Understanding CSRS Lump-Sum Credit Payment

Federal agencies are required to tell surviving former workers or retirees to contact OPM directly to learn more about their potential entitlements following Chapter 75 of the CSRS and FERS Retirement Handbooks published by the Office of Personnel Management (OPM). However, government agencies rarely get in touch with surviving family members.

This article aims to clarify the lump amount credit, the regulations that govern how it is paid to eligible surviving family members, and the steps that eligible surviving families must take to apply for the lump sum credit.

Lump-Sum Credit For CSRS Offset and Former CSRS Employees 

The unrefunded amount of one or more of the following items makes up the lump-sum credit for deceased former CSRS or CSRS Offset employees.

Retirement deductions for CSRS

The following items are included in the CSRS retirement deductions: redeposits of previously paid refunds; deposits for post-1956 military service; deposits for temporary (non-deduction) service; deposits for temporary (non-deduction) service; interest on retirement deductions through December 31, 1956; deposits for post-1956 military service; and interest paid to the date of separation or transfer to a job not covered by CSRS, in any sum covering more than one year of service, for an employee or former employee who passes away with less than five years of creditable service.

Keep this in mind:

1. The lump-sum credit does not include donations to the voluntary contribution program (VCP). However, any VCP payments made by the deceased employee, plus interest, shall be reimbursed individually in a lump sum payment under the order of priority if the person passes away while on the job or after separation from the company.

2. A lump-sum credit may have been paid to a current or former employee while they were still alive in one of three ways: (a) through a refund payment to a separated employee who was not eligible for a CSRS annuity; (b) through a lump-sum payment under the alternative annuity provision; or (c) through the payment of a CSRS annuity.

Guidelines for CSRS Lump-Sum Credit Payment

In general, a CSRS lump-sum credit is paid as follows: The full lump-sum credit in the CSRS retirement fund is payable to the person(s) eligible under the usual order of precedence if no survivor is entitled to a monthly CSRS survivor annuity upon the death of a CSRS/CSRS Offset employee.

The person entitled to a lump-sum credit in the order of precedence may not be awarded the lump-sum credit if a CSRS/CSRS Offset employee dies while on the job and a CSRS survivor annuity is payable to the employee’s spouse, ex-spouse, or child. However, he or she may get part of the lump sum payment made up of the following:

• Retirement deductions made from the employee’s pay once the person becomes qualified for the maximum annuity

• Redeposits of previously paid refunds in part unless the survivor annuitant fully paid the redeposit

• Partial deposits for short-term (non-deduction) work done after September 30, 1982, unless the survivor annuitant paid the total amount of the deposits

• Partial deposits for military service after 1956 and Advertising

• Paid deposits for post-1956 military service aren’t used to determine the survivor benefit

Any properly certified and timely request for recovery of a legitimate obligation due to the United States government may be made concerning a CSRS lump-sum credit payment.

The amount of a lump-sum payout representing an employee’s actual contributions (including partial deposits and redeposits) upon the death of a CSRS/CSRS Offset employee or former employee is exempt from federal and state income taxes. However, any interest earned on those contributions is regarded as taxable income in the year the refund is given.

Making a CSRS Lump-Sum Credit application

Those who wish to apply for the CSRS lump-sum credit must:

1. Fill out form SF 2800 (Application for Death Benefits) (https://www.opm.gov/forms/pdf fill/sf-2800.pdf) completely, and affix any additional paperwork or proof that the application or the situation calls for

2. Join the certified death certificate of the dead

3. If the agency has not yet forwarded the employee’s records to OPM, send the completed application to the agency; otherwise, send it directly to OPM if the agency has already forwarded it to OPM. The location is Office of Personnel Management, PO Box 45 Boyars, Pennsylvania 16017-0045.

Responsibility of OPM

OPM decides which benefits are payable for the CSRS lump-sum credit and the FERS lump-sum credit. OPM may ask the applicant to provide more documentation depending on the kind of benefit and the case specifics.

Contact Information:
Email: rick@andrikfinancial.com
Phone: 9568933225

Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.

In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.

His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.

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