Federal income tax on voluntary contributions


Q. I am CSRS and contributing to the CSRS Volunteer Contributions.  I am curious, that when I retire and use this saved money for additional annuity it should be tax-free, since I have already paid federal tax on it.  Can you confirm this please?  I do understand that when I get the additional retirement CSRS annuity it will not be added into my regular annuity, but rather be a separate annuity and not subject to increase for annual COLA.
Mostly, I want to confirm that I will not be paying federal tax on VC money again.

A. While the money you contributed to your voluntary contributions account will be exempt from taxes for the reason you cited, any interest you have earned will be taxable.


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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 fedexperts@federaltimes.com.

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