CSRS Deposit and Redeposit: Rules, Deadlines, and the Pre-1982 Penalty

An unpaid deposit or redeposit can permanently reduce your CSRS annuity — and the rules change depending on when the service occurred. If you had temporary federal employment, seasonal work, or a period where you took a refund of your retirement contributions, those gaps in your contribution history need to be resolved before you retire. After separation, the window closes.

Here's how the deposit and redeposit rules work, what happens if you don't pay, and why the October 1, 1982 date matters so much.

Deposits: Paying for Non-Deduction Service

A "deposit" covers periods of federal civilian service when no retirement deductions were withheld from your pay. The most common scenarios:

• Temporary or intermittent appointments where retirement coverage wasn't applied
• Seasonal employment before conversion to a permanent position
• Service before you were covered by a retirement system

The deposit amount is calculated as a percentage of the basic pay you earned during the non-deduction period, plus compound interest. For CSRS, the base rate is 7% of your earnings during that period. Interest accrues from the midpoint of each period of service, compounding annually on December 31.

The October 1, 1982 Dividing Line

This date is the single most important threshold in the CSRS deposit rules:

Service before October 1, 1982 (unpaid deposit): The service counts in your annuity computation even without the deposit — but OPM reduces your annual basic annuity by 10% of the unpaid deposit balance (principal plus interest). This is a permanent reduction applied every year for the rest of your retirement.

If your unpaid deposit is $15,000, your annual annuity is reduced by $1,500 per year. Over a 25-year retirement, that's $37,500 lost to avoid a $15,000 payment. The math almost always favors making the deposit.

Service on or after October 1, 1982 (unpaid deposit): The service counts toward your eligibility thresholds (meeting the 5-, 20-, or 30-year requirements), but it's completely excluded from the annuity computation. OPM calculates your pension as if those years of service never happened. There's no reduced-credit option — it's full credit with the deposit paid, or zero credit without it.

Redeposits: Restoring Refunded Contributions

A "redeposit" covers periods of federal service where retirement deductions were properly withheld, but you later received a refund of those contributions — typically when you left federal service and withdrew your retirement money.

If you returned to federal service and want those earlier years counted in your annuity, you need to redeposit the refunded amount plus interest.

The March 1, 1991 Dividing Line

The redeposit rules have their own critical date:

Service ending before March 1, 1991 (unpaid redeposit): The service counts in both your eligibility and annuity computation. But OPM applies an actuarial reduction to your monthly annuity — a percentage based on your age at retirement and the outstanding redeposit balance. The younger you are at retirement, the larger the reduction.

This actuarial reduction is permanent and typically more expensive over a long retirement than simply paying the redeposit.

Service ending on or after March 1, 1991 (unpaid redeposit): The service counts toward eligibility, but it's completely excluded from the annuity computation. Same as the post-1982 deposit rule: pay in full or get zero credit in the formula.

Military Service Deposits

Federal employees with active-duty military service face a separate deposit calculation. To receive full, permanent credit for post-1956 military service in your CSRS annuity, you generally must pay a deposit equal to 7% of your total military basic pay during the active-duty period, plus compound interest. Employees first covered under CSRS before October 1, 1982, may receive initial credit without a deposit but face the Catch-62 recomputation described below.

The interest-free grace period is two years from the date you were first covered under a civilian retirement system. After that, interest compounds annually.

The Catch-62 Trap

For employees first covered under CSRS before October 1, 1982, post-1956 military service gets automatic credit in your annuity — even without a deposit. But there's a catch.

When you reach age 62 and become eligible for Social Security (with at least 40 quarters of covered earnings), OPM must recompute your annuity and remove the military service credit. If you are already 62 when you retire and eligible for Social Security, OPM applies the recomputation at retirement. This typically costs 2% of your High-3 for each year of military service.

Making the military deposit before retirement prevents the Catch-62 recomputation entirely. Your military years remain credited permanently, regardless of Social Security eligibility.

For employees first covered under CSRS or CSRS Offset on or after October 1, 1982, no automatic credit exists. You must pay the military deposit before separation to receive any credit. Post-retirement deposits are not accepted.

How to Calculate What You Owe

Your agency's HR office initiates the process. Submit Standard Form 2803 (Application to Make Deposit or Redeposit) along with documentation of the service period. For military deposits, you'll also need:

• DD Form 214 (Member-4 copy)
• Form RI 20-97 (Estimated Earnings During Military Service), completed by the appropriate military finance center

Your agency sends the package to OPM, which calculates the exact amount owed — the principal based on your historical earnings during the period, plus compound interest through the current year.

OPM's processing time for deposit calculations can run 6 to 12 months. Because interest compounds annually on December 31, starting the process early in the calendar year means you pay less interest than if you wait until fall.

Payment Options

Once OPM returns the calculated amount, you pay through your employing agency's payroll office. Options typically include:

• Lump-sum payment — pay the full amount at once
• Payroll deductions — spread payments over multiple pay periods, but all payments must be completed before your separation date

You cannot make deposit or redeposit payments after you retire. This is an absolute deadline. If you separate with an unpaid balance, the consequences (the 10% reduction for pre-1982 service, exclusion for post-1982 service, or the Catch-62 recomputation for military time) apply permanently.

The Bottom Line on Timing

Start the deposit and redeposit process 12 to 24 months before your planned retirement date. Between the SF 2803 submission, OPM's calculation processing, and the actual payment timeline, you need at least a year of runway.

If you're unsure whether you have unpaid deposit or redeposit obligations, request a service history audit from your HR office. They'll pull your SF 2801-1 (Certified Summary of Federal Service), which documents every period of creditable and non-creditable service.

The CSRS Retirement Guide includes a deposit and redeposit cost-benefit worksheet that shows the breakeven point for each type of obligation — so you can see exactly how long it takes for the annuity increase from paying the deposit to exceed the deposit cost.

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