Super Investment for Office Elders

Senior Correspondent Mike Causey has stepped away from the keyboard for a much-needed break. While he chooses between Team Edward and Team Jacob, we present the final “Most Popular Federal Report” for this vacation cycle. We take you back in time now to January 14, 2010, when this column was first published. Bear in mind some details may have changed since then. sk

Being the oldest person in the office (so I’m told) isn’t much fun.

You may be furthest behind the technology curve.

You are doubtless missing out on all the fun of social networking.

You think twittering is for the birds.

Odds are, as a doddering senior civil servant, you can’t name any of the winners of American Idol. Not one! Nor can you contribute to an intelligent discussion over why Jon and Kate Gosselin split. Or why Kate is estranged from her parents, or even who Jon and Kate are for godsake!

You’ve doubtless overlooked the benefits of Keeping Up With The Kardashians. Or how to accomplish same.

In short you’re on the federal short list for Loser-Of-The-Year.

And yet…

As a long-time fed, you may be eligible for one of the best super-safe investment options around. It’s called the Voluntary Contributions program and it is available only to federal and postal workers who are under the old Civil Service Retirement System, or the CSRS Offset retirement program.

The program operates like a certificate of deposit, except that it’s better, because for the next 12 months Uncle Sam has pledged to pay you 3.125 percent on your investment. Trying finding a 12-month CD anywhere else that pays that much!

Although its been around for years, the VC program (which is unrelated to the Thrift Savings Plan) remains one of the government’s best kept secrets.

It is a separate program that lets eligible feds (once enrolled in the program) invest after-tax dollars into their VC account. Individuals can invest at their own pace – weekly, monthly, annually – by check, in increments of $25. That means you could invest $25, or $100 or $2,000 anytime. The only catch is that your investments cannot exceed the equivalent of 10 percent of your lifetime federal salary.

When you decide to cash out of the VC program, you can either take a lump sum (which most people do) or you can use it to boost (slightly) your monthly CSRS annuity.

When you withdraw the money (and you can only do it once) none of the money you invested in the VC program is taxed. That’s because you invested previously-taxed money. What is taxed is the amount you earned on your investment.

In the past, during periods of high inflation the VC program paid a higher rate of interest. In 2000, for example, the 12-month guaranteed rate was 5.875 percent. The year before it was 5.67 percent. In 1992 it paid 8.125 percent, and so on. In 2009 the VC rate was 3.875 percent.

So what’s the catch? Well you must be under the old CSRS (or offset) retirement system. It is not available to the majority of federal and postal workers who are under the newer FERS retirement plan.

To sign up you need a VC application form (SF 2804). The forms are available at your agency. Then send the application to:

You can also download the form by clicking here.

Once you’ve been enrolled you can send deposits to your VC account to:

    Office of Personnel Management
    PO Box 952015
    St. Louis, Md 63195-2015

For more information, click here.

Oh, about Jon and Kate. We first reported years ago, it would never last!!!

To reach me:

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