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CSRS Refund of Employee Retirement Contributions
This column will discuss the payment of employee contributions to the Civil
Service Retirement System (CSRS) when the employee leaves federal service before
he or she is able to retire.
The column will explain: (1) the concept of the lump sum credit; (2) the
content of a refund; (3) the requirement that an employee must meet to be
eligible for a refund; (4) the effect of spousal/former spouse notification
requirements on the payment of a refund; (5) the effect of court orders on the
payment of a refund; (6) the effect of debts due to the U.S. on the payment of a
refund; (7) the procedures for obtaining a refund; and (8) the options available
to an employee with respect to a refund upon separation from federal
A lump sum credit is defined as the "unrefunded amount" of an employee's
contributions to the Civil Service Retirement and Disability Fund (the CSRS
fund). This lump sum credit consists of:
- Retirement contributions deducted from basic pay -- approximately 7 percent
of an employee's after-taxed wages;
- Deposits and/or redeposits, including deposits for post-1956 military
- Interest payable under law.
The following individuals are eligible for a lump sum credit: (1) a separated
employee or an employee who is no longer covered by CSRS or FERS; (2) the
beneficiaries of a deceased annuitant or a survivor annuitant if the full amount
of retirement contributions had not been paid out in the form of an annuity or
survivor annuity at the time of death; and (4) the beneficiaries of a deceased
A refund is a lump sum payment to a former employee or to an employee who is
no longer covered by CSRS or FERS of the amount to his or her lump sum credit. A
refund payment includes payment of any and all: (1) retirement contributions
deducted from basic pay, including CSRS Offset contributions for individuals
covered under CSRS Offset; (2) deposits and/or redeposits; (3) military service
credit deposits; (4) voluntary contributions to CSRS under the voluntary
contribution program; and (5) interest payable under the law.
Interest is payable on refunded contributions covering at least one year of
CSRS service but fewer than five years of CSRS service. Interest is payable at
three percent compounded annually.
What is the effect of a CSRS refund?
When a CSRS refund has been properly paid, all annuity rights based on
service covered by the refund are void unless the former employee is later
reemployed in a position subject to CSRS or FERS deductions. If the reemployment
is under FERS, it may be necessary to make a deposit to cover the service before
any credit for the service is restored.
Service for which the employee received a refund is creditable in determining
whether a current employee has service for the required number of years to be
eligible for a CSRS annuity. But such service may be used for annuity
computation purposes only in the following circumstances:
- If the individual applies for a non-disability annuity commencing after Dec.
1, 1990 and the refunded service ended before Oct. 1, 1990. The refund does not
have to be repaid in order for the individual to receive credit for the service.
Full credit will be allowed for the length of the refunded service, but the
annuity will be actuarially reduced by an amount equal to the reduction for an
alternative form of annuity lump-sum in the amount of the redeposit.
- If the individual applies for a disability annuity or the refunded service
ended after Oct. 1, 1990, then the individual must redeposit the refund plus
- If the individual is eligible to make an alternative annuity election, the
redeposit will be deemed paid at the time of retirement.
A refund is subject to any properly certified and timely request for recovery
of a valid debt due the United States government. The amount of a refund
representing an employee actual contribution is not subject to federal income
taxes. But any interest paid on those contributions is taxable in the year in
which the refund is paid.
A former employee must meet all of the following requirements to be eligible
for a refund: (1) separates from federal service for at least 31 consecutive
days or transfers to a position in which he or she is not subject to CSRS,
CSRS-Offset or FERS deductions and remain in that position for at least 31
consecutive days; (2) files an application with OPM for a refund; (3) not
to be reemployed in a position subject to CSRS or FERS deductions at the time
the application is filed; (4) not to be eligible to receive an annuity within 31
days after filing the application; (5) not to be prohibited from receiving a
refund because of a court order; and (6) comply with requirements for
notification of current and former spouses. A current spouse must always be
notified, regardless of the length of the marriage on the amount of civilian
service the employee has.
The former employee's application for a refund must be accompanied by form SF
2802B, Current/Former Spouse Notification of Application for Refund of
Retirement Deductions Under the Civil Service Retirement System, for a current
spouse and each qualifying former spouse. Form SF 2802B must be signed by the
individual's current spouse or any former spouse. OPM cannot pay the refund
unless the applicant submits an SF 2802B, supplies the documentation required
below, or is authorized a waiver of the notification requirement.
If the employee is unable to secure a current or former spouse's signature on
the application, the employee must submit with the refund application one of the
- Notarized statements by two individuals who witnessed the employee notifying
or attempting to notify a current or former spouse of the refund application.
The notarized statements must attest that the witness state that the employee
personally gave, or try to give, the notification to the spouse or former
spouse, to whom the employee's purpose should have been clear.
- A current or former spouse's mailing address in order that OPM may attempt
to notify him or her. If OPM is requested to make the notification, it will
cause a six to eight week delay in payment of the refund. The refund cannot be
paid unless OPM receives a return receipt, indicating that the notice was
OPM may waive the spousal notification requirement if the employee submits
evidence to OPM that his or her current or former spouse's whereabouts are
unknown. Evidence may consist of:
- A determination by a court or administrative agency empowered to make a
decision that ht espouse is missing; or
- A notarized statement from the former employee and two other competent
adults, one of whom is not related to the former employee, attesting to the fact
that a current or former spouse's whereabouts are unknown. The statement must
detail the steps taken to locate him or her.
If a former employee falsifies information or signature on form SF 2802B, he
or she may be investigated and prosecuted. If the falsification results in a
payment to the former employee that should properly have been made to a current
or former spouse based on a qualifying court order, the former employee will be
subject to civil litigation or administrative action to recover the erroneously
To receive a refund, an employee or former employee must file form SF 2802,
Application for Refund of Retirement Deductions and an SF 2802B, if required.
The SF 2802 must be signed in ink in order to be accepted by OPM. OPM will
verify that the "original" signature appears on the application. OPM cannot
accept a photocopy. The payment address information shown on the SF 2802 must be
the correct mailing address for the refund payment. OPM cannot accept an address
that has been altered.
If the application has been separated 30 days or less, the application must
be filed with the agency. If the former employee has been separated more than 30
days, he or she sends the application directly to OPM at the following
Office of Personnel Management
Civil Service Retirement
Retirement Operations Center
About the Author
Edward A. Zurndorfer is a Certified Financial Planner and Enrolled Agent in
Silver Spring, Maryland. He is also a registered representative with
Multi-Financial Securities Corporation (Branch A9X), member FINRA/SIPC, also
located in Silver Spring, Maryland