If you served on active duty in the military and then become a federal civilian employee, that military time may count as time in service for calculating your FERS or CSRS pension. Periods of active duty while in the any of the military reserves, including your annual active duty training, count. However, National Guard active duty only counts if it was Title 10, section 233(d), or under a call by the president. Service must be honorable. And a deposit has to be received before you retire (that’s the buyback).

You need to qualify for a FERS or CSRS pension, which generally means serving at least 5 years as a federal civilian. Then the military time you deposit, nicknamed buyback, is added to the years you actually work as a civilian when calculating your FERS or CSRS pension benefit.

The pension formula for a FERS employee is the average of your High 3 salaries times your creditable service times our multiplier. If you have 24 years of federal civilian service, a high-3 pay of $110,000, and will retire before age 62, your pension would be $110,000 x 24 years x 1%. That’s $26,400 a year. If your buy back 6 years of military time, that 30 years which is $33,000. That’s $6,600 more a year in your FERS pension. Live 30 years in retirement and that’s almost $200,000 more with the buyback. And buying back military time may give you enough creditable years you to retire earlier.

A buyback for a FERS employees is about 3% of your total military BASE pay for the years you are depositing. If you wait more than 3 years to buyback, you will also have to pay interest Even with the interest it is usually worthwhile to buy back the time.

The multiplier for CSRS employees is about 7%. But the rules for CSRS employees are more complicated. If you are a CSRS employee that will not be eligible for Social Security, no deposit, or buyback, is required and you will get full credit for military service after 1956.

If you’re a CSRS employee that will be eligible for Social Security, the military time you buy back will count towards eligibility for retirement and computation of your pension. If you don’t buyback any time, your military time will count towards eligibility for retirement. And if you retire before your eligible for Social Security at 62, your military time will count toward your pension computation just up until you reach 62.

If you have a regular military pension and buy back those years you will have to give up your military pension. This very rarely makes financial sense. But if you’re entitled to a reserve pension that starts at age 60 you can keep that, whether you buyback or not. This often does come out as a great deal.

You don’t need to do all the math your HR office will do the calculations for you. You will need a copy of your DD 214 the Report of Transfer or Discharge. If you can’t find it, you can request a copy it from the National Personnel Records Center by filling out a Standard Form 180.

Then complete a form RI 20-97 Estimated Earnings During Military Service and mail with a copy of your DD214 to your appropriate military finance center. They send back your statement of estimated earnings.

Take your estimate of earnings and your DD214 to HR and fill out an SF 2803 Application to Make Deposit or Redeposit. HR will then compute the amount of your military deposit using the Military Deposit Worksheet, let you know the amount, and options for making payments.

Once HR gives you the buyback cost, compare that to how much more your pension payments would be with the buyback. The process can be a pain, but it is usually well worth it. You can payoff all at once or in payments over time. And remember, your application to deposit, buyback, military time has to be approved and paid BEFORE you retire.