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National Associationof Letter Carriers

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Civil Service Retirement System

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Whether covered by the Civil Service RetirementSystem (CSRS) or the Federal Employees Retire-ment System (FERS), letter carriers planning to re-tire face many different options and elections whencompleting an application for retirement—questionsregarding proper annuity calculation, survivor annu-ity, life insurance options and many more.

This booklet has been prepared and updated toprovide CSRS carriers with answers to these ques-tions. Because FERS benefits differ greatly fromthose offered under the Civil Service RetirementSystem, a separate booklet is available for those car-riers enrolled under FERS.

I recognize that retirement is not only an impor-tant stage in one’s life, it is sometimes a difficultone—full of complex questions and answers.That iswhy this booklet will also be of assistance to carriersalready retired by enabling them to make informedchoices during their retirement years.

So whether you are already retired or planning toretire, this booklet will serve as a handy referenceguide. Use it well and enjoy your retirement years.

Sincerely,

William H.YoungPresident

Dear NALC Member:

National Association

of Letter Carriers

100 Indiana Avenue, N.W.

Washington, D.C. 20001

QUESTIONSA N D

A N S W E R SO N T H E

CIVIL SERVICERETIREMENT SYSTEM

This booklet refers ONLY tothe Civil Service RetirementSystem (CSRS).A bookletregarding the FederalEmployees RetirementSystem (FERS) is availablethrough the NALC SupplyDepartment.The purpose ofthis booklet is to answermany of the questions posedto the NALC RetirementDepartment.

Revised 2008 Edition

Where can I call if I havequestions/problemsconcerning myretirement benefits?

The NALC RetirementOffice operates a toll freenumber (1-800-424-5186)on Monday,Wednesday andThursday, 10-12 noon and2-4 pm, EasternTime.

What is the number forthe RetirementInformation Office of theU.S.Office of PersonnelManagement?

Toll Free 1-888-767-6738,or inWashington, D.C.202-606-0500.

Where can I call for SocialSecurity information?

1-800-772-1213

CONTENTS

QuestionNumber

Financing the Civil Service Retirement Fund 1-6Employees Covered and Crediting of Civilian Service 7-21Military Service Credit 22-27Types of Retirement—Qualifying for CSRS Annuity 28-34Alternative Annuity (Lump Sum Option) 35Disability Retirement 36-50Deferred Annuity 51-55Survivor Annuity Elections 56-67How Annuity Is Determined 68-88How To Claim a Survivor Annuity 89-100Survivor Predeceases Annuitant/Annuitant Marries or Remarries 101-102Refund—Redeposit 103-113How CSRS Benefits Are Paid/Can Benefits Be Attached 114-119Federal Income Taxes 120-122Politics/Jury Duty/Declination of Annuity 123-126Forms Used Under CSRS 127-129CSRS and Social Security 130-134General Information on the TSP 135-139The TSP, IRAs and Taxes 140-145Employee Contributions to the TSP 146-148TSP Investment Options 149-151TSP Interfund Transfers 152-155Getting Funds Out of the TSP 156-162The TSP Loan Program 163-165Spousal Rights and TSP Savings in Death of CSRS Participant 166-169Federal Employees Group Life Insurance and Health BenefitsCoverage 170-178

What an Annuitant Should Do when Divorced/Death of Spouse 179-180General Retirement Information 181-189

because they wereseparated fromCSRS-covered feder-al employment formore than a year andreturned to a positionin which they werecovered by CSRS af-ter 1983. For theseemployees, their So-cial Security with-holdings are offsetfrom their CSRScontributions, sothat the combinedSocial Security andCSRS contributionsare the same as foremployees who haveCSRS coverageonly.

When CSRS-Offsetemployees retire,they receive fullCSRS benefits untilthey are eligible forSocial Security bene-fits, generally at age

overtime pay, mili-tary pay, specialallowances suchas uniforms, cashawards forsuggestions orsuperior accom-plishment.

5 Has this deductionrate always beenseven percent?

No. Changes indeduction rates areshown in the tablebelow.

6 What areCSRS-Offsetcontributions?

CSRS-Offsetemployees are cover-ed by Social Security

FINANCING THE

CIVIL SERVICE

RETIREMENT

FUND

Percentage ratesfor deductions

Dates of Service from basic payFrom August 1920 to

June 1926 21/2%From July 1926 to June 1942 31/2%From July 1942 to June 1948 5%From July 1948 to

September 1956 6%From October 1956 to

December 1969 61/2%From January 1970* 7%

1 What is the CivilService RetirementFund?

It is the accumula-tion of money held intrust by the U.S.Treasury for the pur-pose of paying annu-ity, refunds, or deathbenefits.

2 How is the moneyinvested?

It is invested by theU.S.Treasury ingovernmentsecurities.

3 How much is de-ducted from thesalary of eachmember of theretirement system?

Seven percent of thebasic pay (except forlaw enforcement andfirefighter personnel,Congressional em-ployees, and Mem-bers of Congress).

4 What is meant bybasic pay?

Basic pay is the payor compensationset by law or regula-tion. It does notinclude bonuses, *There were temporary increases in 1999 and 2000 but the

deduction rate was rolled back to 7% effective January 2001.

Security benefit thatrepresents theperiod of timethey were covered

by both CSRS andSocial Security.

62. At that time, theCSRS benefit isoffset by the portionof their Social

EMPLOYEES

COVERED AND

CREDITING OF

CIVILIAN SERVICE

7 Who are membersof the Civil ServiceRetirementSystem?

Appointive and elec-tive officers and em-ployees in or underthe executive, judi-cial, and legislativebranches of the U.S.Government andother employeesspecifically coveredby law or regulationwho were hired priorto January 1, 1984.

8 Is membership op-tional with the em-ployee?

For persons em-ployed beforeJanuary 1, 1984 itwas automatic exceptin the case ofMembers of Con-gress and certainemployees in thelegislative branchwho had the optionof becoming mem-bers.

9 May credit beallowed for servicefor which no retire-ment deductionswere taken?

Yes, provided theemployee became amember of CSRS af-ter such service wasperformed.

10 Is deposit requiredto obtain credit forperiods of servicefor which no retire-ment deductionswere taken?

It depends uponwhen the servicewas performed. Ifthe service was priorto October 1, 1982,payment of thedeposit is required inorder to receive themaximum annuity,but not to receivecredit for the service.If the service wasperformed on orafter October 1,1982, and deposit is

not made, the servicecounts toward retire-ment eligibility andthe service can beused for high-3 aver-age salary purposes,but the service is notused in determiningtotal service for an-nuity computationpurposes.

11 How is the annuityaffected if the de-posit is not madefor service prior toOctober 1,1982?

The annuity is re-duced by 10 percentof the amount due asdeposit. For example:If a retiring employeehas an unpaid depositwhich amounts to$1,200.00, the yearlyreduction in theannuity will be 10percent of $1,200.00,or $120.00, or$10.00 a month.

12 Is it to the employ-ee’s advantage tomake the deposit?

This question can-not be answered bya simple yes or no.There are good rea-sons for making it,

and there are goodreasons for not mak-ing it. It depends onthe length of servicethat the depositwould cover, thenumber of years ofcreditable servicethat an employeewould have whenretiring, and thenumber of yearsthat the employeefigures his/her life ex-pectancy will be af-ter retiring.The ac-tual amount of adeposit made atretirement will be re-turned to the annui-tant in ten years. Ifthe retiree lives longenough, he/she willget the investmentback plus the addedannuity for all theyears that he/shelives.

13 May deposit orredeposit be madein installment pay-ments?

Payment may bemade in a lump sumor in installments ofnot less than $25.00each, paid directly tothe U.S. Office ofPersonnel Manage-ment while the indi-vidual is still in activeemployment.

14 In case of the deathof an employee,may a survivor en-titled to annuitybenefits make thedeposit or rede-posit?

Yes.

15 Is credit allowedfor leave withoutpay?

Credit is given with-out deposit to thefund for so much offurlough or leavewithout pay (LWOP)as does not exceedsix months in anycalendar year. If inreceipt of OWCPbenefits, credit isgenerally given forthe entire period ofcompensation if car-ried on the rolls in aLWOP status.

16 Is service with stateand municipal gov-ernments credit-able under the CivilService RetirementSystem?

No.

17 Is extra creditallowed for unusedsick leave?

Yes, where the em-ployee retires on animmediate annuityor dies.The timerepresented by theunused sick leave isadded to the em-ployee’s actual serv-ice used in comput-ing annuity.

18 What is an im-mediate annuity?

One that begins nolater than one monthafter separation fromthe service.

19 How much time isallowed for unusedsick leave?

It is on the day-for-day basis; 8 hours ofunused sick leaveequals one day. Onthis basis, approxi-mately 22 days ofunused sick leaveequals one month.

20 Is deposit requiredto receive credit forunused sick leave?

No.

No of 1 Day 1 Mo. 2 Mo. 3 Mo. 4 Mo. 5 Mo. 6 Mo. 7 Mo. 8 Mo. 9 Mo. 10 Mo. 11 Mo.Days & Up & Up & Up & Up & Up & Up & Up & Up & Up & Up & Up & Up

0 0 174 348 522 696 870 1044 1217 1391 1565 1739 19131 6 180 354 528 701 875 1049 1223 1397 1571 1745 19192 12 186 359 533 707 881 1055 1229 1403 1577 1751 19253 17 191 365 539 713 887 1061 1235 1409 1583 1757 19304 23 197 371 545 719 893 1067 1241 1415 1588 1762 19365 29 203 377 551 725 899 1072 1246 1420 1594 1768 19426 35 209 383 557 730 904 1078 1252 1426 1600 1774 19487 41 214 388 562 736 910 1084 1258 1432 1606 1780 19548 46 220 394 568 742 916 1090 1264 1438 1612 1786 19599 52 226 400 574 748 922 1096 1270 1444 1617 1791 1965

10 58 232 406 580 754 928 1101 1275 1449 1623 1797 197111 64 238 412 586 759 933 1107 1281 1455 1629 1803 197712 70 243 417 591 765 939 1113 1287 1461 1635 1809 198313 75 249 423 597 771 945 1119 1293 1467 1641 1815 198814 81 255 429 603 777 951 1125 1299 1472 1646 1820 199415 87 261 435 609 783 957 1130 1304 1478 1652 1826 200016 93 267 441 615 788 962 1136 1310 1484 1658 1832 200617 99 272 446 620 794 968 1142 1316 1490 1664 1838 201218 104 278 452 626 800 974 1148 1322 1496 1670 1844 201719 110 284 458 632 806 980 1154 1328 1501 1675 1849 202320 116 290 464 638 812 986 1159 1333 1507 1681 1855 202921 122 296 470 643 817 991 1165 1339 1513 1687 1861 203522 128 301 475 649 823 997 1171 1345 1519 1693 1867 204123 133 307 481 655 829 1003 1177 1351 1525 1699 1873 204624 139 313 487 661 835 1009 1183 1357 1530 1704 1878 205225 146 319 493 667 841 1015 1188 1362 1536 1710 1884 205826 151 325 499 672 846 1020 1194 1368 1542 1716 l890 206427 157 330 504 678 852 1026 1200 1374 1548 1722 1896 207028 162 336 510 684 858 1032 1206 1380 1554 1728 1901 207529 168 342 516 690 864 1038 1212 1386 1559 1733 1907 2081How to use this chart—To find the increased service time credit for unused sick leave, use the fol-lowing formula. Find the number of hours of unused sick leave. In the horizontal column you willfind the number of months and in the vertical column the remaining number of days. For example,441 hours equals 2 months and 16 days. Another example: 1455 hours equals 8 months and 11 days.

21 Does the limitationon annuity of notmore than 80% ofthe high-3 averagesalary apply toannuity based onunused sick leave?

sick leave intoincreased servicetime credit for higherannuities follows:

No. Additional annu-ity attributable to thesick leave credit isallowable over andabove this limitationof 80%. A chart forconverting unused

22 What does theterm military ser-vice cover?

Time spent in serv-ice to: the Army;Navy; Air Force;Marine Corps; CoastGuard; Regular orReserve Corps ofPublic HealthService after June 30,1960; orCommissionedOfficers of NationalOceanic & Atmos-pheric Administra-tion after June 30,1961.

23 Is military servicecreditable forCivil Service re-tirement purposes?

Military service iscreditable providedit was active serviceand was termi-nated under honor-able conditions andwas performedbefore separationfrom a civilian posi-tion under theRetirement System.

24 What is Chapter12731,Title 10,U.S.Code?

It is a provisiongranting retiredpay to members ofthe reserve compo-nents of the ArmedForces on the basisof service.Thebasic requirementis the attainment ofage 60 with thecompletion of 20years of service inthe Armed Forces.This provision pro-vides that you candraw a reserve mili-tary pension and stillreceive credit for themilitary servicetoward your CivilService annuity.

25 May militaryretired pay bewaived so that themilitary servicewill be creditedunder the CivilService Retire-ment System?

Yes.

26 May militaryservice be creditedtoward retirementrather than towardSocial Security?

Credit will auto-matically be givenunder the CivilService RetirementSystem for militaryservice performedbefore January 1,1957. Credit maybe given under theCSRS for militaryservice performedon or after January1, 1957, only if theemployee is not eli-gible for Social Se-curity old age bene-fits.

Your military ser-vice which took placeafter December 31,1956 is automaticallycredited towardsSocial Security bene-fits if you become eli-gible for such bene-fits. Such servicecannot simultane-ously be credited inthe computation ofyour civil service an-nuity unless, beforeretirement, you pay adeposit to cover theservice.

If you first cameunder the CivilService RetirementSystem on or afterOctober 1, 1982

MILITARY

SERVICE

CREDIT

your post-1956 militaryservice will not be includ-ed in your civil serviceannuity without paymentof a deposit, even if youare not eligible for SocialSecurity benefits.

Individuals firstemployed by the federalgovernment under theCivil Service RetirementSystem before October 1,1982, will have theoption of either: (1) mak-ing the seven-percentdeposit for post-1956military service—therebyavoiding a possiblereduction in annuity atage 62, or (2) receivingcredit as in the past andhaving his/her annuityreduced at age 62 ifhe/she becomes eligiblefor Social Security.

The basic depositis equal to seven percentof the base pay (not al-lowances) earned duringa period or periods ofactive military serviceperformed afterDecember 31, 1956.

Interest is charged onthe basic deposit at thefollowing market interestrates.

1985 - 13%1986 - 11.125%1987 - 9.0%1988 - 8.375%1989 - 9.125%1990 - 8.75%

1991 - 8.625%1992 - 8.125%1993 - 7.125%1994 - 6.25%1995 - 7.0%1996 - 6.875%1997 - 6.875%1998 - 6.75%1999 - 5.75%2000 - 5.875%2001 - 6.375%2002 - 5.5%2003 - 5.0%2004 - 3.875%2005 - 4.375%2006 - 4.125%2007 - 4.875%2008 - 4.750%

Future years to bedetermined by theDepartment ofTreasury.

No credit for anymilitary service isgiven to an employeewho receives militaryretired pay unless theretired pay is awardedfor: (a) service- connect-ed disability incurred incombat with an enemy ofthe United States, or (b)service-connected dis-ability caused by aninstrumentality of warand incurred in the lineof duty during a periodof war, or (c) under theprovisions of Chapter12731,Title 10, U.S.C.(pertaining to retirementfrom a reserve compo-nent of the ArmedForces).

An employee who is

receiving military retiredpay which bars credit formilitary service may electto waive the retired payand have the military ser-vice added to civilian ser-vice in computing theannuity. However, if thisemployee does not waivemilitary retired pay,retirement rights will bebased on civilian serviceonly and military servicewill not be included incomputing the annuity.The employee may, how-ever, receive both militaryretired pay and civil ser-vice annuity at the sametime.

27 May an employeereceive credit forservice with theNational Guard?

Only when the or-ganization is acti-vated in the U. S.Army or AirForce.

28 What kinds ofretirement areprovided for in theretirement law?

They are known asoptional, earlyoptional, disability,deferred, and discon-tinued service an-nuity for either 25years of service or20 years of service, ifat least age 50. Forboth early optionalretirement (e.g.,reduction in force)and discontinuedservice retirement(e.g., involuntaryseparation except formisconduct),employees can retireat any age with 25years of service orage 50 with 20 yearsof service.Therewould be an annuityreduction of 2 per-cent for each yearemployee is underage 55.

29 Is there a mini-mum requirementas to the amountof civilian service?

Yes. Five years ofcivilian service isrequired beforeannuity benefits maybe paid in any case.

30 Must an employeeapply for retire-ment?

Yes. An applicationmust be completedfor any annuitybenefits.

31 Under what condi-tions may anemployee retireoptionally?

• Age 62 with aminimum of 5years of service;• Age 60 with 20years of service; or• Age 55 with 30years of service.

32 Must applicationfor optional retire-ment be made be-fore the employeeis separated fromthe service?

No. However, it isadvisable to applyabout 6 weeks inadvance of the datescheduled for separa-tion.

33 What is the maxi-mum annual leavea letter carrier canbe paid for?

440 hours. Anyamount over 440hours will beforfeited, if not used.

34 What day shouldyou retire on?

For optional retire-ment, an employeeshould retire on thelast day of a month,or on the first 3 daysof the month so thatannuity will com-mence the followingday after the effectivedate of retirement. Ifthe employee isretired after the 3rdof the month, annu-ity will commencethe first of the fol-lowing month.

TYPES OF

RETIREMENT—

QUALIFYING FOR

CSRS ANNUITY

ALTERNATIVE

ANNUITY

(LUMP SUM

OPTION)

35 Can I receive alump sum pay-ment?

No, the lump sumwas eliminated bythe Omnibus BudgetReconciliation Act of

1993, except forcertain non-disability retireeswho retire with alife-threateningaffliction or othercritical medical

condition thatlimits probablelife expectancyto less than twoyears.

36 Under what condi-tions may anemployee retire fordisability?

An employee mustbecome totally dis-abled for useful andefficient service inthe position held andmust have completedat least 5 years ofcivilian service.

37 What constitutestotal disability?

Inability of theemployee, because ofinjury or illness, tosatisfactorily performthe duties of theposition held or the

duties of a similarposition. It need notbe shown that theapplicant is disabledfor all kinds of work.Under 5 USC8337(a) it states: “Anemployee of theUnited States PostalService shall be con-sidered not qualifiedfor a reassignment…if the reassignmentis to a position in adifferent craft or isinconsistent with theterms of a collectivebargaining agree-ment covering theemployee.”

38 Who determineswhether an em-ployee is totallydisabled to qualifyfor an annuity?

The U.S. Office ofPersonnel Manage-ment makes thedetermination.

39 Must the injury orillness be incurredwhile on duty?

No. If it is in-curred on the job,however, the em-ployee will have achoice between an-nuity under theCSRS or benefitsfrom the Depart-ment of Labor’sOffice of Workers’Compensation Pro-grams, and the em-

DISABILITY

RETIREMENT

ployee may choosewhichever is to his/her advantage.

40 Who files the annu-ity application if anemployee is men-tally incompetent?

The employee’sguardian.

41 May the employ-ing department oragency apply tohave an employeeretired for disabil-ity?

Yes. If the agencybelieves that theemployee is totallydisabled for usefuland efficient servicein the position held.

42 When does a dis-ability annuitybegin?

It begins on the dayafter separation orthe day after theemployee’s pay statusterminated and theemployee has metthe disability and ser-vice requirements.

43 Are further med-ical examinationsnecessary after theemployee is placedon the disabilityannuity rolls?

Periodic examina-tions are requireduntil the annuitantreaches age 60 oruntil it is found thatthe disability is of apermanent nature.

44 Must the annuitantpay for these med-ical examinations?

Yes.

45 In case a disabilityannuitant underage 60 recovers,what is his/herstatus?

The annuity will bediscontinued at theend of one year fromdate of the medicalreport showingrecovery, or uponFederal reemploy-ment, whichevercomes first.

46 Is reinstatement inthe federal serviceautomatic uponrecovery orrestoration toearning capacity?

No.The individualmust locate a posi-tion on their own.

47 What happens to adisability annui-tant whose earningcapacity isrestored?

Even if the annuitantremains totally dis-abled, an annuitantwhose earningcapacity is restoredbefore reaching age60 will have his/herannuity discontin-ued. (Annuity is notdiscontinued ifrestored after age60).

48 When is a disabilityannuitant’s earn-ing capacity con-sidered restored?

Earning capacity is consideredrestored if, in onecalendar year theannuitant’s incomefrom wages or self-employment, orboth, is at least 80% of the currentbasic pay of the position from which the employeeretired.

50 If an annuitantwho has recoveredor whose earningcapacity is restoredis not reemployedin the governmentservice,may theretiree receive afurther annuityafter the disabilitystops?Yes.The annuitant isconsidered involun-tarily separated, andwould be eligible todraw one of the fol-lowing annuities:• Deferred annu-ity—would beginwhen the annuitantreaches age 62;

• 20-year discon-tinued service an-nuity—if the annui-tant is age 50 with atleast 20 years of ser-vice, this annuitywould begin immedi-ately following thetermination of thedisability annuity; or• 25-year discon-tinued service an-nuity—if the annui-tant had at least 25years of serviceregardless of age, thisannuity would beginimmediately follow-ing the terminationof the disabilityannuity.

49 Is income fromsuch sources asrents,dividends,Social Security,pensions, insur-ance policies,stocks or bondsconsidered in de-ciding whether adisability annui-tant’s earning ca-pacity is restored?No. Only incomefrom wages or self-employment is con-sidered.

DEFERRED

ANNUITY

51 Who is eligible fordeferred retire-ment?

Any separated em-ployee who is age 62and has completedat least 5 years ofcivilian service pro-viding the employeeleft retirement con-tributions in the CivilService RetirementFund.

52 When does thisdeferred annuitybegin?

It begins on theseparated employee’s62nd birthday.

53 How do I apply formy deferred CSRSannuity?

60 days prior to your62nd birthday—write or call theoffice of PersonnelManagement(OPM), RetirementOperations Center,Boyers, PA 16017(888) 767-6738.OPM will send theapplication fordeferred annuity.

54 Is an employee eli-gible for deferredannuity regardlessof the reason forseparation?

Yes. Providing he/she leaves the retire-ment contributionsin the Civil ServiceRetirement Fundand is not convictedof certain NationalSecurity offenses.

55 If I die beforeattaining age 62,orafter age 62 butbefore applying forannuity,will mysurvivor(s) receivesurvivor benefits?

The only benefitpayable will be yourlump-sum credit inthe retirement fund;monthly survivorannuity will not bepayable.

58 What is an annuitywithout survivorbenefit?

It is the annuitywhich is payable tothe retiring employeefor his/her lifetimeonly.

59 When is the sur-vivor annuity tothe widow or wid-ower effective?

It is effective the dayafter the employee orretiree dies and con-tinues until the endof the month beforethe one in which thewidow or widowerremarries before age55 or dies. Remarri-age after age 55 doesnot affect the sur-vivor annuity. Forremarriages occur-ring after January 1,1995, if the widow/widower remarriesbefore age 55, andwas married at least30 years to the indi-vidual on whose ser-vice the survivorannuity is based, thesurvivor annuity willnot be terminated.

60 How much sur-vivor annuitywould the widowor widowerreceive?

The widow or wid-ower of a retiredemployee will gener-ally receive 55% ofthe retiree’s basicannuity. (The annui-tant can provide apercentage less than55% if agreed uponby the spouse at timeof retirement).

61 How much is thereduction in the re-tired employee’sannuity if he/sheaccepts the annuitywith survivor ben-efit to his/her wid-ow or widower?

The reduction is21/2% of the first$3,600, and 10% ofany amount over$3,600 used as abase for the survivorbenefit.

62 What is the annuitywith survivorbenefit to namedperson having aninsurable interest?

In this type, the retir-ing employee takes areduction in theannuity and names aperson who has aninsurable interest in

56 How many types ofannuities arethere?

Four. (1) Annuitywith survivor benefitto widow or widow-er; (2) Annuity with-out survivor benefit;(3) Annuity withsurvivor benefit tonamed person havingan insurable interest;or (4) Annuity toprovide a formerspouse or combina-tion current/formerspouse survivorannuity.

57 Can an employeechoose which typeof annuity he/shewants?

Yes. A marriedemployee is automat-ically granted theannuity with survivorbenefit to widow orwidower, unless thespouse waives his/herright to the survivorbenefit.

SURVIVOR

ANNUITY

ELECTIONS

his/her life to receivea survivor annuity.

63 Who may elect anannuity with sur-vivor benefit tonamed personhaving an insur-able interest?

Any retiringemployee who is ingood health.

64 If an employeeelects an annuitywith survivor ben-efit to named per-son having aninsurable interest,how much is thereduction in annu-ity?

This depends on thedifference in agesbetween the retiringemployee and theperson named as sur-vivor annuitant. Seethe table below:

65 How much sur-vivor annuity willthe person havingan insurable inter-est receive?

This person willreceive 55% of theretiring employee’sreduced annuity.

66 How does a retir-ing employee indi-cate the type ofannuity he/shewishes to receive?

There is a portion ofthe Application forRetirement whichmust be completedindicating the retir-ing employee’schoice.

67 Can an annuitantever change his/hertype of annuity?

In some cases, it canbe changed and inothers it cannot:

• A survivor electionmay not be revokedor changed, oranother survivornamed later than 30days after the date ofthe first regularmonthly annuitypayment. However, aretiree who was mar-ried at time of retire-ment and elected aself-only annuity, ora partially reducedannuity to a currentspouse, formerspouse or insurableinterest designee mayelect no later than 18months after retire-ment, an annuityreduction or anincreased annuityreduction to providea current spouseannuity. If the mar-riage should termi-nate before theretired employeedies, the amount ofannuity will beincreased by theamount previouslydeducted for the sur-vivor annuity, and ifthe annuitant getsremarried, an elec-

ReductionAge of person named in relation in annuityto that of retiring employee of Retiree

Older, same age or less than5 years younger 10%

5 but less than 10 years younger 15%10 but less than 15 years younger 20%15 but less than 20 years younger 25%20 but less than 25 years younger 30%25 but less than 30 years younger 35%30 or more years younger 40%

the spouse for a sur-vivor benefit.

NOTIFY:

U.S. Office of Per-sonnel Management,Retirement Opera-tions Center, Boyers,Pennsylvania 16017,in writing of this in-tention no later than2 years after the mar-riage.

• An employee retir-ing, unmarried, andwho elected a surviv-or benefit to a namedperson having an in-surable interest maychange this if he/shegets married andelects his/her spouse

to be covered with asurvivor benefit.Thisalso must be donewithin 2 years afterthe marriage.

• If a retiree remar-ries the same personthey were married toat retirement andthat person had pre-viously consented toan election of nosurvivor annuity, theretiree may not electto provide a survivorannuity for that per-son when he or sheremarries.

tion can be made tocover the new spousefor a survivor benefit.If the spouse prede-ceases the annuitantand that annuitantlater remarries, theannuity is reducedactuarially for all themonths that theannuity was restoredto full annuity inorder to include thenew spouse for thissurvivor benefit.

• An employee whowas not married atthe time of retire-ment and later mar-ries, can request thatthe annuity bechanged to include

HOW

ANNUITY IS

DETERMINED

68 How is the amountof employee’s basicannuity deter-mined?

The amountdepends primarilyupon an employee’slength of service andthe high-3 averagesalary.

69 How is an employ-ee’s length of ser-vice computed?

All periods of cred-itable service areadded together pluscredit for unusedsick leave.The odddays under 30 in thetotal are dropped,and the time (yearsand months) remain-

ing is the length ofservice used in theannuity computationformula.

70 How is an employ-ee’s“high-3”aver-age pay computed?

The “high-3” averagesalary is the highestsalary obtainable byaveraging the rates ofbasic pay in effectduring any 3 consec-utive years of service.(Does not have to befrom January 1 toDecember 31.)

71 What is the gen-eral formula forobtaining the basicannuity?

•Take: 11/2% of thehigh-3 averagesalary and multiplythe result by 5years of service;

•Take: 13/4% of thesame high-3 averagesalary and multiplyby years of servicebetween 5 and 10;

•Take: 2% of thesame high-3 averagesalary and multiply

by all service over 10years;

• Add:The results ofthese three figures isthe retiree’s basicannuity per year.

72 Is the general for-mula for comput-ing the basic annu-ity used in all kindsof retirement?

It is used in comput-ing the basic annuityin age, optional, 20-year and 25-year dis-continued serviceannuities, anddeferred retirements.

It is used in disabilityretirements only if itproduces a greaterbasic annuity thanthe guaranteed mini-mum.

73 How much is theguaranteed mini-mum disabilityannuity?

The guaranteed min-imum is the lesser ofthe 2 followingamounts:

(1) 40% of the em-ployee’s high-3 aver-age salary: or (2)The

* Annuity in excess of 80% which is produced by credit for unused sick leave ispayable.

Earned Retirement PercentagesBased onYears of Service

Percentof High

Years 3-Yearof AverageService Earnings

5 7.50%6 9.25%7 11.00%8 12.75%9 14.50%10 16.25%11 18.25%12 20.25%13 22.25%14 24.25%

Percentof High

Years 3-Yearof AverageService Earnings

15 26.25%16 28.25%17 30.25%18 32.25%19 34.25%20 36.25%21 38.25%22 40.25%23 42.25%24 44.25%

Percentof High

Years 3-Yearof AverageService Earnings

25 46.25%26 48.25%27 50.25%28 52.25%29 54.25%30 56.25%31 58.25%32 60.25%33 62.25%34 64.25%

Percentof High

Years 3-Yearof AverageService Earnings

35 66.25%36 68.25%37 70.25%38 72.25%39 74.25%40 76.25%41 78.25%42 80.00%43 80.00%

amount obtainedunder the generalformula after in-creasing the em-ployee’s actual cred-itable service by thetime remainingbetween the date ofseparation and thedate they reach age60.

74 Do all employeeswho retire for dis-ability get the guar-anteed minimumannuity?

The guaranteedminimum offers noadvantage to anemployee when re-tiring if the em-ployee has at least21 years and 11months service, or ifthe employee hasreached age 60 attime of retirement.

75 Is there a limita-tion on the amountof basic annuity?

Yes.The maximumbasic annuity underany formula men-tioned cannot bemore than 80% ofthe high-3 averagesalary.

76 What happens tothe retirementdeductions takenduring service inexcess of that nec-essary to producethe maximumbasic annuity?

The retirementdeductions withheldafter the month inwhich the employeereaches this 80%limitation are setaside as a specialcredit when theemployee is separat-ed.This amounttogether with applic-able interest com-puted to the date ofretirement is appliedtoward any depositdue and any balanceis refunded. In theevent of death inservice, this amountis refundable as alump sum deathbenefit.

77 Is there an excep-tion to the 80%limitation?

Yes. Additionalannuity attributableto credit for unusedsick leave is allowableover and above thislimitation. Also,additional annuitycan be purchasedwith the excessretirement deduc-

tions describedabove instead ofaccepting the refund.

78 Can voluntary con-tributions furtherincrease annuity?

Yes, at retirement,each $100 in theaccount, includinginterest earned willprovide an additionalannuity of $7 a year,plus $.20 for eachfull year the employ-ee is over age 55 atretirement.

79 How are voluntarycontributionsmade?

Only CSRS employ-ees can make volun-tary contributions(provided they donot owe a deposit orredeposit for civilianservice).The deposit/redeposit had to havebeen made to theOPM prior to retire-ment. Contributionsare made in multi-ples of $25.

80 Can a refund ofvoluntary contri-butions be receivedinstead of addi-tional annuity?

Yes.The contribu-tions can be with-drawn with interestat any time beforereceiving an annuity

based on these con-tributions.

81 Are annuitiesadjusted afterretirement to takeaccount of increas-es in the cost of liv-ing?

Yes. Annuities areadjusted annually totake into accountincreases in the costof living.

82 What were theamounts of COLAreceived during thepast 5 years:

12-1-03 . . . .2.1%12-1-04 . . . .2.7%12-1-05 . . . .4.1%12-1-06 . . . .3.3%12-1-07 . . . .2.3%

83 How is yourCOLA computedif you retired inthis year?

You must be re-tired for the fullyear to receive thefull COLA.TheCOLA year goesfrom December 1through November30. If you retired in:

December FULL COLAJanuary 11/12February 10/12March 9/12

April 8/12May 7/12June 6/12July 5/12August 4/12September 3/12October 2/12November 1/12

84 May an annuitantbe employed out-side the FederalGovernment?

Yes.

85 May an annuitantbe reemployed inthe FederalGovernment?

Yes.

86 May an annuitantwho is reemployedin the FederalGovernment con-tinue to drawannuity?

Generally yes, butthe individual’ssalary is reduced bythe amount of annu-ity paid during theperiod of reemploy-ment. Reemployedannuitants in certaindifficult to fill posi-tions such as tempo-rary census workersare exempt from thesalary offset.

87 What kind of deathbenefits are there?

• A survivor annuitybenefit which ispayable in monthlyinstallments; or

• A lump sum benefitpayable if there is nosurvivor annuity pay-able.The lump sumwould consist of theamount paid into theRetirement Fund bythe employee plusapplicable interest, ifany.

88 What happens toannual leave that isadvanced at thebeginning of theyear?

If the employeeretires and has usedadvanced annualleave in excess ofwhat has beenearned, the retireemust pay the PostalService for all un-earned annual leave.

one, even the execu-tor or administratorof the estate.

Any unpaidaccrued annuity dueto the deceased willbe paid to the eligiblesurvivor.

2. Notify the U.S.Office of PersonnelManagement,Retirement Opera-tions Center, Boyers,Pennsylvania 16017.Indicate the annui-tant is deceased andrequest forms forclaiming survivorbenefits.

SF 2800—Application forDeath Benefits (forSurvivor Annuity orLump-SumPayment).

FE 6—Claim forDeath Benefits (forLife Insurance fromthe FederalEmployees’ GroupLife InsuranceProgram).

OPM will processthe request as soonas possible.The let-ter of notification

should include thefull name of thedeceased, exact dateof birth, exact dateof death, CSA(claim) number, andthe address, rela-tionship and nameof the person who isapparently entitledto benefits.

3. Obtain certi-fied copies of thedeath certificate toenclose with applica-tions SF 2800and FE 6, and forany other needs.

Completing anapplication (SF2800) for survivorbenefits is necessaryso that OPM canauthorize payment ofall benefits to the eli-gible survivor.

Benefits may alsoinclude automatichealth insurance cov-erage if the survivorhas been covered bythe annuitant’senrollment in one ofthe government’shealth benefits pro-grams, and if the sur-vivor is eligible toreceive a survivorannuity immediatelyafter the death of theannuitant.

When applying forlife insurance bene-

HOW TO

CLAIM A

SURVIVOR

ANNUITY

89 What should a sur-vivor annuitant doto claim benefits?

Survivors must applyto receive benefits.

1. Return anyuncashed checkssent the annuitantafter his/ her death tothe return addressshown on theTreasury Depart-ment’s envelope inwhich the check wasdelivered. If annuitypayments have beensent directly to thebank or other finan-cial institution,promptly notify thatinstitution of theannuitant’s date ofdeath. Ask that anypayments receivedafter the date ofdeath be returned totheTreasuryDepartment.

Returning un-cashed checks to theTreasury Depart-ment is necessarybecause governmentchecks made payableto a deceased personcannot be legallynegotiated by any-

dent between theages of 18 and 22may also be eligible.

94 Is a child’s sur-vivor annuitypayable in additionto the widow’sannuity?

Yes. Each eligiblechild who has a sur-viving parent whowas the spouse orformer spouse of thedeceased employee,will receive approxi-mately $444 permonth. Each eligiblechild who has nosurviving parent orwhose surviving par-ent was never mar-ried to the deceasedemployee will receiveapproximately $532per month.Theseamounts are reducedproportionately ifmore than three chil-dren are eligible forsurvivor annuities.The amount of childbenefits are periodi-cally increased bycost-of-living adjust-ments.

95 When a child’sannuity stops, isthe widow orwidower’s annuityaffected?

No.

fits, if the retiree wascovered by theFederal Employees’Group LifeInsurance Program,there is no need forthe eligible survivorto write the NewJersey office ofFEGLI.They cannotsettle a claim until acertification of thedeceased annuitant’sinsurance status isreceived from OPM.

90 To whom is a sur-vivor annuitypayable?

It may be payable tothe surviving spouse(widow or widower),and children of thedeceased employeeor deceased annui-tant, or to a formerspouse. It may alsobe payable to a per-son having an insur-able interest who wasnamed by theemployee at the timeof retirement.

91 What conditionsmust the deceasedemployee have metto permit paymentof a survivorannuity?

He/she must havecompleted at least 18months of civilianservice and, at the

time of death, musthave held a positionwhich was subject tothe CSRS .

92 What conditionsmust the widowor widower of adeceased employeemeet to be eligiblefor survivorannuity?

A widow or widowermust have been mar-ried to the employeefor a total of 9months prior to theemployee’s death.The 9 monthrequirement doesnot apply if there is achild born of themarriage or theemployee’s death wasaccidental.

93 What conditionsmust a child of adeceased employeemeet to be eligiblefor a survivorannuity?

The child must beunmarried andunder age 18 or anunmarried child whois over 18 and isincapable of self-sup-port because of aphysical or mentaldisability whichbegan before age 18,or an unmarriedchild who is a stu-

96 When does the sur-vivor annuity to awidow or widowerof a deceasedemployee begin?

The day after theemployee or annui-tant’s death.

97 How long will thewidow or widowercontinue to receivethe survivorannuity?

Until the end of themonth before the onein which the widowor widower dies orremarries before age55. Remarriage afterage 55 does not ter-minate the widow orwidower’s annuity.For remarriagesoccurring afterJanuary 1, 1995, ifthe widow/widowerremarries before age55, and was marriedat least 30 years tothe individual onwhose service thesurvivor annuity isbased, the survivorannuity will not beterminated.

98 How long will eachchild continue toreceive the sur-vivor’s annuity?

Until the unmarriedchild reaches age 18;or an unmarriedchild who is over 18but is incapable ofself-support becauseof a physical or men-tal disability whichbegan prior to age 18either becomes self-supporting, marriesor recovers from thedisability; or an un-married child who isa student betweenages 18 and 22ceases to be afull-time student.

99 If a child lost theirannuity because ofmarriage,can thebenefit be restoredif the marriageterminates?

Yes.The annuity andhealth insurance cov-erage can resumeupon the end of thechild’s marriage andcan continue untilage 22 for childrenwho are not married

and enrolled as stu-dents on a full-timebasis. If a child is un-married and incap-able of self-supportbecause of disabilitywhich began beforeage 18, benefits cancontinue for life.

100 Are survivorannuities paiddirectly to thechild/children?

Not usually. A child’sannuity is generallypaid to the survivingparent or legalguardian. However,an adult student maybe paid directly uponrequest.

102 What happens ifthe civil serviceannuitant marriesor remarries afterretirement?

If the annuitant mar-ries or remarries andwants to cover his/her new spouse for acivil service annuity,he/she must notify,within 2 years of themarriage, the U.S. Of-fice of PersonnelManagement, Retire-ment OperationsCenter, Boyers,Pennsylvania 16017,and furnish his/herCSA (claim) num-ber, Social Securitynumber, date ofbirth, and a copy ofthe marriage certifi-cate.

The retiree mustpay a deposit equalto the differencebetween the amountof annuity actuallypaid and the amountof annuity that wouldhave been paid if thesurvivor election hadbeen in effect contin-

uously since date ofretirement or datethe reduction termi-nated, whichever isapplicable.Thisdeposit, whichincludes interest, ispaid by a permanentactuarial reductionthat, in most cases, isless than 5% of theretiree’s annuity.

101 What happenswhen the civilservice annuitant’sspouse predeceasesthe annuitant?

The annuitant canhave his/her annuityrestored to full-liferate. If there are nodependent children,health benefits cover-age can be changedto a self only plan.The beneficiaries forlife insurance mayneed to be changed.Another changewhich the annuitantmay make is achange in federalincome tax withhold-ing.The annuitantmust notify the U.S.Office of PersonnelManagement,Retirement Opera-tions Center, Boyers,Pennsylvania 16017,and furnish themwith his/her CSA(claim) number,Social Security num-ber, date of birth,and a copy of thedeath certificate.

SURVIVOR PREDECEASES

ANNUITANT / ANNUITANT

MARRIES OR REMARRIES

REFUND—

REDEPOSIT

103 What is meant by arefund?

A refund is thereturn to an employ-ee of money tohis/her credit in theretirement fund.

104 Under what condi-tions is a refundpayable?

It is payable when anemployee is separat-ed from governmentservice and the sepa-ration takes place atleast 31 days beforethe beginning date ofany annuity forwhich he/she may beeligible.

105 May an employeewho is eligible toretire on an imme-diate annuitychoose to receive arefund rather thanan annuity?

No.

106 May a formeremployee who iseligible for deferredretirement be paida refund?

Yes. If a refund appli-cation is filed with

the U.S. Office ofPersonnelManagement, Re-tirement OperationsCenter, Boyers,Pennsylvania 16017at least 31 daysbefore annuity pay-ments are scheduledto begin.

107 If an employee whois eligible fordeferred retire-ment is paid arefund,may aredeposit of therefund be madelater so that theemployee mayreceive an annuityat age 62?

No. But if reem-ployed under CSRS,the employee couldacquire a new retire-ment right and makethe redeposit of therefund in order toreceive full credit forservice covered bythe refund.

108 If an employee isseparated beforereaching eligibilityfor retirement,may the money beleft in the retire-ment fund?

Yes.The employeedoes not have toapply for a refund.

109 Is there any advan-tage to leavingmoney in theretirement fund?

If the employee has5 or more years ofcivilian service, he/she could receive adeferred annuity atage 62 by leaving themoney in the retire-ment fund. In dollarsreceived, the annuityin most cases is morevaluable than therefund.

110 If a refund is notpaid at the time ofseparation,may itbe paid in thefuture?

Yes. Anytime prior to31 days before thebeginning date ofany annuity forwhich the employeeis eligible.

112 May the employingagency’s retire-ment contributionbe refunded?

No.The agency’scontributions aredeposited to theretirement fund in

111 What happens tomoney left in theretirement fund ifdeath occurs?

The money will berefunded as a lumpsum death benefit.

general and are notcredited to any indi-vidual employee.

113 How is applicationfor refund made?

Application must befiled on StandardForm 2802.

114 How are benefitspaid?

Payments authorizedby the Office ofPersonnelManagement areissued by theTreas-ury Department andpayable on the firstbusiness day of themonth after themonth or other peri-od for which theannuity has accrued.

115 May annuitychecks be negotiat-ed under Power ofAttorney?

No.

116 May annuity,re-funds,or lumpsum death pay-ments be attachedin order to settle ajudgment or otherindebtedness?

Such paymentsgenerally are notsubject to attach-ment, levy, gar-nishment or otherlegal process; how-ever, such pay-ments are subjectto legal process toenforce child sup-port, alimony, orseparate mainte-nance obligation orcommunity prop-erty settlement inconnection withdivorce, annulmentor legal separation ofan annuitant.

117 Does this bar applyto indebtednessdue to the UnitedStates?

No.This is oneexception to the rule,and annuity pay-ments may be usedto settle a claimwhich the govern-ment may haveagainst an individual.

118 May an employeevoluntarily assignhis/her retirementdeductions assecurity for a loanor other purpose?

No.

119 May an employeeborrow from theretirement fund?

No.

HOW CSRS BENEFITS

ARE PAID/

CAN BENEFITS BE

ATTACHED

FEDERAL

INCOME

TAXES

POLITICS/

JURY DUTY/

DECLINATION

OF ANNUITY

120 Are annuity pay-ments subject tofederal incometaxes?

Yes. Under rules set forth and ad-ministered by theInternal RevenueService.

121 May an annuitanthave federalincome taxes with-held from annuitypayments?

Yes. Annuitants witha touchtone tele-phone can use theU.S. Office ofPersonnel Manage-ment’s “Annuitant

Express” by calling1-800-409-6528 tostart, stop or changetax withholdings.Those withouttouchtone serviceshould contact OPMat 1-888-767-6738.

122 May an annuitantchoose not to haveincome tax with-held from annuitypayments?

Yes.The tax with-holding is entirelyvoluntary.

123 May an annuitantengage in politics?

Yes. An annuitant isnot an employeeand, therefore, is notgoverned by thepolitical activityrestriction applyingto employees.

124 If an annuitantserves on a jury,will his/her annuitybe affected?

No.

125 May a persondecline to accept allor part of the civilservice annuitythey are entitled toreceive?

Yes, if there is a per-sonal reason for suchaction.

126 How is this done?

By signing a waiverand filing it with theU.S. Office ofPersonnelManagement,RetirementOperations Center,Boyers, Pennsylvania16017.

127 What forms areused for filingapplication underCSRS?

• Standard Form2800—Death Benefits;• Standard Form2801—ImmediateRetirement;• Standard Form3112A—Applicant’sStatement of Disability3112B— Supervisor’sStatement3112C—Physician’sStatement3112D—Agency Certifi-cation of Reassignmentand AccommodationEfforts3112E—DisabilityRetirement ApplicationChecklist

FORMS

USED

UNDER

CSRS

Note:The SF 3112A,3112B, 3112C, 3112Dand 3112E should becompleted for Disabil-ity Retirement, in ad-dition to the SF 2801,Application for Imme-diate Retirement.

• OPM Form 1496—Deferred Retirement;• Standard Form2802—Refund of Retire-ment Deductions;• Standard Form2803—Deposit or Rede-posit to cover previousservice;• Standard Form2804—Voluntary contri-butions;• Standard Form2808—Designation ofbeneficiary for accruedannuity due (payable ina lump sum);• Form FE-6—Claimfor Death Benefits (Lifeinsurance).

128 Where may theseforms be secured?

The personnel officeof the employingagency or from theU.S. Office of Per-sonnel Manage-ment, RetirementOperations Center,Boyers, Pennsyl-vania 16017.

129 What recoursedoes an applicanthave if his/herclaim is denied?

The applicant mayexercise reconsidera-tion rights providedby the Office ofPersonnelManagement. Inmost cases followingan adverse final deci-sion by OPM, theapplicant will thenhave appeal rights tothe Merit SystemsProtection Board.

130 May an individualreceive a civil ser-vice annuity andSocial Securitybenefits at thesame time?

Yes, if qualified forboth benefits.

131 What is theWindfallEliminationProvision of theSocial Security Re-form Act of 1983?

It established that aperson would onlydraw Social Securitybenefits for the actualwork done under theSocial Security Act. Itestablished that a per-son who draws a civilservice annuity (orother noncovered an-nuity) must have atleast 30 years of “sub-stantial” Social Secur-ity coverage in orderto draw full benefitsfrom Social Security.For each year less than30 years of “substan-tial” coverage, yourSocial Security benefitis reduced by 5% untilyou reach 40%.That40% becomes thefloor for your SocialSecurity benefits.

You must have earnedthe following amountsto be considered “sub-stantial” earnings:

CSRS AND

SOCIAL

SECURITY

132 What does 40credits entitle youto under SocialSecurity?

You are entitled to beenrolled in Medicareand draw a SocialSecurity monthlybenefit, subject tothe windfall elimina-tion provision.

133 Are theWindfallElimination Pro-vision and thePension Offset oneand the same?

No.

134 What is the Gov-ernment PensionOffset?

If you worked forfederal, state or localgovernment and werenot covered by SocialSecurity when youremployment ended,two-thirds of yourpension benefits fromthat employment willbe offset against anySocial Security bene-fit for which you areeligible as a spouse,widow, or widower.You can receive onlythe amount of SocialSecurity benefit thatexceeds two-thirds ofyour governmentpension.This fre-quently eliminatesSocial Security bene-fits altogether.

SubstantialYear Earnings

1951-54 $ 9001955-58 1,0501959-65 1,2001966-67 1,6501968-71 1,9501972 2,2501973 2,7001974 3,3001975 3,5251976 3,8251977 4,1251978 4,4251979 4,7251980 5,1001981 5,5501982 6,0751983 6,6751984 7,0501985 7,4251986 7,8751987 8,1751988 8,4001989 8,9251990 9,5251991 9,9001992 10,3501993 10,7251994 11,2501995 11,3251996 11,6251997 12,1501998 12,6751999 13,4252000 14,1752001 14,9252002 15,7502003 16,1252004 16,2752005 16,7252006 17,4752007 18,1502008 18,975

135 What is theThriftSavings Plan(TSP)?

It is a retirement sav-ings plan similar toan IndividualRetirement Account(IRA).The moneyemployees contributeto theTSP is tax-deferred, whichmeans they do nothave to pay taxes onit until they withdrawit during retirement.

136 Who can partici-pate in theThriftSavings Plan?

All postal and federalemployees may par-ticipate. However,the rules are differentfor CSRS and FERSemployees. In gener-al, the thrift plan ismore valuable toFERS employees.

137 Do employees haveto participate in theThrift SavingsPlan?

No.

138 How important isit for CSRS em-ployees to partici-pate in theThriftSavings Plan?

While theTSP is amajor component ofthe three tier FERSretirement package,CSRS employees canuse theTSP as a wayto save extra moneyfor the future and geta tax break today.CSRS employees donot receive agencymatching or auto-matic contributionsthat FERS employ-ees receive. However,theTSP investmentoptions, withdrawaland tax informationare the same for bothCSRS and FERSemployees.

139 What factors influ-ence how much anemployee canexpect to save andearn through theTSP?

The main factors arehow much theemployee earns inbasic pay, how muchhe or she con-tributes, how manyyears he or she con-tributes and the rateof return earned byTSP investments.

GENERAL INFORMATION

ON THE TSP

140 If an employeealready has anIRA,can he or shestill participate intheTSP?

Yes.

141 Can aTSP partici-pant roll his or herIRA into theThriftSavings Plan?

Yes. Active or sepa-rated employees canroll over (transfer)money from a quali-fied retirement planor a traditional IRAinto their existingTSP account.However, separatedemployees cannotroll over money intotheirTSP account ifthey have alreadymade a full with-drawal of theiraccount or are receiv-ing monthly pay-ments.

142 Do employees whotransfer their TSPaccounts into IRAsupon separationfrom governmentservice pay taxeson their TSPsavings?

No.TSP transfers toIRAs are not taxeduntil they are takenout of the IRAs.

143 What are the taxadvantages ofcontributing tothe TSP?

Contributions to theTSP are not subjectto federal and moststate income taxes inthe year they aremade, nor is theinterest earned by anemployees’TSPaccounts.TSP fundsare taxed only afterthey are withdrawn,usually at the time ofretirement when themarginal tax ratesfacing most taxpay-ers are lower.

144 How are fundswithdrawn fromtheTSP taxed?

It depends on themethod of with-drawal:

• Lump-sum andequal payment distri-butions ofTSP fundsare treated like ordi-nary income andtaxed in the year(s)they are received.

• Annuities pur-chased by theThriftInvestment Boardwith an employee’sTSP account aretaxed in the year(s)annuity payments arereceived.

•TSP savings trans-ferred to an IRA orother eligible planare not taxed untilthey are withdrawnfrom the IRA orplan.

145 When is there anearly withdrawalpenalty tax?

The IRS imposes a10 percent earlywithdrawal tax onamounts receivedfrom theTSP if theemployee separatesor retires before theyear in which theyreach age 55 andwithdraw their

THE TSP, IRAS AND TAXES

account in a singlepayment or a seriesof monthly pay-ments. In this case,the employee wouldbe subject to thepenalty tax on allamounts receivedbefore age 59 1/2(including financial

hardship in-servicewithdrawals).

However, the penaltytax does not apply toa series of monthlypayments based onlife expectancy, nor isit imposed on annu-ity payments, pay-ments made because

of death, or pay-ments made to par-ticipants who retireon disability.

146 How do employeesmake contribu-tions to theThriftSavings Plan?

Contributions canonly be madethrough payrolldeductions.Thus,participants must bein a pay status (i.e.,receiving a paycheckfrom the governmentor Postal Service) tomake contributions.

148 What are“catch-up”contributions?

“Catch-up contribu-tions” are supple-mental tax-deferredemployee contribu-tions, which are inaddition to regularTSP contributions.The amount of sup-plemental contribu-tions one may con-tribute is $5,000.These contributionscan be made by par-ticipants age 50 orolder who would liketo make contribu-tions above the maxi-mum $15,000amount they couldotherwise make totheTSP.

147 How much canemployees put intotheThrift SavingsPlan?

Beginning in 2006there were no longerany percentage limitson employees contri-butions to theTSP.TSP contributionswill be limited onlyby the restrictionsimposed by theInternal RevenueCode.

The IRS annual elec-tive deferral limit for2008 is $15,500.

EMPLOYEE CONTRIBUTIONS

TO THE TSP

149 How are contribu-tions to theTSPinvested?

TSP savings areinvested in five dif-ferent investmentfunds, the G, C, F, Sand I Funds. Partici-pants may choosehow to allocate theirpayroll contributionsand fund balancesamong these fivefunds on their own,or they may allow theFederalThrift Invest-ment Board to auto-matically managetheir investmentsamong the five fundsby selecting theLifecycle Fund or LFund option. Eachinvestment option isdescribed below:

• GovernmentSecuritiesInvestment (G)Fund. Contributions

Because catch-upcontributions aresupplemental, theydo not count againsteither the regularTSP contribution

(percentage) limits orthe IRS electivedeferral limit.However, the combi-nation of regular and

catch-upTSP contri-butions cannotexceed the total IRScontribution limit forthe year.

to the G Fund areinvested in specialshort-term U.S.Treasury securities.Treasury securities,which are essentiallyloans to the FederalGovernment, are thesafest investmentsavailable toTSP par-ticipants.

• Common StockIndex Investment(C) Fund. Fundcontributions areinvested in a repre-sentative sample (orindex) of all stockslisted on the majordomestic stockexchanges. Stocksare certificates ofownership in a com-pany which mayappreciate in valueover time and fre-quently pay periodic,variable paymentscalled dividends.

• Fixed IncomeIndex Investment(F) Fund.Contributions direct-ed to the F Fund areinvested in a repre-sentative sample ofU.S. government andcorporate bonds.Bonds are debt secu-rities, with maturitiesof between 10 and30 years, that usuallypay a fixed interestrate or coupon.Bonds may be tradedand frequently riseand fall in value inresponse to changesin the economy and,to a lesser extent,corporate perfor-mance, interest ratesand the fortunes ofcompanies whichissue them.

• SmallCapitalizationStock IndexInvestment (S)Fund.Contributions to theS Fund are investedin the stocks ofsmaller companies(i.e., those not in-

TSP INVESTMENT OPTIONS

cluded in the S&P500), shares thatoften offer higherreturns but at muchgreater risk than thelarge company stocksof the C Fund.

• InternationalStock IndexInvestment (I)Fund. Retirementsavings invested inthe I Fund are usedto purchase shares incompanies activeoutside the UnitedStates—shares thatare subject to cur-rency risk as well asthe market andcredit risk associatedwith the C Fund’sdomestic shares.

• Lifecycle (L)Fund. The L Fundsare “lifecycle funds”that are investedaccording to a pro-fessionally deter-mined mix of stocks,

bonds, and securi-ties.There are five LFund options, eachoffering a differentcombination ofinvestments in thefive basic TSP funds(G, C, F, S and I).The precise combi-nation is determinedby how many yearsparticipants are fromwithdrawing theirTSP funds. Overtime, the mix ofinvestments in the LFunds become moreconservative—morebonds and fewerstocks—as partici-pants get older.

150 Can an employeelose money invest-ing in the TSP?

Yes, it is possible,though very unlikelyif investments aremade over the long-term. In fact, there isvery little risk ininvesting in the GFund, even in theshort-term. But theother Funds doinvolve some risk butwith higher level ofrisk comes higherrates of returns.

151 Who manages theTSP’s investmentfunds?

The FederalRetirement ThriftInvestment Boardmanages the G Fundand the L Funds.The Board has con-tracts with BarclaysGlobal Investors, acompany owned byBarclays PLC, tomanage the F, C, S,and I Fund assets inindex funds openonly to tax-exemptemployee benefitplans. (These indexfunds are not open toindividual investors.)

154 How do TSPparticipantsrequest interfundtransfers?

The TSP Web siteand the ThriftLineare the most efficientways. Participantscan also submit aninterfund transferrequest on FormTSP-50, InvestmentAllocation, and mailit to the TSP ServiceOffice.

155 When will myinterfund transferbe effective?

If you request aninterfund transfer onthe Web site or theThriftLine before12:00 noon, easterntime, your requestwill ordinarily beprocessed and postedto your account atthe close of businesson that day. Requestsmade after 12:00noon, eastern time,will ordinarily beprocessed and postedto your account atthe close of businesson the followingbusiness day. If youuse FormTSP-50,your request willgenerally be proc-essed and posted toyour account withintwo business days ofthe day it is receivedby the TSP.

152 What is a TSPinterfund transfer?

An interfund transferis the movement ofpast TSP contribu-tions from one in-vestment fund toanother (e.g., fromthe G Fund to the FFund).TSP partici-pants may make twointerfund transfersper month. However,participants maytransfer Funds intothe “safe” G Fund atany time, even if theyhave already madetwo interfund trans-fers during the samecalendar month.

153 Are there restric-tions on what con-tributions andearnings anemployee maytransfer?

There are no restric-tions.

TSP INTERFUND TRANSFERS

GETTING FUNDS OUT

OF THE TSP

156 Can aTSP partici-pant withdraw themoney in his or herTSP account whilestill employed bythe Postal Serviceor other govern-ment agency?

Yes, employees whoare facing hardshipsituations or whoreach age 591/2 andwant to makeaccount withdrawalsfor any reason maynow do so.

In-service with-drawals before age591/2 will be subjectto the 10 percentearly withdrawalpenalty tax (whichdoes not apply tothose making age-based withdrawals).Both forms of with-drawals will be tax-able income in theyear in which pay-ment is made, andmay be subject to themandatory 20 per-cent federal incometax withholdingunless rolled overinto an IRA.

157 Can aTSP partici-pant who separatesfrom the USPS orother federalagency leave his orher savings in theTSP?

Yes. After leaving theservice, the entireaccount balance canbe left in theTSPuntil April 1 of thecalendar year afterthe participantreaches age 701/2, orin which the partici-pant retires if work-ing beyond that age.If withdrawal is notmade by this dead-line, theTSPaccount must bepaid to the partici-pant in the form ofan annuity, asrequired by law.

158 May an employeecontinue to makecontributions totheTSP after sepa-rating from thePostal Service orother federalagency?

No. Although theywill continue toreceiveTSP partici-pant statements andcontinue to have theright to shift theirsavings among theTSP’s investmentfunds, separatedemployees may notmake additional con-tributions to theTSP.Their accounts willcontinue to accrueearnings as long astheir savings remainin theTSP.

159 What are the basicTSP withdrawaloptions?

•Transfer his or hervested account bal-ance to an IndividualRetirement Account(IRA) or other eligi-ble retirement plan;or

• Receive his or heraccount balance in alump-sum payment;or

into three major cat-egories:

• Single Life annu-ities, payable as longas the participantlives.Variations with-in this type of annu-ity include those withcost-of-living adjust-ments, cash refundoptions and featureswhich guarantee thedistribution of theparticipant’sTSPaccount balanceswithin 10 years.

• Joint Life withSpouse annuities,payable as long asthe participant andhis or her spouselives.Variations with-in this type of annu-ity include those withcost-of-living adjust-ments, cash refundoptions and varyinglevels of survivorannuities.

• Joint Life with OtherSurvivor annuities,payable as long asthe participant and anamed person withan insurable interestlives.

Variations within thistype of annuityinclude those withcash refund optionsand varying levels ofsurvivor annuities.

Additional informa-tion is available in abooklet entitled“Summary of theThrift Savings Plan,’’August 2005 editionavailable from thePostal Service andother federal agen-cies.

162 How does anemployee apply towithdraw his orher savings fromtheTSP?

Upon separation, thePostal Service (orother federal agency)is required to furnishthe employee aTSPWithdrawal Packagewith the requiredforms.

• Receive his or heraccount balance insubstantially equalpayments over afixed period of timeor in a fixed amountuntil the account isdepleted; or

• Receive a life annu-ity based on theamount in his or heraccount.

160 May an employeewho qualifies forFERS or CSRS dis-ability benefitswithdraw his orherTSP savings?

Yes. He or she hasthe same withdrawaloptions as thosedescribed in theanswer to question158.

161 If an employeechooses to with-draw his or herfunds from theTSPby means of a lifeannuity,how manydifferent types ofannuities are avail-able?

TheTSP offers 18different types ofannuities, which fall

entitled “ThriftSavings Plan Loans”updated June 2006available from thePostal Service andother federalagencies.

164 How much can anemployee borrowfrom his or herTSP account?

Loan amounts arelimited to the valueof the employee’sown contributionsthough not allemployees may beable to borrow themaximum, giventheir salary and abili-ty to repay loans on atimely basis.Theminimum loanamount is $1,000.Participants mayhave one outstand-ing loan for generalpurposes and oneresidential loan at atime.

165 What are the termsofTSP loans?

Prepayment in full ispermitted by certi-fied check, moneyorder or cashier’scheck. Otherwise,employees repayloans against theiraccounts throughpayroll deductionsand must pay inter-est.The term of theloan is set in theapplication and therate of interestcharged is the rate ofreturn earned by theG Fund during themonth in which theloan application isreceived by theTSPService Office.Employees who sep-arate from govern-ment service mustrepay their loans infull in order toprocess any with-drawal request.

163 Can an employeeborrow from his orherTSP account?

Yes, there are twotypes of loans—ageneral purpose loanand a loan for thepurchase of your pri-mary residence.Youcan apply for a gen-eral purpose loanwith a repaymentperiod of 1 to 5years, or you canapply for a residen-tial loan with arepayment period of1 to 15 years. Nodocumentation isrequired for a generalpurpose loan, butyou must submitdocumentation (suchas a contract for thepurchase of your res-idence) to supportthe amount you arerequesting for a resi-dential loan. Infor-mation about theTSP loans is pro-vided by a booklet

THE TSP LOAN PROGRAM

•TSP accounts maybe used to enforceTSP participants’legal obligations toprovide alimony and/or child support pay-ments.

•The former spousesof TSP participantsmust be notifiedwhen participantswho leave federalservice prior tobecoming eligible forretirement benefitstransfer theirTSPaccounts to an IRAor other pensionplan.

168 Who gets anemployee’sTSPfunds if he or sheshould die beforereceiving anyTSPpayments?

The person identi-fied by the employeeas the beneficiary ofhis or her account onFormTSP-3, theDesignation ofBeneficiary form. Ifno beneficiary isnamed, the account

will be distributedaccording to thestandard order ofprecedence.

169 Who gets anemployee’sTSPannuity if he or sheshould die afterretirement?

In the event of deathafter theTSP officereceives a completedannuity request, ben-efits will be providedin accordance withthe former employ-ee’s annuity selec-tion.

166 What rights dospouses of partici-pants have withregard to theTSP?

Spouses have certainrights when partici-pants apply to bor-row from theiraccounts or with-draw funds from theTSP.The spouses ofTSP participants cov-ered by CSRS will benotified when partic-ipants apply for aTSP loan or apply towithdraw from theirTSP accounts.

167 What rights do for-mer spouses ofparticipants havewith regard to theTSP?

•TSP participantsmay not make anydecision with regardto their accountswhich conflict withan applicable courtorder, decree, orcourt-approvedagreement obtainedby their formerspouses.

SPOUSAL RIGHTS AND TSP

SAVINGS IN CASES OF DEATH

Those who retiredafter December 31,1989 and are underage 65 pay for thebasic life insuranceuntil they reach 65.

•They may also electto have the amountonly reduce by 1%per month at age 65to no less than 50%of the basic policyvalue—

THE EXTRA PRE-MIUM FORTHISLESSER REDUC-TION COVERAGEIS $0.60 PERMONTH FOREACH $1,000 OFBASIC INSUR-ANCE PAYABLEFROMTHE COM-MENCING DATEOF ANNUITYUNTIL DEATH.

•Thirdly, they mayelect that the amountof basic insurancewill not reduce afterage 65.

THE EXTRAPREMIUM RE-QUIRED FOR NOREDUCTION INBASIC INSUR-ANCE COVERAGEIS $1.83 PERMONTH FOREACH $1,000 OFBASIC INSUR-ANCE PAYABLE

ance.When theemployee retireshe/she must pay forbasic life insurancecoverage until age 65at the monthly rateof $0.325 per thou-sand dollars of cover-age. At that timethere are no furtherpayments and thebasic coverage beginsto reduce by 2% permonth until it reach-es 25% of the facevalue, payable uponthe retiree’s death.

172 What other op-tions are availablefor continuingbasic life insur-ance coverage?

There are 3 choices aretiree may make:

• A retiree may electto continue underthe old systemwhereby a reductionof 2% per month inthe basic life insur-ance policy valuebegins at age 65 anddeclines to 25% ofthe basic value —nocost to retirees whoretired beforeJanuary 1, 1990.

FEDERAL EMPLOYEES

GROUP LIFE INSURANCE

AND HEALTH BENEFITS

COVERAGE

170 May an employeekeep the basic cov-erage of FederalEmployees’GroupLife Insurance af-ter retirement?

Yes.The employeemust have been en-rolled in the basiccoverage for the 5years immediatelypreceding retirementor the full period orperiods of serviceduring which thebasic life insurancewas available to theemployee, if less than5 years. On and afterDecember 9, 1980those who retiremust make a writtenelection as to theamount of theirpost-retirement basiclife insurance cover-age they want toretain after age 65,on a form obtainedat the employing of-fice.

171 What is the costof basic lifeinsurance?

As an active employ-ee, the USPS paysfor basic life insur-

FROMTHE COM-MENCING DATEOF ANNUITYUNTIL DEATH.

If a retiree decides tocancel the increasedpost-retirement cov-erage, the amount ofbasic coverage wouldbe reduced to 25%of face value.

173 May an employeekeep the standardoptional life insur-ance after retire-ment?

Yes. You may alsoretain your cover-age if you are eligi-ble to continue thebasic insurance andif, in addition, youhave also had thestandard optionalcoverage in force fornot less than the fullperiod or periods ofservice during whichthe coverage wasavailable to you orthe 5 years of serviceimmediately preced-ing your retirement.YOU MUST PAYFORTHIS INSUR-ANCE UNTILYOUREACH AGE 65 atwhich time the cov-erage will reduce by2% per month untilit reaches 25% of theface value ($2,500).

174 May an employeekeep the addi-tional optional orfamily optionallife insurance afterretirement?

Yes. This coveragemay be retained ifyou are eligible tocontinue the basicinsurance and if, inaddition, you havealso had the life in-surance in force fornot less than the fullperiod or periods ofservice during whichit was available toyou or the 5 years ofservice immediatelypreceding yourretirement.YOUMUST PAY FORTHIS INSUR-ANCE UNTILYOUREACH AGE 65 atwhich time the cov-erage will reduce by2% per month for 50months, at whichtime the coverageceases. Employeesseparating for retire-ment on or afterApril 24, 1999 canelect to continuethese coverages onan unreduced basisby paying premiumspast age 65.

175 What are livingbenefits?

Effective July 25,1995, you may electto receive a lump-sum payment (livingbenefits) if you areterminally ill andhave a documentedmedical prognosisthat your lifeexpectancy is 9months or less.Theform for electing liv-ing benefits (FE-8) isonly available fromthe Office of FederalEmployees’ GroupLife Insurance (1-800-633-4542).

176 May an employeekeep his/her healthbenefits coverageafter retirement?

Yes. If retiring onan immediate an-nuity and if youhave been continu-ously enrolled un-der the program(or covered as afamily member)since the first op-portunity to enroll,or for the 5 years ofservice immediatelypreceding retire-ment.

eligible forTRI-CARE and CHAM-PVA coverage cansuspend the FEHBPcoverage and laterreturn to theFEHBP ifTRI-CARE or CHAMP-VA coverage is termi-nated.

178 If an employeedies,may his/hersurvivors continuehealth benefitscoverage?

If there is a survivorannuity payable andif the survivor hasbeen covered as adependent on yourFEHBP while youwere living, the cov-erage will continueand the premium willbe deducted from thecivil service survivorannuity.

177 If a retiree cancelsthe Federal Em-ployees HealthBenefit Programcoverage,canhe/she reenroll at alater date?

No. Once a retireecancels health cover-age under theFEHBP, it can neverbe reinstated.However, formermilitary members

WHAT AN ANNUITANT

SHOULD DO IN THE EVENT OF

DIVORCE/DEATH OF SPOUSE

179 What should theannuitant do if theperson chosen as asurvivor annuitantpredeceaseshim/her or themarriage is termi-nated by divorce orannulment?

Write to: U.S.Office of Person-nel Management,Retirement Opera-tions Center,Boyers, Pennsylvania16017, requesting theannuity be re-stored to the full liferate. Be sure to signthe letter and giveyour CSA (claim)number. If there are

180 What should anannuitant do if afamily memberdies who is cov-ered by his/herfamily optional lifeinsurance?

Write to: U.S. Officeof Personnel Man-agement, RetirementOperations Center,Boyers, Pennsylvania16017, requestingFE-6 DEP to claimdeath benefits. Besure to give yourfull name, CSA(claim) number,Social Securitynumber, and dateof birth. Send acopy of the deathcertificate when youreturn the com-pleted FE-6 DEPto OPM.

no other eligibledependents youmay request tochange the healthcoverage to self only.

In addition you maywant to fileDesignation ofBeneficiary forms: SF2823 and SF 2808regarding life insur-ance and lump sumbenefits which maybe payable on thedeath of the annui-tant. A copy of thedeath certificate ordivorce/annulmentdecree should besent, whicheverapplies.

GENERAL

RETIREMENT

INFORMATION

181 Can the annuitantrequest that his/hercivil service annu-ity checks be sentto a financial in-stitution (DirectDeposit)?

Yes. The personmay go to the fi-nancial institutionof his/her choiceand request SF1199A which shouldbe completed andsent to the Office ofPersonnelManagement.Yourretirement claimnumber (either CSAor CSF) must be puton Form SF 1199A.The annuitant canalso accomplish thechange by callingOPM at 1-888-767-6738 or writing toOPM, RetirementOperations Center,P.O. Box 45 Boyers,PA 16017-0045.CAUTION: If youchange financialinstitutions, donot close the oldaccount until

183 How are NALCunion dues with-held from myannuity checks?

By completingForm 1189 throughyour local NALCbranch, who inturn will forwardit to NALC Head-quarters inWash-ington, D.C.

184 How long afterretirement will ittake for my NALCunion dues with-holdings to begin?

This varies fromperson to person.However, once theU. S. Office ofPersonnel Manage-ment completes finalaction on your annu-ity claim, there willbe a retroactiveamount withheld fordues and the nextmonth it will adjustto the monthlyamount of withhold-ing for dues.

your first annuitypayment arrives atthe new bank—thismay be 30-60 daysafter you have com-pleted the SF1199A.This willavoid any problemwith a missing pay-ment.

182 What happens ifmy civil serviceannuity check isnot received?

Wait five mail deliv-ery days and notify:U. S. Office ofPersonnel Man-agement, P. O. Box7815,Washington,D.C. 20044-7815 orby phone at 1-888-767-6738 or callingfrom theWashington,D.C. area: 202-606-0500.This numbermay also be used if adirect deposit pay-ment is not receivedat the financial insti-tution.

187 What generaladdress shouldretirees use tocorrespond withthe U.S.Officeof PersonnelManagement?

U.S. Office ofPersonnelManagement,RetirementOperations Center,Boyers, Pennsylvania16017.

188 Where can I getgeneral informa-tion from OPM,TSP,or NALC viathe Internet?

http://www.opm.gov/retire

http://www.tsp.gov

http://www.nalc.org

185 Do I have anyaccidental deathbenefits throughthe NALC?

Yes.The MutualBenefit Association,NALC, 100 IndianaAvenue, NW,Washington, D.C.20001 covers retiredmembers of theNALC for $5,000 incase of accidentaldeath.

186 Do local branchesof the NALC haveany death benefits?

There are some localbranches of theNALC who have adeath benefit payablein the death of itsmembers—the sur-vivor should contactthe local NALCbranch upon theretiree or employee’sdeath.

189 I am a participantof theThriftSavings Plan(TSP)and would like tocontact them forinformationregarding myaccount.How can Ido so?

Thrift Savings PlanService CenterNational FinanceCenterP.O. Box 61500New Orleans, LA70161-1500

Thriftline1-TSP-YOU-FRST1-877-968-3778Monday – Friday7:00am – 9:00pm(Eastern StandardTime)

NOTES:

NOTES:

NOTES:

NOTES:

National Association of Letter Carriers

100 Indiana Avenue, N.W.

Washington, D.C. 20001-2144

NationalAssociationof LetterCarriers,AFL-CIO

OfficersWilliam H.Young

President

Fredric V. RolandoExecutive Vice President

Gary H. MullinsVice President

Jane E. BroendelSecretary-Treasurer

George C. MignosiAssistantSecretary-Treasurer

Dale P. HartDirector of City Delivery

Brian E. HellmanDirector ofSafety and Health

Ernest S. KirklandDirector ofRetired Members

Myra WarrenDirector of Life Insurance

Timothy C. O’MalleyDirector,Health Benefit Plan

Board of Trustees -Laws SectionLawrence D. Brown, Jr.

Chairman

Michael J. GillRandall L. Keller

National Business AgentsManny PeraltaPaul PriceNeal TisdaleWesley A. DavisMike WeirPatrick C. CarrollNed FurruLew DrassJudy WilloughbyGene GoodwinWilliam J. CookeWilliam J. LuciniTimothy W. DowdyJohn J. CascianoLarry Cirelli

QNational Association of Letter Carriers

100 Indiana Ave. NWWashington, DC 20001-2144

www.nalc.org 202-393-4695