A FERS refund is a lump-sum payment of the retirement contributions that were deducted from your paychecks while you worked for the federal government, plus interest if your service ran longer than a year. You request it by filing Standard Form 3106 with the Office of Personnel Management after you’ve been separated from federal service for at least 31 days. The money is yours to take, but the tradeoff is real: cashing out your contributions means giving up the monthly pension those contributions would have paid you for life. If you worked five years or more, read the section on deferred annuities before you file anything.
Who Can Request a Refund
Two conditions have to be met. You must have been separated from a FERS-covered position for at least 31 consecutive days, and you must not be eligible for an annuity beginning within 31 days of filing your application.1eCFR. 5 CFR 843.202 – Eligibility for Payment of the Unexpended Balance to a Separated Employee During that 31-day window you can’t be working in any position covered by FERS or the older Civil Service Retirement System.
If you already qualify for an immediate retirement annuity, OPM won’t process a refund. Someone who has hit the age and service thresholds for lifetime monthly payments isn’t allowed to cash out instead.
Read This Before You File: The Deferred Annuity
If you completed at least five years of creditable civilian service, you don’t have to take a refund at all. You can leave your contributions in the retirement fund and collect a deferred annuity later. With five years of civilian service, monthly payments start at age 62. With at least 10 years of creditable service (including five civilian years), you can start collecting at your Minimum Retirement Age, which runs from 55 to 57 depending on your birth year.2U.S. Office of Personnel Management. Applying for Deferred or Postponed Retirement Under the Federal Employees Retirement System
The math usually favors the annuity by a wide margin. A refund is a modest lump sum today; a deferred annuity is monthly income for the rest of your life. Seven years of federal service at a solid salary produces a lifetime pension whose total value almost always dwarfs the refund. The refund feels concrete because the check arrives in weeks. The deferred annuity feels abstract because it’s decades away. The numbers don’t care about that.
If you have fewer than five years of creditable civilian service, a deferred annuity isn’t available to you, and the refund is your only route to getting your contributions back.
How Much You Get
The refund, formally the “lump-sum credit,” equals the retirement deductions withheld from your basic pay across your federal career, plus interest on those deductions if your service ran more than one year.3Office of the Law Revision Counsel. 5 USC 8401 – Definitions Interest compounds annually based on the average yield earned by the Civil Service Retirement and Disability Fund from Treasury securities purchased during the preceding fiscal year.
The percentage taken from each paycheck depends on when you were first hired under FERS:
- Before 2013: 0.8% of basic pay
- During 2013: 3.1% of basic pay
- 2014 or later: 4.4% of basic pay
For 2026, the interest rate applied to deposits and redeposits into the retirement fund is 4.25%.4U.S. Office of Personnel Management. Former Employees
What Taking the Refund Costs You Later
The effect on future pension rights depends on when you separated from federal service. For separations on or after October 28, 2009, refunded service still counts toward establishing your eligibility (or “title”) for a future annuity if you return to government. It also still counts in your average salary computation. What it won’t do, unless you pay the money back, is count toward the size of your annuity benefit.1eCFR. 5 CFR 843.202 – Eligibility for Payment of the Unexpended Balance to a Separated Employee For separations before October 28, 2009, the older rule was harsher: refunded service wasn’t creditable for any purpose, including establishing title to an annuity.
The bottom line under either rule: if you take the refund and never return to federal service, that pension is gone. You’ve traded a future income stream for one check.
If You Come Back: The Redeposit
If you take a refund and later return to a federal job, you can pay back what you withdrew, plus interest, to restore full credit for that service. This option, called a redeposit, became available under Public Law 111-84 for anyone covered by FERS on or after October 28, 2009. Before that law, FERS redeposits weren’t allowed at all.4U.S. Office of Personnel Management. Former Employees
A redeposit requires repaying the full refund amount plus interest that accrues from the date of the refund. The 2026 interest rate charged on redeposits is 4.25%. The longer you wait, the more interest piles on. Without the redeposit, the refunded years still help you qualify for an annuity, but they won’t be used to calculate how much that annuity pays. OPM advises against filing a deposit or redeposit application within six months of retirement, since the paperwork can tangle up the retirement process.5National Finance Center. FERS Deposits/Redeposits
How to File
You’ll complete Standard Form 3106, Application for Refund of Retirement Deductions. It asks for your Social Security number, the name of your last federal agency, and whether you want the payment by electronic funds transfer or paper check.6U.S. Office of Personnel Management. SF 3106 – Application for Refund of Retirement Deductions
If you’re married or have a living former spouse to whom you were married for at least nine months, you’ll also need Standard Form 3106A, which notifies that spouse or former spouse about the refund request. FERS requires this because taking a refund can affect survivor benefits. The SF 3106 instructions explain when the 3106A is required and what to do if notification isn’t possible.6U.S. Office of Personnel Management. SF 3106 – Application for Refund of Retirement Deductions
Where to Send It
If you’re still working or left federal service within the past 30 days, submit the completed application to your servicing personnel office. They’ll forward it to OPM once you’ve met the 31-day separation requirement. If you’ve been separated for more than 30 days, mail it directly to OPM:7U.S. Office of Personnel Management. How Do I Apply to Have My Retirement Contributions Refunded to Me in a One-Time Payment
U.S. Office of Personnel Management
Retirement Operations Center
PO Box 45
Boyers, PA 16017
There is no online portal for SF 3106. The form must be printed, completed, and mailed.
How Long It Takes
OPM does not publish a guaranteed processing timeline, and the SF 3106 form and its guidance don’t specify how long payment takes after receipt. Delays can run longer when service records need to be reconstructed or verified across multiple agencies.
Taxes and the Rollover Choice
Your original retirement contributions came out of after-tax pay, so the portion of the refund representing those contributions isn’t taxable. The interest included in the refund is fully taxable as ordinary income.8United States Office of Personnel Management. FERS Refund Fact Sheet
If OPM pays the interest portion directly to you, it must withhold 20% for federal income tax. If you’re under 59½, a 10% early distribution penalty may also apply to the taxable interest unless an exception under the Internal Revenue Code fits your situation.8United States Office of Personnel Management. FERS Refund Fact Sheet
You can sidestep both the withholding and the penalty by electing a direct rollover of the taxable interest into a traditional IRA, a SIMPLE IRA, or the Thrift Savings Plan. With a direct rollover, OPM sends the money straight to the receiving account, no federal tax is withheld, and the funds keep growing tax-deferred. You mark your rollover preference on the SF 3106 itself.
What the Refund Does Not Cover
The FERS refund covers only the defined-benefit pension contributions deducted from your pay. It has nothing to do with your Thrift Savings Plan. The TSP is a separate defined-contribution account, similar to a 401(k), managed by the Federal Retirement Thrift Investment Board. Your TSP balance stays in your account after you leave federal service and is handled through tsp.gov, using its own forms, rules, and tax treatment.
If you previously made a deposit for military service credit under FERS, the rules for getting that money back are separate. A former employee who deposited money for military service before becoming subject to FERS can choose either a partial refund (the excess above what the FERS deposit would have required) or the full deposit amount. Taking the full refund means no future deposit for that military service can ever be made.9eCFR. 5 CFR 842.308 – Refunds of Deductions and Service Credit Deposits Made Before Becoming Subject to FERS That’s a one-way door worth weighing against the pension value military service credit adds.
If You Die Before Claiming
If a former federal employee dies before receiving a refund, the contributions in the retirement fund, with any applicable interest, are payable to survivors in this order: surviving spouse; children (with the share of any deceased child going to that child’s descendants); parents (equally, or the full amount to a surviving parent); executor or administrator of the estate; and next of kin under the laws of the state where the employee lived. This order applies automatically.10U.S. Office of Personnel Management. FERS Lump Sum Payment Order of Precedence Upon the Death of a Current Employee
To send the money to someone other than the default, file Standard Form 3102 (Designation of Beneficiary) with your employing agency while still working, or with OPM after separation. The designation has to be received before death to be valid, and it stays in effect until you cancel it or the contributions are paid out.11U.S. Office of Personnel Management. Designation of Beneficiary