Most Federal employees at SAO are covered by the Federal Employees Retirement System (FERS), the Civil Service Retirement System (CSRS), or the CSRS Offset System (CSRS Offset). Federal employees hired under temporary appointments of less than 1 year or intermittent appointments are covered only by the Social Security system.

You are covered by FERS if you:

• Were first hired in a Federal position providing civil service retirement on or after January 1, 1984
• Were hired under a term or taper appointment
• Were rehired after a break-in-service of more than one year and had less than five years of previous creditable civilian service as of December 31, 1986 (or date rehired, whichever is later)
• Are rehired after separation from a covered FERS position, or
• Transfer from CSRS or CSRS Offset to FERS within six months from the date of rehire.

You are entitled to CSRS coverage if you were:

• First hired on or before December 31, 1983, and were continuously covered by CSRS
• Previously covered by CSRS and were rehired after a break-in-service of less than one year.

If you are reemployed after a break-in-service of 365 days or more (post 1983), you have six months from the date of rehire in which to elect a transfer to FERS in lieu of being covered by the CSRS Offset system. (If you elect FERS coverage, you also have 30 days in which to elect to participate in the Thrift Savings Plan.) Your annuity will be computed under the CSRS formula for the time worked under the CSRS system, and under the FERS formula for the remainder of your covered service should you elect FERS coverage. Retirement eligibility and death benefits are based on FERS rules if you transfer to FERS.

General retirement information can be accessed on the OPM Webpages.

FEDERAL EMPLOYEES RETIREMENT SYSTEM (FERS)

FERS is a three-tiered retirement plan comprised of three components: Social Security, a Basic Benefit Plan and the Thrift Savings Plan.

Federal employees first hired after 1983 are automatically covered under Social Security. Social Security taxes are levied against that portion of all wages that does not exceed an amount called the contribution and benefits base (wage base). The annual wage base is adjusted each year to reflect increases in average wages throughout the national economy. All wages up to the wage base are subject to Social Security taxes, which total 7.65 percent. Wages that exceed the wage base are subject to HITS only.

• Old Age Survivor Disability Insurance (OASDI) equals 6.2 percent
• Medicare Hospital Insurance Tax (HITS) equals 1.45 percent

OASDI, which provides your Social Security retirement benefits, is paid to you only if you are at least age 62 and have paid Social Security taxes for the required period of time (40 credits if born after 1928, and year of birth plus 11 if born in 1928 or before). To qualify for disability retirement under Social Security, you must meet the Social Security eligibility requirements before becoming disabled. HITS covers a portion of hospital expenses incurred at age 65 or older.

The Basic Benefit Plan provides retirement, disability and survivor benefits in addition to those benefits provided by Social Security. Survivor and disability benefits are available after 18 months of creditable civilian service. The employee contribution rate for employees hired (or rehired after a break in service) during 2013 increased from .08 percent for those hired before 2013 to 3.1 percent. This rate applied to Revised Annuity Employees (RAE). For FERS employees first hired in 2014 or later, the contribution rate is 4.4 percent. This rate appklies to Further Revised Annuity Employees (FRAE). To receive all other benefits from this portion of FERS, you must have at least 5 years of creditable civilian service. (See eligibility table below.)

The Thrift Savings Plan (TSP) is a retirement savings plan for Federal employees. It is similar to a 401(k) plan, and it offers before-tax savings and tax-deferred investment earnings. Eligible FERS employees receive automatic agency contributions in addition to matching contributions. (See the separate section of this benefit plan description for details.)

Enrollment

Enrollment in the FERS Basic Benefit Plan and Social Security is automatic, and begins as of your appointment or eligibility date. Biweekly deductions will automatically be taken from your pay. It is important to designate a beneficiary for your FERS contributions using SF-3102. Please refer to the section, "THRIFT SAVINGS PLAN (TSP)" for enrollment and plan details.

Eligibility for FERS Retirement Benefits

There are three categories of retirement benefits in the Basic Benefits Plan: Immediate, Early and Deferred. Eligibility is determined by your age and number of years of creditable service. In some cases, you must have reached the Minimum Retirement Age (MRA) to receive retirement benefits. If you leave Federal service before you meet the age and service requirements for an immediate retirement benefit, you may be eligible for deferred retirement benefits. To be eligible, you must have completed at least five years of creditable civilian service. The early retirement benefit is available in certain involuntary separation cases and in cases of voluntary separations during a major reorganization or reduction in force.

The following table summarizes retirement eligibility criteria for FERS participants.

* Reduction is 5% for each year under age 62.

Reduced benefits means if you retire at the minimum retirement age (MRA) with at least 10, but less than 30 years of service, your benefit will be reduced at the rate of 5% for each year you are under age 62, unless you have 20 years of service and your annuity begins at age 60 or later.

If you retire under FERS, your annuity begins the first of the following month.

Factors That May Affect Your Annuity

Supplemental Annuity - An annuity supplement is provided to retirees under certain circumstances to take the place of the Social Security tier of FERS that is not payable until age 62. You must have at least one year of FERS service to qualify for this supplement. The supplement is payable by the government as follows:

• Voluntary Retirement: MRA 55-57 and 30 years

• Early Out Retirement: MRA 55-57

• Discontinued Service: MRA 55-57

You are not eligible for the supplement if you voluntarily retire under the age of 62 with a reduced annuity, or if you retire on disability or deferred retirement.

Disability Retirement - As a result of disease or injury, you are eligible for disability retirement at any age under the FERS Basic Annuity if you have completed 18 months of creditable civilian service and are unable to perform useful and efficient service in your position or any other vacant position at the same grade or pay level in the same commuting area for which you are qualified. You may also qualify for Social Security disability benefits if you meet the Social Security eligibility and quarters of coverage requirements.

Survivor benefits may be paid under certain conditions to current and/or former spouse(s), children, and a spouse you marry after retirement. Since the rules and computations are complicated, you should contact the SAO Benefits Office for details.

1. If you die while employed in Federal service, and have at least 18 months but less than 10 years of creditable civilian service, your eligible spouse will receive a lump sum payment that is adjusted for inflation, plus a lump sum of either half of your annual salary at time of death or half of your average high three yearly salary, whichever is higher.

2. If you have at least 10 years of Federal service, your eligible spouse will also receive an annuity equal to half of your accrued Basic Annuity. Eligible dependent children will receive an annuity that will be offset by any Social Security benefits payable.

3. If you die as a FERS retiree and had elected full survivor benefits, your eligible spouse will be paid 50% of the amount of your unreduced annuity, plus an annuity supplement if he/she is under age 60 and not eligible for Social Security benefits. (Your annuity will be reduced by 10% annually during your lifetime to provide full survivor benefits.) You may elect a lesser or no survivor benefit with your spouse's consent.

4. Your eligible surviving spouse may receive an annuity if you die after leaving Federal employment with at least 10 years of service, but before receiving an annuity (e.g., deferred retirement). The unreduced benefit, which equals one-half of your accrued Basic benefits, begins at the time when you would have reached age 62. It may begin sooner if your spouse elects a reduced annuity.

5. If you die with no survivors, the balance in your retirement account is paid in a lump sum to any individual(s) you have designated.

Refunds and Redeposits - If you resign from your position, you can request a refund of your FERS deductions. If you receive a refund of FERS deductions, you may not redeposit these funds, and the period covered by the refund will not be counted for eligibility to retire, or in the computation of any future annuity. The amount of refund is the total amount you have paid into the retirement system and does not include any interest payments or the amount that the Smithsonian has paid into the retirement system for you. Periods for which no retirement deductions were made (on or after January 1, 1989) are not creditable for retirement computation or eligibility purposes.

Part-time Employment - To determine the size of your annuity, part-time service will be prorated (part-time hours worked divided by the number of hours you would have worked if full-time) and credit will be given for days or hours actually worked.

CIVIL SERVICE RETIREMENT SYSTEM (CSRS)

CSRS is a defined benefit pension plan funded by contributions received from both the employee and the employer. You and Smithsonian Institution each contribute 7% of your base salary every two weeks. Employee contributions are guaranteed to be paid (to you or your survivors) as a retirement benefit.

It is important to update your beneficiary designation(s) periodically. Click here to complete a new CSRS beneficiary designation in PDF fillable format.

Eligibility for CSRS Retirement Benefits

The following table shows when you are eligible to retire and receive benefits from the CSRS retirement fund.

If you retire under any other optional retirement provision on the last day of the month or within the first three days of a month, your annuity is computed beginning the next day. Otherwise, it is computed beginning the first day of the following month. If you retire under a discontinued service retirement, your annuity is computed beginning the day after separation. For example, if you are notified that your position will be abolished on July 1 of a particular year, and you meet the criteria for Optional or Discontinued Service Retirement, you may resign anytime prior to the July 1 date and apply for retirement benefits. If you were to choose to resign from service on June 20, then your annuity commences on June 21. If you resign on June 30, your annuity commences on July 1 of that year.

An employee who separates from Federal service before meeting the requirements of an immediate annuity is entitled to a deferred annuity to start at age 62, if the employee has completed at least five years of civilian service and has not taken a refund of the retirement deductions covering the last period of service.

If you retire on disability, your annuity is computed beginning the first day you enter a continuous non-pay status, or the day after separation, whichever is later.

Factors That May Affect Your Annuity

Disability Retirement - If you retire on disability under age 60, you are guaranteed a minimum basic annuity amounting to the lesser of (a) 40% of your high-three salary, or (b) CSRS annuity figured under the general formula as though service had continued to age 60.

Survivor Benefits - At retirement, you may elect:

1. Full survivor benefits for a current spouse, which will be 55% of your unreduced CSRS annuity

2. Less-than-full or no survivor annuity, provided the current spouse consents

3. To name a person having an insurable interest to receive an annuity.

If you elect a full survivor annuity, you will receive a reduced annuity during your lifetime. If you die after five years of civilian service, and before you retire, your surviving spouse will receive 55% of the amount you would have received if you had retired at the time of your death (referred to as an "earned annuity"), or the lesser of:

• 22% of your highest three years' average salary

• 55% of the amount your annuity would have been if you had continued working until age 60 at the same "high-3."

Eligible dependent children under age 18, or any unmarried children between age 18 and 22, who are full-time students may also receive benefits. If you have no survivors eligible for an annuity, the balance of your retirement account is paid in a lump sum in the following order, unless you specify otherwise. If you wish to specify payment in a different order, or payment to a person not included below, contact the SAO Benefits Office.

• To your child or children in equal shares, with the share of any deceased child distributed among the descendants of that child

• Parents

• Estate

• Next of kin.

Deposit or Redeposit - If you have Federal service for which no CSRS retirement contributions were made (i.e., temporary appointments, military service) or if you received a refund of contributions, you may wish to make a deposit or redeposit to cover that service time. Deposits and redeposits can significantly affect the amount of your annuity by providing you with additional years of service credit. Contact the SAO Benefits Office at SAO-Benefits@cfa.harvard.edu for further details.

Part-time Employment - If you worked part-time before April 7, 1986, you will be given full credit for all service performed. Part-time service performed on or after April 7, 1986 will be prorated (part-time hours worked divided by the number of hours you would have worked if full-time) and credit will be given for days or hours actually worked.

Deferred Annuity/Refund - If you are separated from Federal service before meeting the age requirements for an immediate annuity, you may receive a deferred annuity payable at age 62, unless you waive the rights to an annuity by applying for a refund of retirement deductions. The amount of refund is the total amount you have paid into the retirement system. The refund does not include any interest payments or the amount that the Smithsonian has paid into the retirement system for you.

CSRS OFFSET SYSTEM

If you have five or more years of CSRS service and are rehired after a break in Federal service of at least 365 days after 1983, you are eligible to participate in the CSRS Offset Retirement System. You will have six months after being rehired under a CSRS Offset appointment to transfer to FERS. If you elect FERS coverage, you also have 30 days in which to elect the Thrift Savings Plan (TSP). Should you elect FERS coverage, your annuity will be computed under the CSRS formula for the time worked under the CSRS system, and under the FERS formula for the remainder of your covered service. Retirement eligibility and death benefits are based on FERS rules if you transfer to FERS.

CSRS offset employees contribute to both Social Security and CSRS. Employees currently contribute 0.80% of basic pay for the Basic benefit. Employees also contribute 7.65% to the Social Security Administration. All rules that apply to full CSRS employees also apply to CSRS Offset employees.

Benefits - Your CSRS annuity is reduced (offset) when you become eligible for Social Security (usually at age 62). The reduction is equal to your Social Security benefit creditable for service after 1983 when you paid into both CSRS and Social Security. In no instance will the reduction result in a benefit less than the total CSRS benefit entitlement.

For more information about FERS, CSRS or the CSRS Offset System, please contact the SAO Benefits Office at SAO-Benefits@cfa.harvard.edu.

THRIFT SAVINGS PLAN (TSP)

The Thrift Savings Plan (TSP) is a retirement savings plan for Federal employees. It is similar to a 401(k) plan, and it offers before-tax savings and tax-deferred investment earnings. Both FERS and CSRS employees are eligible to participate. The TSP is supplemental to the CSRS retirement plan, and an integral part of the FERS retirement plan. There are three sources of TSP contributions:

• Employee contributions
• Agency Automatic (1%) contributions (FERS employees only)
• Agency Matching contributions (FERS employees only)

All new employees are immediately eligible to make their own regular contributions to TSP up to $19,500 (the annual deferral limit established by the Internal Revenue Service) for 2020. Any eligible Federal civilian employee can make these contributions through payroll deduction from basic pay before taxes are withheld. Employees may elect any dollar amount or percentage (1 through 99) of basic pay. All new hires or rehires with a break in service whose Entrance on Duty (EOD) date is on or after October 1, 2020 are automatically enrolled in the TSP with a contribution of 5% of basic pay. Transfer-in employees without a break in service will continue with their same payroll deduction amount.

Note: A break in service for TSP purposes is a separation from Federal service for more than 30 calendar days.

As stated above, CSRS employees do not receive an agency automatic (1%), nor agency matching contributions.

There is a special "catch up" provision for federal employees who are age 50 or older, or who will become age 50 during the calendar year for which they are making an election. These employees may be eligible to make additional before-tax contributions to the TSP through payroll deductions if they have contributed the maximum regular contributions. The maximum IRS elective deferral limit for catch up contributions made in 2020 is $6,500. Catch up contributions will stop when the limit is reached or at the end of the calendar year, whichever occurs first. Employees must make a new election for each calendar year, as catch up contributions will not automatically continue from one year to the next.

For more information, please refer to the TSP Web pages.

Eligible FERS employees will receive an automatic 1% agency contribution, even if they choose not to make their own contributions. If FERS employees elect to make employee contributions, the Smithsonian will also match their contributions dollar for dollar on the first 3% of their pay, and $.50 on the dollar for the next 4-5% of their pay. CSRS employees do not receive agency matching contributions. Employees may cancel their contributions to TSP at any time.

All new hires and rehires with a break in service (FERS and CSRS) whose EOD date is on or after October 1, 2020 will be automatically enrolled in the TSP with a contribution of 5% of basic pay. FERS employees who are automatically enrolled in the TSP will receive a 3% agency matching contribution dollar for dollar and the next 4-5% at $.50 on the dollar, as well as the agency automatic 1% contribution. CSRS employees are not eligible for the agency contributions.

• Employees may change the amount or percentage of their contributions or terminate their contributions at any time by completing form TSP-1. All accurately completed forms will be processed to become effective the pay period following the date of receipt in the SAO Benefits Office.
• Employees who wish to stop the automatic enrollment immediately and have no TSP deductions taken, must complete and return the TSP-1 form to the SAO Benefits Office (MS17; fax 617-495-7263) within the first 14 calendar days of employment.
• Employees who wish to receive a refund of the employee contributions associated with the automatic enrollment may request the refund by completing and sending form TSP-25 directly to TSP. In order to be eligible to receive the refund, the request must be received by TSP no later than the refund deadline date provided in the TSP welcome letter that will be sent from TSP shortly (approximately 30 days) after the employee's EOD (entrance on duty).

Investment Options

The Thrift Savings Plan offers a choice of six investment options (see below). Employees may change the allocation of TSP contributions among the different investment funds at any time using the TSP website (www.tsp.gov) or the ThriftLine. Information about each investment fund can be found in the "Summary of the Thrift Savings Plan" Handbook or online at www.tsp.gov.

Basics

Roth contributions are withheld from your pay check after your income is taxed. When you withdraw funds from your Roth balance, you will receive your Roth contributions tax-free, since you have already paid taxes on the contributions. You also will not pay taxes on any earnings, as long as you are at least age 59 1/2 (or disabled) and your withdrawal is made at least 5 years after the beginning of the year in which you made your first Roth contribution.

In contrast, Traditional (pre-tax) contributions, which lower your current taxable income, provide you with a tax break today. Funds grow in your account tax-deferred, but when you withdraw your money, you must pay taxes on both the contributions and their earnings.

If you currently participate in the TSP, money already in your account when you begin making Roth contributions will remain part of your Traditional balance. You will not be able to convert the funds to the Roth.

Agency contributions will always be part of your Traditional (non-Roth) balance.

The combined total of Roth and tax-deferred Traditional contributions for 2019 cannot exceed the elective deferral limit of $19,000, and the catch-up contribution limit is $6,000.

Any contribution allocation or interfund transfer will apply to the investment of both Roth and Traditional balances. You will be able to transfer Roth 401(k), Roth 403(b), and Roth 457(b) - but not Roth IRA - funds into the Roth balance in your TSP account. Pre-tax transfers will continue to be placed in your Traditional balance.

You will be able to take loans, in-service withdrawals, and partial withdrawals from your account as before. Funds withdrawn will come out of your account on a pro rata basis - with a proportional amount from your Traditional and Roth balances.

How to Enroll in the Roth Option

• Use form TSP-1 for regular Roth contributions and TSP-1-C for catch up contributions.
• You can contribute to both Roth and Traditional balances.
• For more information, please refer to the TSP website: www.tsp.gov/roth/index.html.

In-Service Withdrawals

The TSP is a long term retirement savings program. While you are still employed by the Federal Government, it is not advisable to take funds out of the plan before retirement. The effect of an in-service withdrawal on your future retirement could be severe. When you make a withdrawal, you permanently deplete your retirement savings and the future earnings that could be realized on the amount you withdraw. However, if the need arises, there are two ways to do so.

• Age-based In-service Withdrawal. Participants who are at least age 59 1/2 can make a one-time withdrawal of all or a portion of their vested account balance. The amount you withdraw is considered taxable income in the year in which payment is made.
• Financial Hardship In-Service Withdrawal. Participants who can demonstrate financial hardship can make a withdrawal of their own contributions and their earnings in an amount up to their documented hardship. After a participant makes a financial hardship withdrawal, s/he cannot make contributions to the TSP or make another financial hardship withdrawal for a period of six months. In addition to paying income taxes on the withdrawal, the participant will also be subject to a 10% early withdrawal penalty if under age 59 1/2.

 TSP Loan Program

Participants may borrow from their TSP accounts for general purposes or for the purchase of a primary residence. To be eligible, the participant must have at least $1,000 of their own contributions and associated earnings in their account. You pay yourself back the interest through a series of employee payroll deductions. The interest you pay is the G-Fund rate of return at the time you apply for the loan.

If You Leave SAO

The retirement income that you receive from your TSP account will depend on how much you contributed while employed and the earnings (or losses) on your contributions. Several income options from which to choose are available once you decide to leave Federal service. For more information on your withdrawal options, please refer to the booklet, Withdrawing Your TSP Account, which may be downloaded from the TSP webpage, www.tsp.gov, or requested from the SAO Benefits Office.

Additional Information

TSP publications and forms are all available online at the TSP website at www.tsp.gov. For further information, please contact the SAO Benefits Office at SAO-Benefits@cfa.harvard.edu.