Basic benefit contribution of FERS


Q. Is there any way for me to opt out of the Basic Benefit offered in FERS?

I just started as a GS employee. I did not realize that the Basic Plan will require me to contribute 4.4 percent of my income to a retirement plan that pays 1 percent per year served. Please check my math. Does that mean I will have to draw retirement for a minimum of 4.4 years before I break even on these payments? That is without considering any growth rate on these funds.

A. As to your first question, no, there isn’t any way for you to opt out. As to your second, you need to understand how the retirement system works. While you are putting in 4.4 percent of your salary, your agency is putting in 11.1 percent. That money will be used to fund your retirement. When you retire, the government will return your contributions first and only after they are expended will you begin receiving the government’s portion. (That is true regardless of the percent of pay that an employee is contributing.) If you live long enough, you’ll receive more in annuity payments than you and the government contributed. FYI: Although you paid taxes on your retirement contributions while you were working, when you retire and file your return, under current tax law only a portion of your annuity will be tax free. The tax-free amount is based on actuarial (life expectancy) tables, which vary according to the age at which the employee retires, whether he elected a survivor annuity, and the age of the spouse.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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