CSRS Return of Excess Contributions FERS i 

Chapter 33
 

Table of Contents 

Subchapter 33A FERS 

Part 33A1 General Information 

Section 33A1.1-1 Overview ...................................... 1
 

A. Introduction ............................................... 1
 

B. Topics Covered ............................................ 1
 

C. Organization of Subchapter ..................................... 2
 

D. Statement of Authority ........................................ 2
 

Section 33A1.1-2 Background ..................................... 3
 

A. Excess CSRS Deductions ...................................... 3
 

B. How Excess CSRS Deductions Are Derived .......................... 4
 

C. Civilian Service Credit Deposits and Redeposits Made Under CSRS ........... 4
 

D. Military Service Credit Deposits .................................. 4
 

Part 33A2 Return of Excess CSRS Retirement Deductions 

Section 33A2.1-1 Eligibility Requirements ............................ 5
 

A. Who May Receive a Return of Excess Deductions ...................... 5
 

B. Group 1 (CSRS Transferees) .................................... 6
 

C. Examples of Group 1 (CSRS Transferees) ........................... 6
 

D. Group 2 (CSRS Offset Transferees) ................................ 7
 

E. Examples of Group 2 (CSRS Offset Transferees) ....................... 8
 

F. Group 3 (Automatically FERS) .................................. 9
 

G. Example of Group 3 (Automatically FERS) .......................... 10
 

H. Who May Not Receive a Return of Excess Deductions ................... 10
 

Section 33A2.1-2 Amount of Return - Excess CSRS Deductions .............. 11
 

A. Amount of Return (Groups 1, 2, and 3) ............................. 11
 

B. Interest Rate on Return of Excess CSRS Deductions (Groups 1 and 2) ......... 11
 

C. Interest Rate on Return of Excess CSRS Deductions (Group 3) .............. 12
 

Part 33A3 Return of Excess Military Service Credit Deposits 

Section 33A3.1-1 Eligibility Requirements ............................ 13
 

A. Who May Receive a Return of Excess Military Service Credit Deposits ........ 13
 

B. Who May Not Receive a Return of Excess Military Service Credit Deposits ..... 13
 

CSRS and FERS Handbook April, 1998 
ii CSRS Return of Excess Contributions FERS 

Chapter 33
 

Section 33A3.1-2 Amount of Return - Military Service Credit Deposits ......... 14
 

A. Computation of the Excess Military Service Credit Deposit Return ........... 14
 

Section 33A3.1-3 Examples of Situations Resulting in a Return of
 

Excess Military Service Credit Deposits ............................ 15
 

A. Example A ............................................... 15
 

B. Example B ................................................ 16
 

C. Example C ............................................... 17
 

Part 33A4 Procedures 

Section 33A4.1-1 Employee Responsibility ............................ 18
 

A. Employees Must Complete an Application ........................... 18
 

Section 33A4.1-2 Agency Responsibility .............................. 19
 

A. Documentation of the SF 50 .................................... 19
 

B. Return Procedures ........................................... 19
 

C. Agency Reimbursement for Return of Excess Military Service Credit Deposits .... 20
 

D. Agency Procedure Following Return of Excess Military Service Credit 

Deposits ................................................. 21
 

E. Handling Employee Request for Reconsideration ....................... 21
 

Section 33A4.1-3 OPM Responsibility ............................... 23
 

A. Procedure ................................................ 23
 

B. Authorization of Payment ...................................... 23
 

Section 33A4.1-4 Advice to Employee ............................... 24
 

A. Federal Income Tax Information .................................. 24
 

B. Automatic Refund of Excess Deductions ............................ 24
 

Subchapter 33B 

Section 33B1.1-1 Job Aids ....................................... 25
 

OPM Form 1562, Application for Return of Excess Retirement Deductions (for local 

reproduction) .............................................. 27
 

Copy of Sample Denial Letter ...................................... 31
 

April, 1998 CSRS and FERS Handbook 
Return of Excess Contributions FERS 1 

Chapter 33 

Subchapter 33A FERS 

Part 33A1 General Information 

Section 33A1.1-1 Overview 

A.	 Introduction Subchapter 33A outlines the rules and policies covering the return of excess 

CSRS retirement deductions to certain eligible FERS transferees and those 

employees automatically covered by FERS. This subchapter also covers the 

return of excess military service credit deposits to FERS employees who 

were automatically converted to FERS or who elect(ed) to transfer to 

FERS. 

The return of excess contributions applies only to FERS. There is no 

comparable provision under CSRS. Therefore, there is no CSRS 

subchapter on return of excess deductions. 

B. Topics Covered	 This subchapter covers -­

•	 The eligibility requirements for a return of excess CSRS deductions 

and the amount of the return; 

•	 The eligibility requirements for a return of excess military service 

credit deposits and the amount of the return; and 

•	 The procedures that must be followed for a return of excess CSRS 

deductions or excess military service credit deposits. 

CSRS and FERS Handbook	 April, 1998 
2 Return of Excess Contributions FERS 

Chapter 33 

Section 33A1.1-1 Overview (Cont.) 

C.	 Organization of This subchapter has four parts. 

Subchapter 

Part Name of Part Page 

33A1 General Information 1 

33A2 Return of Excess CSRS 

Retirement Deductions 5 

33A3 Return of Excess Military 

Service Credit Deposits 13 

33A4 Procedures 18 

D. Statement 

of Authority 

This subchapter is based on the laws and regulations cited below. 

•	 United States Code: 5 U.S.C. 8331(8) and 8342(a) and 8411(a) & (c) 

•	 Section 302(c) of Public Law 99-335, as amended by section 119 of 

Public Law 100-238 

•	 Code of Federal Regulations: 5 CFR 842.308 and Subpart D of 

5 CFR 846 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 3 

Chapter 33 

Section 33A1.1-2 Background 

A. Excess CSRS 

Deductions 

Certain employees who transfer to FERS or who are automatically covered 

under FERS may receive service credit under FERS rules for some or all of 

their previous civilian service during which CSRS deductions were made. 

These employees are eligible for a return of excess deductions. 

For employees who are automatically covered under FERS, excess 

deductions consist of deductions exceeding 1.3 percent of basic pay, plus 

interest. 

For employees who transfer to FERS, excess deductions consist of the 

amount of deductions actually withheld less the amount that would have 

been withheld under FERS withholding provisions for service after 1986 

and 1.3 percent of basic pay for service before 1987, plus interest. (For 

pre-1987 service, 1.3 percent is the hypothetical FERS deduction rate.) 

The following table lists employee deduction rates for CSRS and CSRS 

Interim/Offset service and the FERS deduction (or hypothetical deduction) 

rate for transferees. 

Year CSRS CSRS Interim/ FERS 

Only Offset 

1970­

1983 

N/A 1.3% of basic 

pay 

1984­

1986 7%, 7.5%, 

1.3% of basic pay 1.3% of basic 

pay 

1987 

or 8% of 

1.3%, 1.8%, or 

2.3% of basic pay 

(see Note 2) 

1.3% or 1.8% of 

basic pay 

1988­ .94%, 1.44%, or .94% or 1.44% 

1989 1.94% of basic of basic pay 

basic pay pay (see Note 2) 

1990 .8%, 1.3%, or .8% or 1.3% of 

and 1.8% of basic pay basic pay 

later (see Note 2) 

CSRS and FERS Handbook April, 1998 
4 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A1.1-2 Background (Cont.) 

A.	 Excess CSRS NOTE 1: See Chapter 30, Employee Deductions and Agency 

Deductions Contributions, for information regarding which employees are 

(Cont.) subject to the various deduction levels. 

NOTE 2:	 CSRS Offset employees contribute the designated amounts of 

basic pay listed in the table above until basic pay equals the 

Social Security maximum taxable amount; thereafter, they 

contribute at the full CSRS rate (7, 7.5, or 8 percent as 

applicable). A table of Social Security maximum taxable 

amounts is located in section 30C1.1-1 of Chapter 30. 

B.	 How Excess Returns of excess CSRS deductions are paid by OPM based upon 

CSRS Deductions information provided by agencies and retirement records held by OPM. 

Are Derived 

C.	 Civilian Service Employees who have paid deposits or redeposits under CSRS rules to OPM 

Credit Deposits for service that is now subject to FERS computational rules are also eligible 

and Redeposits for a return of any monies paid in excess of 1.3 percent or the appropriate 

Made Under FERS deduction rate(s), as applicable, plus interest. 

CSRS 

D. Military Service 

Credit Deposits 

Rather than the 7 percent of basic pay required of CSRS employees, FERScovered employees pay 3 percent for post-1956 military service. 

Employees who are automatically covered by FERS and employees who 

elect to transfer to FERS and are not entitled to a CSRS annuity component 

are eligible for a return of military service deposits that exceed 3 percent 

(excluding interest). 

The FERS law does not provide for the payment of interest on excess 

military service credit deposits. Returns of excess CSRS military service 

credit deposits are paid by the employing agency if it has all necessary 

records regarding the deposits made by the employee. Otherwise, OPM 

pays the return. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 5 

Chapter 33 

Part 33A2 Return of Excess CSRS Retirement Deductions 

Section 33A2.1-1 Eligibility Requirements 

A.	 Who May There are four groups of employees or former employees who are (or were) 

Receive a Return eligible for a return of excess CSRS deductions. These groups are 

of Excess discussed further in paragraphs B through G below. In determining 

Deductions whether an employee has 5 or more years of service (other than service 

covered by both CSRS and Social Security), include all refunded service 

and service covered only by Social Security. 

Group 1:	 Employees who were paying full (7 or 7.5 percent) CSRS 

contributions at the time they transferred to FERS and had less 

than 5 years of creditable civilian service other than service 

covered by both CSRS and Social Security as of the effective 

date of their transfer to FERS. 

Group 2:	 Employees who were under CSRS Offset provisions when they 

transferred to FERS and who have less than 5 years of creditable 

civilian service other than service covered by both CSRS and 

Social Security, or whose basic pay exceeded the Social Security 

maximum taxable amount while they were covered under CSRS 

Offset, as of the effective date of their transfer to FERS. 

Group 3:	 Employees who were automatically covered by FERS on January 

1, 1987, or automatically covered upon rehire or conversion and 

have prior paid service at the full CSRS deduction rate. 

Group 4:	 Senior Officials such as Presidential appointees, Federal Judges, 

Members of Congress, and non-career SES and Foreign Service 

employees who elected to transfer from full CSRS coverage to 

reduced CSRS coverage or FERS during the 1987 open season. 

NOTE:	 Information about returns of excess contributions for Senior 

Officials is contained in Chapter 101, Special Retirement 

Provisions for Senior Officials, section 101A4, Service Credit 

and Return of Excess Deductions. 

CSRS and FERS Handbook	 April, 1998 
6 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A2.1-1 Eligibility Requirements (Cont.) 

B. Group 1 (CSRS
 

Transferees)
 

This group of transfer employees eligible for a return of excess deductions 

includes those who have, on the effective date of transfer to FERS: 

•	 Less than 5 years of creditable civilian service other than service 

covered by both CSRS and Social Security; and 

•	 Past service covered by full CSRS deductions (7 or 7.5 percent). 

Many employees in this group began creditable civilian service between the 

dates of July 1, 1982, and December 31, 1983, and transferred to FERS 

during the 1987 open season. 

NOTE:	 Determination of eligibility for a return is based on the effective 

date of the transfer, not the date the employee signed or 

submitted the election form. 

C.	 Examples of 

Group 1 (CSRS 

Transferees) 

EXAMPLE 1: Pamela Watson 

Service History 

10-15-82 to 8-31-87 CSRS (7%) and 

no Social Security 

9-1-87 Transfer to FERS 

Since Pamela's total civilian service (4 years 10 months 16 days) was less 

than 5 years as of the effective date of her transfer to FERS (9-1-87), all 

service is redesignated as FERS. She is eligible for a return of the 

difference between the full CSRS rate of 7 percent and the applicable FERS 

deduction rate of 1.3 percent of basic pay for the entire period from 10-15­

82 to 8-31-87. All of Pamela's service is subject to FERS rules for annuity 

computation purposes. 

EXAMPLE 2: Kevin Olson 

Service History 

7-1-82 to 9-30-87	 CSRS (7.5%) and 

no Social Security 

10-1-87	 Transfer to FERS 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions	 FERS 7 

Chapter 33 

Section 33A2.1-1 Eligibility Requirements (Cont.) 

C.	 Examples of 

Group 1 (CSRS 

Transferees) 

(Cont.) 

D.	 Group 2 (CSRS 

Offset 

Transferees) 

Since Kevin had more than 5 years of CSRS service ( 5 years 3 months) 

prior to the effective date of the transfer to FERS (10-1-87), he is not 

eligible for a return of excess CSRS deductions. Kevin's service from 

7-1-82 to 9-30-87 remains subject to CSRS rules and he will have a CSRS 

component in his FERS annuity when he retires. 

EXAMPLE 3: Richard Shelton 

Service History 

4-30-70 to 9-3-72	 CSRS (7%), refunded upon separation 

1-1-75 to 2-1-77	 Rehired on temporary 

appointment, under Social Security only 

2-2-77 to 7-3-87	 Converted to full CSRS, 

with no Social Security 

7-4-87	 Transfer to FERS 

Richard had over 14 years of service subject to CSRS prior to the effective 

date of his transfer to FERS (7-4-87) and will have a CSRS annuity 

component. He is not eligible for a return of excess CSRS deductions 

because all creditable service prior to transfer to FERS will be used in the 

CSRS component. 

This group of transfer employees must meet one of the following criteria to 

be eligible for a return of excess deductions: 

1.	 On the effective date of transfer to FERS, have 

•	 Less than 5 years of creditable civilian service other than service 

covered by both CSRS and Social Security; and 

•	 Past service covered by full CSRS deductions; or 

2.	 Regardless of length of service other than service covered by both 

CSRS and Social Security, performed CSRS Offset service after 1986 

for which CSRS deductions exceeded the amount due under FERS 

provision. 

CSRS and FERS Handbook	 April, 1998 
8 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A2.1-1 Eligibility Requirements (Cont.) 

E.	 Examples of 

Group 2 (CSRS 

Offset 

Transferees) 

EXAMPLE 1: Larry Kennan 

Service History 

12-1-77 to 10-31-82	 CSRS (7%) and 

no Social Security 

1-5-84 to 12-31-86	 Interim CSRS with 

Social Security 

1-1-87 to 7-18-87	 CSRS Offset with 

Social Security 

7-19-87	 Transfer to FERS 

Since the service for which full CSRS deductions were withheld (12-1-77 to 

10-31-82) was less than 5 years (4 years 11 months), all of his service is 

redesignated as FERS and Larry is entitled to a return of the excess CSRS 

deductions made during the period of 12-1-77 to 10-31-82 (provided he has 

not already received a refund of the deductions). He is not entitled to a 

return for the periods from 1-5-84 to 12-31-86 because the amount withheld 

is equal to the amount due under FERS provisions. 

NOTE: Larry also may be entitled to a return of excess CSRS 

deductions in 1987 if his basic pay exceeded the Social Security 

maximum taxable amount causing his retirement contributions to 

increase to 7 percent. 

EXAMPLE 2: Lidia Montes 

Service History 

6-1-78 to 7-15-83	 CSRS (7%) and 

no Social Security 

10-15-84 to 7-18-87	 Interim and Offset 

CSRS with Social Security 

7-19-87	 Transfer to FERS 

Lidia's full CSRS deduction service (6-1-78 to 7-15-83) exceeds 5 years 

(5 years 1 month 11 days). Since she will receive an annuity with a CSRS 

component, Lidia is not eligible for a return of CSRS deductions for the 

period 6-1-78 to 7-15-83. Lidia's salary did not reach the Social Security 

maximum taxable amount during her CSRS Offset service in 1987. 

Therefore, she had no excess deductions in 1987. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 9 

Chapter 33 

Section 33A2.1-1 Eligibility Requirements (Cont.) 

E.	 Examples of 

Group 2 (CSRS 

Offset 

Transferees) 

(Cont.) 

EXAMPLE 3: Bob Smith 

Service History 

7-1-77 to 10-31-82	 CSRS 

1-5-84 to 12-31-86	 Interim CSRS with 

Social Security 

1-1-87 to 4-5-89	 CSRS Offset with Social 

Security (Bob is a GM 15) 

7-20-89 to 7-31-89	 Rehired, CSRS Offset 

with Social Security 

8-1-89	 Transfer to FERS 

Bob had 5 years of service subject to full CSRS and will have a CSRS 

annuity component. Therefore, there are no excess deductions for the 

period of full CSRS coverage. However, Bob's pay in 1987 and 1988 

exceeded the Social Security maximum taxable amount, resulting in CSRS 

deductions that exceeded the FERS deductions that now apply. 

Bob is eligible for a return of excess deductions equal to the difference 

between (1) the amount of CSRS Offset deductions withheld for the periods 

from 1-1-87 through 4-5-89 and (2) the amount of FERS deductions that 

now apply to that period. The difference in 1987 is 5.7 percent (7.0 

percent ! 1.3 percent) of the basic pay in excess of the Social Security 

maximum taxable amount of $43,800. The difference in 1988 is 6.06 

percent (7.0 percent ! .94 percent) of the basic pay in excess of the Social 

Security maximum taxable amount of $45,000. Since Bob did not exceed 

the 1989 maximum taxable amount before transferring to FERS, there are 

no excess contributions in 1989. Also, there are no excess contributions for 

the period from 1-5-84 through 12-31-86 since Bob's CSRS Interim 

deductions equal the amount due under FERS (both at 1.3 percent). 

F. Group 3 Employees who were automatically covered by FERS on January 1, 

(Automatically 1987, or upon rehire or conversion, and have prior paid service at the full 

FERS) CSRS deduction rate are eligible for a return of excess deductions equal to 

the CSRS deductions exceeding 1.3 percent of basic pay, plus interest. 

CSRS and FERS Handbook	 April, 1998 
10 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A2.1-1 Eligibility Requirements (Cont.) 

G.	 Example of 

Group 3 

(Automatically 

FERS) 

EXAMPLE: Ronald Aguillen 

Service History 

6-3-82 to 2-15-83 CSRS 

8-2-87	 Rehired, Automatically FERS 

Ronald paid full CSRS deductions from 6-3-82 to 2-15-83 and was 

automatically covered under FERS when he was rehired on 8-2-87. All of 

his service is redesignated as FERS and he is entitled to a return of the 

excess CSRS deductions made during the period of full CSRS coverage 

(provided he has not already received a refund of the deductions). The 

return is 5.7 percent (7 percent minus 1.3 percent) of Ronald's basic pay 

during the period, plus interest. (See section 33A2.1-2C.) 

H.	 Who May Not Returns of excess deductions are not payable to: 

Receive a Return

of Excess 1. Individuals first hired on or after January 1, 1984, who had no prior 

Deductions creditable civilian service at the time they were hired. 

2.	 Employees who have no full CSRS or CSRS Interim/Offset service that 

becomes subject to FERS rules when FERS coverage begins. 

3.	 Individuals who are eligible for a CSRS component in their FERS 

annuity and who have no CSRS Interim/Offset service. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 11 

Chapter 33 

Section 33A2.1-2 Amount of Return - Excess CSRS Deductions 

A.	 Amount of 

Return (Groups 

1, 2, and 3) 

The amount of the return of excess deductions for employees who 

transferred to FERS (Groups 1 and 2) is the difference between the amount 

of CSRS deductions and deposits to the employee's credit and the FERS 

contribution amount (or 1.3 percent of basic pay for service before 1987), 

plus interest on the excess deductions. 

The amount of the return for employees who were automatically covered by 

FERS (Group 3) is the difference between the amount deducted and 1.3 

percent of basic pay, plus interest on the excess deductions. 

B.	 Interest Rate on 

Return of Excess 

CSRS Deductions 

(Groups 1 

and 2) 

Interest is computed in a manner similar to that for a normal refund of 

CSRS retirement deductions, except that (1) the variable interest rate is used 

after 1984 (see below) and (2) interest is payable regardless of length of 

service. Interest accrues monthly and is compounded annually through the 

end of the month prior to payment or to the date of separation from Federal 

service, whichever is earlier. 

The FERS law requires OPM to pay interest on the returnable CSRS 

deductions for Groups 1 and 2 at the rate of: 

•	 4 percent a year through December 31, 1947; 

•	 3 percent a year from January 1, 1948, through December 31, 1984; 

and 

•	 A variable interest rate, determined annually by the Department of the 

Treasury based on the average yield of new Retirement Fund 

investments purchased during the pervious fiscal year, for years after 

1984. 

Variable Interest Rates 

Year 

1985 

1986 

1987 

1988 

1989 

1990 

Interest 

Rate 

13.0% 

11.125% 

9.0% 

8.375% 

9.125% 

8.75% 

Year 

1991 

1992 

1993 

1994 

1995 

1996 

> 1997 

All future 

periods 

Interest 

Rate 

8.625% 

8.125% 

7.125% 

6.25% 

7.0% 

6.875% 

6.875% < 

To be determined 

by the Department 

of the Treasury 

CSRS and FERS Handbook	 April, 1998 
12 Return of Excess Contributions FERS 

Chapter 33
 

Section 33A2.1-2 Amount of Return - Excess CSRS Deductions (Cont.)
 

C. Interest Rate on Interest is computed in a manner similar to that for a normal refund of 

Return of Excess CSRS retirement deductions. No interest is payable if the period of service 

CSRS Deductions is less than a year. Interest accrues monthly and is compounded annually 

(Group 3) through the end of the month prior to payment or to the date of separation 

from Federal service, whichever is earlier. For Group 3, the interest rate is 

4 percent a year to December 31, 1947, and 3 percent thereafter. 

April, 1998 CSRS and FERS Handbook 
Return of Excess Contributions FERS 13 

Chapter 33 

Part 33A3 Return of Excess Military Service Credit Deposits 

Section 33A3.1-1 Eligibility Requirements 

A. Who May Receive	 Any employee who has paid more than 3 percent of military basic pay for 

a Return of Excess military service credit deposits for service that is subject to FERS 

Military Service computation rules is eligible for a return of the excess deposits. (See 

Credit Deposits Chapter 22, Creditable Military Service, part 22B2.) 

B. Who May Not Employees who transfer to FERS and have military service performed 

Receive a Return before the effective date of the transfer credited in the CSRS component are 

of Excess Military not eligible for a return of excess military service credit deposits. 

Service Credit 

Deposits 

CSRS and FERS Handbook	 April, 1998 
14 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A3.1-2 Amount of Return - Military Service Credit Deposits 

A. Computation of	 Generally, for each eligible employee who has a military service credit 

the Excess deposit account, agencies must -­

Military Service 

Credit Deposit 1. Determine what, if any, military service for which a CSRS deposit has 

Return been made is subject to FERS rules. 

2.	 From the employee's Military Deposit Worksheet (OPM Form 1514), 

determine the amount paid under CSRS rules for the post-1956 military 

service that is now creditable under FERS rules. 

3.	 Compute the amount due for the service under FERS rules. (See 

Subchapter 23B of Chapter 23, Service Credit Payments for Post-1956 

Military Service.) 

NOTE:	 The initial Interest Accrual Date (IAD) for the computation under 

FERS is different than the initial IAD used for the CSRS 

computation. (The IAD is the date each year when interest is 

assessed on the outstanding balance owed on the employee's 

account. See subchapter 23B of Chapter 23 for instructions on 

computing the IAD under FERS.) 

4.	 Subtract the amount due under FERS from the amount paid under 

CSRS. The difference is the return due to the employee. 

NOTE:	 See the examples that follow. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 15 

Chapter 33 

Section 33A3.1-3 Examples of Situations Resulting in a Return of 

Excess Military Service Credit Deposits 

A. Example A Kristin Randall 

Service and Deposit History: 

1-1-55 to 12-31-57	 Active Duty Military 

8-1-83	 Full CSRS coverage 

9-30-86	 Paid Total Military 

Service Credit Deposit ($350) 

7-5-87	 Transfer to FERS 

Excess Deposit to be Returned = $200 

Kristin Randall was first employed under CSRS on 8-1-83, had 1 year of 

post-1956 military service and paid the full military deposit due on 9-30-86. 

The amount of basic pay earned during military service from 1-1-57 to 12­

31-57 was $5,000. The amount of deposit to receive CSRS credit for that 

year of military service was $350 ($5,000 x 7%). Since Kristin paid the 

deposit before her initial Interest Accrual Date (IAD) of 10-1-86, no interest 

was charged. 

Kristin transferred to FERS on 7-5-87. Since she had less than 5 years of 

creditable civilian service, all civilian and military service are subject to 

FERS rules. Under FERS rules, Kristin needs to pay only $150 ($5,000 x 

3%) for the military service credit deposit. Thus, she is eligible for a 

return of the excess military deposit amount of $200 ($350 ! $150). In 

addition, she is eligible for a return of excess deductions for her civilian 

service. 

CSRS and FERS Handbook	 April, 1998 
16 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A3.1-3 Examples of Situations Resulting in a Return of 

Excess Military Service Credit Deposits (Cont.) 

B. Example B Alexandra Thadeus 

Service and Deposit History: 

1-1-55 to 12-31-57 Active Duty Military 

8-1-83 Full CSRS coverage 

11-1-86 Paid $100 to Military 

Service Credit Deposit Account 

7-5-87	 Transfer to FERS 

Return of Excess Deposit = None 

Alexandra Thadeus was first employed under CSRS on 8-1-83, had 1 year 

of post-1956 military service and paid $100 to her military service credit 

deposit account on 11-1-86. The payment was made after the initial IAD; 

therefore, interest was charged to Alexandra's account. The amount of 

basic pay earned during military service from 1-1-57 to 12-31-57 was 

$5,000. The deposit necessary to receive CSRS credit for that year of 

military service was $390.58 ($5,000 x 7% = $350) plus ($350 x 11.594% 

= $40.58). 

Alexandra transferred to FERS on 7-5-87. Since she had less than 5 years 

of creditable civilian service, all civilian and military service is credited 

under FERS rules. Under FERS rules, Alexandra needs to pay $150 

($5,000 x 3%). Therefore, she owes a balance of $50 ($150 ! $100). No 

interest is assessed if she makes the payment in full before her IAD of July 

5, 1990 (see note below). 

NOTE:	 FERS rules provide that a FERS employee's interest-free grace 

period for FERS military deposit expires on the later of: 

• January 1, 1989, or 

• 2 years after the employee first becomes subject to FERS. 

Since interest accrues and compounds annually, no interest is 

charged until 1 year after the end of the grace period 

(January 1, 1990, at the earliest). 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 17 

Chapter 33 

Section 33A3.1-3 Examples of Situations Resulting in a Return of 

Excess Military Service Credit Deposits (Cont.) 

C. Example C Lewis Thompson 

Service and Deposit History: 

1-1-55 to 12-31-57	 Active Duty Military 

3-1-86	 Interim CSRS/Social 

Security coverage in Agency ABC 

9-30-86	 Paid Total Military 

Service Credit Deposit ($350) 

1-1-87	 Automatically Converted to FERS 

2-15-87	 Transferred to Agency XYZ 

6-12-87	 Applied for return of 

excess military deposit 

Return of Excess Deposit = $200 

Lewis Thompson was first employed in agency ABC under the interim 

provisions on 3-1-86, had 1 year of post-1956 military service, and paid the 

full military deposit due on 9-30-86. The amount of basic pay earned 

during military service from 1-1-57 to 12-31-57 was $5,000. 

The amount of deposit to receive credit for that year of military service was 

$350 ($5,000 x 7%). Lewis paid the $350 deposit on September 30, 1986, 

before his initial Interest Accrual Date (IAD) of 10-1-86. 

On 1-1-87, Lewis was automatically converted to FERS. Since he had less 

than 5 years of creditable civilian service, all civilian and military service is 

credited under FERS rules. Under FERS rules, Lewis needs to pay only 

$150 ($5,000 x 3%) for the military service credit deposit. Lewis 

transferred to agency XYZ on 2-15-87, so agency ABC had closed out his 

records and sent them to OPM. Therefore, when Agency XYZ receives 

Lewis' application for return of the excess on 6-12-87, the agency forwards 

Lewis' application to OPM, which authorizes payment of $200 to him. 

CSRS and FERS Handbook	 April, 1998 
18 Return of Excess Contributions	 FERS 

Chapter 33 

Part 33A4 Procedures 

Section 33A4.1-1 Employee Responsibility 

A. Employees Must	 In order to apply for a return of either excess CSRS deductions or excess 

Complete an military service credit deposits, employees must complete OPM Form 

Application 1562, Application for Return of Excess Retirement Deductions, and submit 

it to an authorized agency official. 

NOTE 1:	 Subchapter 33B contains a copy of OPM Form 1562, 

Application for Return of Excess Retirement Deductions. This 

form may be reproduced locally. 

NOTE 2:	 Notification of a current or former spouse is not required in 

order to receive a return of excess deductions. 

1.	 The return of excess CSRS deductions is made by OPM. 

2.	 The return of excess military service credit deposits is made by either 

OPM or by the employing agency. If all the necessary records 

pertaining to the military service deposit are available to the employing 

agency, the agency returns the excess. Otherwise, OPM processes the 

application and authorizes the payment. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions	 FERS 19 

Chapter 33 

Section 33A4.1-2 Agency Responsibility 

A. Documentation of	 The agency must enter a remark on the SF 50 that transfers the employee to 

the SF 50	 FERS as instructed in Chapter 28 of The Guide to Processing Personnel 

Actions (formerly FPM Supplement 296-33). If the employee is eligible for 

a return upon transfer to FERS, the remark is "previously covered--return 

eligible." Payroll offices may use this remark to determine the eligibility of 

employees who apply for a return of excess deductions. 

B.	 Return Procedures The employing office must follow the procedures given below to process 

excess CSRS deductions return applications for employees in eligibility 

groups 1, 2, and 3 listed in section 33A2.1-1. 

1.	 Accept Application for Return of Excess Retirement Deductions 

(OPM Form 1562). 

Eligible employees must submit OPM Form 1562 to the employing 

office in order to obtain a return from OPM. 

2.	 Verify return eligibility. 

Search the employee's Official Personnel Folder (OPF) for all 

creditable civilian service regardless of where performed and ensure 

that the appropriate remark (as specified in paragraph A above) is 

indicated on the transfer SF 50. 

3.	 Match application with SF 2806. 

Upon receipt of the application, match the information contained on the 

application with that shown on the SF 2806 along with information 

obtained from the OPF to ensure eligibility for the return. 

4.	 Complete the back of the OPM Form 1562. 

5.	 If the employee is eligible for a return of excess CSRS deductions or 

excess military service deposit payments for which the agency does not 

have all the necessary records, certain forms must be forwarded to 

OPM. 

CSRS and FERS Handbook	 April, 1998 
20 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A4.1-2 Agency Responsibility (Cont.) 

B.	 Return Procedures Send the closed out and certified SF 2806, the military service deposit 

(Cont.)	 record, if applicable, and the application together, under the cover of a 

separate FERS Register of Separations and Transfers (SF 3103) to: 

Office of Personnel Management 

Retirement Operations Center 

P.O. Box 45 

Boyers, PA 16017 

6.	 OPM computes the amount of the return due and authorizes payment to 

the employee. 

7.	 If the employee is eligible for a return of military service credit deposit 

payments and all the necessary records are available to the agency, the 

agency computes the amount of the return due and authorizes/issues a 

check to the individual for the amount of the return. See paragraphs C 

and D below for instructions on how to adjust the financial records. 

8.	 If the employee is not eligible for a return, notify the employee in 

writing of this decision and of his or her right to request OPM to 

reconsider the agency decision. The agency decision must be in 

writing, state the reason for the denial, and inform the employee of the 

time limit for requesting reconsideration, and of the agency address to 

send a reconsideration request. Subchapter B of this Chapter contains a 

sample denial letter that agencies may use. 

C. Agency	 To be reimbursed, the agency includes the amount of the excess military 

Reimbursement service credit deposit return on the Report of Withholdings and 

for Return of Contributions for Health Benefits, Group Life Insurance and Retirement (SF 

Excess Military 2812) as a negative amount on the FERS "Military Deposit" line. 

Service Credit 

Deposits The SF 2812 must be accompanied by a report identifying the following 

itemized by name: 

•	 The amount of return to each individual; 

•	 Date of birth; 

•	 Social Security number; and 

•	 The total amount of reimbursement. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 21 

Chapter 33 

Section 33A4.1-2 Agency Responsibility (Cont.) 

D. Agency Procedure	 After the military service credit deposit return is paid, the agency must: 

Following Return 

of Excess Military 1. Record the return as a negative amount in the "Calendar Year Salary 

Service Credit Deductions" column on the applicable military service deposit SF 2806. 

Deposits 

2.	 Under the "Remarks" column: 

•	 Note that a return of excess military service credit deposit was made; 

and 

•	 Indicate how the return was paid (that is, "included in salary for pay 

period ending..."; or "paid by check and symbol numbers..., dated..."). 

3.	 All paid-in-full redesignated military service credit deposit SF 2806's 

must be closed and held by the agency until separation. Upon 

separation, forward the SF 2806's to OPM, covered by an SF 3103 

(Register of Separations and Transfers). Use the procedures otherwise 

used to close and submit "paid in full" military deposit service 

SF 2806's (see Chapter 23 for procedures). 

NOTE: A redesignated SF 2806 that supports a return payment must 

be submitted to OPM under cover of a separate SF 3103. Do 

not intermingle them with regular retirement submissions to 

OPM. 

E.	 Handling 

Employee 

Request for 

Reconsideration 

Upon receipt of a request for reconsideration of an agency decision to deny 

a return of excess deductions or to certify that the employee is not entitled 

to a return of excess deductions, the agency must send OPM copies of the 

following: 

1.	 The return application (OPM Form 1562); 

2.	 A copy of the initial decision given to the employee; 

3.	 The employee's request for reconsideration; 

4.	 Each SF 50 (or equivalent) showing an appointment or separation; 

CSRS and FERS Handbook	 April, 1998 
22 Return of Excess Contributions	 FERS 

Chapter 33 

Section 33A4.1-2 Agency Responsibility (Cont.) 

E.	 Handling 

Employee 

Request for 

Reconsideration 

(Cont.) 

5.	 The SF 50 (or equivalent) showing the effective date of FERS coverage; 

6.	 Documentation of all LWOP in excess of 6 months in any calendar 

year; and 

7.	 Name and phone number of the agency contact for additional 

information about the case. 

The above information must be sent to: 

Office of Personnel Management 

Agency Services Division 

FERS Reconsideration Request 

P.O. Box 57 

Washington, DC 20044 

NOTE:	 OPM notifies the agency of its decision on an employee's 

request for reconsideration. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions FERS 23 

Chapter 33 

Section 33A4.1-3 OPM Responsibility 

A.	 Procedure 1. OPM computes the amount of return due the employee based on records 

in file and any received from the current employing agency. 

2.	 If OPM determines that the employee is not eligible for a return of 

excess deductions, it informs the employee of his or her reconsideration 

rights. 

B. Authorization of When an agency determines that an applicant may be entitled to a return of 

Payment excess military deposit, but does not have all the necessary records 

pertaining to the individual's military service deposit account, it sends the 

return application to OPM for processing. If the employee is entitled to a 

return, OPM authorizes the payment to the employee. 

CSRS and FERS Handbook	 April, 1998 
24 Return of Excess Contributions FERS 

Chapter 33 

Section 33A4.1-4 Advice to Employee 

A.	 Federal Income The Internal Revenue Service (IRS) has stated that excess deductions are not 

Tax Information	 subject to Federal income tax. Consult the IRS for information about the 

taxation of the interest portion of a return of excess contributions. 

B.	 Automatic Upon retirement from Federal service, if the retiree has not applied for a 

Refund of Excess return of excess deductions, OPM automatically refunds the excess when 

Deductions the retirement is adjudicated. The excess amount is not part of the 

alternative annuity lump-sum payment. 

April, 1998	 CSRS and FERS Handbook 
Return of Excess Contributions 

Chapter 33 

FERS 25 

Subchapter 33B 

Section 33B1.1-1 Job Aids 

This section includes the following job aids: 

•	 Application for Return of Excess Retirement Deductions, SF 1562 (for 

local reproduction) 

•	 Copy of Sample Denial Letter 

CSRS and FERS Handbook	 April, 1998 
26 Return of Excess Contributions FERS 

Chapter 33
 

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April, 1998 CSRS and FERS Handbook 
Return of Excess Contributions FERS 27 

Chapter 33

APPLICATION FOR RETURN OF EXCESS RETIREMENT DEDUCTIONS

FEDERAL EMPLOYEES RETIREMENT SYSTEM

To avoid delay in payment: (1) Complete application in full; (2) Typewrite or print in ink; (3) Read the information on the back of this form.

1. Name (last, first, middle) 2. Date of Birth (Month, day, year) 3. Social Security Number 4. Are you a citizen of the United States of America G Yes 

G No 

5. List all other names you have used (including maiden name, if applicable) 6. Previous applications filed (indicate by "x") G Retirement Annuity G Deposit G Refund 

7. List below all of your civilian and military service for the United States Government Indicate whether retirement deductions were withheld

from your salary (Check One) 

Have you paid deposit for any

period, including military service? (Check One) Department or Agency (including bureau, branch, or division where employed) Location of Employment (City, State, and ZIP Code) Title of Position Periods of Service Beginning Date Ending Date Withheld Not Withheld Fully or partially paid Not Paid 

8.Indicate below whether you wish to have Federal income tax withheld from the interest portion of your payment:G Withhold Federal income tax from the interest portion of my payment. If you elect withholding, the amount withheld will be 10% of the total interest payable.GDo not withhold Federal income tax from the interest portion of my refund payment. 

FEDERAL TAX WITHHOLDING--Although the return of excess contributions is not subject to Federal income tax, any interest paid on your contributions is taxable in the year that it is paid. If you elect no to have Federal tax withheld, or if you do not have enough Federal tax withheld, you may be responsible for payment of estimated tax. In addition, you may incur penalties under the estimated tax rules if your withholdings and estimated tax payments are not sufficient.PRIVACY ACT STATEMENT--Public Law 99-335, Federal Employees Retirement System Act, authorizes solicitation of this information. The data you furnish will be used to determine you eligibility to receive a return of excess retirement deductions.This information may be shared with national, state, local, or other charitable or social security administrative agencies to determine and issue benefits under their programs, or with law enforcement agencies when they are investigating a violation or potential violation of the civil or criminal law.Executive Order 9397 (November 22, 1943) authorizes use of the Social Security Number to distinguish you and people with similar names. Furnishing your Social Security Number, as well as other data, is voluntary, but if you do not do this, OPM may be unable to determine your eligibility to receive a return of excess retirement deductions.WHERE TO FILE YOUR APPLICATION1. If you are employed or have been separated 30 days or less, forward this application to the office in which you were last employed.2. If you have been separated more than 30 days and want a refund of your total deductions, use form SF 3106; otherwise, forward this application to the Office of Personnel Management, Federal Employees Retirement System, P.O. Box 45, Employee Service and Records Center, Boyers, PA 16017.

9. APPLICATION CERTIFICATIONI hereby certify that all statements in this application, including any information I have given on the back, are true to the best of my belief and knowledge and that the tax withholding election made here reflects my wishes.Your Signature (Do not print) DateWARNING--Any intentional false statement in this application or willful misrepre-sentation relative thereto is a violation of the law punishable by a fine of not more than $10,000 or imprisonment of not more than 5 years, or both. (18 U.S.C. 1001)10. ADDRESS FOR MAILING REFUND CHECKNumber and Street Telephone Number (including area code)City, State, and ZIP Code

WE CANNOT AUTHORIZE PAYMENT IF THIS ADDRESS IS ERASED OR OTHERWISE CHANGED

NOTE: This application should not be offered to a financial institution or other person as collateral or security for a loan. An employee must apply for payment personally any payment must be made directly to him or her. However, outstanding debts to the U.S. Government can, at the Government's request, be withheld from a payment provided alllegal requirements are met. See back of this form for important information concerning your application for return of excess retirement deductions. 

Previous editions not usable SEE BACK FOR MORE INFORMATION Reproduce Locally OPM Form 1562 U.S. Office of Personnel Management Rev. January 1991 

CSRS and FERS Handbook Update 14 

August 15, 1995 
28 Return of Excess Contributions FERS 

Chapter 33
 

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August , 1996 CSRS and FERS Handbook 
Return of Excess Contributions FERS 29 

Chapter 33 

Instructions to Employee 

Do not complete this application if you had more than 5 years of civilian 

service as of the effective date of your FERS coverage. (Service after 1983 

covered by both CSRS and Social Security deductions does not count 

toward the 5 year limit. Do count refunded service and service not covered 

by CSRS deductions.) The notice of personnel action concerning your 

transfer to FERS will generally indicate if you are eligible for a refund. If your 

personnel office determines that you are not eligible for a return of excess 

deductions because you had 5 years of creditable civilian service, your 

application will be returned to you and your service will be credited under the 

Civil Service Retirement System. You may request, in writing, for your 

personnel office to reevaluate your application if you believe you have less 

than 5 years of creditable civilian service. If your agency again determines 

that you are not eligible for a return of excess deductions, OPM will 

reconsider your application. 

If you have less than 5 years of creditable civilian service (excluding service 

after 1983 that was simultaneously subject to both CSRS and Social Security 

deductions) on the effective date of your FERS coverage, you may request a 

return of any excess military deposit you may have made as well as any 

excess CSRS deductions. Your service will still be credited under FERS. 

You may elect a return while you are an employee. Use this form to elect 

such a return. By law, interest is not paid on excess military deposits. In 

transfer cases, interest is paid on excess civilian deductions at a rate of 3% 

through 1984 and an annually variable rate thereafter. 

The variable rates are listed below: 

1985 13% 

1986 11.125% 

1987 9% 

1988 8.375% 

1989 9.125% 

1990 8.75% 

1991 8.625% 

Part 2 - To be completed by employing office 

Instructions to Employing Office
 

Review service listed in item #7 on the front of this form and the applicant's personnel folder and complete the following:
 

1. Eligibility for Return of Excess Contributions 

Years Months Days 

1 a. Total civilian service subject to full CSRS or Foreign Service Retirement deductions 

1 b. Total creditable civilian service not subject to retirement deductions (other than Social Security) 

1 c. Enter total of 1a. and 1b. (exclude service subject to Social Security and partial retirement deductions) 

1 d. Does item 1c. show at least 5 years service? 

GNo6 Employee is entitled to return of excess deductions 

GYes6 Employee is not entitled to a return of excess deductions.

 Return application to employee. 

Effective date of FERS coverage 

3. I certify that this individual has less then 5 years of creditable civilian service (excluding service after 1983 subject to both CSRS and Social

 Security coverage), is covered by FERS, and is eligible for this refund. 

Signature Date 

Part 3 - Instructions to Payroll Office 

Please forward the original of this application along with the emloyee's redesignated civilian or military SF 2806 to OPM under cover of a FERS Register of 

Separations and Transfers (SF 3103) separate from regular SF 3103's. Do not intermingle these retirement records with other FERS retirement records being sent 

to OPM. For additional information, see FPM Supplement 830-1, Chapter 33. 

Amount of excess military deductions paid by the Payroll Office: $____________. 

U.S. Office of Personnel Management	 Reproduce Locally Back of OPM Form 1562 

Application for Return of Excess Retirement Deductions 

CSRS and FERS Handbook	 August, 1996 
30 Return of Excess Contributions FERS 

Chapter 33
 

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August, 1996 CSRS and FERS Handbook 
Return of Excess Contributions FERS 31 

Chapter 33 

Copy of Sample Denial Letter 

Agency Letterhead 

(Date) 

(Name and Address of Employee) 

Dear (Name): 

We cannot approve your application for a return of excess retirement deductions because a review of your 

personnel records indicates that you have at least 5 years of civilian service creditable under the Civil Service 

Retirement System (CSRS). Section 302(c) of the Federal Employees Retirement System (FERS) Act of 1986 

permits refunds of the difference between the CSRS deductions paid and the 1.3% FERS deductions only in 

cases where the transferring employees have less than 5 years of civilian service creditable under CSRS. 

Congress provided for the return of excess deductions because transferring employees who have less than 5 

years of creditable civilian service will have all of their service counted under the FERS basic annuity formula, 

which is not as generous as the CSRS formula. 

While our records indicate that you are not eligible for a return of excess deductions, the fact that you have at 

least 5 years of creditable civilian service under CSRS means that you have earned a CSRS benefit that will be 

transferred to FERS as outlined on pages 25 and 26 of the FERS Transfer Handbook. Both your past military 

and civilian service may be credited under the rules outlined in the Handbook. Remember that CSRS credits are 

more valuable than FERS credits, so the fact that you are not eligible for a return may not be adverse to your 

interests. 

If you believe that our determination that you have 5 years of civilian CSRS service is incorrect, you may 

request reconsideration of this decision. A request for reconsideration must be in writing and filed within 30 

days of the date of this letter. Your request must include a copy of this letter and your Application for Return 

of Excess Deductions. Requests for reconsideration must be submitted to: 

(Insert Name and Address of Personnel Office Employee 

designated to receive requests) 

If you request reconsideration, we will again review your personnel records. If our finding remains unchanged, 

we will forward the documentation upon which it was based to the Office of Personnel Management (OPM) 

where your application will be reconsidered. OPM will notify you of their decision directly. 

Sincerely, 

(Signature and Title of Personnel 

Office Employee issuing the decision) 

CSRS and FERS Handbook August, 1996