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Articles | Voluntary Contribution Program (VCP): Eligibility, Contributions, Refunds and Procedures for CSRS an . . .
Voluntary Contribution Program (VCP): Eligibility, Contributions, Refunds and Procedures for CSRS and CSRS Offset Employees
(Part 1 of 2)
This column discusses the Voluntary Contribution Program (VCP), including which
employees are eligible to contribute to the VCP, how much an eligible employee
can contribute, the interest earned on voluntary contributions, the refund of
voluntary contributions, and the procedures governing VCP accounts.
[Editor's note: Part 2 of this
column discusses withdrawal options from a VCP account,
including a rollover to a Roth IRA and annuity options that allow a CSRS or CSRS
Offset employee the option to receive an additional CSRS annuity from the Office
of Personnel Management (OPM).]
Employees who are currently covered by CSRS and CSRS-Offset or separated
employees whose application for retirement under CSRS is currently being
processed by OPM can apply to make voluntary contributions to the CSRS
Retirement and Disability Fund.
The following employees are not eligible to contribute to the
- FERS employees;
- an employee who has transferred to FERS from CSRS (a "trans" FERS employee);
- CSRS or CSRS Offset employee who owe a deposit for "nondeduction" (temporary
time) civilian service or a redeposit for refunded CSRS retirement deductions.
Any CSRS or CSRS Offset employee who owes such a deposit or redeposit will be
eligible to make voluntary contributions upon completing the deposit or
Payments to the VCP must be made in multiples of $25 ($25, $50, $75, $100).
Total contributions to the VCP may not exceed 10 percent of an employee's
aggregate basic pay as of the date any contribution is made. Basic pay is the
pay the employee receives for creditable civilian service that is covered by
deduction or deposits.
An employee may not circumvent the 10 percent limit by making contributions
based on anticipated earnings. Any amount found to be in excess of the limit
will be refunded by OPM without interest.
Interest is earned at the rate of three percent annually through Dec. 31,
1984. Beginning Jan. 1, 1985, voluntary contributions earn a variable interest
rate determined each calendar year by the Department of the Treasury. This is
based on the average yield of new investments purchased by the VCP fund during
the previous fiscal year. The interest credited to each voluntary contribution
account is compounded annually through December 31st of the preceding
The following table summarizes the interest rates for the period 1985 -
VCP contributions begin to earn interest on the date deposited by OPM. If a
current employee takes a refund of VCP contributions, interest accrues to the
date OPM authorizes the refund payment.
Interest is computed to the date of separation when an employee separates and
takes a refund of voluntary contributions.
The following example illustrates this point.
Jim made a VCP contribution that OPM deposited on March 1, 2009, and then
separated from federal service on July 31, 2009. The employee applied for a
refund in August 2009. Interest was paid at the rate of 3.875% for five
Interest will continue to accrue in an individual's account if an employee
separates from federal service with entitlement to a deferred annuity and does
not request a refund of his or her voluntary contributions. The accrual will
start from the beginning of the date of annuity or death, whichever is earlier.
Interest will accrue on the VCP contribution until the date of separation for
retirement if an employee separates from federal service to retire on an
immediate annuity. This rule applies regardless of whether the retired employee
elects to receive a refund of voluntary contributions or to purchase an
Voluntary contribution payments are made directly to OPM. Payments cannot be
made by payroll deductions.
Employees who want to make voluntary contributions must obtain form SF 2804,
Application to Make Voluntary Contributions (downloadable from the
OPM website here), complete SF 2804, and submit to the agency's
An employee must pay all deposits or redeposits for temporary service or
refunded service prior to making voluntary contributions. An employee should not
send money with the application. OPM will not accept contributions until it has
approved the employee's application.
After such approval, OPM will assign the employee a voluntary contribution
account number (CSV number) along with instructions on how to make payments to
the voluntary contribution account. OPM also sends payment receipts and the
Voluntary Contributions Annual Statement of Account to the account holder. The
statement is sent at the beginning of each year, showing the amount of interest
through December 31 of the preceding year.
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