Q. I have to buy back four years, which will give me 30 years with the Defense Department. It will cost me $8,000. I owe about $1,500. The rest is interest. I never knew about this until I started retirement plans. If I had, I would have started a repayment plan. Can you explained why the why there is so much interest and is there way it can be reduced? I have been waiting now for eight months for the Office of Personnel Management to make its final calculations so I can begin to pay. Is there anything I can do to get OPM speed up the process?
A. First, before January, 1985, the interest rate was a flat 3 percent. From that point forward, a variable interest rate has been charged. As determined annually by the Department of the Treasury, the interest rate for any year equals the overall yield to the retirement fund from retirement securities during the preceding fiscal year. Those rates have varied from a high of 11.125 percent in 1985 to a low of 2.25 percent this year.
Second, there is no way that the amount you owe in interest can be reduced. You owe what you owe.
Third, I’m not aware of any way that you can get OPM to speed up the process.