In general, military service is creditable for retirement under FERS if:
- The military service was performed before the date of separation from the civilian employment upon which the annuity is based;
- It was active duty;
- It was not included in the computation of military retired pay, or if it was included in retired pay, the retired pay was awarded based on disability incurred in combat with an enemy of the United States or caused by an instrumentality of war and incurred in the line of duty during a period of war; or granted under the provisions of chapter 67, title 10, of the U.S. Code;
- It was honorable service; and
- A deposit is made for military service when applicable.
Active Military Service Performed Before January 1, 1957. This service is creditable toward FERS retirement without a deposit.
Active Military Service Performed on or After January 1, 1957. You must make a deposit to credit this service toward FERS retirement eligibility and computation of your retirement annuity. For many people it is advantageous to make the deposit since the extra years of service will increase their retirement annuity.
A deposit for military service must be made to your civilian payroll office before you separate; it cannot be paid to the Office of Personnel Management (OPM). Planning ahead will allow you to make the deposit in installments rather than a single payment. If your military service is required for retirement eligibility you must pay the deposit in full before your retirement can be processed.
The amount of the deposit is 3 percent of the basic pay earned during the periods of active military service plus interest. Interest begins to accrue on deposits for post-1956 military service 2 years after you were first employed (or reemployed after a period of military service) in a position subject to FERS deductions. Interest accrues and is compounded annually until the deposit is paid in full.
Interest rates are determined by the Treasury Department each calendar year.
If you are receiving retired military pay, in addition to making the required deposit, you must waive your retired military pay at the time of your retirement from a FERS position to credit the service toward your FERS annuity unless:
- You are retiring from civilian service after September 30, 1982 and have military service that was not used in the computation of retired military pay, such as enlisted service performed as a cadet or midshipman by an individual who retires as an officer or service in excess of 30 years.
- The retired military pay was awarded:
- On account of a service-connected disability incurred in combat with an enemy of the United States;
- On account of a service-connected disability caused by an instrumentality of war and incurred in the line of duty during a period of war; or
- Under provisions of 10 U.S.C. 12731-12739 (retired pay under Chapter 1223 for members of the Reserves).