Should I withdraw my FERS Contributions?

Share This:
Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on pinterest

“How do I know when it’s worth it to withdraw (refund) my FERS contribution when I leave the Fed workforce? if I have less than 10 years but meet the minimum 5 years, I have to wait till age 62 so how do I know inflation will eat away at it since the growth speed is very low with FERS.” – Nam

What are your FERS Contributions

Under the Federal Employee Retirement system, federal employees pay into their benefits through salary deductions each pay period.  

The amount of your FERS contributions depends on what date you began working and were eligible for retirement benefits with the federal government. 

FERS contributions under FERS, FERS RAE, or FERS FRAE.

If you are a FERS, FERS RAE, or FERS FRAE you will receive the same benefits regardless of which retirement system you were hired under.

However, the amount that you will contribute to the retirement system will vary based on the period that you were hired.

The calculation of what your benefit will be based on is the same for all three: FERS, FERS RAE, or FERS FRAE.

To calculate your FERS Annuity Calculation under FERS, FERS RAE, or FERS FRAE you take: 

Less than 20 years of service (at least age 62): Years of service x High-3 x 1% = Annuity Payment.

20 years or more of service (at least age 62): Years of service x High-3 x 1.1% = Annuity Payment.

Vesting under FERS, FERS RAE or FERS FRAE.

In order to be vested under FERS, FERS RAE, or FERS FRAE a Federal Employee must have been employed and eligible for retirement benefits for a consecutive 5 year period.

Vesting here means that you are eligible to participate in retirement benefits. This means that if you were age 50 and decided to leave federal employment you could wait until you were age 62 and turn on your federal pension.

Should you leave your contributions under FERS, FERS RAE or FERS FRAE.

Nam asks whether or not they should leave their employee contributions with the Federal government or withdraw them.

More often than not we like to see federal employees leave their contributions with the federal government vs. withdrawing them based on their personal financial situation.

Leaving your contributions with the federal government retirement system means that you could be eligible for a future benefit or if you return to work and a new retirement system exists you could be able to retain your status under the older system.

 

Share This:
Share on facebook
Share on twitter
Share on linkedin

Leave a Reply

Your email address will not be published.

Related Articles

Using FERS as a Down Payment

Using FERS as a Down Payment

“Can I withdraw my FERS to use as a down payment for purchase of Real Estate?” – Tracey. https://www.youtube.com/watch?v=CPm4DDHl0-c&feature=youtu.be When Federal Employees use their retirement benefits to buy a home

micah-shilanski-profile

Your Financial Planners

Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.

7 CLASSIC RETIREMENT MISTAKES Federal Employees Make

Join Our Newsletter & Learn About The 7 Critical Mistakes FEDs Make

Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.