Federal Employee Retirement System (FERS)

The Federal Employee Retirement System (FERS) began in 1987. FERS replaced the Civil Service Retirement System (CSRS). The components of the FERS retirement are a defined contribution plan, defined benefit pension, and Social Security. There are three versions of the FERS Retirement System: FERS, FERS RAE, and FERS FRAE.

The defined benefit pension calculation is the same for all three versions of FERS. FERS employees are required to contribute a percentage of their salary towards their FERS pension. The original FERS employees contribute 0.8%, FERS RAE contribute 3.4%, and FERS FRAE contribute 4.4%.

The defined contribution component is more commonly referred to as the Thrift Savings Plan or TSP. Federal employees, regardless of their retirement system (FERS or CSRS), may contribute $23,500 to their TSP if under age 50. Beginning the year that a FERS or CSRS Employee reaches age 50 they become eligible to make catch up contributions to their Thrift Savings Plan. Recent tax legislation created a second catch-up contribution category that specifically targets employes age 60-63. The standard catch-up contribution is $7,500 and the enhanced catch-up contribution for those age 60-63 is $11,250.

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**Information current as of June, 2025, and may be subject to change. Please consult irs.gov for the most current contribution limits.

FERS employees receive employer contributions to their TSP and CSRS employees do not. The Thrift Savings Plan employer contributions fall into two categories. The first is a mandatory 1% contribution for all FERS employees. The government will match a FERS employee’s TSP contributions dollar for dollar on the first three percent of their contributions and then 50 cents on the dollar for the next two percent. The maximum matching contribution is 4%, which requires a 5% employee contribution. The maximum employer contribution is equal to 5% of salary.

Social Security is the final component for FERS employees. Unlike CSRS employees, FERS employees contribute 6.2% of their salary (up to the Social Security wage base). Historically, CSRS had two components to their retirement (Pension & TSP) and FERS had three (Pension, TSP, & SS). Although CSRS retirees may not be eligible or Social Security Retirement Benefits based on their work history, the Social Security Fairness Act allows CSRS and other retirees with non-covered pensions to collect Spousal Social Security Benefits.

Special planning considerations include:

• CSRS vs. FERS: Older isn’t necessarily better.
• TSP contributions and matching
• FERS Annuity Supplement
• FERS Transfers
• Social Security optimization
• Withdrawals from TSP before age 59.5 if retired at age 55 or older.

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