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United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number 12 - 104 Date: October 3, 2012

Subject: Federal Employees Retirement System-Revised Annuity 

Employees (RAE) 

Purpose: The purpose of this Benefits Administration Letter (BAL) is to provide 

guidance concerning employees and Members of Congress who will be covered under 

the Federal Employees Retirement System (FERS) as Revised Annuity Employees (RAE), 

FERS-RAE. This guidance only applies to automatic FERS coverage determinations. 

Employees who are subject to CSRS, CSRS-Offset, or FICA-only coverage and who have 

an opportunity to elect to transfer to FERS will be subject to FERS, not FERS-RAE, if they 

elect to transfer to FERS. 

Background: Public Law 112-96, Section 5001, the “Middle Class Tax Relief and Job 

Creation Act of 2012,” makes two significant changes to the Federal Employees’ 

Retirement System (FERS). First beginning in 2013, new employees (as designated in 

the statute) will have to pay significantly higher employee contributions, an increase of 

2.3 percent of salary. Second, new Members of Congress and Congressional employees, 

in addition to paying higher retirement contributions, will accrue retirement benefits at 

the same rate as regular employees. 

 

Coverage Determination:

FERS-RAE coverage will generally apply to any individual who receives an appointment 

not excluded from FERS coverage on or after January 1, 2013, and who would normally 

be placed in FERS. There are three exceptions to this general rule, however, and the 

date December 31, 2012, is a key date for each of those exceptions. An individual will 

be excluded from FERS-RAE coverage if any of these exceptions apply: 

1. the individual on December 31, 2012, was covered under FERS; 

OR
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2. the individual on December 31, 2012, was performing civilian service which is 

creditable or potentially creditable service under FERS (for example the 

individual may have been covered under another retirement system from which 

service credit may be transferred to FERS, such as CSRS, CSRS-Offset, Foreign 

Service, Federal Reserve, or CIARDS) 

OR

3. the individual on December 31, 2012, was not covered under FERS and was not 

performing civilian service which is creditable or potentially creditable service 

under FERS, but as of December 31, 2012 had performed at least five years of 

civilian service creditable or potentially creditable under FERS, including service 

subject to CSRS or CSRS-Offset. 

Potentially Creditable Service 

Certain categories of service become fully creditable only if the employee takes certain 

actions, such as applying to pay for the service by a deadline established in law or 

waiving rights to benefits under another retirement system for Federal employees. For 

example, service covered by the Foreign Service Pension System is potentially (but not 

fully) creditable until an employee has waived his or her rights to benefits under that 

system and made the necessary deposit to OPM. In making coverage determinations 

count all creditable civilian service that is potentially creditable on the effective date of 

the personnel action requiring the coverage determination. The resulting coverage 

decision remains valid even though the employee may never ever take all the actions 

needed for the service to become fully creditable. 

Break in Service of Three Days or Less that Spans December 31, 2012 

If an individual leaves a FERS covered position immediately before December 31, 2012, 

and returns to a FERS covered position after a break of three days or less, the employee 

will continue to be covered under FERS even if the employee returns after December 31, 

2012. A break in FERS coverage of three days or less is not considered to be a 

separation from service and the individual is considered to be covered under FERS on 

December 31, 2012. 

Receipt of Compensation Benefits While Separated from Service on December 31, 2012 

When an individual returns to Federal service following a separation during which he or 

she was receiving compensation benefits under the Federal Employees’ Compensation 
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Act (FECA) from the Office of Workers’ Compensation Programs, the individual is 

deemed, for service credit purposes, to have been on a leave of absence without pay for 

the period during which he or she was receiving the compensation benefits and that 

period is creditable service under FERS. If an individual is separated from Federal 

service on December 31, 2012, but is never-the-less entitled to service credit for that 

day because he or she was receiving FECA benefits, the individual is considered to have 

been performing civilian service creditable under FERS on December 31, 2012, and is 

excluded from FERS-RAE coverage. 

Performing Active Duty Military Service on December 31, 2012, Following a Separation 

from Civilian Service 

If a FERS covered employee separates from Federal service before December 31, 2012 

to enter active duty military service, and returns to Federal service after December 31, 

2012, after exercising his or her reemployment rights under 38 U.S.C. § 4312, the 

employee is not considered to be separated from Federal service for purposes of 

determining FERS-RAE coverage. Under specific provision of the Uniformed Services 

Employment and Reemployment Rights Act (USERRA), individuals reemployed with the 

Government under chapter 43 of title 38 must be treated as not having a break in 

service. 

FERS Employees in a Leave Without Pay Status On December 31, 2012 

FERS employees who are not separated from Federal service but who on December 31, 

2012, are in a leave without pay status are excluded from FERS-RAE coverage, even if: 

the employee has been on leave without pay for more than six months in 2012, 

and does not receive service credit for December 31, 2012, or 

the employee has been on leave without pay while performing active duty 

military service and does not return to the Federal civilian service by exercising 

his or her reemployment rights. 

Examples 

1. Employee receives a FERS covered appointment effective January 14, 2013. This 

is a first hire – employee had no prior civilian service with the Federal 

Government. 

Employee is subject to FERS-RAE coverage. 
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2. Employee receives a FERS covered appointment effective January 2, 2013. 

Employee had one previous period of civilian service with the Federal 

Government covered under FERS from September 14, 2008, to 

December 29, 2012. 

Employee is subject to FERS coverage. 

Although the employee was not employed by the Government on December 31, 

2012, the break between the end of the employee’s FERS appointment 

(December 29, 2012), and the beginning of the next appointment (January 2, 

2013) is only three days. The break is not considered to be a separation from 

service and the employee is considered to have been covered under FERS on 

December 31, 2012. 

3. Employee receives a FERS covered appointment effective January 14, 2013. 

Employee had one previous period of civilian service with the Federal 

Government covered under FERS from September 14, 2008, to 

December 29, 2012. 

Employee is subject to FERS-RAE coverage. 

The employee was not employed by the Government on December 31, 2012, and 

the employee as of December 31, 2012, had performed less than five years of 

civilian service creditable or potentially creditable under FERS. In this case the 

break between the end of the employee’s FERS appointment (December 29, 

2012), and the beginning of the next appointment (January 14, 2013) is more 

than three days so the break is not creditable and the employee is not excluded 

from FERS-RAE. 

4. Employee receives a FERS covered appointment effective April 29, 2014. 

Employee had one previous period of civilian service with the Federal 

Government from September 14, 2008, to January 5, 2013. The employee was 

covered under FERS throughout that previous period of service.

Employee is subject to FERS coverage because the employee was employed in a 

civilian position subject to FERS on December 31, 2012. (The fact that the 

employee had not yet completed 5 years of service as of December 31, 2012, is 

not a relevant consideration in this scenario because the employee was covered 

under FERS on December 31, 2012.)

5. Employee receives a FERS covered appointment effective January 6, 2013. 

Employee had previous civilian service that was covered under the Foreign 

Service Pension System (FSPS) from February 12, 2012, through January 5, 2013.

Employee is subject to FERS coverage because the employee was working in a 

position on December 31, 2012, that is potentially creditable under FERS.
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6. Employee receives a FERS covered appointment effective May 5, 2013. 

Employee previously had civilian service that was covered under FERS from June 

3, 2001, through June 21, 2008.

Employee is subject to FERS coverage on May 5, 2013. 

Although the employee was not employed with the Federal Government on 

December 31, 2012, the employee had performed at least 5 years of creditable 

civilian service as of December 31, 2012. 

7. Employee receives a FERS covered appointment effective May 5, 2013. 

Employee previously had civilian service that was covered under the Foreign 

Service Pension System (FSPS) from June 3, 2001, through June 21, 2008.

Employee is subject to FERS coverage on May 5, 2013. 

Although the employee was not employed with the Federal Government on 

December 31, 2012, the employee had performed at least 5 years of potentially 

creditable civilian service as of December 31, 2012. 

8. Employee receives a FERS covered appointment effective June 16, 2013. 

Employee previously had performed Federal service under FERS from December 

10, 2008, through June 22, 2011, when the employee’s agency took action to 

separate the employee from service because she was receiving FECA

compensation benefits from the Office or Workers’ Compensation Programs. 

The employee continued receiving compensation benefits after the separation 

from service until she returned to Federal service on June 16, 2013. 

Employee is subject to FERS coverage. 

Although employee was separated from Federal service on December 31, 2012, 

she is entitled to service credit for the period of separation during which she 

received the FECA benefits and, therefore, is considered to be performing civilian 

service creditable under FERS on December 31, 2012. 

9. Employee receives a FERS covered appointment effective June 16, 2013. 

Employee previously had performed Federal service under FERS from May 11, 

2009, through June 22, 2011, when the employee separated from Federal 

service to enter active duty in the military. The individual performed active duty 

service with the military from June 23, 2011 through June 8, 2013, when he 

received an honorable discharge. He was reemployed by his former agency 

effective June 16, 2013, after exercising his reemployment rights under chapter 

43 of title 38.

Employee is subject to FERS coverage.

Although the employee was not a civilian employee of the Federal Government 

on December 31, 2012, he returned to Federal service after exercising his 
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reemployment rights under chapter 43 of title 38 and therefore, for purposes of 

determining FERS-RAE coverage, the employee must be treated as though he 

were not separated from his FERS civilian employment on December 31, 2012. 

10. Employee received a FERS covered appointment effective June 16, 2013. 

Employee previously had performed Federal service under CSRS from June 13, 

1977 through September 21, 1981. 

Employee is subject to FERS-RAE Coverage. 

Employee was not an employee of the Federal government on 01/01/2013 and 

did not have 5 years of prior CSRS covered creditable service. 

Members and Congressional Employees: 

The Members and Congressional employees who do not qualify for the exclusion from 

being a FERS-RAE employee are subject to a significant change in their future benefits. 

The first change is they will be subject to employee contributions at the same 

contribution rate as regular employees. Secondly, their retirement benefits will be 

computed under the regular employee formula and not the enhanced formula used for 

FERS Members and Congressional employees. 

Attachments: 

Attachment 1 provides revisions to the retirement coverage determination tables from 

Chapter 10 of the CSRS and FERS Handbook for Personnel and Payroll Offices to 

incorporate FERS-RAE coverage to assist you in determining the correct coverage. 

Attachment 2 is the FERS and FERS-RAE contribution tables that provide the 

percentages for both the employee and agency contributions. Please note that we are 

currently developing retirement plan codes to account for FERS-RAE coverage and we 

will provide those codes in future guidance. 

IF you have any questions concerning this BAL, you may contact Sharon Appel, Program 

Analysis Officer at 724-794-2005 extension 3127 or Sharon.Appel@opm.gov. 

 Kenneth J Zawodny Jr 

 Associate Director 

 Retirement Services 
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ATTACHMENT 1 

REVISED RETIREMENT COVERAGE DETERMINATION TABLES FROM 

CHAPTER 10 OF THE CSRS AND FERS HANDBOOK FOR PERSONNEL AND 

PAYROLL OFFICES 

First Hires (presumes no prior Federal service under FERS or any other retirement 

system) 

STEP DECISION FACTOR IF YES ... IF NO ... 

1 Does employee have prior non-Federal service that was 

covered by or creditable under CSRS? (See section 

10A1.3-3B) 

Go to Step 2 Go to Step 5 

2 Does employee meet 5 year test? (See section 10A1.1-2I) Go to Step 3 Skip to Step 5

3 Is current appointment excluded from CSRS? (See 

section 10A1.3-3) 

Go to Step 4 Coverage under 

CSRS Offset with 

option to elect FERS 

4 Is current appointment excluded from FERS? (See 

section 10A1.3-5) 

Coverage under FICA 

only (unless not 

applicable) 

Covered by FICA 

with option to elect 

FERS 

5 Is appointment excluded from FERS by law or 

regulation? (See section 10A1.3-5) 

Coverage under FICA 

only (unless not 

applicable) 

Go to Step 6

6. Is appointment effective on or after January 1, 2013 Coverage under 

FERS-RAE

Coverage under 

FERS
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Transfers/Conversions

STEP DECISION FACTOR IF YES ... IF NO ... 

1 Does employee qualify as a senior official? (See 

section 10A1.3-6C)

See Chapter 101 Go to Step 2 

2 Was last employment under another Federal 

retirement system (for example, FSRS)? 

Skip to Step 5 Go to Step 3 

3 Was last appointment covered by OASDI (FICA) 

only? 

Go to Step 4 Employee retains 

previous coverage 

4 Did employee previously have FERS coverage? Skip to Step 11 Go to Step 5 

5 Was employee first hired after December 31, 1983? Skip to Step 11 Go to Step 6 

6 Is the current appointment temporary NTE 1 year or 

intermittent and not career or career conditional? 

Employee covered under 

FICA only 

Go to Step 7 

7 Is the current appointment excluded from CSRS by 

law or regulation? (See section 10A1.3-3) 

Go to Step 8 Skip to Step 9 

8 Does employee meet the 5-year test? (See section 

10A1.1-2I) 

Employee covered under 

FICA only with option 

to elect FERS 

Skip to Step 16

9 Is current appointment now subject to FICA? (See 

section 10A1.3-6) 

Go to Step 10 Employee covered 

under CSRS with 

option to elect FERS* 

10 Does employee meet the 5-year test? (See section 

10A1.1-2I) 

Employee covered under 

CSRS Offset with 

option to elect FERS 

Skip to Step 16

11 Is the current appointment temporary NTE 1 year or 

intermittent and not career or career conditional (that 

is, excluded from FERS)? 

Employee covered under 

FICA only 

Go to Step 12

12 Is current appointment effective on or after 

January 1, 2013?

Go to Step 13 Employee covered 

under FERS

13 Was employee covered under FERS on 

December 31, 2012?

Employee covered under 

FERS

Go to Step 14

14 Was employee on December 31, 2012, performing 

civilian service that was creditable or potentially 

creditable under FERS (e.g. service covered under 

another retirement system for which credit may be 

transferred to FERS, such as Foreign Service, Federal 

Reserve, or CIARDS?)

Employee covered under 

FERS

Go to Step 15

15 Does employee as of December 31, 2012, have at 

least 5-years of creditable or potentially creditable 

service under FERS?

Employee covered under 

FERS

Employee covered 

under FERS-RAE

16 Is current appointment effective on or after 

January 1, 2013?

Go to Step 17 Employee covered 

under FERS

17 Was employee on December 31, 2012, performing 

civilian service that was creditable or potentially 

creditable under FERS (e.g. service covered under 

another retirement system for which credit may be 

transferred to FERS, such as Foreign Service, Federal 

Reserve, or CIARDS?)

Employee covered under 

FERS

Go to Step 18

18 Does employee as of December 31, 2012, have at 

least 5-years of creditable or potentially creditable 

service under FERS?

Employee covered under 

FERS

Employee covered 

under FERS-RAE
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Rehires 

STEP DECISION FACTOR IF YES ... IF NO ... 

1 Does employee qualify as a senior official? (See 

section 10A1.3-6C) 

See Chapter 101 Go to Step 2 

2 Did employee previously have FERS coverage? Skip to Step 10 Go to Step 3 

3 Was employee first hired after 

December 31, 1983? 

Skip to Step 9 Go to Step 4 

4 Is current appointment temporary NTE 1 year or 

intermittent and not career or career-conditional?

Coverage under FICA 

only 

Go to Step 5 

5 Is employee's current appointment excluded from 

CSRS by law or regulation? (See section 10A1.3-

3) 

Go to Step 6 Skip to Step 7 

6 Does employee meet 5-year test? (See section 

10A1.1-2I) 

FICA only with option 

to elect FERS 

Skip to Step 13

7 Is current appointment now subject to FICA? (See 

section 10A1.3-6) 

Go to Step 8 Coverage under 

CSRS with option to 

elect FERS 

8 Does employee meet the 5-year test? (See section 

10A1.1-2I) 

Coverage under CSRS 

Offset with option to 

elect FERS 

Skip to Step 13

9 Is the current appointment temporary NTE 1 year 

or intermittent and not career or career conditional 

(that is, excluded from FERS)? 

Coverage under FICA 

only 

Skip to Step 13

10 Is the current appointment temporary NTE 1 year 

or intermittent and not career or career conditional 

(that is, excluded from FERS)?

Coverage under FICA

only

Go to Step 11

11 Is current appointment effective on or after 

January 1, 2013?

Go to Step 12 Coverage under 

FERS

12 Was employee covered under FERS on 

December 31, 2012?

Coverage under FERS Skip to Step 14

13 Is current appointment effective on or after 

January 1, 2013?

Go to Step 14 Coverage under 

FERS

14 Was employee on December 31, 2012, performing 

civilian service that was creditable or potentially 

creditable under FERS (e.g. service covered under 

another retirement system for which credit may be 

transferred to FERS, such as Foreign Service, 

Federal Reserve, or CIARDS?)

Coverage under FERS Go to Step 15

15 Does employee as of December 31, 2012, have at 

least 5-years of creditable or potentially creditable 

service under FERS?

Employee covered under 

FERS

Employee covered 

under FERS-RAE

 
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Attachment 2 

Contribution Charts 

FERS Contribution Rates 

Category

FERS Contribution Rates (%)

Retirement 

Plan Code

Normal Cost 

%

Employee 

%

Agency 

%

Regular K 12.7 .8 11.9

Law Enforcement Officer, 

Firefighter, Member of 

Capitol Police, Member of 

the Supreme Court Police

M 27.6 1.3 26.3

Air Traffic Controller L 27.3 1.3 26.0

Military Reserve Tech N 15.7 .8 14.9

Customs and Border 

Protection Officers

O 27.6 1.3 26.3

Employees under section 

303 of the CIA Act of 1964 

(when serving abroad)

18.0 .8 17.2 

Member of Congress 19.6 1.3 18.3

Congressional Employee 18.0 1.3 16.7
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FERS RAE Contribution Rates 

Category

FERS RAE Contribution Rates (%)

Retirement 

Plan Code

Normal Cost 

%

Employee 

%

Agency 

%

Regular TBD 12.7 3.1 9.6

Law Enforcement Officer, 

Firefighter, Member of 

Capitol Police, Member of 

the Supreme Court Police

TBD 27.6 3.6 24.0

Air Traffic Controller TBD 27.3 3.6 23.7

Military Reserve Tech TBD 15.7 3.1 12.6

Customs and Border 

Protection Officers

TBD 27.6 3.6 24.0

Employees under section 

303 of the CIA Act of 1964 

(when serving abroad)

18.0 3.1 14.9 

Member of Congress 12.7 3.1 9.6

Congressional Employee 12.7 3.1 9.6