OPM Says You Owe Money Back: Your Overpayment Waiver Rights

Last Updated: June 28, 2026 Reading Time: 11 min

A FERS retiree got an OPM overpayment notice for $3,728.75. He disputed it. OPM said it had dropped the case, then kept collecting anyway. He appealed to the Merit Systems Protection Board and recovered $1,480.64. That case, decided June 16, 2026, is a reminder most federal employees never get: when OPM says you owe money back, you have real rights, and a federal overpayment waiver is one of them.

The government overpays employees and retirees a lot. OPM issued roughly $245 million in improper retirement payments in FY2022 alone, and its five-year improper-payment total tops $1.24 billion. Then it comes to collect. This guide covers what an overpayment is, when you can get it waived, and the exact steps to fight a clawback.

Key Takeaways

  • You do not have to simply write a check. You can dispute the amount, request a waiver, ask for a payment plan, and appeal to the MSPB.
  • Two separate laws apply: 5 U.S.C. 5584 for salary overpayments and 5 U.S.C. 8470(b) (FERS) or 8346(b) (CSRS) for annuity overpayments.
  • The waiver test is "not at fault" plus "against equity and good conscience." OPM's own mistake helps your case.
  • The deadline is 30 calendar days from the notice. Miss it and you lose most of your options.
  • A timely MSPB appeal stops collection while your case is reviewed.

How Overpayments Actually Happen

Most overpayments are not the employee's fault. The common causes split by whether you are still working or already retired.

For active employees (salary overpayments):

  • Payroll or HR coding errors after a promotion, transfer, or schedule change
  • Leave Without Pay that was not processed, so pay kept flowing
  • Retroactive FEHB or FEGLI premium adjustments after a plan change
  • Retirement coverage corrections (CSRS vs CSRS Offset vs FERS) that change what should have been withheld

For FERS and CSRS retirees (annuity overpayments):

  • Interim annuity errors. OPM pays an estimated interim annuity while it processes your case. If the estimate ran high, a debt appears when the case is finalized. This is the single most common new-retiree overpayment.
  • The FERS Supplement earnings test. Retirees between their Minimum Retirement Age and 62 get the Special Retirement Supplement, which is reduced $1 for every $2 earned above the annual limit ($24,480 in 2026). Miss the annual earnings report (Form RI 92-22, mailed in April) or under-report, and you get overpaid.
  • Reemployed annuitant rules. Going back to federal work suspends a FERS annuity or reduces a CSRS one. When that does not get applied, the overpayment piles up.
  • Unreported death of a retiree or survivor, which is the number-one cause of improper payments overall.

If you want to confirm what your correct pension figure should be before you argue about an overpayment, model it first with the FERS Retirement Calculator.

Overpayments run on two separate legal systems. Using the wrong process wastes your 30 days.

Feature Salary overpayment (active employee) Annuity overpayment (retiree)
Statute 5 U.S.C. 5584 5 U.S.C. 8470(b) FERS / 8346(b) CSRS
Regulation 5 CFR Part 550, Subpart K 5 CFR Part 845 / Part 831, Subpart N
Who decides the waiver Your employing agency OPM Retirement Operations
Collection method Salary offset, capped at 15% of disposable pay Offset from your annuity check
Appeal path Agency hearing, then claims court OPM reconsideration, then MSPB, then Federal Circuit
Waiver time limit 3 years from discovery No fixed waiver deadline; offset can run beyond 6 years

The retiree track is the one most people deal with, and it has the cleaner appeal chain through the MSPB.

The Waiver Standard: Two Tests You Must Pass

To get an annuity overpayment waived, you have to clear two separate bars.

Test 1: You Were "Without Fault"

You are without fault if you did nothing, by action or by silence, that caused the overpayment. OPM finds fault when you:

  1. Made a statement you should have known was wrong (like understating earnings on the supplement form)
  2. Failed to report something material you should have known mattered (like returning to federal work)
  3. Accepted a payment you knew or should have known was wrong

One nuance trips people up: OPM being at fault does not automatically clear you. The question is whether you did something wrong. But if OPM gave you bad information that led you to believe your payments were correct, that weighs in your favor. There is also a 60-day safe harbor: tell OPM within 60 days that a payment looks wrong, and you are treated as without fault.

Test 2: Recovery Is "Against Equity and Good Conscience"

Even without fault, you must show that making you pay would be unfair. There are three independent ways to get there.

  • Financial hardship. You need substantially all of your income and liquid assets for ordinary living expenses. You prove this with Form RI 34-1, the Financial Resources Questionnaire.
  • Changed position for the worse. You relied on the money in a way you cannot undo, such as retiring early or making a major purchase based on the payment.
  • Unconscionability. The government's own conduct makes collection unfair. In Gordon v. OPM, the Federal Circuit found that OPM's nearly seven years of combined delays made recovery unconscionable even though the retiree had received both FERS and Social Security disability payments at the same time.

Original Data: The Waiver Outcome Matrix

This is the part competitors do not publish. The factors below decide most waiver cases. Where your situation lands across these rows predicts your odds far better than any single fact.

FedTools 2026 Overpayment Waiver Outcome Matrix

Factor Strongly favors waiver Neutral Strongly opposes waiver
Who caused the error Pure OPM administrative error OPM error, but you had the data You gave wrong data or failed to report
Could you have known? No way to know Had access to info suggesting it Knew or clearly should have known
Action on discovery Notified OPM within 60 days No action, no clear duty Kept accepting after you knew
Financial position Need nearly all income for living costs Modest savings Substantial savings or other income
Did you change position? Retired early or made an irreversible move Some changed spending No reliance at all
OPM processing delay OPM delayed 1+ year (approaches unconscionable) OPM timely, you delayed OPM prompt, you delayed
Reporting obligation None existed; no form sent Unclear or form sent late Clear duty, form sent, ignored
Type of payment Pure interim annuity error Supplement test, reported wrong Supplement test, failed to report

Source: FedTools 2026 Waiver Decision Matrix, built from 5 CFR Part 845 Subpart C, 5 CFR Part 831 Subpart N, and MSPB/Federal Circuit case law.

Most of your boxes in the left column means a strong waiver case. Most in the right column means prepare a repayment plan instead.

You Have More Than Two Choices

A lump-sum demand is not your only option, even if a full waiver is denied.

  • Dispute the amount (a hearing). If you think the math is wrong, challenge the debt's size. This is different from a waiver, which concedes the debt but asks for forgiveness.
  • Partial waiver. OPM can forgive part of the debt based on partial hardship.
  • Repayment schedule. Active employees can negotiate below the 15% default offset in writing. Retirees can spread annuity offsets over the period the overpayment accrued.
  • Compromise. Under the Federal Claims Collection Standards, OPM can accept less than the full amount when full collection is unlikely or not cost-effective.

What to Do When You Get the Notice

The single most important rule: you have 30 calendar days from the notice date. Treat it as a hard deadline.

  1. Read the notice. Find the amount, the period claimed, and how it was calculated. Annuity notices usually come on Form RI 34-3.
  2. Verify the amount. Pull your Leave and Earnings Statements or annuity payment history and compare against what you were owed.
  3. Pick your strategy. You can ask for more than one in the same letter: dispute the amount, request a waiver, and/or request installments.
  4. Submit in writing, postmarked within 30 days. For OPM annuity debts, mail to OPM Retirement Operations, P.O. Box 45, Boyers, PA 16017-0045. Include your name, date of birth, OPM claim number, and signature.
  5. Attach documentation. For a waiver, include Form RI 34-1 and a written statement of why you were not at fault, plus any proof of OPM error, delay, or your reliance on the payment.
  6. If OPM denies the waiver, you have 30 days to appeal to the MSPB. A timely appeal stops collection while it is pending.
  7. If the MSPB denies it, appeal to the U.S. Court of Appeals for the Federal Circuit.

Useful contacts: OPM Retirement Services at 1-888-767-6738 (call before 8

a.m. ET for shorter holds) and the MSPB appeal portal at mspb.gov.

Interest, Penalties, and the Clock

For salary debts, interest starts on day 31 after the bill, and penalties begin on day 121 if nothing has been collected. While you are still employed, salary overpayment debts are not reported to credit bureaus. That changes if you separate with a balance owed, when the agency can refer the debt to the Treasury Offset Program and report it.

For annuity overpayments, OPM can keep collecting by offsetting your annuity even past the six-year mark for lawsuits, though it must weigh whether collection is cost-effective on very old debts.

If a layoff or separation is part of your situation, the Severance Pay Calculator can help you see how a separation interacts with any outstanding balance.

Calculate Your Correct Pension First

Before you concede a single dollar, confirm what OPM should have paid you. Use our free FERS Retirement Calculator to model your annuity from your high-3 salary and years of service, then compare it against the figure OPM is claiming. Run your numbers now.

Frequently Asked Questions

Can OPM take back money it already paid me in retirement?

Yes, but only with due process. OPM must send written notice, give you 30 days to respond, weigh any waiver request, and let you appeal to the MSPB. Salary offset for active employees is capped at 15% of disposable pay per pay period under 5 U.S.C. 5514.

What if the overpayment was entirely OPM's mistake, do I still have to pay it back?

Maybe not. OPM's own fault in creating the error strongly supports a waiver. If OPM made a pure administrative mistake and you had no reason to know your payments were wrong, a waiver is well grounded. Courts have also held that OPM's multi-year delays can make collection unconscionable, as in Gordon v. OPM.

How long does OPM have to collect an annuity overpayment?

There is no absolute cutoff for collection by administrative offset from your annuity, though the general statute of limitations for a lawsuit to collect money is six years. For salary overpayments, the agency's waiver authority expires three years from discovery of the error.

What happens if I ignore the overpayment notice?

Ignoring it is the worst option. OPM begins offsetting your annuity automatically, you lose the right to request a waiver after 30 days, interest starts on day 31 for salary debts, and penalties begin on day 121. For separating employees, the debt can be sent to Treasury and reported to credit bureaus.

Can I appeal if OPM denies my waiver?

Yes. You have 30 calendar days after OPM's final denial to appeal to the Merit Systems Protection Board, and a timely appeal stops collection while your case is pending. If the MSPB rules against you, you can appeal to the U.S. Court of Appeals for the Federal Circuit.