“I continue to be confused about the status of the excess retirement contributions I made into my retirement account after having reached the 41 years, 11 months milestone. I am a CSRS employee on the cusp of retiring at the end of this month. When OPM issues me a check for the amount of my excess retirement contributions, is that amount taxable? If yes, how can I avoid paying taxes on it?”
When you retire, any excess contributions will be returned to you with the option of purchasing additional annuity benefits, which aren’t subject to the 80 percent earned annuity limit. For more information about how those excess contributions would be treated, go to https://www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c031.pdf.
Note: Those contributions aren’t taxable because you already paid them when you were working; however, any interest they earned will be.
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Reg Jones, a charter member of the senior executive service, is the resident expert on retirement and the federal government at Federal Times. From 1979 until 1995, he served as an assistant director of the U.S. Office of Personnel Management handling recruiting and examining, white and blue collar pay, retirement, insurance and other issues. Opinions expressed are his own.