Application To Make Voluntary Contributions Page 3
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Federal Taxation of Voluntary Contributions
You may elect a refund of your voluntary contributions,
If you take a refund of voluntary contributions, any
plus interest, or you may purchase additional annuity. The
accrued interest is taxable in the year you receive payment,
amount of additional annuity purchased with your voluntary
unless you roll it over into an IRA or other qualified retire
contributions and interest depends upon your age at the time
ment plan. Also, if you receive the refund before you attain
you retire and, once fixed, it does not change as you grow
age 59½, the interest portion of the refund is subject to an
older. If you retire at age 55 or younger and do not elect a
additional 10 percent early distribution tax. However, the
survivor's voluntary contributions annuity benefit, each
following situations are exceptions to this 10 percent tax:
$100 to your credit will purchase $7 a year of additional
annuity. This additional annuity increases by 20 cents for
1. payments on account of disability (as defined by the
each full year you are over 55 when you retire. Thus if you
Internal Revenue Service Code);
retire at age 60, each $100 will purchase $8 a year of addi
2. monthly additional annuity payments elected at the
tional annuity; at age 62, $8.40 a year; and at age 70, $10 a
time of retirement (rather than a lump sum payment of
year. The additional annuity is payable for as long as you
the Voluntary Contributions account);
stay retired. Cost-of-living adjustments are not applied to
3. payments after separation from service during or after
the additional annuity.
the year in which you attain age 55.
When you retire and elect to purchase additional annuity,
you may elect to share your additional annuity with your
To determine whether the 10 percent tax applies, you
spouse or any other person. If you do, your own additional
should get Form 5329 (and instructions) from your local
annuity will be reduced and, at your death, the person you
Internal Revenue Service office. The interest portion of the
named will be paid half your additional annuity for the rest
refund would be eligible for rollover treatment if you elect
of his or her life. The reduction in your additional annuity
a refund at retirement. If you elect to receive an additional
will depend on the difference in ages between you and the
annuity as a result of your voluntary contributions, it will
person you name.
be taxed under the “General Rule.” Please refer to IRS
Publication 721, “Tax Guide to U.S. Civil Service
Benefits” for further information. Payments to survivors
Death After Retirement
are not subject to the 10 percent tax.
Any voluntary contributions or interest not paid in the form
of additional annuity to you or to your named survivor will
be refunded in a lump sum.
Detach This Information Sheet and Keep It for Future Reference.
Reverse of SF 2804
Revised July 2006
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