Hi, my name is Eric. I am calling because I have a question about buying back my military time. I am retired from the from the Marine Corps. Injuries Sustained in Combat. So I received a CRSC Combat Related Special Compensation, and my question is how does that impact… because I heard that if you buy back your time, you surrender that. So hopefully you can answer this question. Thank you. Bye. – Eric
Federal employees with prior military service have the unique opportunity to enhance their FERS pension through a military time buyback. However, if you’re receiving Combat-Related Special Compensation (CRSC), things can get a bit more complicated. Let’s break down how these benefits interact and what you need to know to make an informed decision.
Understanding Military Time Buyback
Military time buyback allows federal employees to count their active-duty military service toward their federal retirement. By paying a deposit, you can increase your total years of service, which could mean a larger FERS pension down the road.
Here’s how it works:
- Eligibility: Active-duty military service that ended honorably is generally eligible to be credited toward your federal civilian retirement.
- The Cost: You’ll pay a deposit based on a percentage of your military basic pay, plus interest if applicable. Starting early can reduce your costs since interest accrues over time.
- The Benefits: Adding military time to your federal service increases your years of service for retirement calculations, potentially boosting your pension amount.
While this program offers significant benefits, it’s important to understand how it interacts with other military-related compensation, especially CRSC.
What Is Combat-Related Special Compensation (CRSC)?
CRSC is a tax-free benefit for retired military members with combat-related disabilities. It’s designed to compensate for the offset between military retired pay and VA disability compensation.
Key features include:
- Tax-Free Payments: CRSC payments are not subject to federal income taxes, providing a financial advantage.
- Eligibility: You must be a military retiree with a combat-related disability rating from the VA to qualify.
- Purpose: CRSC helps ensure that veterans injured in combat receive adequate compensation without forfeiting other benefits.
While CRSC is a valuable benefit, its connection to military retirement can create challenges if you’re considering a military time buyback.
The Impact of Buying Back Military Time on CRSC
The interaction between military time buyback and CRSC depends on whether you’re a retired military member or separated (non-retired).
For Retired Military Members
If you’re receiving CRSC as a retired military member and are receiving a military pension, buying back your military time could result in the loss of both your military retirement and your CRSC payments.
Here’s why:
- Buying back your military time requires waiving your military retirement.
- Since CRSC is tied to your military retirement, giving up your retirement also means losing your CRSC payments.
For example, if you’re receiving CRSC for a combat-related injury and decide to buy back your military time, you’ll lose both your retirement pay and the CRSC payments associated with it. This trade-off can have significant financial implications, especially if CRSC makes up a large portion of your income.
For Separated (Non-Retired) Military Members
If you served in the military but did not have the 20 years to receive a military retirement, buying back your military time generally does not affect CRSC payments.
Why? CRSC is tied to military retirement status. If you’re not receiving military retirement but qualify for CRSC due to a combat-related disability, there’s no retirement pay to waive when you buy back your military time.
This makes buying back military time a more straightforward decision for separated military members.
Conclusion
Buying back military time is a powerful tool for increasing your FERS pension, but it comes with important trade-offs, especially if you’re receiving CRSC. By understanding how these benefits interact and considering your long-term financial goals, you can make an informed decision that supports your retirement plans.
Careful planning and expert advice can help you navigate the complexities and make the best choice for your unique situation. With the right approach, you’ll be well on your way to a secure and fulfilling retirement.
Micah Shilanski 00:04
Buying back your military time could be a great way to increase your civilian FERS pension, but there could be a special cost, especially if you were receiving some combat related special compensation, and you need to know what these rules are, so make sure you stay tuned for this FERS Federal Fact Check. Hi, I’m Micah Shilanski with Plan Your Federal Retirement today, we have a great question that comes in from Eric, about military time, but just not about military time, about getting some additional compensation for a combat related special compensation that’s coming in, so let’s have a listen to Eric’s question.
Eric 00:39
Hi, my name is Eric. I’m calling because I have a question about buying back my military time. I am retired from the Marine Corps injuries sustained in combat, so I’ve received a CRSC Combat Related Special Compensation, and my question is, how does that impact, because I heard that if you buy back your time, you surrender that, so hopefully you can answer this question, thank you, bye.
Micah Shilanski 01:04
Eric thank you for calling in and giving us that information, that is a really good question. Now I gotta say there’s a couple of caveats in here, I don’t deal with this regularly, so make sure you’re getting up to date information, make sure with DFAS, you’re working with your HR and everything I’m about to say kind of jives with what they’re saying as well. This is a bit of a depends question, and where I’m seeing it when I kind of did my research on this is it’s all tied to, are you retired from the military or separated from the military? If you’re retired from the military and you go back to buy your FERS time, now, there’s exceptions for guard time, right? So let’s assume there’s not guard inside of here, or going, this active duty says it’ll look like or I heard from your question, that this active duty time, let’s say you put in your 20 years, and you’re retired, and you’re getting the CRSC pay, and you go to buy back that military time to make it count towards your civilian service, then yes, that would negatively affect that compensation, as in, that compensation will be reduced, if not, would go away by buying back the retired time. However, if you were not retired, let’s say you had 5 years, 10 years, whatever, in the core, and you worked, but you did not have a retirement, and you separated, you might be getting VA pay, in addition to that, you might be getting the CRSC pay, the combination kind of out of the two, and then if you buy back that, I’m going to say unused military time that’s not counted towards retirement, it should not affect your CRSC pay again there’s a lot of rules in here with this, so make sure you’re looking at DFAS, make sure you’re working with your HR make sure all of that information is meshing together. If you have questions like this that are really particular, this is where it makes sense to kind of sit down with somebody, but we’re more on one to go through the details. It’s not trying to plug us for our service here, but these benefits can get really complex really quickly. So make sure you’re getting the most out of your benefits, and then, in addition, Eric, when you’re going through this process, I would say, don’t just rely on a generic letter from the agency, whichever one that says, hey, if you follow this rule, you’re gonna be just fine. I have found more often, I found several times, unfortunately, OPM will pick on them has made mistakes, they sent a communication to people before they were clients and saying, great news, this is how your benefits work, and OPM was wrong, and the clients could not rely on that letter as verification as to why they did a certain thing and they lost out on benefits, so you really have to know these rules anytime you deal with an agency on something like this, make sure you ask them to cite the rules, directly, you go and read that and make sure you know how the system works this is sure money on what you guys to get the most out of your retirement, until next time, Happy Planning!