Q & A Session – Maximum Retirement Benefits Refund

0

Ask the Lawyer received the following question (paraphrased for easier reading and clarity) from a reader on a legal matter that might be of interest to the entire audience.

Q:

When I retire, I will have worked over two years beyond the CSRS maximum pension computation formula of 42 years. I understand the overpayment will be refunded to me, however, as required by a court order my ex receives some of my pension. Does this mean when I receive the refund, my ex will get a portion of it? Is it possible to obtain my refund by means other than as a portion of an annuity payment?

A:

Under CSRS, the maximum retirement benefit you can receive is 80 percent of your high-3 average salary, plus credit for your sick leave. This limit generally affects only those who have more than 41 years of service. A few months after retirement, OPM mails a refund check, with interest, to employees who have excess retirement contributions and also mails a letter that gives you a chance to return the check, in exchange for a slightly higher retirement pension. Thus, your two options are to take your refund check or to use that money to purchase additional annuity, which is not subject to the 80 percent limit. This money is treated as if you had put money in the Voluntary Contributions Program – and your pension will be increased by the amount advised in the letter.

According to the OPM Pamphlet on “A Handbook for Attorneys on Court-ordered Retirement, Health Benefits and Life Insurance . . .” (http://www.opm.gov/retire/pubs/pamphlets/ri83-116.pdf), the court order must expressly direct OPM to pay a portion of the monthly CSRS or FERS benefits. The court order may affect any of three types of retirement benefits paid by OPM–employee annuities, refunds of employee contributions, and survivor annuities. The regulations treat each of the three types of OPM retirement benefits independently. As the OPM pamphlet explained, “The court may wish to prevent payment of the refund of retirement contributions or award the former spouse a portion of the refund.” You should also provide a copy of the court order to your retirement specialist in personnel or human resources office to determine whether the court order directs OPM to pay a portion of your employee contribution refund.

Bill Bransford is managing partner of Shaw, Bransford & Roth, PC.

Disclaimer: Ask a Lawyer publishes information on this website for informational purposes only. Information on this website is intended – but not promised, guaranteed, or warranted – to reflect correct, complete and current developments. In addition, the contents of the website do not constitute legal advice and do not necessarily reflect the opinions of the attorney. Information from this website is not intended to be used as a substitute for specific legal advice, nor should you consider it as such. You should not act, or refrain from acting, based on information on this website without seeking specific legal advice about your particular circumstances. No attorney-client relationship between you and Ask a Lawyer’s author is created by the transmission of information to or from this site.

 

Share.

About Author

Leave A Reply