Cracking Box #19 — What It Means for Your Pension (and Potential Withdrawals)

What it is, why it matters, and how it connects to the FERS refund you may be eligible to claim

Written by: Mark Brown of High 3 Team

This is the first article in a series that will break down the components of a Leave and Earnings Statement (LES). The purpose of the series is to explain important pay, retirement and benefits related concepts to ensure you are able to track, understand and receive all of your earned benefits.


Box #19 on your LES is often overlooked and rarely understood. This article will explain what it means and why it matters.

What is Box #19?

Box #19 is the “Cumulative Retirement” box. Each pay period, a percentage of your base pay is automatically deducted from your pay and contributed to the retirement system. The number in block #19 is the total dollar amount of Employee contributions you have made to the Federal Employee Retirement System (FERS) to date while under the current Pay Center.


The amount of cumulative retirement contributions reflected in box #19 defines the amount of your FERS or CSRS retirement Annuity (CIVMAR Pension) that is tax-free as these were made as “after-tax” contributions. The cumulative amount in box #19 does not include Agency (MSC) contributions. This is not the same as the monthly pension you will receive in retirement; it is your personal contribution to the retirement fund. CALCULATING THE ACTUAL PENSION (Annuity) will be a separate article.


This amount accumulates over your employment with the agency and represents your personal financial contribution to your future retirement benefits. Box #19 represents your after-tax contributions (your “basis”), which are later recovered tax-free during retirement. It does not mean your entire annuity is tax-free. The tax-free portion of your retirement annuity is determined by the cumulative employee career contributions to FERS or CSRS.


These contributions are deducted from BASE PAY (which will be explained in next Month’s article). Base Pay changes for many reasons. Such reasons include receiving Ship Pay, receiving Pool Pay, receiving a promotion, Cost of Living Adjustments (COLA’s), and more. This total is specific to your current payroll office or agency.


If you transfer to a different agency, the cumulative amount for that agency will be reset to $0.00, but your total federal service record and contributions to FERS or CSRS will be maintained by the Office of Personnel Management (OPM).


As part of your booklet, you receive from OPM when your retirement is finalized, there will be a page titled “Tax Free Portion of Annuity” which explains in detail the calculation for the individual.

An Important Note for those Hired BEFORE June 1, 2014

If you were hired prior to June 1, 2014, the amount in box #19 will not reflect your full career contributions. Military Sealift Command changed its pay center to the Defense Finance and Accounting Service (DFAS) for its Civilian Marine Personnel (CIVMARs) on June 1, 2014. This transition involved moving the payroll function from the MSC Unified Civilian Mariner Payroll System (UCPS) to the DFAS-managed Defense Civilian Pay System (DCPS). OPM will assimilate your total FERS contributions as part of finalizing your retirement, as they will have all your payroll records.

Cumulative contributions on an LES for MSC or any Federal Agency start over when:


  • When the Pay Center changes (as it did with MSC)
  • If you change the Agency you are working for
  • If you resign and later return to MSC or any other Federal Agency

Your total contributions are still recorded, but the number will start over on your LES.

Not every CIVMAR will retire from MSC. During the career of a CIVMAR it is possible that they are faced with family, health, logistics, or other issues that prevent them from continuing in their current seagoing federal position and resign, not retire, from Military Sealift Command. If this is the case, they need to consider their options and what to do with the funds in box 19.

Contributions to CSRS (From BASE PAY)


Hired On/After

Employee

Agency (MSC)

Total

August 1, 1920

7.0%

7.0%

14%


Contributions to FERS (From BASE PAY)


Hired On/After

Employee

Agency (MSC)

Total

January 1, 1987

0.8%

13.2%

14%

January 1, 2013

3.1%

10.9%

14%

January 1, 2014

4.4%

9.6%

14%

The combined cumulative (Employee & Agency) contributions funds defined benefit plans where the government directly pays your pension from its own retirement funds, like the Civil Service Retirement and Disability Fund (CSRDF). Your federal pension, often referred to as an annuity, is a promise from the government to provide a guaranteed lifetime income based on your years of service and salary history, funded by agency contributions and Treasury transfers. In other words, your retirement annuity is a percentage of your AVERAGE HIGH 3 (highest three consecutive years) of BASE PAY. We will dive deeper into Average High 3 and Base Pay in future articles.

The Specific Importance of Understanding Box #19

Option 1: Continue Federal Employment 

Move to a shore-based position with MSC or any other Federal Agency and continue their federal service. If this is the case, they will continue to have FERs contributions deducted from their pay, and they will continue working towards a federal retirement. 

Option 2: Resign from Federal Employment 

  1. Apply for a deferred retirement at the following ages & years of service before resignation.
  • Minimum 5 Years/age 62
  • Minimum 10 Years/age 56 – 57 (depending on birth year)

The deferred retirement would provide a permanent FERS Annuity (pension) and a Survivor Benefit option for life Survivor Benefit (details discussed in a later article.) However, the individual would not be eligible for Health & Life insurance benefits.


b. Leave their cumulative retirement contributions in place.

If you return to MSC or any other Federal Agency in the future, you can be credited the prior Service Credit time and contributions towards a full retirement. This is known as a “break in service”. Upon return, your SERVICE COMPUTATION DATE (Box #11) would reflect your prior service.

Option 3: Withdraw the money.

1. To request a FERS contribution refund, complete the Application for Refund of Retirement Deductions (FERS), Standard Form (SF) 3106, from the Office of Personnel Management (OPM) website. If you have been separated for 30 days or less, submit the form to your servicing personnel office. If you have been out of federal service for more than 30 days, mail the completed application, along with the spouse notification form if applicable, directly to the OPM Retirement Operations Center in Boyers, PA.


2. For service under the Federal Employees Retirement System (FERS), you would get interest on the refund of those contributions if you worked more than one year. Interest is paid at the same rate that is paid for government securities.


3. If you had any service under the Civil Service Retirement System (CSRS) while you worked, interest will be included in the refund of those contributions if you have more than one but less than five years of service. Interest is paid at three percent.

If you choose to withdraw the money, you can rollover the refund to an IRA or Employer Sponsored Plan:

1. You can roll over lump sum payments representing your retirement contributions, including voluntary contributions, and applicable interest. An eligible payment can be paid either to you or directly to an individual retirement account or other employer sponsored plan. Your choice will affect the amount of taxes you owe.

2. The government is required to withhold Federal income tax from taxable payments over $200 at the rate of 20 percent. However, you may choose to take all or part of these payments in a direct rollover to an individual retirement account or an employer-sponsored retirement plan that accepts rollovers. The taxable portion can be rolled over into the Thrift Savings Plan. If you make this election, we they will not withhold the Federal income tax from the taxable payments.

3. You can open an individual retirement account to receive a direct rollover. You must contact the individual retirement account sponsor to find out how to have your payment made to your account. If you are unsure of how to invest your money, you may wish to temporarily establish an account to receive the payment. However, you may wish to consider whether you may move any or all the monies to another account at a later date without penalties or limitations.


4. If you choose to have the payment made to you and it is over $200, the taxable portion is subject to the 20 percent Federal income tax withholding. The payment is taxed in the year in which it is received unless within 60 days after receiving it, you roll it over to an individual retirement account or retirement plan that accepts rollovers. You can roll over up to 100 percent of the eligible distribution, including the 20 percent withholding. To do so, you must replace the 20 percent withholding within the 60-day period. You will be taxed on any amount that you do not roll over. For example, if you roll over only 80 percent of the distribution, you will be taxed on the remaining 20 percent.

CAUTION

Your Thrift Savings Plan value is yours as well, which can be left in place, cashed out, or rolled into an outside IRA or Employer Sponsored Plan (401K) and will be discussed in detail in a separate later article. If you resign without at least three years of service, you are not VESTED IN THE MATCHING of up to 5%.


If you withdraw retirement contributions, BE CERTAIN YOU ARE NOT RETURNING to Federal Service. Otherwise, if you return, your prior service does not exist. You can however RE-DEPOSIT the monies taken out of BOX #19 to “buy” the prior service, but you will owe interest that compounds annually. 


If you started with MSC prior to 1 June 2014, it will add 2-4 additional months to the payout of Box #19 since totals from 2 Pay Centers must be assimilated by OPM through the archives. This is also applicable if you have worked for another Federal Agency in addition to MSC.

In my 22 years of working with Federal Employees I have seen many of those that resign from Military Sealift Command return to Federal service for any number of reasons. IN MOST cases, it was/would have been better to have left FERS retirement contributions in place until you are certain you are not returning to Federal Service. This is since the previous Service credit time was more valuable upon return than the monies withdrawn at resignation. The monies that were withdrawn can be “Re-deposited” and the Service credit time applied. However, the amount withdrawn accrues annual compound interest from the withdrawal date to current. This often negates the cost vs. benefit to not be in favor of the returning employee. However, personal circumstances vary, check with a financial advisor to see what is right for you. 

Disclaimer
This content is provided for informational purposes only and does not constitute financial, tax, or investment advice. Always consult a qualified professional to review your individual situation and ensure you receive guidance tailored to your needs.

The annotated LES below is for reference to the items discussed in this article.

Conclusion

If this helped demystify Box #19, you will get even more value from the rest of the articles in The Final Muster, where we break down LES line items, benefits, and retirement decisions in plain language. For deeper, one-on-one help—especially if you are planning a retirement, changing agencies, or weighing a resignation versus deferred retirement—reach out to Mark Brown at High 3 Team: markbrown@high3team.com. High 3 Team specializes in federal retirement planning and can translate your LES, SF-50s, service history, and benefit elections into a clear action plan.

And if you are a mariner or CIVMAR navigating pay, credentials, or career moves, explore more guides on CIVSail.com—from pay tools to step-by-step benefits explainers—designed to help you make informed decisions at sea and ashore.

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