Federal HR Policies Affecting Schedule A Appointment
Federal Retirement System
The Civil Service Retirement System (CSRS) was enacted in 1920, and most of the people that worked for the Federal government were covered by the Federal retirement plan. Social Security was established in 1935 to pay retirement benefits to workers and the plan was later changed to include survivor benefits. For many years the CSRS and Social Security retirement benefits programs were the primary form of retirement benefits available to Federal employees.
At the present time there are several Federal retirement plans available, e.g., Foreign Service, Law Enforcement, etc., however, most of the employees of the Federal government continue to be covered under the Civil Service Retirement System (CSRS), the Federal Employees Retirement System (FERS), and, the Civil Service Retirement System Offset (CSRS Offset). Information on the current systems, impacting legislation, benefits, contributions, refunds, and the retirement processes can be found in the Office of Personnel Management (OPM),CSRS and FERS Handbook.
Title 5, U. S., Code, Chapter 83 – Civil Service Retirement System
Title 5, U. S. Code, Chapter 84 – Federal Employees’ Retirement System
Social Security Website
OPM CSRS and FERS Handbook for Personnel & Payroll Offices
The Federal Retirement Systems were established to provide retirement and death benefits to eligible and participating employees and their eligible family members. The Federal civil service plan changed when the Social Security Amendments of 1983 (Public Law 98-21) provided that certain Federal employees, be covered by Old Age, Survivors and Disability Insurance (OASDI). In addition, employees that were not covered by OASDI were required to pay Hospital Insurance Tax (HIT) better known as the Medicare portion of the Social Security Program.
Detailed information on the Federal retirement programs, procedures, processes, and practices are in OPM's CSRS and FERS Handbook. Please review the Handbook for detailed information or contact the CES HRD Retirement Officer or Benefits Coordinator for information specific to a given situation.
Eligibility and Retirement Coverage Determination
All Cooperative Extension Service (CES) employees with Federal benefits contribute to one of the Federal Civil Service Retirement programs and the Social Security System. Retirement programs include CSRS, CSRS Offset, or FERS with some form of Social Security withholdings, i.e., Federal Insurance Contributions Act (FICA) deductions required by the Internal Revenue Code, Old Age and Survivor Disability Insurance OASDI, and Hospital Insurance Tax (HIT). Some employees also contribute to the Federal Thrift Savings Plan (TSP).
The retirement coverage and program for CES employees with Federal benefits is determined by several factors. The employees start date; amount of prior creditable service, if any; breaks in service and length(s) of break in service; and, changes as a result of new and changed retirement laws will be used to determine the proper retirement coverage for each individual employee. The employee's retirement code and Retirement Service Computation Date (SCD) that supports the retirement determination must be documented on the SF 2806, CSRS Individual Retirement Record, or SF 3100A, FERS Individual Retirement Record, and on the CES 436 Conversion action to the new CES Personnel Action System, effective 05/15/2002, and the Termination of the Schedule A appointment action that was effective 01/31/2003.
The guidelines for determining the retirement coverage of an employee can be found in Chapter 10 of OPM's CSRS and FERS Handbook.
Retirement Systems & Programs
The following information serves as a quick view of the Federal civilian retirement programs. Additional information on the retirement programs can be found in the Federal Benefits Matrix section of this guidance.
Eligible CES employees participate in one of three retirement programs, and the components of each program are substantially different.
Civil Service Retirement System (CSRS)
- Federal retirement system for eligible Federal employees who entered the civil service on or before 12/31/83.
- Eligible employees are subject to CSRS employee deductions. They are excluded from paying OASDI taxes, however they do contribute to HITS.
- Eligible employees can participate in the Thrift Savings Plan (TSP) and the government does not contribute to the employees TSP account.
Note: Before the enactment of Public Law 99-335, which established the FERS retirement system, there was another system for employees first hired after December 31, 1983, and certain rehires. The CSRS Interim System is a version of the CSRS that was developed as a result of the Social Security Amendments of 1983. Public Law 98-21 provided that certain Federal employees be covered by OASDI. Prior to this law coverage under CSRS exempted employees from OASDI taxes. This change applied to all first hired after 12/31/83.
Civil Service Retirement System Offset (CSRS Offset)
- Federal retirement system for employees that have a year or more break in service and five years of creditable civilian service under CSRS.
- Eligible employees are subject to reduced CSRS employee deductions. They are required to pay OASDI taxes.
- Eligible employees can participate in the TSP and the government does not contribute to the employees TSP account.
Federal Employees Retirement System (FERS)
- Federal retirement system for employees that entered on duty after 1/1/84, and employees that had a break in service and less than five years of prior creditable service.
- Eligible employees are subject to Social Security taxes and FERS basic benefit deductions.
- Eligible employees can participate in the TSP and the employing CES organization may contribute a percentage of matching funds to the employees TSP account.
Note: Employees who were erroneously placed in FERS either on January 1, 1987, or upon a rehire or conversion effective after this date, who should have been placed in CSRS, CSRS Offset, or only social Security with a 6-month opportunity to elect FERS coverage, are deemed to have elected FERS coverage under OPM regulations. Employees who decline FERS coverage will not have another opportunity to elect FERS coverage unless they become reemployed in a position subject to FERS after a break in service of more than 3 days, or OPM offers a FERS Open Season.
The entrance on duty date, prior creditable service, and prior retirement coverage will be used to determine the appropriate retirement program. All retirement coverage determinations made on or after January 1, 1987, should be put to the 5-Year Test. If the employee satisfies the 5-year test, he or she is not automatically covered by FERS, and may be excluded from CSRS coverage. Note: The 5-year test should be applied before determining that an employee being rehired, transferred, or converted is automatically subject to FERS.
The 5-year test is met if the employee had 5 years of creditable civilian service as of 12/31/86. (See chapter 20 of the OPM CSRS and FERS Handbook for information on creditable civilian service.) The 5-year test is also met if the employee had a break in service of more than 3 days ending after 1986, the employee had past coverage under the CSRS or Foreign Service Retirement System (FSRS), and the employee also had 5 years of creditable civilian service as of the break in service.
The guidelines for determining the retirement coverage of an employee, and the 5-Year Test can be found in Chapter 10 of OPM's CSRS and FERS Handbook. Information on Special Coverage Rules can be found in Chapter 12.
Recording and Reporting Employee Retirement Deductions
Employees and employers contribute to an individuals’ retirement program. Employees can also make voluntary contributions to their retirement accounts. An employees service history and retirement deductions are recorded on the OPM Individual Retirement Record (IRR) card.
Individual Retirement Records are maintained by the agency for each employee subject to CSRS (including CSRS Offset) and FERS. The records are used by OPM as the basic record for determining the retirement benefits payable to a separated employee or his or her survivors.
Payroll and other relevant information for an individuals’ Federal retirement plan, deductions, and contributions are recorded on the IRR’s. In addition, a copy of the record is to be submitted to the USDA, HRD, MSB team annually.
Employee retirement contributions are deducted from their salary and recorded on the SF 2806, CSRS Individual Retirement Record for employees that are covered by the CSRS and CSRS Offset retirement plans. Deductions for employees covered by the FERS retirement plan are recorded on the SF 3100 Individual Retirement Record.
CES will also use the IRR to record changes in benefits that impact on their former federal employees’ continued employment and retirement and their participation in the Federal Benefits Programs, e.g., health and life insurance.
The employees’ CSRS, CSRS Offset, and FERS deductions and other payments, e.g. deposits, redeposits, and excess contributions are recorded on the IRR’s and the money is transmitted to OPM. The benefits payments are recorded on the SF 2812, Report of Withholdings and Contributions for Health Benefits, Life Insurance and Retirement, if the agency makes their own disbursements of withholding and contributions by check. The agency payroll office number must be recorded on the form and the check.
When an employee separates from a CES office the IRRs must be closed out and sent to OPM no later than 30 calendar days after the effective date of the separation. (Note: A copy of the record can be send to the new CES office if the employee moves from one CES office to another.) When an employee retires the IRR must be included and forwarded to OPM with the retirement package. Information on separated employees and employees that transfer from one CES office to another with Federal benefits must be recorded on the OPM Record of Separation and Transfers CSRS 2807 or the FERS SF 3103.
If a error is found in an IRR after an employee separates and the IRR has been forwarded to OPM, the record must be corrected by completing a SF 2806-1, Notice of Correction of Individual Retirement Record Civil Service Retirement System, or a SF 3101, Notice of Correction of Individual Retirement Record Federal Employees Retirement System.
The instructions for preparing and maintaining IRR’s for CES employees can be found in the Individual Retirement Record section of this guidance or contact the USDA HRD CES team.
Additional information on Individual Retirement Records and Registers of Separation and Transfers can can also be found in Chapter 81, and information on Payroll Office Reporting of Withholdings and Contributions can be found in Chapter 80 of the OPM CSRS and FERS Handbook. Information and procedures on making Civilian Deposits can be found in Chapter 21 and information on Military Deposits can be found in Chapter 23, Military Service Deposits.
Deposits and Redeposits
Sometimes creditable service, both civilian and military, requires a deposit or redeposit of retirement funds before an employee can receive credit for the prior service in the computation of their Retirement Service Computation Date and/or used in the computation of an employee's annuity. Service that did not include contributions to the retirement system for the period of service, or service that included the retirement contributions and the employee withdrew their contributions when they separated from the service, may or may not be creditable.
- Individuals first employed in a position covered by CSRS on or after October 1, 1982, must make a military service deposit in order to receive credit for post-1956 military service for any purpose.
- Individuals first employed in a position covered by CSRS before October 1, 1982, may receive credit for post-1956 military service if he or she retires from civilian service prior to age 62. The employee will receive credit for their military service when computing the employees retirement SCD; however, the military service cannot be used in the computation of CSRS benefits when the employee reaches age 62 if the employee is eligible for Social Security Benefits.
- FERS rules require that all creditable service be covered by deductions or a deposit to the fund. Once a FERS employee receives the refund the service is no longer creditable, and FERS employees cannot redeposit money into their retirement program.
- Nondeduction service performed before January 1, 1989, is creditable for FERS retirement if a deposit is made. Nondeduction service performed on or after January 1, 1989, except for Peace Corps and Volunteers in Service to America (VISTA) is not creditable for any retirement purpose.
Deposits and redeposits can only be paid by employees that are currently employed because the money for the deposit or redeposit must be paid to an employees’ payroll office. The payroll office is responsible for making sure that the proper procedures are followed and they will record the deposit information on the employees Individual Retirement Record and forward the money to OPM.
Information on creditable civilian and military service can be found in Chapters 20 and 22 of the OPM CSRS and FERS Handbook. Chapters 21 and 23 provides information on Service Credit Payments for Civilian Service and Post-56 Military Service.
Contributions and Refunds
Employees and employers contribute to an individuals retirement programs. Employees can also make voluntary contributions to their retirement accounts. Employees can request a refund of their retirement contributions when they separate, other than by retirement or death actions, from their agency. Employees are not entitled to a refund of the agency's contributions to the employees CSRS and FERS accounts, and information on TSP withdrawals and loans can be found in the TSP section of this guidance.
- The SF-2802, Application for Refund of Retirement Deductions - CSRS, is the form to use whenever an employee with CSRS coverage wants to apply for a refund of their retirement contributions. Employees that request a refund of their CSRS contributions can buy back the refunded period of service if they so desire.
- The SF-3106, Application for Refund of Retirement Deductions - FERS, is the form to use whenever an employee with FERS coverage wants to apply for a refund of their retirement contributions. FERS employees that request a refund of their FERS contributions lose all rights to their FERS service covered by the refund. Employees cannot redeposit their FERS refunded contributions.
Additional information on retirement contributions and refunds can be found in Chapters 30, 31, and 32 of OPM's CSRS and FERS Handbook.
Return of Excess Contributions
Excess contributions may result when a FERS transferee, or employees who were automatically covered under FERS, have prior CSRS deduction service and/or made deposits for military service and their prior service is now subject to FERS computational rules. The return of excess contributions applies only to FERS, and there is no comparable provision under CSRS. The OPM 1562, Application for Return of Excess Retirement Deductions, is the form to use whenever an employee with FERS coverage wants to apply for the return of excess contributions.
Additional Information on excess contributions can be found in Chapter 33 of OPM's CSRS and FERS Handbook.
Designation of Beneficiary
Employees can designate a beneficiary to receive any lump-sum benefit due under the Civil Service Retirement System upon the designator's death. The lump-sum payment due upon the death of an employee, former employee, or retiree is the total lump-sum credit to the individual's credit in the Retirement Fund, and annuity accrued and unpaid on the death of a retiree. Note: If a survivor is eligible for a survivor annuity, the lump-sum credit is not payable; however, accrued and unpaid annuity is payable.
The SF 2808, Designation of Beneficiary, Civil Service Retirement System, is used by an employee, former employee, or retiree participating in the CSRS to designate a beneficiary or beneficiaries of any lump-sum amount payable upon his or her death. The SF-3102, Designation of Beneficiary, Federal Employees Retirement System, is used by an employee, former employee, or retiree participating in the FERS to designate beneficiary(ies).
Lump-sum payments upon the death of an employee, former employee, or retiree are paid to the person or persons surviving the deceased in accordance with the following order of precedence:
- To the properly designated beneficiary or beneficiaries.
- If there is no properly designated beneficiary, to the widow or widower.
- If none of the above, to the child or children, with the share of any deceased child distributed among the descendants of that child.
- If none of the above, to the parents in equal shares or the entire amount to the surviving parent.
- If none of the above, to the executor/administrator of the estate, or to any other person who has authority under state law to represent the deceased's estate.
- If none of the above, to the other next of kin who are entitled under the laws of the domicile of the deceased at the date of death.
There are several types of retirements available to CES employees with Federal benefits. In addition, some CES employees may be covered by the Federal retirement system and the state or university retirement system. The rules, eligibility requirements, processes, and procedures for the Federal programs are different, and there may be some major differences between the both systems.
Following is a brief view of the types of Federal retirements and the requirements:
CSRS Optional Retirement - Employees must be separated from a position subject to CSRS Contributions and meet the following age and service requirements:
- 62 with 5 years of service
- 60 with 20 years of service
- 55 with 30 years of service
- Employees must also meet the "One-Out-Of-Two Requirement", i.e., the employee must be covered by CSRS at least 1 year within the 2 year period immediately preceding the separation on which the annuity is based.
FERS Optional Retirement - Employees must be separated from a position covered by FERS deductions and meet the age and service requirement:
- 62 with 5 years of service
- 60 with 20 years of service
- MRA with 30 years of service
Employees must meet the Maximum Retirement Age (MRA) which ranges from 55 to 57.
Early Voluntary Retirement- Voluntary Early Retirement Authority (VERA) issued by the Office of Personnel Management. The reason for the VERA request must include a major reorganization, reduction in force, major transfer of function, or other workforce restructuring or reshaping in which a significant percentage of the agency's employees will be separated or downgraded. Information on VERA's and the process for requesting VERA's is attached. Click on this hyperlink to download the VERA template.
All requests for VERA's must be submitted to the USDA HRD CES team. The USDA HRD CES team will review and prepare the package for forwarding to the USDA Office of Human Capital Management (OHCM). OHCM will review and prepare the package for forwarding to OPM. OPM will only accept VERA request from the USDA OHCM.
OPM will respond to the USDA OHCM and all approved request will be forwarded to the requesting office, along with the special instructions, and the USDA and OPM reporting requirements.
Employees may volunteer for the VERA, after OPM approves the request, if they:
- Meet the age and service requirements;
- meet the minimum civilian service requirement (5 years of creditable service);
- separate from a position subject to CSRS/FERS coverage;
- meet the "1-out-of-2" requirement for CSRS retirements;
- served in a position covered by the OPM authorization for the minimum time specified by OPM (usually at least 30 days); and
- separate between the beginning and ending dates of the early out period.
In addition, the employees must meet one of the age and service requirements:
- Age 50 with at least 20 years of service
- Any age with at least 25 years of service.
If an employee has the minimum 5 years of creditable civilian service, creditable military service may be used to meet the balance of service necessary for an early voluntary retirement. Post 1956 military service cannot be used to meet the FERS requirements unless the employee makes the military deposit prior to retiring. Note: Accrued and unused sick and/or annual leave may not be used to meet either of the service requirements noted above.
Discontinued Service Retirement - Information on DSR's and the process for requesting DSR's is attached. Additional information can be found in Chapter 44 of the OPM CSRS and FERS Handbook. (Click on this hyperlink to download the DSR attachment as a Microsoft Word file.) Employees identified for a involuntary action may elect to separate before the involuntary action becomes effective and they can request to be considered for a DSR instead of being separated from their position. The end result of the separation action, voluntary or involuntary, will determine the appropriate nature of action and remarks for the separation action.
Employees with Federal benefits must be eligible for a DSR before an offer can be made, and/or a request for DSR is considered. The requirements for a DSR are pretty much the same as the requirements for a VERA, with one exception - FERS employees must be given a reasonable offer before they can be separated or volunteer for a DSR in lieu of being separated. The attached information on the DSR processes and procedures includes a chart for DSR eligibility and Attachment A of the DSR information provides additional information on the reasonable offer requirement.
All DSR's must be effective the day of, or prior to, the proposed separation date.
Deferred Retirement - allows an employee who separates from service or transfers to a position that is not covered by the retirement system to be entitled to a deferred annuity commencing at age 62 if he or she:
- Is not eligible for an immediate annuity within 1 month of separation;
- meets the minimum civilian service requirement;
- does not take a refund of retirement deductions after separating from service (or transferring to a noncovered position); and
- meets the "1-out-of-2" requirement.
MRA + 10 Retirement - allows an eligible employee to retire optionally under FERS with an immediate reduced MRA + 10 annuity if he or she meets all of the following conditions:
- Minimum civilian service requirement;
- minimum retirement age (MRA);
- 10-year service requirement;
- separation from a position subject to FERS coverage; and
- no entitlement to an immediate annuity based only on age and service.
An employee must have at least 5 years of creditable civilian service to be eligible for an MRA + 10 retirement annuity. Information on the MRA + 10 retirement authority and process can be found in Chapter 42 of the OPM CSRS and FERS Handbook
Other Retirements and Death Cases
Disability retirements and death cases are the most complex separation actions. The documents for these actions include some of the forms and procedures for the other retirement actions; however, both of these actions require some special processing.
Disability retirement must be pre-approved by OPM and a preliminary disability action must be prepared and submitted to OPM for approval before the disability retirement can be processed. Chapters 60 and 61 of the OPM CSRS and FERS Handbook contains information on disability benefits.
All death cases require some special handling and forms and process specific to death benefits. Extra care should be given to the deceased employee's family and the CES HRD office should work with the family to complete the death action. Chapters 70 and 71 of the OPM CSRS and FERS Handbook contains information on death benefits.
OPM and USDA must be notified of the employees death as soon as the required information is provided to the CES HRD office. Required information includes the full name of the deceased employee, date of death, retirement claim number, if known, and social security number.
A Retirement Action Cover Sheet should be completed for all retirement/death applications forwarded to OPM and a copy of the cover sheet should be forwarded to the USDA, HRD, MSB team. This sheet is used by OPM to resolve some benefit questions that may come up in the retirement process and serves as a reference for USDA if they receive calls from OPM regarding a specific retirement action. The forms will be retained by USDA for 90 days after the application package is forwarded to OPM.
Benefits for Retirees and Survivors
Eligible employees can continue their health benefits and life insurance into retirement as long as they meet the requirements to continue the coverage. Retiring employees with self only health insurance coverage can participate in the annual open seasons. Survivors of a deceased retiree with self only coverage are not eligible for health benefits coverage.
Employees must be covered by Federal health and life insurance for at least five years prior to the date of their retirement in order to transfer their health and life insurance with them when they retire. If the employee does not meet the five year requirement he/she can request a "Waiver of the 5 Year Requirement" for their health insurance coverage (See the Federal Employees Health Benefits section of this guidance). However, there are no provisions which allow the transfer of life insurance when the employee was not covered for 5 years.
Records and Forms
There are several records and forms used for retirement actions, and the forms process differ from one type of action to another. However all retirements and other separations have one thing in common, they require the completion of the CSRS and FERS Individual Retirement Records.
Appendix II of this guidance has a list of forms currently used in CES. Most, if not all, of the retirement forms can be downloaded from OPM's web site, and forms can be requested from the USDA HRD CES team. The retirement chapter for the type of action being processed will provide information on all of the forms needed to process the specific actions.
For additional information on Federal retirement programs and state retirement programs available to former CES Federal appointees please contact the CES HRD office or the USDA HRD CES team.
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