Civil Service Retirement System employees with 41 years and 11 months of creditable service have reached the point in their careers when they have earned the maximum annuity payable under the law — 80 percent of their high-three, the average of their three highest consecutive years of basic pay.

Many of them want to know: What happens now?

First, CSRS annuities are the sum of three multiplication calculations: 1.5 percent of the high-three, multiplied by the first five years of service; plus 1.75 percent of the high-three, multiplied by the next five years of service; plus 2 percent of the high-three, multiplied by all remaining years and full months of service.

Here is the annuity calculation for an employee with a high-three of \$100,000 and 41 years and 11 months of service:

• 0.015 x \$100,000 x 5 years = \$7,500.

• 0.0175 x \$100,000 x 5 years = \$8,750.

• 0.02 x \$100,000 x 31.917 (31 years, 11 months) = \$63,834.

Adding up those products yields a total annuity of \$80,084. Drop the \$84 and you have the \$80,000 maximum annuity, 80 percent of the \$100,000 high-three.

So, what happens when you cross that threshold? The good news is that you can increase your annuity in two ways that aren’t subject to the 80 percent limit — credit for unused sick leave and continuing retirement deductions.

If you meet the age and service requirements to retire, unused sick leave will be added to your service time and included in the calculation of your annuity. Every year of unused sick leave — 2,087 hours — increases your annuity by 2 percent. Every month of unused sick leave — 174 hours — increases your annuity by 1/12th of 2 percent. As a result, your annuity can not only be increased, but it can exceed the 80 percent limit.

Retirement contributions continue to be deducted from your pay after you reach 40 years and 11 months of service. When you retire, you’ll get every penny of that money back, with interest. Your excess contributions will be tax-free. Only the interest you receive will be taxable in the year you receive it, unless you roll it over into a tax-deferred account.

At retirement, the Office of Personnel Management will offer you the opportunity to buy additional annuity that isn’t subject to the 80 percent limit. The rules are the same as for the Voluntary Contributions Program, which allows CSRS employees to increase their annuities by making payments to the Civil Service Retirement and Disability Fund.

If you retire at age 55 or younger, each \$100 of your excess retirement contributions will buy you \$7 a year of additional annuity. This amount increases by 20 cents for each full year you are older than 55 at the time you retire. So, if you retire at age 62, you’d receive \$8.40 for every \$100. And you’d receive it for the rest of your life.

You can also use your voluntary contributions to buy a survivor annuity for your spouse or anyone else you choose. If you do, your own annuity will be reduced to pay for it. The reduction is 10 percent, plus an additional 5 percent for each full five years the beneficiary is younger than you. At your death, the one you designated to receive the survivor benefit would receive half of your reduced annuity for life.

Interest payments on a voluntary contribution account cease when an employee retires. So you can’t leave your excess contributions in there and watch them grow. Further, neither the additional annuity you buy nor any survivor annuity you elect would be increased by annual cost-of-living adjustments.

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