Many federal civilian employees have prior military service. Understanding how that military time can be applied toward your civilian retirement benefits is an important — and often overlooked — aspect of federal employment planning.
The Basics
Federal employees who served in the military may be able to receive credit for that service time in their civilian retirement calculation. This means your military years could count toward both your eligibility for retirement and the size of your annuity.
However, this credit is not automatic. In most cases, you must take specific action — commonly referred to as a "military service deposit" or "buyback" — to receive credit for your military time.
How the Buyback Works
To receive civilian retirement credit for military service, you generally must:
- Make a deposit covering a percentage of your military basic pay for the period of service
- Pay applicable interest if the deposit is made more than three years after entering civilian federal service (for FERS employees) or two years (for CSRS)
The deposit rates differ by retirement system:
- FERS employees — The deposit is typically 3% of military basic pay, plus interest
- CSRS employees — The deposit is typically 7% of military basic pay, plus interest
Interest accrues at a rate set annually by the Treasury Department, and because it compounds, the cost of buying back military time increases the longer you wait.
Why It Matters
Crediting military service time can have significant effects on your retirement:
- Earlier retirement eligibility — Additional years of creditable service may allow you to retire sooner
- Higher annuity — More years of service directly increases your pension calculation
- Special Retirement Supplement eligibility — For FERS employees, reaching certain service thresholds unlocks additional benefits
Important Considerations
Social Security overlap — If you are a FERS employee and will also receive Social Security benefits based on your military service, there are specific rules about how these benefits interact. Making the deposit generally ensures you can receive full credit under both systems.
Timing — The cost of the buyback increases with interest over time. Federal employees with military service should evaluate this option early in their civilian careers when the cost is lowest.
Documentation — You will need your DD-214 (Certificate of Release or Discharge from Active Duty) and may need to obtain earnings records from the Defense Finance and Accounting Service (DFAS).
Getting Started
If you have prior military service and are currently a federal civilian employee, your first step should be contacting your agency's HR or retirement office. They can:
- Help you determine whether your military service is creditable
- Calculate the cost of the deposit
- Explain the process for making the payment
For more information about federal employment topics, visit our Resources page.
This article is for educational purposes only. Specific eligibility and calculations depend on individual circumstances. Consult your agency's retirement counselor for personalized information.