Civil Service

Retirement

System

Federal Employees’

Group Life

Insurance Program

Federal Employees

Health Benefits

Program

Federal Employees

Retirement

System

Long Term

Care Insurance

Program

United States

Office of

Personnel Management

The Federal Government’s Human Resources Agency

Retirement and Insurance Service

Benefits Administration Letter

Number: 02-103 Date: May 7, 2002

Subject: Retirement Coverage Error Correction:

Erroneous FERS Coverage in Effect for Less than 3 Years

This Benefits Administration Letter (BAL) provides instructions for correcting errors

involving erroneous FERS coverage that lasted for less than 3 years of service. It

includes instructions for correcting errors where an employee is in FERS by mistake

and can choose to stay in FERS. These are sometimes called “deemed FERS”

elections (see 5 CFR §846.204(b)(2)). You should resume correcting these coverage

errors following the instructions in this BAL, provided the error was in effect for less

than 3 years of service.

What is a deemed FERS error?

A deemed FERS error is one where the employee is automatically put in FERS and

should have been put in CSRS, CSRS Offset, or Social Security (FICA)-only with a 6-

month opportunity to elect FERS coverage.

Procedures for correcting these errors are already in the CSRS &

FERS Handbook for Personnel and Payroll Offices. Why is this BAL

being issued?

You have been correcting deemed FERS coverage errors since 1993. However, the

Federal Erroneous Retirement Coverage Corrections Act (FERCCA) changes some of

the procedures for correcting retirement coverage when the employee is erroneously

put in FERS. You should follow the instructions in this BAL for correcting erroneous

FERS coverage errors until the Handbook is updated.
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How does FERCCA affect erroneous FERS coverage that has been in

effect for less than 3 years?

FERCCA changes the service credit rules for employees who owe deposits or

redeposits for military or civilian service that they performed before the coverage error.

The employee can still pay the deposit or redeposit under normal rules. However, if the

employee does not pay the military or civilian deposit or redeposit, the military or civilian

service is used in the computation of the employee’s retirement benefit. The retirement

benefit will be reduced by an amount that is actuarially determined.

FERCCA also changes some of the rules regarding TSP contributions. Any

contributions an employee made to his or her TSP account while erroneously covered

under FERS may remain in the employee’s TSP account. Earnings associated with the

employee’s contributions may also remain in the employee’s TSP account. Agency

contributions made while the employee was erroneously covered under FERS, and

associated earnings, still must be removed from the employee’s TSP account if the

employee declines FERS coverage. Although FERCCA allows payment of lost

earnings on employee make up TSP contributions in some situations, it does not permit

payment of lost earnings when the employee was erroneously placed in FERS.

What if the employee was erroneously put in FERS and would have

had no opportunity to elect FERS?

If this error lasted for less than 3 years of service, you must correct the error. The

employee has no choice regarding his or her retirement coverage.

What if the error was discovered some time ago and the employee

was already given a chance to choose to stay in FERS under OPM’s

old guidance?

If the employee already chose whether he or she wanted to be deemed to have elected

FERS, or if the employee was given a notice but failed to respond, then the employee

does not get an opportunity to make another election.

I already corrected an employee’s retirement coverage from FERS and

I didn’t give the employee the chance to choose to remain in FERS.

Do I have to go back and give the employee the opportunity to remain

in FERS?

Yes. If the employee was put in FERS during a period that the employee would have

had an opportunity to elect FERS, then you must now go back and give the employee a

chance to elect FERS. Note that if the employee decides that he or she wants FERS
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coverage, the effective date of the FERS coverage is retroactive to the date that the

employee was erroneously put in FERS.

What if we discover that our employee was erroneously put in FERS

while working at a previous agency?

Your agency is responsible for notifying the employee of the error, correcting the

personnel records, and, if applicable, giving the employee an election opportunity and

counseling. If the Individual Retirement Records or Social Security records for the prior

service need correction, then you must notify the prior agency (through that agency’s

benefits counselor) so that they can ensure that the corrections are made.

Can we now correct all retirement coverage errors?

Attachment 1 provides you with the instructions for correcting errors involving erroneous

FERS coverage. At this time, you may only correct retirement coverage errors that

have been in effect for less than 3 years of service. We will provide detailed guidance

on correcting retirement coverage errors that lasted for 3 or more years of service in the

future.

Raymond J. Kirk, Acting Director

Benefits Officers Resource Center

Retirement and Insurance Service

Attachments:

Attachment 1: Correcting Erroneous FERS Coverage

Attachment 2: Model Notice of Error Subject to Correction under FERCCA

Attachment 3: Model Notice of the Opportunity to Decline FERS Coverage

Attachment 4: Thrift Savings Plan Correction Instructions

Attachment 5: Should You Stay In FERS? (A guide to choosing between FERS and

CSRS retirement plans when you were erroneously put in FERS.)

Attachment 6: Should You Stay In FERS? (A guide to choosing between FERS and

CSRS Offset retirement plans when you were erroneously put in FERS.)