BAL Making Eligibility Determinations Under The 

Federal Erroneous Retirement Coverage Correction 

Act (FERCCA) 

Attachment 3 

FERCCA Out-of-Pocket (OOP) Guidelines 

TABLE OF CONTENTS 

Introduction............................................................................Page 2 

Guidelines for Waiver................................................................Page 3 

How to Apply..........................................................................Page 4 

How OPM Makes its Decision......................................................Page 5 

Request for Waiver Model Letter...................................................Page 6 

Guidelines for Payment of Expenses................................................Page 8 

Attorneys’ Fees........................................................................Page 12 

Proving Your Case....................................................................Page 14 

How to Apply..........................................................................Page 16 

How OPM Makes its Decision......................................................Page 17 

Request for Reimbursement Model Letter.........................................Page 18 

1
FERCCA Out-of-Pocket Guidelines 

Introduction

Overview Public Law 106-265, the "Federal Erroneous Retirement Coverage 

Corrections Act (FERCCA)," was enacted to relieve problems that had 

resulted from employees being placed in the wrong retirement system. 

Generally, the law gave certain employees who had been placed in the 

wrong retirement system the option of either remaining in that system 

or transferring to the retirement system in which they should have 

been participating. This approach allows employees to receive the 

retirement benefit they had expected to receive. 

However, a small number of employees received some form of 

settlement payments from their agencies in compensation for the error 

and are barred from having an election unless the settlement payment 

is repaid or waived by OPM. Congress also recognized that merely 

correcting the retirement coverage error might not wholly compensate 

some of the affected employees for all the expenses arising from a 

coverage error. Therefore, section 2208 of FERCCA permits the 

Office of Personnel Management (OPM) to waive payments due from 

eligible employees or to reimburse eligible employees for out-ofpocket expenses incurred as a result of the retirement coverage error, 

or the correction of a retirement coverage error. 

Eligibility of 

recipient 

To be eligible to receive a waiver or reimbursement of an expense, 

you must first have had a qualifying retirement coverage error. This 

means you must have been erroneously placed in the wrong retirement 

system, either CSRS, CSRS Offset, FERS, or Social Security only, 

when you should have been in one of the other three. This erroneous 

retirement coverage must have: 

• Been in effect at the beginning of 1987, or occurred 

subsequently. 

• Lasted for at least 3 years of service after 1986. 

Eligibility of 

amount 

To be eligible for waiver, the obligation for payment must have been 

created by the correction of the retirement coverage error, or be a 

condition for correction of the coverage error. Also, the payment of 

the obligation must not be a candidate for reimbursement as an out-ofpocket expense. 

2
Guidelines For Waiver

Waiver of 

interest 

In some instances, a coverage error may change the nature of past 

service for which no retirement deductions were withheld from FERS 

service to CSRS service. The amount of the deposit due (principal and 

interest) to purchase credit for the non-deduction service subsequently 

increases. However, the value of the lifetime benefit payable under 

CSRS at retirement also increases significantly. Further, Congress 

provided that payment for the increased deposit could be made by 

actuarial reduction from your future annuity. 

OPM may waive the additional interest you owe for a civilian or 

military deposit following correction of the coverage error if you 

demonstrate that the higher annuity benefit and the fact that you had 

use of the deposit monies during the error period do not fully 

compensate you for the error. 

Waiver of 

settlement 

payment 

You may, as a result of litigation over a retirement coverage error, 

have received a settlement payment or court-ordered payment for 

losses you sustained because of the retirement coverage error. 

Generally, you must repay that amount before you can benefit from 

the correction of a retirement coverage error under FERCCA. 

However, you may request that OPM waive collection of all or part of 

the settlement payment or court-ordered payment. To be entitled to 

waiver, you must demonstrate why the waiver is necessary to fully 

compensate you for your losses. 

NOTE: Out-of-pocket expenses that are reimbursable under Section 

2208 of FERCCA cannot be offset from the amount of a settlement or 

court ordered payment that must be repaid under FERCCA. Instead, 

you must apply separately for reimbursement of those expenses under 

the OPM's OUT-OF-POCKET EXPENSES instructions.

3
How to apply

Write a 

letter 

You do not need to file a form. All you need to do is send OPM a 

signed letter. This letter should contain, or have attached, specific 

information that OPM needs before it can act on your request. The 

information OPM needs is: 

1. A description of the retirement coverage error that you believe 

makes you eligible for waiver. This description should include: 

• The date (month, day and year) of the retirement 

coverage error. 

• The erroneous retirement coverage (CSRS, CSRS 

Offset, FERS, or Social Security only). 

• The date the retirement coverage error was corrected. 

• The corrected retirement coverage (CSRS, CSRS 

Offset, FERS, or Social Security only). 

• The dates of any break(s) in service that occurred 

during the period of the retirement coverage error. 

2. A statement of the specific dollar amount you wish to have

waived and why you think it should be waived. 

3. Your name, address, telephone number, and Social Security 

number. 

4. The name, address, and telephone number of your current or 

last Federal employer. 

5. A copy of the court order or settlement agreement that awarded 

the payment, and any other document you believe that OPM 

should consider when reviewing your request.

Model letter A model letter is provided for your convenience. Use of the model 

letter will assure that OPM has all the information it needs to process 

your request. The model letter is on page 6. 

Address Send your request for waiver to: 

US Office of Personnel Management 

OOP Claims, Room 4H28 

1900 E Street NW 

Washington DC 20415 

4
How OPM Makes Its Decision 

Decision 

made on 

written 

record 

OPM will base its decision on only the written record, including all of 

your submissions and other documentation in OPM's possession. 

Agency 

report when 

needed 

At OPM's discretion, OPM may request your latest employing agency, 

or a previous employing agency, if the qualifying retirement coverage 

error did not occur at your latest employing agency, to provide an 

administrative report. The report may include: 

• A description of the retirement coverage error; 

• The agency's recommendation for resolution of the claim; and 

• Any other information the agency believes OPM should 

consider. 

No appeal of 

final decision 

The law provides that OPM's decision will be the final decision. It will 

not be subject to appeal, or any other kind of administrative or judicial 

review. 

5
Request For Waiver Sample Letter

US Office of Personnel Management 

OOP Claims, Room 4H28 

1900 E Street, NW 

Washington DC 20415 

Re: Request for Waiver of under Section 2208 of FERCCA 

Dear Sirs: 

My name is:______________________________, my SS# is:_____________________, 

and my address is:________________________________________________________. 

My phone number is: (Day) __________________ (Eve) _________________________. 

The name and address of my current or last Federal employer is: 

__ ________ ____________________________________________. 

Their phone number is:___________________________________. 

I was placed in the wrong retirement system (Circle one): 

 CSRS FERS CSRS Offset Soc. Sec. Only 

on (date) _________________. 

My retirement coverage was corrected to (Circle one): 

CSRS FERS CSRS Offset Soc. Sec. Only 

on (date) _________________. 

OR 

____ My retirement coverage has not been corrected (check if appropriate). 

I request waiver of $________ of my settlement or court-ordered payment that totaled 

$_______ and was made on ___/___/___. Please explain why the waiver is necessary to 

fully compensate you for the coverage error. (Attach additional sheets as necessary.) 

6
________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

I request waiver of interest or other amount owed to OPM. State why your election of a 

retirement plan under FERCCA does not fully compensate you for the error. (Attach 

additional sheets as necessary.) 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

________________________________________________________________________ 

Check if appropriate: 

____ I have attached copies of documents that support my case. 

____ I received a lump-sum settlement or court-ordered payment. A copy of the 

agreement or order is attached. 

__________________________________ ______________ 

(Signature) (Date) 

7
Guidelines For Payment Of Expenses

Expense 

caused by 

retirement 

coverage 

error 

Not all out-of-pocket expenses are reimbursable. To be reimbursable, 

an out-of-pocket expense must be directly caused by the retirement 

coverage error, or its correction. Certain expenses that are a direct 

result of the correction of a retirement coverage error, such as 

additional retirement deductions, are clearly caused by the retirement 

coverage error. However, when the out-of-pocket expense was not 

solely caused by the retirement coverage error, but also involved the 

employee's reaction to the retirement coverage error, then the causal 

connection is not so clear. 

Expense is 

reasonable 

In a case where the out-of-pocket expense is a result of the employee's 

reaction to the retirement coverage error, OPM must determine 

whether the employee's reaction, under the circumstances, was 

reasonable. An employee's reaction is reasonable when it is not taken 

rashly, but only after some thought, and on its face can be expected to 

mitigate a problem caused by the retirement coverage error, and when 

no less expensive action could have easily been identified to have the 

same consequence. 

Expense is 

not contrary 

to long term 

retirement 

interests 

In reaction to the retirement coverage error, the employee should have 

considered the long term effect on his or her retirement interests. In 

trying to correct one problem caused by the retirement coverage, the 

employee should not have created a greater problem. Therefore, as a 

general rule, a reasonable reaction is also one that is not contrary to 

the employee's long term retirement interests. 

Unrelated 

expenses are 

not 

reimbursed 

Expenses that are not directly caused by the retirement coverage error 

cannot be reimbursed, even though they occurred close in time to the 

retirement coverage error, or its correction. This is because the 

expense was either not caused by the retirement coverage error, or the 

retirement coverage was not the primary cause of the expense. In the 

latter case, while the retirement coverage error may have had some 

relationship to the expense, it was not the most significant or 

controlling factor. 

Prohibited 

expenses 

FERCCA specifically prohibits payment of losses related to foregone 

contributions and earnings under the Thrift Savings Plan (TSP). This 

would include, by inference, expenses incurred in connection with a 

non-governmental retirement investment program, meant to 

compensate for foregone TSP contributions and earnings, and 

expenses incurred in the liquidation of property or other investments 

8
to fund makeup contributions to the TSP. 

Examples 

Examples 

not exclusive 

Set out below are examples of the kinds of out-of-pocket expenses that 

may be reimbursed and may not be reimbursed. These examples do 

not exclude consideration of any kind of expense that is not listed. 

However, any claim for another kind of expense is expected to provide 

a persuasive rationale, consistent with the guidelines above, that the 

expense was reasonable. 

Examples of reimbursable expenses: 

FICA tax OPM will reimburse you for FICA tax (social security deductions) on 

pay items which were not subject to CSRS deductions, such as 

overtime and awards, if you were erroneously covered by CSRS, and 

which, as a result of the correction of the retirement coverage error, 

are subject to retroactive FICA tax. 

Retirement 

deductions 

OPM will reimburse you for CSRS Offset or CSRS retirement 

deductions you were required to pay because your employer corrected 

a retirement coverage error. This will generally involve only 

retirement coverage errors that were corrected before FERCCA 

became effective. Your employer is required to pay any additional 

retirement deductions resulting from a retirement coverage error that is 

corrected under FERCCA. 

Additional 

interest on 

deposit 

In some instances, a coverage error may change the nature of past 

service for which no retirement deductions were withheld from FERS 

service to CSRS service. The amount of the deposit due (principal and 

interest) to purchase credit for the non-deduction service subsequently 

increases. However, the value of the lifetime benefit payable under 

CSRS at retirement also increases significantly. Further, Congress 

provided that payment for the increased deposit could be made by 

actuarial reduction from your future annuity. 

OPM may reimburse you for the additional interest you paid for a 

civilian or military deposit following correction of the coverage error. 

This is if you demonstrate that the higher annuity benefit and the fact 

that you had use of the deposit monies during the error period does not 

fully compensate you for losses resulting from the error. 

Financial 

planning fees 

OPM will reimburse you for reasonable financial planning fees 

incurred because a retirement coverage error, or the correction of a 

retirement coverage error, resulted in a need to adjust your household 

budget and/or long term retirement planning. OPM's reimbursement 

9
will be limited to the amount normally paid for these services. 

EXAMPLE: You should have been placed under FERS when you 

came to work, but were placed under CSRS instead. Later, your 

retirement coverage is corrected to FERS. In order to take full 

advantage of FERS, you want to pay makeup contributions to the TSP 

through payroll deduction. Before you can do that, however, you need 

to reduce the amount you spend monthly on other items. To 

accomplish this, you consult a financial management specialist on how 

to consolidate debt and/or set up a household budget. OPM will 

reimburse you for fees you pay for this service. 

Expenses that are not reimbursable 

Where there 

is no out-ofpocket loss 

Before OPM can reimburse an expense, there must be an actual, outof-pocket loss on your part. When a retirement coverage error is 

corrected, funds may be transferred from one Government account to 

another. However, unless you have to pay out additional funds, there 

is no out-of-pocket expense. 

EXAMPLE: A common situation involves retirement and social 

security deductions. If you were under CSRS you would pay 7 percent 

of your base pay in retirement contributions, while if you were under 

CSRS Offset you would pay 6.2 percent of your pay in social security 

deductions and .8 percent in retirement deductions, up to the social 

security maximum. For pay in excess of the social security maximum, 

you would pay 7 percent retirement deductions. You would pay the 

same total amount in retirement and social security deductions 

whether you were under CSRS or CSRS Offset. Consequently, if your 

CSRS retirement coverage is erroneous, and you are changed to CSRS 

Offset, the Government will move some of the money from the 

retirement deduction account to the social security deduction account. 

This is done at no additional expense to you, so there is no expense to 

be reimbursed. This is true whether your CSRS deductions are 

adjusted for FICA by your payroll office while you are an employee, 

or by OPM after you separate. The fact that you expected to receive a 

full refund of your CSRS retirement deductions when you separated 

does not convert this offset to an out-of-pocket loss. Further, you will 

receive full Social Security credit for all years covered by the error. 

Indirect 

expenses 

While OPM may reimburse you for expenses caused by a retirement 

coverage error, it will not reimburse you for expenses you incurred in 

paying the initial expense. That is because these other expenses are not 

directly caused by the retirement coverage error. 

EXAMPLES: If you paid a reimbursable expense with a credit card, 

10
OPM will not reimburse you for credit card interest. If you sell 

property to raise funds to pay your attorneys' fees, OPM will not 

reimburse you for commissions you paid and other expenses incurred 

in the sale of the property. If you obtain a debt consolidation loan as a 

consequence of financial counseling, OPM may reimburse you for the 

financial counseling fee, but it will not reimburse you for the loan 

origination fee. 

Expenses 

caused by 

inadequate 

information 

You may have made a decision in regard to your retirement, or another 

benefit or investment program based on inadequate information that 

resulted in an unwanted expense. That expense cannot be reimbursed 

unless you can demonstrate that, despite due diligence, you were 

unable to obtain accurate retirement information from an appropriate 

source. 

11
Attorneys' Fees

Reimbursable 

amounts 

Attorneys' fees, and other costs related to administrative and judicial 

action you incurred to correct or mitigate the adverse effects of the 

retirement coverage error may be reimbursed by OPM. This includes 

not only the actual attorneys' fees but also court costs, expert witness 

fees, and other litigation expenses. If the attorney bills separately for 

clerical or office expenses, those amounts would also be 

reimbursable. 

Litigation 

not 

necessary 

Attorney fees incurred by you in an attempt to correct a retirement 

coverage error are reimbursable even if you did not go to court. 

EXAMPLE: You believe that your agency has placed you in the 

wrong retirement system. You consult an attorney to see what can be 

done to correct the matter. The attorney researches the law, believes 

that you are correct, and writes a letter to your employeer demanding 

that your retirement coverage be changed. Your employer denies the 

request. The attorney advises you that he will need a $10,000.00 

retainer before he can take the matter to court. Because you are unable 

or unwilling to pay the retainer, you drop the matter. Nevertheless, the 

amounts you paid the attorney for the initial consultation, to do the 

research, and write the letter to the agency are reimbursable by OPM. 

You do not 

need to win 

If your legal efforts to correct your retirement coverage error did 

involve litigation, it is not necessary for you to have won in court for 

OPM to reimburse you for your attorneys' fees and other litigation 

expenses. 

EXAMPLE: Your employer erroneously places you under CSRS 

instead of CSRS Offset. Four years later they make a retroactive 

correction. You ask OPM to refund your excess CSRS deductions, but 

it refuses. You appeal OPM's decision, but ultimately the court rules in 

OPM's favor. The attorneys' fees you incurred throughout the process 

may be reimbursed by OPM, even though you did not ultimately win. 

Fees and 

expenses 

must be 

reasonable 

As required by the general guidelines outlined elsewhere in these 

instructions, reimbursable attorneys' fees and other litigation expenses 

must be reasonable. In determining whether the expenses are 

reasonable and necessary, OPM will consider the following factors: 

• The type and the amount of the expense; 

• The circumstances that gave rise to the expense; 

• Whether the expense is directly related to litigation or other 

legal activity concerning a retirement coverage error, and 

12
• Whether the charges are consistent with amounts usually 

charged in matters of similar complexity. 

Attorneys' 

fees awards 

In making this determination, it will be necessary for OPM to review 

the attorney's itemized billing records. (See the section entitled 

Proving Your Case for further information.) 

OPM will not pay for legal services that have already been reimbursed 

by another source, such as an attorneys' fees award by a court or 

agency, or legal insurance. However, if you only received partial 

reimbursement from an attorneys' fees award or legal insurance, OPM 

will consider reimbursing you for the remaining amount. 

13
Proving Your Case 

Burden of 

proof 

You bear the burden of proof. If you wish to be reimbursed for 

expenses, you must show in a clear and convincing manner that the 

expenses you claimed actually occurred, are reasonable, and that they 

were directly caused by the retirement coverage error. The following 

paragraphs describe the minimum kind and amount of evidence that 

must be submitted before OPM may consider allowing your request. 

Proof of 

Payment 

Proof that the expense in question has been paid must accompany any 

claim for reimbursement of expenses. This proof can take many forms. 

If it is an expense that you paid directly out of your own funds, the 

proof could be cancelled checks, receipts, credit card statements, and 

any other documents which show that you paid the bill(s). If the 

amount in question was paid by payroll deduction, payroll statements 

showing the amount that was deducted would be appropriate. 

Attorneys' 

fees and 

other 

litigation 

expenses 

The following documents should be submitted with a request for 

payment: 

• A copy of your fee agreement(s) with the attorney(s). 

• Itemized statements or bills from your attorney(s). Each line 

item should describe the task performed to a sufficient degree 

that it can be determined that the task was related to the 

retirement coverage error, the amount of time spent on that 

task, and the rate at which that time was billed. 

• If the matter went to litigation, a copy of the complaint or other 

pleading filed by the attorney with the court or administrative 

hearing body. This document should clearly state that the 

litigation has been initiated to either correct or recover 

damages for a erroneous retirement coverage decision. 

• Itemized bills or statements from the clerk of the court and any 

other agencies or persons who collected fees and costs from 

you in connection with the litigation. 

• A copy of any award for attorneys' fees and litigation expenses 

that reimbursed you for some or all of the expenses you 

incurred in connection with the litigation. This would include 

any payment resulting from a legal insurance policy. If there 

was no such award, you should state so in your letter. 

• Affidavits or declarations made under penalty of perjury by the 

attorney(s) or other providers which cure any deficiencies in 

the itemized statements and other billing documents. 

14
FICA, CSRS 

Offset or 

FERS 

deductions 

When claiming reimbursement for FICA tax charged on items that 

were not subject to CSRS deductions, or CSRS-Offset or FERS 

retirement deductions that were not withheld because of the retirement 

coverage error, but paid later, you should submit a copy of the letter 

from the agency demanding payment. 

Financial 

management 

planning fees 

If you request reimbursement of financial planning fees, you should 

submit a statement that explains why the financial planning was 

necessitated by a retirement coverage error or the correction of a 

retirement coverage error, and a copy of the bill you received from the 

person or organization that provided the service. 

Additional 

interest on 

deposit 

The following documents should accompany a request for 

reimbursement of additional interest on a deposit for military service: 

• The original bill, showing the deposit without interest, and the 

interest due. 

• A corrected bill showing the deposit without interest, and the 

interest due. 

• Proof of payment. If you are requesting reimbursement of 

additional interest on a deposit for civilian service, you need 

only provide your CSD account number. 

In addition, you must explain why coverage under CSRS or CSRS 

Offset does not make you financially whole. 

Other 

expenses 

To be reimbursed for expenses other than those enumerated above, 

you must submit a bill or other document you received at the time of 

the expense which states the amount of the expense and why it 

occurred, and a detailed explanation of why you believe that this 

expense was directly caused by the retirement coverage error. 

15
How To Apply 

Write a 

letter 

 

You do not need to file a form. All you need to do is send OPM a 

signed letter. This letter should contain, or have attached, specific 

information that OPM needs before it can act on your request. The 

information OPM needs is: 

1. A description of the retirement coverage error that you believe 

makes you eligible for reimbursement of a loss. This 

description should include: 

• The date (month, day and year) the retirement coverage 

error began. 

• The erroneous retirement coverage (CSRS, CSRS 

Offset, FERS, or Social Security only). 

• The date the retirement coverage error was corrected. 

• The corrected retirement coverage (CSRS, CSRS 

Offset, FERS, or Social Security only). 

• The dates of any break(s) in service that occurred 

during the period of the retirement coverage error. 

2. A description of the specific dollar amounts you wish to have 

reimbursed and why you think they should be reimbursed. 

3. Your name, address, telephone number, and Social Security 

number. 

4. The name, address, and telephone number of your current or 

last Federal employer. 

5. Any information or documents you believe that OPM should 

consider when reviewing your request. (For further 

information, see the following section, "Proving Your Case.") 

Model letter A model letter is provided for your convenience. Use of the model 

letter will assure that OPM has all the information it needs to process 

your request. The model letter is on Page 17. 

Address Send your request for reimbursement to: 

US Office of Personnel Management 

OOP Claims, Room 4H28 

1900 E Street NW 

Washington DC 20415 

16
How OPM Makes Its Decision

Written 

record only 

OPM will base its decision on only the written record, including all of 

your submissions and other documentation in OPM's possession. 

Agency 

report 

At OPM's discretion, OPM may request your latest employing agency, 

or a previous employing agency, if the qualifying retirement coverage 

error did not occur at your latest employing agency, to provide an 

administrative report. The report may include: 

1. A description of the retirement coverage error; 

2. A statement as to whether a settlement or other court-ordered 

award was made; 

3. The agency's recommendation for resolution of the claim; and 

4. Any other information the agency believes OPM should 

consider. 

Final 

decision: no 

right of 

appeal 

The law provides that OPM's decision will be the final decision. It will 

not be subject to appeal, or any other kind of administrative or judicial 

review. 

17
REQUEST FOR REIMBURSEMENT SAMPLE LETTER

US Office of Personnel Management 

OOP Claims, Room 4H28 

1900 E Street, NW 

Washington DC 20415 

Re: Request for Reimbursement of Out-of-Pocket Expenses 

Dear Sirs: 

My name is:______________________________, my SS# is:_____________________, 

and my address is:________________________________________________________. 

My phone number is: (Day) __________________ (Eve) _________________________. 

The name and address of my current or last Federal employer is: 

__ ________ ____________________________________________. 

Their phone number is:___________________________________. 

I was incorrectly placed in the ________________________________ retirement system 

on (date) _________________. 

My retirement coverage was corrected to the ____________________________ 

retirement system on (date) _________________. 

(OR) 

My retirement coverage has not been corrected to the ____________________________ 

retirement system. 

For Social Security taxes (FICA) and CSRS retirement deductions paid, please provide 

the amount paid and the agency to which payment was made. 

For reimbursement of interest paid on a CSRS (Offset) deposit, please demonstrate why 

your election of CSRS (Offset) does not fully compensate you for the error. 

For all other expenses, please show (1) amount paid, (2) to whom paid, (3) why you 

believe the expense resulted from the coverage error, and (4) how that course of action 

would have corrected/mitigated the effect of the coverage error. 

18
Use appropriate closing: 

I have attached copies of the necessary documents to prove my case (see the OUT-OFPOCKET EXPENSE Instructions to determine what proof is necessary). 

(Or) 

I have attached proof that I have paid these expenses (see the OUT-OF-POCKET 

EXPENSE Instructions to determine what proof is necessary). 

(Or) 

I received a lump-sum settlement or court-ordered payment. A copy of the agreement or 

order is attached. 

(Or) 

I received an award or other payment to cover some or all of my attorney fees. A copy of 

the award or other document showing the details of the payment is attached. 

________________________________________ ________________________ 

(Signature) (Date) 

19