Should I buy back 20 years of military time?

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“Greetings, I am retired from the Army after 20 years as a Staff Sergeant.  I am currently a GS 14 with 11 years under FERS. When I retire do I keep my military retirement monthly check and a fed GS retirement separate from the military time? Or should I buy back the time and retire with 40 Years?  Sorry, I am so confused”- Jeff

Creditable Military Service:

Generally, military service in the Armed Forces of the United States is creditable for retirement purposes if active service is terminated under honorable conditions and performed prior to your separation from civilian service for retirement.

Military Service Credit Deposit:
  • 3% of military base pay during the period of active service
  • Interest accrues on the 2nd anniversary of federal employment or 2nd anniversary of discharge for “interrupted” civilian employment.
  • Interest compounds annually on the anniversary date

Follow these step by step instructions:  Defense Finance and Accounting Service > CivilianEmployees > militaryservice > militaryservicedeposits

Attach your Certificate of Release or Discharge from Active Duty, DD 214 (or equivalent), and any available records of pay or promotions to the RI 20-97 and send it to the appropriate military finance center. Verification of your service is required to obtain your estimated earnings. Listing of acceptable documents. Note: To obtain a copy of your DD214, write to or send a military records request form, Standard Form 180(SF-180) to:

National Personnel Records Center

Military Personnel Records

9700 Page Avenue

St. Louis, MO 63132-5100

Variable Interest Rates

1985

13.0%

1998

6.75%

2011

2.75%

1986

11.125%

1999

5.75%

2012

2.25%

1987

9.0%

2000

5.875%

2013

1.625%

1988

8.375%

2001

6.375%

2014

1.625%

1989

9.125%

2002

5.5%

2015

2.0%

1990

8.75%

2003

5.0%

2016

2.0%

1991

8.625%

2004

3.875%

2017

1.875%

1992

8.125%

2005

4.375%

2018

2.125%

1993

7.125%

2006

4.125%

2019

2.75%

1994

6.25%

2007

4.875%

2020

2.25%

1995

7.0%

2008

4.75%

2021

1.375%

1996

6.875%

2009

3.875%

2022

1.375%

1997

6.875%

2010

3.125%

 

 

Creditable Military Service:  Retirement

Military retirees cannot apply their years of military service toward civilian federal retirement if they receive military retired pay. 

Military retirees must waive their military retirement pay if they wish to use their years of military service to increase their civil service years and receive an increased annuity through either the Civil Service Retirement System (CSRS) or Federal Employee Retirement System (FERS).

If you do not waive your military retired pay, you may then receive both your military retired pay and your civil service annuity at the same time.

Combine civilian and military service under FERS
  • 41 years of combined civilian and military service
  • 41 x 1.0% (1.1% if age 62 or older) x high-three average salary
  • 41% x $140,000 (hi-3) = $57,400 / year
  • 45.1% (age 62+ x $140,000 = $63,140 / year
Keep separate:
  • Military retirement:  $30,000 / year
  • FERS retirement:
  • 11 x 1% x $140,000 = $4,400 / year 
    • Reduction if under age 62: pension will be reduced by 5% for every year (or 5/12 of a % for every month) that you retire before age 62.

Combined benefit:  $57,400 or $63,140 / year vs $30,000 (military) + $4,400 (FERS) = $34,400 / year

Considerations:
  • How much is the military deposit?  
  • How long will it take to earn as much additional FERS retirement to equal deposit amount?
  • Diet COLA under FERS
  • Future changes to either benefit
  • Survivor benefit and cost of election

.

Retired Pay Waiver

“I (Full Name and Military Serial Number) hereby waive my military retired pay for Civil Service or Federal Employees Retirement System purposes effective (The day before your annuity begins). I hereby authorize the U.S. Office of Personnel management to withhold from my (CSRS or FERS) annuity any amount of military retired pay granted beyond the effective date of this waiver due to any delay in receiving or processing this request.”

Mail your waiver via U.S. postal mail to the following address:

Defense Finance and Accounting Service

U.S. Military Retirement Pay

8899 E 56th Street

Indianapolis, IN 46249-1200

Faxed requests of this nature can be sent to (800) 469-6559.

If a retiree has been awarded the retired pay on …
  • account of a service-connected disability 
    • either 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
  •  under the provisions of Chapter 67, Title 10, U.S.C. (pertaining to retirement from a reserve component of the Armed Forces).

…Then a waiver is not necessary to receive credit under CSRS or FERS.

Veterans Administration Benefits

Individuals whose civilian retirement is not based on disability need not renounce VA benefits to receive credit for military service if they waive military retired pay for CSRS or FERS purposes.

National Guard
  • National Guard Service, except when ordered to active duty in service of United States, is generally not creditable. 
  • You may receive credit for National Guard service, followed by Federal civilian reemployment (after August 1, 1990), when all the following conditions are met:
    • The service must interrupt civilian service and 
      • be followed by reemployment
    • It must be full-time, not inactive duty, and 
      • must be member of Army National Guard, Air National Guard. 
    • Also, it must be under a specified law and 
      • be entitled to pay from the U.S. (Or have waived pay from the U.S.) for the service.

If you have any questions concerning National Guard credit, see your personnel office.

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