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(1)

Understanding CSRS Offset

A NARFE Federal Benefits Institute Webinar

Presented by James Marshall

(2)

What Is CSRS Offset?

• Retirement Coverage

– CSRS + FICA

– CSRS Interim

– CSRS Offset

(3)

CSRS vs. CSRS Offset

$ $

$$

CSRDF Social

Security

$

(4)

$ $ $

CSRDF

$ $ $

Social

Security TSP

$ $

CSRS vs. CSRS Offset

(5)

Federal Retirement System History

CSRS

1920 1984* 1987

FERS

CSRS Offset TransFERS CSRS

Interim

2013/14

FERS/

RAE/FRAE Social

Security

1935

(6)

Common CSRS Offset Examples

CSRS

1976 1984 1987 Rehired

1990

CSRS Offset with option to elect

FERS Separated

federal service with 5+ years

1982

Break in service after vesting*

*Break in covered service of more than 365 days on or after 1/1/1984

(7)

Common CSRS Offset Examples

1984 1987

CSRS Offset

Converted to CSRS Interim in 1985

Temporary, taper, indefinite or

term appointment:

FICA only

1981

No break in service but first retirement coverage

between 1984 and 1987

(8)

Common CSRS Offset Examples

FICA Only

1976 1984 1987 Rehired

1990

CSRS Offset with option to elect

FERS Separated

Federal service

1982

“Conner vs OPM”

(9)

Common CSRS Offset Examples

CSRS with DC

Government

1986 1996

Transfer To federal

appointment:

CSRS Offset

CSRS with DC Government

(10)

What If I Retire Before Age 62?

• Full CSRS annuity until 62

• Offset is applied at 62

– Regardless of SSA application

• Offset is based on SSA at 62

– Even if you wait to draw larger SSA later

(11)

What If I Retire at or After Age 62?

• Offset is applied immediately

• Offset is based on SSA at that time

– Regardless of whether you are drawing

SSA or not

(12)

How Does OPM Compute the Offset?

• CSRS benefit is offset by the lesser of:

✓Social Security benefit attributable to offset service, or

✓Based on a formula prescribed by law

Note: Based on a Social Security benefit that

is subject to the WEP

(13)

How Does OPM Compute the Offset?

Years of offset service

X Social Security benefit 40

Example:

25 ÷ 40 = .625

.625 x $1,800 = $1,125

(14)

CSRS vs CSRS Offset

CSRS before 62

$5,000 from OPM

CSRS after 62

$5,000 from OPM

$200 from SSA?

$5,200 total?

CSRS Offset before 62

$5,000 from OPM

CSRS Offset after 62

$5,000

-$1,125 offset

$3,875 from OPM +$1,800 from SSA

$5,675 total

(15)

CSRS vs CSRS Offset

CSRS

• If eligible for SSA

– SSA usually hit harder by the WEP

• If eligible for spousal SSA

– Usually reduced to $0

CSRS Offset

• Usually eligible for SSA

– SSA usually not hit as hard by the WEP , or possibly exempt

• If eligible for a larger spousal SSA benefit

– Usually exempt from the

GPO

(16)

Potential Downside to CSRS Offset

• What if I’m not ready to draw SSA?

• What if I’m still working at 62?

• This is a temporary downside

(17)

Will the Offset Affect My Spouse?

• Spousal survivor benefit payable from OPM?

• Age of surviving spouse?

• Spouse collecting larger SSA benefit than you?

• Spouse collecting smaller SSA benefit than you?

(18)

Spousal Survivor Benefit Example 1

CSRS Offset age 66

$5,000

-478 Reduction for SB -$1,125 Offset

$3,397 from OPM +$1,800 from SSA

$5,197 total

Full survivor benefit elected 55% of $5,000 = $2,750

Spouse age 66

$2,400 from SSA

Upon death of the annuitant:

$2,400 from SSA

+$2,750/month from OPM

$5,150 total

(19)

Spousal Survivor Benefit Example 1

CSRS Offset age 66

$5,000

-478 Reduction for SB -$1,125 Offset

$3,397 from OPM +$1,800 from SSA

$5,197 total

Full survivor benefit elected

Spouse age 66

$2,400 from SSA

Upon death of the spouse:

$5,000

-$1,125 Offset

$3,875 from OPM

+$2,400/month from SSA

$6,275 total

(20)

Spousal Survivor Benefit Example 2

CSRS Offset age 66

$5,000

-478 Reduction for SB -$1,125 Offset

$3,397 from OPM +$1,800 from SSA

$5,197 total

Full survivor benefit elected 55% of $5,000 = $2,750

Spouse age 66

$1,400 from SSA

Upon death of the annuitant:

$1,800 from SSA

+$2,750/month from OPM -$250/month offset

$4,300 total

(21)

How Does OPM Compute the Offset for a Surviving Spouse With Smaller SSA?

Years of offset service

X Increase in Social Security benefit 40

Example:

25 ÷ 40 = .625

.625 x $400 = $250

(22)

Spousal Survivor Benefit Example 2

CSRS Offset age 66

$5,000

-478 Reduction for SB -$1,125 Offset

$3,397 from OPM +$1,800 from SSA

$5,197 total

Full Survivor Benefit Elected 55% of $5,000 = $2,750

Spouse age 66

$1,400 from SSA

Upon death of the spouse:

$5,000

-$1,125 Offset

$3,875 from OPM

+$1,800/month from SSA

$5,675 total

(23)

Recommendations

• If still employed, provide agency retirement office with copy of SSA statement and request retirement estimate

• Notify OPM if they neglect to apply the Offset

• Surviving spouses should double check the offset to

their spousal survivor benefit

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Recommendations

• Stay tuned for instructions to join us for the LIVE Q&A

• You can also send us questions at

fedbenefits@narfe.org

A

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