 West Chester American Postal Workers Union |
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Thanks to APWU Quincy Illinois Area Local #77 for this article.
Are you a career employee who served in active military duty after 1956? Will you qualify for Social Security benefits?
If your answer to both questions is "yes," you may want to make a deposit into the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) so that your military service will be included in your permanent retirement annuity calculation.
A military deposit must be paid in full before you retire, and each period of active duty must be paid in full in order to be credited. It's better to pay a military deposit as soon as possible to avoid additional interest charges.
Why is a military deposit necessary? Effective January 1, 1957, Social Security (FICA) started being deducted from military pay. If you qualify for Social Security benefits, the military service will automatically be credited toward those benefits.
In order to receive benefits from another retirement (i.e., CSRS or FERS), you must also pay into that retirement to "buy in" your military time. You can't get benefits from two retirement systems for the same period of service if you have only paid into one.
If you are a CSRS employee or an employee who transferred to FERS with frozen CSRS time and your first federal career appointment was before October 1, 1982, your active military service should already be included in your Retirement Computation Date (RCD) for determining retirement eligibility. That time will also be included in computing your monthly annuity upon retirement.
However, if you do not pay the military deposit, once you become eligible to draw Social Security benefits (usually at age 62), your active military service time will be deducted from your Civil Service Retirement check.
[Example of CSRS benefit.- 3 years of service equals 6 percent of your high-three-years' average salary. With a high-3 of $35,000, 6 percent would equal $2,100, or $175 per month, which is the amount that would be deducted from your CSRS annuity.]
It does not matter whether you apply to draw your Social Security benefits or not. The key is whether you are eligible, by having worked the necessary number of quarters (credits) under Social Security, either before or after your retirement.
If you are a CSRS employee or a FERS employee and your first federal career appointment was October 1, 1982, or later, your active military service will not be included in your Retirement Computation Date (RCD) until you have completed your military deposit for any period of service.
Once we have received a statement from our Minneapolis Information Service Center indicating you have paid a period of active military service in full, a PS Form 50 will be processed crediting that period of service toward your RCD.
[Example of FERS benefit. 3 years of service equals 3 percent of your high-three-years' average salary. With a high-3 of $35,000, 3 percent would equal $1,050, or $87.50 per month.]
To make a military deposit, you need the form "Estimated Earnings During Military Service," which is available from Employee Benefits. You must send your completed request form, along with a copy of your DD-214 for each period of active military service, to the payroll center for the military branch in which you served. (Addresses are provided along with the "Estimated Earnings" form.)
The military payroll center will complete the form by providing your base military earnings for the
period(s) indicated and will return the completed form to the Gateway District Employee Benefits office, where the amount of deposit due based on those earnings will be calculated.CSRS employees must pay 7 percent of base military earnings, plus interest which has compounded yearly since October 1, 1986. FERS employees must pay 3 percent of base military earnings, plus interest accruing annually beginning either three years after the career appointment date or three years after January 1, 1987, whichever date is later.
The total amount of deposit due, including interest, will be sent back to you, along with the two forms necessary to make the military deposit (SF 2803 and PS 2805). To make the deposit, you must then complete those two forms, indicating which method of payment you prefer.
Your payments may be a lump sum, by check or money order, installments of at least $50 each, by check or money order, or payroll deductions of at least $5 per pay period. Completed forms SF 2803 and PS 2805 (along with any checks or money orders made payable to "U.S. Postal Service") should be sent to Employee Benefits for processing.
