You already left: deferred annuity, refund, or wait

1. The three doors

When you separate from federal service before you are eligible to retire, your FERS contributions do not disappear and they do not follow you. They sit in the Civil Service Retirement and Disability Fund while you choose among three doors, and the choice is largely irreversible.

Door three is only open if you separated at your minimum retirement age with at least 10 years of service. For most people who left in the last two years, the real choice is between doors one and two, and it is not close.

2. Are you vested?

Five years of creditable civilian service vests you in a FERS annuity. That is the whole test for entitlement; the age at which you can collect depends on how much service you have beyond that.

• 5 or more years: deferred annuity at 62.
• 20 or more years: deferred annuity at 60, unreduced.
• 10 or more years and you had reached your MRA when you separated: you may take it as early as MRA, reduced 5% for each year under 62 — or postpone it. See postponed vs. deferred.
• 30 or more years and you had reached MRA: you were eligible for an immediate unreduced annuity, and you should confirm you did not separate as a deferred retiree by accident.

Two wrinkles worth checking. Military service counts toward the five years only if you made the deposit before you separated; after separation you generally cannot. And unused sick leave does not count toward a deferred annuity at all — it is credited only for immediate retirements. Anyone who left with a large sick-leave balance lost it, which is one more argument for retiring rather than resigning when both are available.

3. What a deferred annuity actually pays

The formula is the same one used for any FERS retirement, frozen at your separation:

The high-3 is fixed on the day you left. It does not grow, and it is not indexed for inflation between separation and the day payments start. That is the real cost of deferral, and it is large: a $95,000 high-3 in 2026 has the buying power of roughly $73,000 in 2036 at 2.5% inflation.

Lifetime figures are before COLA and before tax, and they assume payments run to 85. Even the smallest row — seven years of service, a $5,740 annuity — is worth six figures over a normal retirement. That is the number to hold in mind when a refund offer looks like real money.

4. Why the refund is almost always wrong

A refund pays you back your own FERS contributions — typically 0.8% of basic pay for employees hired before 2013, 3.1% for 2013 hires, and 4.4% for those hired in 2014 or later — plus interest under limited conditions. It does not return the government’s much larger contribution, because that was never yours. And it permanently voids any annuity right based on that service, along with any survivor benefit.

Run the comparison with real numbers. An employee hired in 2010 who separated in 2026 with 16 years of service and a $95,000 high-3 contributed 0.8% of pay throughout — on the order of $11,000 to $12,000 in total contributions.

The refund breaks even inside the first year of annuity payments. For a 2014-or-later hire contributing 4.4%, the refund is larger in absolute terms, but the annuity is identical — the higher contribution buys the same benefit — so the break-even is still measured in a few years, not decades. The full mechanics, including the narrow cases where a refund is defensible, are in taking the FERS refund.

When is it defensible? Genuinely rarely: under five years of service with no intention of returning, so no annuity exists to protect; or an immediate, documented financial emergency where no other resource exists. “I need a car” is not that. Note also that the refund is taxable in the year received and, before 59½, may carry a 10% early-withdrawal penalty unless rolled over.

5. Postponed vs. deferred: the FEHB difference

If you separated at MRA or later with 10 to 29 years of service, you did not take a deferred retirement — you took an MRA+10, and you have a choice most separated employees do not.

Take the annuity immediately and it is reduced 5% for every year you are under 62. Postpone it to a later date and the reduction shrinks or disappears — and, critically, FEHB and FEGLI are reinstated when the annuity begins, provided you were enrolled for the five years before separation. A deferred annuitant never gets FEHB back. A postponed annuitant does.

If you are in this group and did not know it, that is the most valuable paragraph on this page. Check your separation SF-50 for your age and creditable service on the date you left.

6. Health and life insurance after you leave

FEHB continues for 31 days after separation at no cost, then ends. Your options after that: Temporary Continuation of Coverage for up to 18 months, at the full premium (government share included) plus a 2% administrative charge, which for a family plan commonly runs $2,000 or more a month; conversion to an individual policy from your carrier; or the ACA Marketplace, where separation is a qualifying event opening a 60-day special enrollment period. For most people leaving federal service under 65, the Marketplace is the practical answer; see bridging healthcare before 65.

FEGLI ends 31 days after separation as well, with a right to convert to an individual policy within 31 days — expensive, but the only option for anyone whose health has changed since they were first insured. If you are postponing an MRA+10 annuity, both come back when it starts; if you are deferring, neither does.

One deadline that catches people: the TCC election must be made within 60 days of separation or the loss of coverage, and agencies do not always send the notice reliably during a reduction. If you are inside that window and unsure, elect TCC and cancel later — cancelling is easy, missing the window is permanent.

7. Your TSP, unattended

The TSP does not care that you left; it will sit invested indefinitely, and for most people that is the right answer. Four things to handle:

• Any loan balance becomes a taxable distribution roughly 90 days after your agency reports the separation. If that already happened to you, it qualifies as a qualified plan loan offset: you may roll the taxed amount into an IRA with your own funds by the due date of that year’s tax return, including extensions. See TSP loans.
• The Rule of 55 applies if you separated in or after the year you turned 55; withdrawals are then penalty-free even before 59½. Rolling to an IRA destroys that. See the Rule of 55.
• Leaving it in the TSP keeps the G Fund and expense ratios measured in hundredths of a percent, neither of which exists in an IRA. The honest case each way is in should you roll your TSP to an IRA.
• Update your address and beneficiary form at tsp.gov. Your agency email is gone; the account is now yours to maintain, and the 1099-R has to reach you.

Low-income years right after separation are also the cheapest window you will ever have for Roth conversions. If you left mid-year and your next year’s income is small, that is an opportunity, not just a setback.

8. If you go back

Reemployment in a covered position restores more than you might expect. Prior service for which you did not take a refund counts toward both eligibility and the annuity computation, so a 12-year employee who returns after three years away resumes at 12 years of credit, not zero. If you did take a refund for service performed after 2012, you can generally redeposit it with interest to recapture the credit; the rules differ for earlier service, and the interest can be substantial.

Two things do not automatically come back. The FEHB five-year clock restarts in most cases, meaning you need five more years of continuous enrollment immediately before retiring to carry coverage into retirement. And if you had already begun receiving a deferred annuity, reemployment usually makes you a reemployed annuitant, with your salary generally offset by the annuity amount. Confirm both in writing with the new agency’s HR before you accept an offer.

9. Claiming it: RI 92-19 and the paperwork

Nothing arrives automatically. OPM does not track you down at 62. You apply.

• Use Form RI 92-19, Application for Deferred or Postponed Retirement (FERS). Download it from opm.gov; do not use the SF-3107, which is for employees retiring from active service.
• File about 60 days before you want payments to begin. Earlier is fine; later means a gap, and OPM does not pay retroactively beyond limited circumstances.
• Mail it to OPM directly, not to your former agency. Your agency has no role in a deferred application.
• Attach the evidence: your separation SF-50, SF-50s establishing your service history, your marriage certificate if electing a survivor annuity, and any court order affecting the annuity.
• Elect the survivor annuity at application. This is the one election you cannot easily revisit, and it also determines whether a surviving spouse could ever have FEHB in the postponed case.
• Keep copies of everything for decades. If you separated at 44 and apply at 62, eighteen years of agency records may be hard to reconstruct. Your own file is your proof.
• Expect the OPM wait. Deferred cases are not faster than regular ones; plan for months, not weeks. See surviving the OPM wait.

Set a calendar reminder now, for the year you turn 61 or 59, whichever applies. It sounds absurd to schedule something eighteen years out. People forget, and unclaimed deferred annuities are a real category.

10. Frequently asked questions