Q: The OPM sent me a CSRS-post Sept. 30,1982, redeposit balance of $59,554 for a period of CSRS covered employment between June 28, 1982 to June 15, 1990. I am 57 and would like to retire at 65 with 17 years of FERS service. I could pay the redeposit value plus additional interest when I retire or could use the proceeds to apply to an annuity. My current TSP statement shows that if I retire at 62, the approximately $60,000 I have on hand could fund an annuity that would generate $309 per month, a payment that may be slightly greater at 65. Would I receive a greater monthly payout if I pay the redeposit? I project my retirement annual high-3 to be around $115,000.
A: Because you took the refund before March 1, 1991, you’ll get credit for that time in determining your total years of service. If you redeposit the amount you owe, that period of service will also be used in your annuity computation. That would increase your annuity by roughly 18 percent. If you don’t redeposit that amount, your annuity will be actuarially reduced by the amount you owe and your age at retirement. Assuming you paid the amount you owe before it gets any higher, the reduction in your annuity would be around $308 a month when you retired at age 62.