This page provides information on various HR Aids for Benefits Officers.

Federal Erroneous Retirement Coverage Corrections Act

The Federal Erroneous Retirement Coverage Corrections Act (FERCCA) section provides you with everything you need to know about FERCCA and it's implementation.

Nonappropriated Fund (NAF) Service

The Nonappropriated Fund (NAF) Service section provides information about portability of benefits, the requirements for crediting NAF service under CSRS and FERS in accordance with Public 107-107, and resources for handling cases involving NAF service.

Your agency is responsible for processing any cases identified as being affected under FERCCA after 8/1/2004. FERCCA cases that were identified prior to 08/01/2004 were placed in the OPM FERCCA database and processed by OPM.

The following table outlines the order of events and responsible parties for each step in the processing of a FERCCA case:

Events and Responsible Parties

Action	Responsibility
(1) Process and mail election package	Agency
(2) Offer and provide counseling to aid employee in making an election decision	Agency
(3) Return form with retirement plan election	Employee
(4) Make retirement plan corrections and updates files (including any make-up contribution schedules)	Agency

Please contact your agency if you have any questions regarding your FERCCA case. If you are retired, you may contact OPM on our nation-wide toll free number 1-888-767-6738 to answer any questions you may have regarding your FERCCA case. The hours of operation are Monday - Friday, 7:30 am - 8:00 pm ET.

FERCCA Legislation

The Federal Erroneous Retirement Coverage Corrections Act (FERCCA) legislation was signed in September 2000. It was designed to provide relief to Federal civilian employees who were placed in the wrong retirement system for at least 3 years of service after December 31, 1986.

FERCCA gives many employees and annuitants placed in the wrong retirement system an opportunity to choose between the Federal Employees Retirement System (FERS) and the offset provisions of the Civil Service Retirement System (CSRS). FERCCA may also provide one or more of the following:

• Reimbursement for certain out-of-pocket expenses paid as a result of a coverage error;
• Ability to benefit from certain changes in the rules about how some Government service counts toward retirement; and
• Make-up contributions to the Thrift Savings Plan and receipt of lost earnings on those contributions.

The Senate approved H.R. 4040, the "Long-Term Care Security Act" and the "Federal Erroneous Retirement Coverage Corrections Act (FERCCA)", on July 25, 2000 and the House passed it on July 27, 2000. The President signed it on September 19, 2000

This legislation, which received bipartisan support, brings fair and equitable relief to Federal employees and their families. It also required the Office of Personnel Management to issue regulations no later than 6-months after enactment. Any time lag between enactment and full implementation will not adversely affect the choices available.

Nonappropriated Fund (NAF) employees work worldwide for the Department of Defense (DoD) or the U.S. Coast Guard (USCG) in retail and military community support activities. NAF activities generate funds to support their operations as well as fund morale, welfare, and recreation (MWR) programs providing services to soldiers, sailors, airmen, marines, and coast guardsmen.

NAF employees are Federal employees but are excluded from most laws administered by the U.S. Office of Personnel Management (OPM) as detailed in 5 U.S.C. 2105(c). Unless specifically provided by law, NAF employment is not subject to civil service provisions.

NAF Employers

• U.S. Army
• U.S. Air Force
• U.S. Marine Corps
• Commander Navy Installations Command (CNIC)
• Navy Exchange Service Command (NEXCOM)
• Army and Air Force Exchange Service (AAFES)
• U.S. Coast Guard

Portability of Benefits

Portability of benefits refers to the ability to retain certain benefits or receive service credit when moving between NAF and civil service positions (also called Appropriated Fund or APF positions).

Within the Federal government, retirement portability refers to the ability for an employee in the NAF retirement system to elect to remain covered under the NAF retirement system when moving to a CSRS or FERS covered position (or vice versa) within a certain timeframe. Employees must meet specific eligibility criteria to make an election under the retirement portability provisions.

History of Portability of Benefits

Public Law (P.L.) 101-508 was the first law permitting the porting of retirement benefits from a NAF position to a CSRS or FERS covered position (or vice versa) after a “qualifying move.” Under the original law, a “qualifying move” was defined as the first move occurring after December 31, 1986, and before August 10, 1996, from a NAF covered position to a CSRS or FERS covered position (or vice versa), within the DoD or USCG, and without a break in service of more than three (3) days.

When P.L. 104-106 became effective on February 10, 1996, the change to the portability of benefit rules loosened some of the qualifying move requirements. The qualifying move requirements were changed again with the passing of the National Defense Authorization Act for Fiscal Year 2002 (P.L. 107-107) on December 28, 2001.

Under P.L. 107-107, a “qualifying move” must meet the following requirements:

1. The individual must not have had a prior opportunity to port coverage under P.L. 101-508 or P.L. 104-106;
2. The individual must move from a DoD or USCG NAF position to a CSRS or FERS covered position in any Federal agency (or vice versa);
3. The individual does not need to be vested in the plan from which they are moving from;
4. The individual must begin employment in the new position within one year of separating from the original retirement plan;
5. The individual has 30 days from the appointment date of the new position to elect to port retirement benefits; and
6. The individual only has one opportunity to port retirement benefits each way (e.g., NAF to CSRS/FERS and CSRS/FERS to NAF).

An election to port retirement benefits coverage is irrevocable and the effective date of the election is the employee’s appointment date into the new position. Agencies will need to file the portability election in the employee’s Official Personnel Folder (OPF) and provide a copy to the appropriate NAF employer and payroll office.

NAF Service Credit Under CSRS and FERS

Section 1132 of P.L. 107-107, changed how service with a DoD NAF or USCG NAF employer is credited under CSRS and FERS. Section 1132 gives CSRS and FERS covered employees the opportunity to elect to credit DoD NAF or USCG NAF service for the sole purpose of establishing eligibility for immediate retirement benefits. CSRS and FERS employees may elect to credit NAF service to qualify for immediate retirement if they:

• separate for retirement on or after December 28, 2001;
• do not already qualify for an immediate retirement under CSRS or FERS based on their non-NAF service; and
• have at least 5 years of creditable civilian service under CSRS or FERS and qualify for a deferred CSRS or FERS retirement.

The computation of retirement benefits under CSRS and FERS may not include the NAF service. Crediting prior NAF service under P.L. 107-107 provisions will not result in a higher CSRS or FERS annuity benefit. To offset the additional cost to the Civil Service Retirement and Disability Fund, an actuarial reduction is applied to the annuity computations of an employee who elects to use their NAF service to qualify for an immediate CSRS or FERS retirement.

An employee who elects to credit NAF service to qualify for an immediate FERS retirement benefit is not eligible to receive a FERS annuity supplement.

Additional information and guidance on the creditability of prior NAF service and computation of benefits under P.L. 107-107 is available in BAL 03-102 and the associated attachments.

Additional Guidance on the Portability of Benefits Relating to NAF Service

Find DoD NAF resources online at Defense Civilian Personnel Advisory Service (DCPAS) Nonappropriated Fund Personnel System and the DCPAS Portability of Benefits Reference Guide.

For general NAF inquiries, please contact DoD NAF Policy at dodhra.mc-alex.dcpas.mbx.naf@mail.mil.

For assistance with the regulations and guidance governing employees covered under CSRS and FERS, please email benefits@opm.gov

Contacts for Information About an Employee's Prior NAF Service or NAF Records

• NAF contacts for verification of prior DoD NAF employment inquiries
• NAF contacts for retirement or portability inquiries

NAF Service Laws and Regulations Under CSRS and FERS

The following laws provide limited exceptions to 5 U.S.C. 2105(c) for NAF service under CSRS and FERS provisions:

• P.L. 107-107 (12/28/2001)
• P.L. 104-106 (02/10/1996)
• P.L. 101-508 (11/05/1990)
• P.L. 99-638 (11/10/1986)

The following regulations provides the rules for retirement coverage elections and crediting of NAF service under CSRS and FERS provisions:

• 5 CFR Part 847 – Elections of Retirement Coverage by Current and Former Employees of Nonappropriated Fund Instrumentalities
  • Subpart A – General Provisions
  • Subpart B – Elections to Continue Retirement Coverage After a Qualifying Move
  • Subpart C – Procedures for Elections Under the Retroactive Provisions (P.L. 104-106)
  • Subpart D – Elections of Coverage Under the Retroactive Provisions (P.L. 104-106)
  • Subpart E – Transfers of Contributions Under the Retroactive Provisions (P.L. 104-106)
  • Subpart F – Additional Employee Costs Under the Retroactive Provisions (P.L. 104-106)
  • Subpart G – Computation of Benefits Under the Retroactive Provisions (P.L. 104-106)
  • Subpart H – Electing to Credit NAFI Service for CSRS and FERS Retirement Eligibility (P.L. 107-107)
  • Subpart I – Computing the Retirement Annuity for Employees Who Elect to Use NAFI Service to Qualify for an Immediate CSRS or FERS Retirement (P.L. 107-107)

OPM Published Guidance on NAF Service

The following OPM Benefits Administration Letters (BAL) provides guidance for retirement coverage elections and crediting of NAF service under CSRS and FERS provisions:

• BAL 03-102, Crediting Service with a DoD or Coast Guard NAFI for CSRS or FERS Immediate Retirement Under P.L. 107-107, NDAA for FY 2002
  • Attachment 1 – Examples: Who Can Elect to Use NAF Service to Qualify for CSRS or FERS Immediate Retirement Under Section 1132 of P.L. 107-107 and Who Cannot
  • Attachment 2 – Computing Annuity Estimates When NAF Service is Used to Qualify for Immediate Retirement under Section 1132 of PL 107-107
  • Attachment 3 – Election Form RI 38-145
  • Attachment 4 – Model Request for Verification of NAF Service; Names and Addresses of NAF Employees; Verification of NAF Service Form (revised 02/11/2003)
  • Attachment 5 – NAF Service Credit Flag
  • Attachment 6 – Charts
• BAL 02-102, Retirement Election Opportunities for Former DoD or Coast Guard NAF Employees Under P.L. 107-107, NDAA for FY 2002
  • Attachment A – Election to Retain NAF Retirement Coverage, RI 28-134
  • Attachment B – Names and Addresses of NAF Retirement Plans
  • Attachment C – Model Request for Verification that Employee was a Participant in a NAF Retirement Plan
  • Attachment D – Notice of NAF Election Flag
  • Attachment E – Election to Retain CSRS, CSRS Offset, or FERS Coverage, RI 38-144
• BAL 97-105, Certain FERS Employees with Previous NAFI Service Need to Make a Service Credit Election
• BAL 96-108, Retirement Election Opportunities for Certain FERS Employees Appointed Before August 10, 1996, After Service in a Nonappropriated Fund Instrumentality of the DoD or Coast Guard
• BAL 96-107, Retirement Election Opportunity for Certain Employees Appointed to Civil Service Positions on or after August 10, 1996, Following Service in a Nonappropriated Fund Instrumentality of the DoD or Coast Guard