If you are a Federal employee and an RPCV, the government may be taking too much money out of your paycheck for your retirement plan.
You could be entitled to a refund, as well as a lower deduction in all future paychecks, meaning that you may be entitled to thousands of dollars in refunds and fewer deductions from your check for the rest of your federal career!
In order to qualify, you must meet all of the following criteria:
- Current federal employee
- Hired after December 31, 2012, and
- Served in the Peace Corps on:
- December 31, 2012, OR December 31, 2013.
The breakdown of federal retirement deduction categories can be seen below:
- Federal employees hired prior to December 31, 2012:
- Contribute 0.8% of their paycheck for their FERS retirement deduction.
- Federal employees hired between December 31, 2012 and December 31, 2013:
- Contribute 3.1% of their paycheck for their FER-RAE retirement deduction.
- Federal employees hired after December 31, 2013:
- Contribute 4.4% of their paycheck for their FERS-FRAE retirement deduction.
If you are a Federal employee who served as a PCV on the switchover dates of December 31, 2012, or December 31, 2013, you may be entitled to pay the lower rate that was in place on that date (0.8% or 3.1%). In addition to paying a lower amount of money each month, you may also be eligible to receive a refund on all overpayments you may have made since being hired as a Fed.
In a recent DOL test-case, one of our [email protected] members received over $2,000 in refunds on retirement overpayments and over $100 more per paycheck because their retirement deduction dropped from 4.4% to 0.8%. The retirement benefits stay the same, but if you qualify for a different retirement plan (based on when you were hired), you may be able to lower the amount deducted from your paycheck.
Pretty good deal, right?!
The law can be complicated, so check with your HR official to make sure that you have the proper retirement deduction assigned to your personnel file. To find out if you are in the right retirement category, just follow these three simple steps:
Step 1: Check your paystub to calculate how much is being deducted for your “RETIREMENT” withholding. If RETIREMENT divided by GROSS PAY equals the correct withholding, you are under the correct retirement category. If your withholding is greater than the rate on the day of the rate switchover when you were serving (i.e. on 12/31/2012 or 12/31/2013), then you may be eligible for a lower retirement deduction. Your retirement plan should then be based on your PC service dates. Continue onto Step 2.
Step 2: Review OPM Benefits Administration Letter #14-107 carefully to make sure you qualify. This letter provides step by step examples to help you determine if you qualify. After you review the OPM letter and are certain you are eligible for the lower retirement deduction rate, continue onto Step 3.
Step 3: Contact your agency’s servicing HR official with a link to the OPM Letter #14-107, and request a review of your eligibility.
Additionally, there is no deadline in which paperwork needs to be completed, so there is not rush in getting paperwork in. That said, please do keep in mind that with most federal HR procedures, the paperwork will take time to process. Proceed with the 3Ps: politeness, patience, and persistence. Some HR officials may be wary of this request initially, it may be completely new to them – be prepared to address their questions and reference the guidance. If you have further questions, you can also contact the OPM contact noted on p.8 of OPM Letter #14-107.
Do let us know how it all goes! Share you story with [email protected] affinity group by emailing [email protected]. There have only been a few test cases performed to date, but the more success stories that are gathered the easier it will be for other RPCVs to make the case to their respective federal HR officials.