Redeposit Credits

[Scout333]

Is it ever worthwhile to repay civil service contributions withdrawn due to a separation of service to regain the years of service given up? I.E. As a CSRS employee who left around 1982 withdrawing approx. 9 years service contributions and returned about 4 years later as a rehired employee and have worked an additional 21 years as a CSRS Offset employee, I am considering whether to repay the contributions withdrawn (and accrued interest). As I understand it, since the redeposit years of service were prior to Oct.,1990 any future annuity amounts will be reduced actuarially if amounts are not repaid. I haven't been able to find out how this computation is made or how to estimate the $$ impact of not repaying it.

Any of you retirement gurus have any ideas for me?

 

[Scout333]

Found a good source of information re CSRS issues/questions at
http://www.federalsoup.com//

 

[Elgallo]

Scout:

Just figure you could loose a max of 18% worst case (I beleive it will be less)on you annunity e.g. you loose 2% pyr X 9years. Then calculate how much that would amount to dollarwise over your remaining lifetime best case you live until 90. My guess is you will see it is worth it.

I did the same thing and withdrew my CSRS $$ in 1981,then came back in 1987 if I recall correctly, and I am now pure FERS. It was worth it to me after doing the calc. above.

Cannot comment as to Offset however.

 

[Scout333]

Thanks, Its nice to hear there are others with the same circumstances. I contacted a Retirement Specialist through our ERC site and requested an estimate of the amount I would have to pay back and a computation of the reduction in annuity should I choose not to repay it. The Retirement Specialist indicated that FERS employees' retirement is computed without the redeposit years if it is not repaid. I.E. The 18% you mentioned. CSRS employees get credit for the years but can pay it back over their expected lifetimes through the actuarial computation. Bottom line, need to wait until I get the facts before making a decision. Imagine that!!

 

[Ed]

Is it ever worthwhile to repay civil service contributions withdrawn due to a separation of service to regain the years of service given up? I.E. As a CSRS employee who left around 1982 withdrawing approx. 9 years service contributions and returned about 4 years later as a rehired employee and have worked an additional 21 years as a CSRS Offset employee, I am considering whether to repay the contributions withdrawn (and accrued interest). As I understand it, since the redeposit years of service were prior to Oct.,1990 any future annuity amounts will be reduced actuarially if amounts are not repaid. I haven't been able to find out how this computation is made or how to estimate the $$ impact of not repaying it.

Any of you retirement gurus have any ideas for me?

The short answer is yes...buy back your time.

 

[Scout333]

Thanks Ed, I agree that you wouldn't want to give up the redeposit years of service. There are several different ways to "pay" the contributions back to get credit for the years of service. I.E. Most would have to pay it back in a lump sum or by payroll deduction which if you would lose 2% a year or 18% off your annuity makes a huge amount of sense. CSRS employees who withdrew their contributions for service that ended before Oct.1, 1990 can "pay" the refunded contributions back by taking an actuarial reduction in their annuity each month for the rest of their lifetimes. As I understand it, the amount due to be paid back (refund plus accrued interest) is divided by a present value factor based on your age at retirement. As an example, at age 60 the factor would be 188.7. You divide the factor into the amount to be "paid" back I.E. guesstimate of 80,000 (refunded amount and accrued interest) divided by 188.7 for a estimated reduction of $ 424 month from your CSRS annuity. You would compare the reduction in annuity to what could be earned on the 80,000 (424 x12/80,000 = 6.36%). So if you think you can earn more than 6.36% on the "payback" amount you would keep the money and take the reduction. All this before tax considerations! Jeez my head hurts!:worried:

 

[fedguy07]

I'm late chiming in on this one (new to this discussion board).
redeposits can be confusing to know what's best. Especially if you have military service too.
I found some helpful info at http://www.myfederalretirement.com
There's also a free calculator that can help determine redep. plus other things in planning to retire