What is a Voluntary Contribution (“VC”)?
It’s an investment in the “Civil Service Retirement and Disability Fund”. The best discussion of how the VC works is contained in a GovExec article written by Federal Benefits Expert Tammy Flanagan. The article can be accessed and printed by clicking here. The VC allows those in CSRS or CSRS Offset to invest after tax dollars much like a traditional IRA. The maximum investment cannot exceed ten percent of one’s lifetime earnings. Those currently in FERS are generally ineligible to participate in the VC. Why invest in the VC? The investment earns interest at a variable rate determined annually by the Treasury Department. However, the reason to invest in the VC is usually not for its earning power. The interest earnings grow tax deferred while in the VC but more importantly, can be transferred to a traditional IRA, the TSP or maybe a Roth IRA. However the real compelling reason to invest in the VC is the principal investment can be transferred to a traditional IRA or a Roth IRA. Opportun
