Get 2001 Publication 721. Tax Guide To U.s. Civil Service Retirement Benefits

The best estimates show only 1% to 4% of the current federal workforce (100,000 employees at the most) are still covered under CSRS.

The average civilian federal employee who retired in FY2022 was 62.3 years old and had completed 25.1 years of federal service. The average monthly annuity payment to workers who retired under CSRS in FY2022 was $5,447. Workers who retired under FERS received an average monthly annuity of $2,126.

Your retirement contributions are not taxable, but interest included in the payment is taxable.

Under FERS, the computation generally is 1% (or 1.1%if retiring at age 62 or later with 20 or more years of service) times the high-three average salary times years and months of service. Under CSRS, after 10 years of service, all years are worth 2% times the high-three average salary.

The maximum benefit you can receive from CSRS is 80 percent of your high-3 average salary, plus credit for your sick leave. This limit generally affects only those who have more than 41 years 11 months of service when they retire.

IRS Publication 721 is the tax guide to civil service retirement benefits. The Internal Revenue Services publishes Publication 721 annually and details information about tax information for retirees from federal services.

Publication 721 explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS).

Median Pension Benefit Table 10. Median benefit for persons age 65 and older with income from private pensions and annuities, public pensions, and veterans benefitsType of pension benefitMedian benefit, 2022Federal government pension$26,380State or local government pension$24,980Railroad pensionN/A3 more rows • Oct 23, 2023