What Does My Retirement Statement Mean

When your application for a CSRS or FERS annuity was approved, the Office of Personnel Management (OPM) sent you a statement. The statement shows the following information:

• The sum of the individual’s retirement plan contributions, commonly referred to as the “cost” of the annuity.
• The day the payments under the annuity commences is known as the annuity starting date, also known as the annuity commencing date.
• The gross monthly rate of the annuity benefit, which represents the annuity’s starting value before any deductions, such as those for taxes or insurance premiums, are made.

This statement is vital to understand the details of the individual’s annuity benefit and the tax-free recovery of the cost of the annuity.

The sum you have already paid in income tax is how much it costs. What you’ve entered here is a portion of your retirement plan contribution. The amount taken out of your pay for plan contributions would be counted as part of your taxable income. However, you did not receive the money. Any presumed deposits or redeposits are included if you choose the alternative annuity option. To calculate the tax-free recovery of your costs, you will utilize the details from your annuity statement.

The annuity cost includes any amounts refunded to the retirement plan, including interest, for contributions previously withheld or for service that was not eligible for retirement deductions. Therefore, the taxable cost of your CSRS or FERS annuity is recoupable up to the amount repaid plus interest. However, you cannot deduct any interest payments made on the payment. These contributions are not optional and should be counted as part of the employee’s regular salary.

According to the OPM‘s statement, the annuity starting date is the day annuity payments begin. Therefore, it is the date on which you can recover the cost of the annuity free of taxes. 

The annuity accrual date and the annuity beginning date are unaffected by any delays in the payment of the annuity, including but not limited to a late application for retirement. Regardless of delays in processing the annuity claim, this date is based on the individual’s retirement plan and service record.

Your CSRS or FERS annuity cost recovery tax-free is determined by the OPM using the annuity start date. On your initial annuity statement, the agency will detail your start date.

The gross monthly rate is the amount you would have received before income tax withholding and insurance premiums. Due to the adoption of the survivor’s annuity and the lump sum payment under the alternative annuity option, they were subtracted from your annuity (if either option applied). For a better understanding, two examples are provided below:

Assume, for illustration, that a person receives $2,000 per month in annuity income. They include a survivor’s pension, cutting their payouts to $1,800 per month. This individual’s monthly gross salary would be $1,800.

The second illustration features a person who receives $3,000 every month in an annuity. The couple decides to take the alternative annuity lump sum payout, cutting their monthly payments from $3,000 to $2,500. This person’s monthly gross salary is $2,500.00.

The gross monthly rate is the amount of the annuity paid out each month before any fees, taxes, or insurance premiums are deducted. It factors in any changes for picking a survivor’s annuity or a lump sum payment under a different annuity choice.

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I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.

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