This article discusses why and how veterans can buy back military service toward their Federal Employee Retirement System (FERS) with special guidance for Military Academy graduates.
Why should I bother?
You served in the military but didn’t retire, or you retired but went to a Military Academy and now work as a Government Service (GS) employee. Is it worth the hassle of buying back military service for your FERS retirement? Absolutely! Your military service can push you into a higher retirement category and is worth thousands of dollars a year.
Federal Employee Retirement System
The FERS system replaced the Civil Service Retirement Act (CSRS). With FERS your retirement comes from three sources: Social Security, a defined benefit plan (FERS) and the Thrift Savings Plan. FERS can provide a lifetime annuity based on an employee’s length of service; average high-three pay; and age. Federal employees who received an appointment on or after January 2014 contribute 4.4% of their base pay into FERS. To be vested in FERS, you will need a minimum of 5 years government service and at least 62 years old for a voluntary/optional unreduced retirement.
For example, the annual computation for an FERS employee, age 62, with ten years of service and a high-three of $142,000:
1% x 142,000 x 10 = $14,200 per year for the rest of the employees life.
How to buy back your Military Service
The first step: determine your earnings for the time you want to buy back. Unless you kept a copy of all your Leave and Earning Statements (LESs), you’ll need to complete an Office of Personnel Management (OPM) Form RI 20-97, Estimated Earnings During Military Service. Attach a copy of any records such as your DD214 for the period you are looking at purchasing back. Fax those forms to DFAS – Indianapolis Center, Army Military Pay Operations, ATTN: Verifications Section (Estimated Earnings) at (866) 401-5849. You can download the OPM form on their website here. OPM will complete the rest of the form and mail it back to you within two months
Next complete a Standard Form (SF) 3108, Application to Make Service Credit Payment; also available on the OPM website. Mail the SF 3108, RI 20-97, and a copy of your DD 214 to DA Office of the Assistant Secretary, Manpower & Reserve Affairs, SW Civilian Personnel Center, ATTN: ABC-C 301 Marshall Ave, Fort Riley, KS 66442-5004. In a month or two, you will receive a letter from DFAS acknowledging your request to buy “FERS/CSRS credits for military service performed.” Mail a check to DFAS, payable to “Catch-62 Military Deposit” with your SSN on the check. The letter from DFAS states it will take approximately eight weeks from the day the check clears to receive the credit.
The last step, once the credit shows up on your LES, is to request an OPM Form 1514 or a Military Deposit Worksheet from your CPAC office. Have this placed in your Official Personnel File. This works as long as you’re not receiving a retirement from your military service. Employees in receipt of military retired pay receive no credit for military retired pay unless waived. Before doing this, I strongly encourage you to discuss it with a professional retirement advisor. However, there’s an exception for time spent at one of the US Military Academies (U.S. Naval Academy, U.S. Military Academy, U.S. Air Force Academy, or the U.S. Coast Guard Academy).
Credit for time at a US Military Academy
All honorable active duty military service is potentially creditable under FERS. Cadet/Midshipman Time cannot be credited to active or reserve military retirement, although it can be credited to FERS.
Typically you’ll receive just under four years of creditable service. For example, in the 1980’s cadets made a little over $5700 per year. You can pay the required 3% of your pay into the FERS retirement system (around $700) to get credit for those years of service. Note: Interest accrues on the unpaid deposit if you wait more than two years after starting Federal Service to pay the deposit.
Instead of the DD 214, you include your transcripts from your time spent at the academy or a letter from the Military Academy and follow the same steps above. Each agency may have different rules. Some will not count that time for annual/sick leave accrual but it should work for retirement.
As a GS-14 step 7 in the San Jose area retiring at age 62 after serving ten years in government service and living to age 88 (US average life span), your total retirement benefit is approximately $379,948. If you add in only four additional years of military service, your total retirement benefit increases to $531,927. That’s almost an additional $152,000! It is well worth your time and effort to obtain credit for your military service in FERS.
Stewart Fearon is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here.