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Frequently Asked Questions Retirement

General

  • Make-up contributions are employee contributions that could have been deducted from your pay earlier, but were actually deducted later because of an error.

    When you are erroneously put in CSRS, CSRS Offset, or Social Security-Only rather than FERS, you are allowed to make up the TSP contributions that you could have made had you been in the correct retirement plan.

    By law, your TSP make-up contributions must be made as payroll deductions. You can't pay your TSP make-up contributions by check or rollover. Subject to the provisions of the TSP error correction regulations, you can decide how much you pay in TSP make-up contributions and how long you want to take to make the payments. TSP make-up contributions are treated as tax-deferred compensation for the year in which they are made up, but are subject to the elective deferral limit(s) for the year(s) in which they could have been made. So, your make-up contributions will reduce your taxable income for the year that you actually make the contribution.

    If you are in FERS and decide to pay TSP make-up contributions, your agency must also pay any attributable Agency Matching Contributions.

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  • Lost earnings are earnings that you would have received if your TSP make-up contributions were deposited when they would have been deposited had you been in the correct retirement plan.
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  •  

    Yes, FERCCA changes the rules on make-up contributions to the TSP for some individuals.

    Before FERCCA, you did not receive lost earnings on any make-up contributions you had withheld from your pay because of a retirement coverage error. You did receive lost earnings on agency contributions made to your TSP account.

    Under FERCCA, you can receive lost earnings on your make-up contributions if you choose to stay in FERS. You also continue to receive lost earnings on any contributions your agency makes to your TSP account.

    Before you're asked to choose retirement plans, OPM will give you information about your TSP benefits under both CSRS Offset and FERS.

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  • No. The Social Security Law also includes a provision -- the Windfall Elimination Provision (WEP) -- that reduces Social Security benefits for individuals who have less than 30 years of "substantial earnings" under Social Security and who have earned a retirement benefit from employment not covered by Social Security; for example, CSRS service. The WEP was designed to eliminate the "windfall" that could result if you were to receive a CSRS annuity based on many years of employment not covered by Social Security and also receive a full Social Security benefit because you had a few years of employment covered under Social Security. The WEP, however, never totally eliminates the Social Security benefit you have earned. For example, in 2001, the maximum amount the WEP can decrease a Social Security benefit is $280.50 per month. For more information, see SSA's The Windfall Elimination Provision at http://www.ssa.gov/pubs/10045.html.
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  • Yes, the Federal Retirement Thrift Investment Board issued proposed rules on April 19, 2001.
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  • If an employee, former employee, or retiree would have had a choice under FERCCA but died before making an election, then the survivor can make that election instead.

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  • Your make-up contributions will be invested based on your most recent contribution allocation. For example, if you currently allocated 75% of the TSP contributions withheld from your pay to go to the C Fund and 25% to go to the G Fund, your make-up contributions will be allocated in the same manner. If you don't have a contribution allocation on file with the Federal Retirement Thrift Investment Board, the make-up contributions will be invested in the G Fund.

    You may also get lost earnings on your make-up contributions. The amount of the lost earnings you receive are based on the contribution allocation in effect at the time the make-up contributions would have been made had you been correctly covered by FERS. For example, suppose you are going to make-up contributions for the period January 11, 1995 to July 6, 1995. During that period you may had allocated 45% of the contributions withheld from your pay to go to the G Fund and 55% to go to the C Fund. The lost earnings on your make-up would be computed as though 45% of your make-up went to the G Fund in 1995 and 55% had gone to the C Fund.

    If you didn't have a contribution allocation, the lost earnings will be based on the return of the G Fund.

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  • Once the review process begins, it takes about 6 weeks (on average) for a decision on the individual's eligibility and for the required quality control reviews.
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  • If you are erroneously covered by FERS and you choose to move out of FERS, FERCCA allows you to keep the employee contributions you made in your TSP account (plus the earnings attributable to your contributions) even if the contributions exceed 5 percent of the basic pay you earned for the pay period that contributions had been made. However, all Government contributions that were made to your account and the attributable earnings must be removed from your account if you do not choose FERS.

    If you choose FERS coverage under FERCCA, you may make up those employee contributions that you could have made had you been correctly covered by FERS, as provided by the current TSP error correction legislation. In addition, you will receive the agency automatic (1%) contributions and agency matching contributions that you should have received had you been correctly covered by FERS. Finally, you will receive lost earnings on both your employee and agency make-up contributions. (Prior to FERCCA, lost earnings were payable only on agency make-up contributions.) The lost earnings on both employee and agency contributions will be determined the same way lost earnings are now determined on agency make-up contributions (that is, as provided by the current TSP regulations).

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  • You will get Social Security credit for all that work, and it won't cost you anything. Your agency will send the Social Security Administration a record of your earnings during all the years you should have had Social Security coverage. All of the CSRS contributions you made during those years that are not needed to cover your retirement costs will be transferred to Social Security. This transfer will pay all the Social Security taxes you owe.
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