United States 

Office of 

Personnel Management

The Federal Government’s Human Resources Agency 

Benefits Administration Letter 

Number 11 - 103 Date: February 25, 2011 

Subject: Authority to Redeposit Refunds under the Federal Employees Retirement 

System (FERS) 

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

guidance on OPM’s implementation of Section 1904 of the National Defense 

Authorization Act (NDAA) for Fiscal Year 2010, Public Law 111-84, enacted October 

28, 2009, regarding FERS refund service. This BAL addresses the following: 

o	 The provisions of section 1904 of the NDAA only apply to employees covered 

under FERS on or after October 28, 2009, and only affect annuity benefits based 

on a separation from FERS coverage on or after October 28, 2009. 

o	 Employees covered by FERS on or after October 28, 2009, may repay (or 

redeposit) any FERS deductions previously refunded to them. They may also 

redeposit any CSRS deductions previously refunded to them that covered CSRS 

service that is credited under FERS rules. 

o	 Payment of the FERS redeposit for FERS service covered by a refund of FERS 

deductions and CSRS service (that is credited under FERS rules) covered by a 

refund of CSRS deductions allows the refunded service to be creditable for 

determining an employee’s retirement eligibility and for computing the amount of 

an employee’s annuity. 

o	 Payment NOT made of the FERS redeposit for FERS service covered by a refund 

of FERS deductions and CSRS service (that is credited under FERS rules) 

covered by a refund of CSRS deductions only allows the refunded service to be 

creditable for determining an employee’s retirement eligibility but it is not 

creditable for computing the amount of an employee’s annuity. 

o	 Employees wanting to make a FERS redeposit may complete the current FERS 

Application to Make a Deposit, SF 3108. Employees must indicate on the 

application that the period of service was refunded and send the completed 

application through their agency for certification. 

o	 Employees wanting to make a FERS redeposit for refunded service and a FERS 

deposit for non-covered service will be assigned two service credit account 

numbers and will receive two separate statements based on each service credit 

account calculation. (The two accounts will be set up based on one application – 

two applications are not necessary.) 

Retirement Services 

Quality Benefits for the Federal Family 

1 
 

Background 

Prior to enactment of the NDAA, FERS employees who separated from federal service 

and were paid a refund of their FERS retirement deductions permanently forfeited all 

retirement credit for the service covered by the refund. If the FERS refund included a 

refund of CSRS deductions covering CSRS service that became subject to FERS rules, 

employees permanently forfeited all retirement credit for that CSRS service as well. If 

that individual returned to work for the Government in a position covered under FERS, 

the employee could not repay (or redeposit) the refunded FERS and CSRS deductions. 

The service covered by the refunded deductions could not be used in determining when 

the employee would become eligible to retire and it could not be used in computing the 

amount of the employee’s annuity. 

(Employees who received a refund of CSRS deductions for service that would be credited 

under FERS rules before becoming subject to FERS could establish FERS credit for that 

refunded CSRS service upon returning to work under FERS by paying a FERS deposit 

for the service, generally equal to 1.3 percent of the basic pay received during that 

service, plus interest.) 

Section 1904 of NDAA – FERS Redeposits 

Section 1904 of the NDAA now provides the authority for FERS employees who took a 

refund of their FERS deductions to make a redeposit of the amount refunded, plus 

interest. FERS employees who took a refund of CSRS deductions covering CSRS 

service that is credited under FERS rules may also make a redeposit for that service to reestablish full retirement credit for that service. The FERS redeposit for refunded CSRS 

service will be based on the appropriate percentage of the employee’s basic pay that is 

required for credit under FERS as noted in the table below, plus interest. Interest for a 

FERS redeposit begins to accrue from the date the employee received the refund of the 

retirement deductions. 

Redeposit for Refunded CSRS Service Subject to FERS Rules 

Type of Service Percentage of Basic 

Pay 

Full-CSRS service 1.3% 

CSRS Interim Service (FICA and CSRS coverage between 

January 1, 1984 and December 31, 1986) 

1.3% 

CSRS Offset Service (FICA and CSRS coverage after 

December 31, 1986) 

Appropriate FERS 

deduction rate 

The original FERS Act included provisions that allow FERS deposits for refunded CSRS 

service when an employee received a CSRS refund before becoming subject to FERS. 

Under those provisions, the refunded service was not creditable for any purpose unless 

Retirement Services 

Quality Benefits for the Federal Family 

2 
 

 

the deposit was paid, and the deposit equaled the appropriate percentage of basic pay (as 

described in the table above), plus interest. There were different rules regarding when 

interest commenced, but in most cases interest started to accrue as of the midpoint of the 

service period (rather than the date of the refund). With the passage of NDAA, the 

refunded CSRS service is creditable for retirement eligibility whether or not the FERS 

redeposit (or FERS deposit for refunded CSRS service) is paid. There are now two 

separate provisions that can be used to compute the amount an employee owes for the 

period of refunded CSRS service – the original FERS Act provisions and the NDAA 

FERS redeposit provisions. We will apply the calculation that is most advantageous to 

the employee. If an employee has already paid-in-full the deposit for refunded CSRS 

service, we will not recalculate the amount due under the FERS redeposit calculation. 

However, if the employee has not completed payments of the deposit for refunded CSRS 

service, we will recalculate the amount due under the FERS redeposit calculation to 

determine if that FERS redeposit amount is more advantageous to the employee. 

The FERS redeposit provisions in section 1904 of the NDAA only apply to employees 

covered under FERS on or after October 28, 2009, and only affect annuities that are 

based on separations on or after October 28, 2009. The survivors of FERS employees 

who die on or after October 28, 2009, may also make a FERS redeposit for refunded 

service. Survivors will be advised of the effect of making the deposit on their survivor 

annuities and have the option of not making the deposit, paying by check, or by having 

the deposit withheld from the Basic Employee Death Benefit (BEDB). 

If the FERS redeposit is made, the refunded FERS service is creditable in determining 

eligibility for retirement and survivor benefits, and can be used to compute the amount of 

the retirement and survivor annuity benefits including the FERS annuity 

supplement/supplementary amount. Redeposits (including interest) paid in full will be 

credited to the Civil Service Retirement and Disability Fund and will be part of the 

employee’s lump sum credit. If the FERS redeposit is not made, the refunded service is 

creditable in determining eligibility for retirement and survivor benefits, but it cannot be 

used to compute the amount of the retirement and survivor annuity benefits. 

Reemployed annuitants working under FERS on or after October 28, 2009, may pay a 

redeposit for refunded service not credited in their original retirement, but the redeposit 

will not have an effect on the original retirement. The redeposit would only affect credit 

for the refunded service if the reemployed annuitant works long enough to qualify for and 

receive a redetermined annuity that is based on a separation from reemployment on or 

after October 28, 2009. (A redetermined annuity is a new annuity that replaces the 

original annuity) 

A paid in full military deposit that is refunded to an employee, as part of a refund will be 

included in the FERS redeposit computation. The refunded military service is not 

creditable under FERS unless the full redeposit is paid. (OPM cannot calculate a separate 

redeposit based solely on the military refund.) If the redeposit is not paid, the military 

service is not creditable for any purpose (not for retirement eligibility and not for annuity 

Retirement Services 

Quality Benefits for the Federal Family 

3 
 

 

 

computation) because the law requires the military service be paid for before it can be 

creditable under FERS. 

If OPM refunded a partially paid military deposit, the part of the refund representing the 

partially paid military deposit will not be included in the FERS redeposit calculation. If 

the employee wants to pay for the military service, the employee will have to apply to the 

agency to pay the deposit in full. 

Please note that the NDAA did not change the way non-covered civilian service (that is, 

Federal civilian service not subject to FERS or CSRS retirement deductions) is credited 

under FERS. Generally, FERS deposits may only be paid for non-covered service 

performed before 1989 (see Attachment 1, General FERS Service Credit Rules) and 

FERS deposits must be paid in full before that non-covered service can be credited under 

FERS. If the FERS deposit for non-covered service is not paid, the non-covered service 

is neither creditable for determining retirement eligibility nor for determining the amount 

of annuity benefit. 

Guidance 

We are amending guidance in BAL 10-101 issued January 12, 2010, 

(http://www.opm.gov/retire/pubs/bals/2010/10-101.pdf) that stated that OPM will issue 

new regulations and revised forms prior to accepting FERS redeposit applications. 

Effective immediately, we are accepting the current FERS Application to Make a 

Deposit, SF 3108, from employees wanting to make a FERS redeposit. Employees must 

indicate on the application that the period of service was refunded and send the 

completed application through your agency for certification. 

Please do not submit a payment with the application. OPM’s financial policy requires all 

payments be sent to OPM’s Funds Management office. If a payment is sent to OPM 

before the service credit account is established, Funds Management will not be able to 

identify where to apply the payment. As soon as the Service Credit office processes the 

application, a bill and instructions for making payments will be sent to the employee. 

Mail the completed FERS application (SF 3108) to Office of Personnel Management. 

Retirement Operations Center, PO Box 45, Boyers, PA 16025, or fax it to 724-794-1351. 

Interest 

Interest is based on the same basic rules applicable to CSRS as described in 5 U.S.C. 

8334 and 5 CFR 831.105. Interest will accrue annually on the outstanding portion of any 

amount that may be redeposited and is compounded annually, until the portion is 

deposited. The interest is computed from the date the refund was paid through December 

31 of the year before the one in which the redeposit is paid in full. 

Retirement Services 

Quality Benefits for the Federal Family 

4 
 

 

 

Interest is charged at a variable rate determined annually by the Department of the 

Treasury. The variable rate for any year equals the overall average yield to the fund from 

retirement security during the preceding fiscal year. 

The table below provides those rates: 

Years Percentage Rates Years Percentage Rates 

2011 2.75% 1997 6.875% 

2010 3.125% 1996 6.875% 

2009 3.875% 1995 7% 

2008 4.75% 1994 6.25% 

2007 4.875% 1993 7.125% 

2006 4.125% 1992 8.125% 

2005 4.375% 1991 8.625% 

2004 3.875% 1990 8.75% 

2003 5% 1989 9.125% 

2002 5.5% 1988 8.375% 

2001 6.375% 1987 9% 

2000 5.875% 1986 11.125% 

1999 5.75% 1985 13% 

1998 6.75 % 1948-1984 3% 

Before 1948 4% 

Survivors of employees who died while still employed may also make this redeposit if 

the survivor is eligible for a survivor annuity. OPM will compute the redeposit amount 

during the survivor annuity process and give the survivor an opportunity to pay it. The 

unpaid refunded FERS service will be used to determine eligibility for a survivor annuity 

but the FERS redeposit must be paid to receive credit for the service in the survivor 

annuity computation. 

Payments 

The redeposit may be made in one or more installments (minimum payment of $50) but 

must be completed before final processing of the retirement or survivor benefit annuity. 

If the redeposit is not paid in full, we will refund any partially paid redeposit and credit 

will not be given for the period of FERS refunded service in the annuity computation. 

The NDAA does not allow credit for refunded service with an actuarial reduction. 

Retirement Services 

Quality Benefits for the Federal Family 

5 
 

 

Once a redeposit is made, employees may not withdraw the redeposit unless they become 

eligible for and obtain a refund of all their FERS retirement deductions or they retire and 

are eligible to choose an alternative annuity and lump sum payment of their retirement 

deductions. 

If a complete redeposit is not made before retirement, OPM will compute the amount 

owed and send a letter with the election to make a lump sum payment for the balance. 

The payment must be made within 30 days of receiving notification of the amount due 

and before final processing of the retirement benefits. If the annuitant or survivor elects 

not to pay in full, OPM will refund the partial payment when the retirement or survivor 

annuity is finalized. 

General FERS Service Credit eligibility rules for paying a civilian deposit/redeposit can 

be found in Attachment 1. 

Currently, our Service Credit System is set up to compute five different categories of 

service in the following order of precedence. 

1. FERS Service 

a. Deposits for non-covered service 

b. Redeposits for FERS refunded service 

2. Post 10/01/1982 CSRS Redeposit Service 

3. Pre 10/01/1982 CSRS Redeposit Service 

4. Post 10/01/1982 CSRS Deposit Service 

5. Pre 10/01/1982 CSRS Deposit Service 

For FERS service, our system can only calculate one type of service credit payment at a 

time – either a deposit for non-covered service or a redeposit for refunded service. If an 

employee wishes to pay both a FERS deposit and a FERS redeposit, we will need to 

establish two service credit accounts so that the amounts due can be computed for the 

deposit and redeposit separately. We will assign two service credit accounts using the 

single application received. Two applications are not necessary. The employee will 

receive two separate statements based on each service credit account calculation. Two 

separate checks must be sent showing each account number on the check to properly 

apply the payment to the correct account. 

 William Zielinski 

 Associate Director

 Retirement Services 

Retirement Services 

Quality Benefits for the Federal Family 

6 
 

Attachment 1: 

General FERS Service Credit Rules 

You can pay a civilian deposit/redeposit for: 

	 Any period of creditable service performed before 1989 during which retirement 

deductions were not withheld from your pay 

	 Any period of civilian service during which CSRS deductions were withheld from 

your pay and were then refunded to you based on an application you filed before 

you became covered by FERS, if the service will not be credited under CSRS 

rules. 

	 Certain periods of civilian service performed under other retirement systems for 

Federal employees (that is, other than CSRS or FERS) 

	 Any period of Peace Corps or VISTA volunteer service (excluding training time) 

regardless of when the service was performed provided that it was followed by a 

period of creditable FERS covered service 

	 If you were employed under FERS on or after October 28, 2009, you can pay a 

civilian redeposit for any period of service under FERS for which you received a 

refund of your retirement deductions 

You cannot pay a civilian deposit/redeposit for: 

	 Any period of service under FERS for which you received a refund of your 

retirement deductions based on an application you filed after you had been 

covered by FERS, if you were not employed under FERS on or after October 28, 

2009 

	 Temporary or intermittent service, which you performed after 1988, unless a 

deposit is allowed by a special provision of law. Temporary service means an 

appointment, which is limited to one year or less. Intermittent service means an 

appointment with no scheduled tour of duty 

	 Any other service which is not creditable under FERS 

	 Periods of leave without pay (If you perform honorable active duty military 

service during a period of leave without pay from a Federal civilian position, you 

may pay a military deposit to your employing agency for that military service 

before you separate from Federal civilian service. See your agency’s Human 

Resource or Benefits staff for more information on how periods of military 

service performed during leave without pay from Federal civilian service is 

credited under FERS.) 

	 Time covered by a lump sum leave payment 

Retirement Services 

Quality Benefits for the Federal Family 

7