Federal Employee's CSRS & FERS Federal Civil Service Retirement
& Financial Planning Resources
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Federal employees have the option of making military service credit payments for
creditable military service to prevent their annuity from decreasing at age 62.
I bought back my active military time when I discovered that my retirement
annuity would decease at age 62 if I didn't. If you have, or anticipate having
at least 40 quarters, 10 years, of social security payments at age 62, you too
should consider paying back your military time. Otherwise your annuity will
decrease. In my case my total payback was about $650 and I was able to pay it
back at $25 a pay. Military pay was meager when I was in the Air Force, my pay
started at $97 a month in 1969.
Military Deposit Menu
If you served on active duty and will be eligible at age 62 to collect Social
Security, your CSRS annuity will be reduced by the number of years that you
served unless you buy back that time. For example, if you serviced in the armed
services for 4 years, when you reach age 62 your CSRS annuity will be reduced by
8%. You can buy back your military time to avoid this reduction and collect your
entire annuity and whatever Social Security benefits that you are entitled to.
Military Service before 12/31/1956
If your active duty military service is prior to December 31, 1956, you
receive full credit for your military service in determining both your
retirement eligibility and your annuity computation, without making a deposit
for the service.
Military Service after 1/1/1957
If your military service is after January 1, 1957, credit for the
military service depends on the date on which you were first employed as a
federal civilian employee:
- Civilian hire date on or after October 1, 1982 - You must make a deposit
to receive credit for the military service.
- Civilian hire date before October 1, 1982 – Your military service will
automatically be credited for retirement eligibility, but not necessarily
for the annuity. You must next determine if you will be eligible to
receive Social Security at age 62.
- If you will not be eligible for Social Security at age 62, then no
deposit is required for the military service to be included in your
retirement annuity.
- If you will be eligible to collect Social Security at age 62, you
must either make a military deposit or your CSRS annuity (and/or spousal
annuity) will be reduced to exclude your military service at age 62.
This is often referred to as “Catch 62.” The reduction to your
CSRS annuity is 2% for each year of military service. For example,
if you have 4 years of military service, when you reach age 62 your CSRS
annuity will be reduced by 8%. If you made your military deposit, there
will not be a reduction in your CSRS annuity at age 62, you continue to
collect your full CSRS annuity, and your entitlement to Social Security
benefits.
Amount of the Deposit
For CSRS employees, the military deposit equals 7% of military base pay, plus
interest. There is a 2-year interest-free grace period on all military
deposits. After the 2-year grace period interest is accrued and compounded
annually. The interest rate is an annual variable rate. The first
possible interest accrual date is 10-1-1986.
Military Buyback Calculator (FREE Online
Calculator by FedCalc)
Military deposits must be made BEFORE you retire.
Back to military deposit menu
It is beneficial for FERS workers to buy back their post 1957 military
service time. FERS retirees with Post 1/1/57 military service will not get
credit or annuity computation without making a deposit using
SF Form 3108. If a deposit is made,
the employee will receive credit towards his/her annuity computation.
Military Service before 12/31/1956
If your active duty military service is prior to December 31, 1956, you
receive full credit for your military service in determining both your
retirement eligibility and your annuity computation, without making a deposit
for the service.
Military Service after 1/1/1957
If your military service is after January 1, 1957, you must make a deposit to
receive credit for the military service. Unless you are retired military, it is
usually beneficial for FERS employees to make a military deposit. If a
deposit is made, the employee will receive full credit for the military service
towards FERS retirement eligibility and the annuity computation.
Amount of the Deposit
For FERS employees, the military deposit equals 3% of military base pay, plus
the applicable interest. There is a 2-year interest-free grace period on
all military deposits. After the 2-year grace period interest is accrued
and compounded annually. The interest rate is an annual variable rate.
The first possible interest accrual date is 10-1-1986.
Military Buyback Calculator (FREE Online
Calculator by FedCalc)
Contact your agency Human Resource department and arrange to pay back your
military time. Complete either a SF-3108 or a
SF-2803.
You can make payments through payroll deduction or pay a lump sum if you desire.
I am retired military -
should I make a deposit for my military service?
An easy way to determine if it makes sense to make your military deposit is
to obtain retirement estimates with and without the military service. However,
if you are a new federal employee retirement estimates may be difficult to
obtain. Large personnel centers are often too busy to calculate
projections. Luckily, the retirement calculation for a FERS
employee is simple enough:
- Determine how much additional you would receive by making the military
deposit: Multiply your years of military service X 1%* x your projected high
three when you retire. * Or use 1.1% if you are waiting until age 62 to
retire.
Example: If you had 20 years military service and you thought your
average pay for your final 3 years of civilian service might be $80,000:
20 years military service x 1% x $80k = $16,000
- For more information on the annuity calculation go to our
FERS Annuity page.
Determine if the amount you would receive in the FERS calculation (above) is
more than the amount you are projected to receive in your military
retirement, because you would have to waive your retired military
pay to receive credit in the civilian retirement.
- If the military pay is higher - do not combine the service or make the
deposit. If your FERS annuity amount is higher than your military
retirement annuity, the next step is to determine how much the
military
deposit will cost.
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