Upping your retirement ante

Federal employees enrolled in the Civil Service Retirement System (CSRS) can add money to their annuities through the voluntary contributions program.

CSRS enrollees can get the Office of Personnel Management to set up a voluntary contributions account for them. The account can be used either to increase the employee's annuity or as a form of savings account.

Employees can contribute up to 10 percent of their lifetime federal salaries to the accounts. The contributions themselves are taken out of employees' paychecks after taxes are deducted, but they earn tax-deferred interest.

Employees can withdraw the full balance from their accounts, including interest, at any time. The interest can be rolled over into a tax-deferred individual retirement account (IRA) or other qualified retirement plan.

Employees can also opt to use their voluntary contribution accounts toward higher annuities. For each $100 in a voluntary contributions account-including interest earned-retirees get an additional annuity of $7 a year, plus 20 cents for each full year they are over age 55 at the time they retire. Unlike the standard CSRS pension, the additional annuity is not increased by annual cost of living increases.

Interest rates for the accounts are based on the average yield of new investments purchased by the retirement fund during the previous fiscal year. The annual interest rates have decreased gradually since the interest rate formula took effect in 1985. In 1985, the interest rate was 13 percent; in 1987, 9 percent; in 1992, 8.1 percent; in 1995, 7 percent; in 1999, 5.8 percent.

OPM has a fact sheet explaining the voluntary contributions program in more detail at: www.opm.gov/fers_election/facts/ri83-10.htm. To apply for the program, you'll need to complete Standard Form 2804 (Application to Make Voluntary Contributions). You can get the form online from www.opm.gov/forms/html/ff_sf.htm if you have FormFlow software. Or you can ask for the form from your agency's personnel office.