 1990

FERS SERVICE CREDIT CHECKLIST	PAGE 2 of 3

Name of Applicant: ___________________________________________ SSN: _____________________

STANDARD FORM 3108, Application to Make Service Credit Payment for Civilian Service (FERS)

QUESTIONS PERTAINING TO SECTION A OF A APPLICATION (Continued)

SECTION A BLOCK NUMBER	REQUIREMENT	YES	NO N/A Block 10:

Are all periods of Federal civilian service listed, and is all requested information provided for each period of service? Required in all cases, even though applicant may not intend to pay for all periods of creditable service. □	□ Block 11:

Is the question about FERS deductions answered? If applicable.	□	□ □ Block 12:

If the answer to Block 11 is "No," is date of separation given? If applicable.	□	□ □ Block 13:

Has the applicant signed the application in Ink? Required in all cases.	□	□ Block 14:

Is the applicant's daytime telephone number provided? Required in all cases.	□	□ Block 15:

Is the application dated? Required in all cases.	□	□

THE FOLLOWING QUESTIONS PERTAIN TO SECTION B OF APPLICATION

SECTION B BLOCK NUMBER	REQUIREMENT	YES	NO N/A Block 1:

Is employee currently covered by FERS? Required in all cases.

Answer must be "Yes," otherwise do NOT use

SF 3108.	□	□ Block 2:

Is the date FERS deductions commenced shown? Required in all cases.	□	□ Block 3a:

Has the question about transferring to FERS been answered? Required in all cases.	□	□ Block 3b:

If the answer to Block 3a is "Yes," then you must complete this block. If applicable	□	□ □

U.S. Office of Personnel Management	(THIS FORM MAY BE LOCALLY REPRODUCED)	RI 95-1

March 1990

FERS SERVICE CREDIT CHECKLIST	PAGE 3 of 3

Name of Applicant: ___________________________________________ SSN: ____________________________

STANDARD FORM 3108, Application to Make Service Credit Payment for Civilian Service (FERS)

QUESTIONS PERTAINING TO SECTION B OF APPLICATION (Continued)

SECTION B BLOCK NUMBER	REQUIREMENT	YES	NO N/A Block 4:

1.	Has all civilian service not covered by FERS or CSRS deduction been shown?

2.	Are all pay rate/changes for temporary service shown?

3.	Is the tour of duty or actual days worked shown for all part-time or intermittent service?

4.	Are earnings for all part-time or intermittent service shown?

If applicable.

If applicable.

If applicable.

If applicable.

□	□ □

□	□ □

□	□ □

□	□ □

Has the application been properly certified and a complete address and telephone number been provided by an agency official?

Required in all cases.

□	□

***PERSONNEL OFFICE REVIEWER***

PERSONNEL SPECIALIST:

TELEPHONE NUMBER: ( )

***PAYROLL OFFICE REVIEWER***

PAYROLL OFFICE CONTACT:

TELEPHONE NUMBER: ( )

U.S. Office of Personnel Management	(THIS FORM MAY BE LOCALLY REPRODUCED)	RI 95-1

March 1990