Myths and Truths About Transfer Elections

Employee Resources

There are a number of common perceptions about the impact of transferring from the Civil Service Retirement System (CSRS) to the Federal Employees Retirement System (FERS). Some are true, and some are false, and others depend on your individual situation. Several of the most common perceptions are listed below, along with a brief comment about whether the perception is or is not correct.

• I understand that, because I'm a Federal employee, I can't receive the Social Security benefit I earned before I came to work for the Federal Government. Is this true? View more
  No, this isn't true. You will receive a Social Security benefit if you earned one based on your own work. It may, however, be reduced because of a provision in Social Security law called the Windfall Elimination Provision. If affects people who have less than 30 years of what the Social Security Administration defines as "substantial earnings." For example. in 1998, it takes Social Security-covered earnings of $2875.00 to earn four credits, but covered earnings of $12,675.00 for them to be "substantial earnings." See the FERS Transfer Handbook of the Social Security Administration's fact sheet A Pension From Work Not Covered by Social Security for more information.
• I understand that if I transfer to FERS I won't get credit for my sick leave. Is this true? View more
  No, this isn't true. If you transfer to FERS, when you retire you get credit for the lesser of the amount of sick leave you had when you transferred and when you retire. For example, if you have 1000 hours when you transfer and 800 hours when you retire, you will receive credit for 800 hours of sick leave in the CSRS portion of your annuity.
• I plan to retire in the next year or two. My friends tell me not to bother to think about transferring to FERS - that it won't benefit me since I am so close to retiring. Is this true? View more
  Maybe yes and maybe no. You must look at your own personal situation to decide whether FERS offers you any advantages. For example, do you already have any Social Security credits? If so, would it be to your advantage to earn some more before you retire? All of us have slightly different situations, so what is the best decision for your friends isn't necessarily the best decision for you. You need to look at what FERS offers and make your own decision.
• I heard that if I transfer to FERS, I will need to contribute 10% to the Thrift Savings Plan to make up for the CSRS benefits I will lose. Is this true? View more
  No, this isn't true. However, most people need to save 3% to 5% in the Thrift Savings Plan to receive the same benefit they would have received under the CSRS. You may want to use the FERS Transfer Model to project benefits at different savings levels. That should help you estimate how much you would need to save if you transfer.
• How is my high-3 average salary computed if I transfer to FERS? Is my CSRS high-3 frozen at my salary today? View more
  No. Your years of service under CSRS are frozen, but your highest three consecutive years of pay, or high-3 (generally your last 3 before retirement), are used to compute the CSRS component, as well as the benefit you earned under FERS. Generally, a high-3 is based on an employee's last 3 years of service before retiring.
• I hears that there's a plan to reduce the benefits of anyone who doesn't transfer to FERS. Is this true? View more
  No. There is no such plan.
• My husband has worked in the private sector all his life. I heard that if I transfer to FERS I can receive a Social Security spousal benefit based on his employment. Is this true? View more
  Maybe. If you transfer to FERS and work for 5 years under FERS, you will be exempt from a part of the Social Security law known as the Government Pension Offset, or GPO. The GPO affects the Social Security spousal benefits of people who receive annuities based on work that wasn't covered by Social Security - like the CSRS. For further information, see the Social Security Administration's fact sheet Government Pension Offset or the FERS Transfer Handbook.
• I heard that if I transfer to FERS, I can retire immediately. Isn't there a minimum waiting period or anything? View more
  This is true. As long as you meet FERS age and service requirements, you can retire immediately. All of your CSRS service counts toward meeting these requirements. You don't have to work under FERS for some specified period of time.
• I'm a 49-year old firefighter with 27 years of service as a Federal firefighter. I heard that I can retire immediately if I transfer to FERS. Is this true? View more
  Yes. Under FERS, law enforcement officers and firefighters can retire at any age as long as they have 25 years of qualifying law enforcement officer/firefighter service. Under CSRS, you must be at least 50 years old to retire under the special rules for these employees.
• I'm 58 years old and have 17 years of CSRS service. My husband is ready to retire, but I won't be eligible until age 62 under CSRS. My friends say I could retire immediately if I transfer to FERS. Is this true? View more
  Yes. Under FERS, you can retire at your minimum retirement age with as little as 10 years of service. This is what is known as the MRA+10 provision. If you transfer and retire, your annuity will be reduced 5% for each year you are under age 62 (unless you are age 60 and have 20 years of service). You can postpone receiving your annuity to minimize or avoid the age reduction. You also can keep your health and life insurance as a retiree as long as you meet regular requirements for continuing then into retirement.
• I'm under the CSRS Offset rules. I understand that if I transfer to FERS, my 10 years of CSRS Offset service will be credited under FERS rules. Is this true? View more
  Yes. If you are under CSRS Offset rules and transfer to FERS, your Offset service (the service that was under CSRS and Social Security at the same time) will be credited under FERS rules. In addition, if you have less than 5 years of CSRS service that isn't Offset service, then all your service will be credited under FERS. Transferring to FERS generally is not a good idea if you have very much Offset service. You lose the value of the CSRS annuity computation for this part of your benefits, and you have missed out on getting matching contributions on your Thrift account. However, there are circumstances in which transferring is a good decision. For example, if you expect to leave Federal service soon, and could become eligible for an MRA+10 annuity by transferring to FERS, it might be to your advantage to do so.
• I got a divorce several years ago and my former spouse is entitled to a portion of my annuity when I retire. I heard that my current spouse doesn't have to consent for me to transfer to FERS, by my ex does. Is this true? View more
  Yes. A current spouse doesn't have to consent to an employee's decision to transfer to FERS. However, if an employee has a court order on file with the U.S. Office of Personnel Management (OPM) that gives a former spouse a portion of the employee's annuity or survivor benefits and the former spouse has not remarried before age 55, the employee cannot transfer to FERS without that former spouse's consent. OPM can waive this requirement only in very limited circumstances.
• I'm a 49-year old air traffic controller with 23 years of service as a controller. I'd really like to transfer to FERS to get a government match on my Thrift Savings money, but I heard that if I do, I lose eligibility for the special formula for air traffic controllers. Is this true? View more
  Yes. When a controller transfers to FERS, the regular CSRS formula is used to calculate the CSRS credit that the controller will receive under FERS, and the guaranteed benefit is completely disregarded.
• I currently have nearly 44 years of Federal service, and hope to work several more years. My friends tell me I should transfer to FERS. Should I? View more
  You are the only person who can decide what is best for you. However, it is true that you have reached the maximum benefits under CSRS, but that you could continue to add to your benefits by transferring to FERS. In addition, you could receive a matching contribution for up to 5% of the money you are saving through the Thrift Plan.
• I never worked anywhere except the Federal Government, so I never earned any Social Security credits. If I transfer to FERS, wouldn't I be throwing away 6.2% of my pay to Social Security since I plan to retire before I could earn a Social Security benefit? View more
  Generally, it isn't a good idea to transfer to FERS if you won't be eligible for a Social Security benefit. However, don't just assume there is no advantage in transferring to FERS. For example, would transferring and working for 5 years under FERS allow you to avoid the Government Pension Offset and receive a Social Security benefit based on your spouse's (or former spouse's) earnings record? Would FERS allow you to retire earlier under the MRA+10 provision? Do you plan to work elsewhere after you retire from the Federal Government? If so, you might want to start earning Social Security credits.
• I always expected to retire from my Federal job. I really enjoy it and can't imagine doing something else. However, there have been cutbacks in my agency and there are rumors of cutbacks in my program. Should I transfer? I'm only 43 years old with 19 years of service, so I can't retire yet. View more
  Only you can decide which plan is best for you. However, it is true that FERS gives you more flexibility about when you can receive your benefits. Under CSRS, if you separate before you become eligible for an immediate annuity, you will only be eligible for a deferred annuity at age 62 - or you can forfeit all benefits and get a refund. In contrast, in FERS, two of the three parts of your benefit, your Social Security credits and Thrift account, are portable. The piece that isn't portable, the FERS basic benefit, is the piece of the package that you pay the least for, and you could start to receive the benefit at your minimum retirement age. For you, that is age 56.