Military BuyBack

Military Buybacks

buybackIf you have active honorable military service that isn’t already being counted toward a military retirement, there is a very good chance that you can “buy” that time back and have it count toward your federal civilian retirement. This article discusses details about the buyback program.

If you do a military buyback, it will increase the number of years in service that are used for your annuity/pension calculation. The more years you have, the larger your federal pension.

Federal employees have the option of making military service credit payments for creditable military service to prevent their civil service annuity from decreasing at age 62. If you have or anticipate having at least 10 years of Social Security payments at age 62, you should consider paying back your military time. Otherwise your annuity will decrease.

If you make a military deposit, there is no effect on your other military benefits such as medical benefits; base access, commissary or VA benefits (including any disability payments from the VA). It only affects active duty retired military pay. You cannot receive two separate retirement packages (military and civilian) for the exact same period of service. However, Reserve or National Guard members under Title 32 can collect both a federal civil service retirement and a Reserve or National Guard retirement package.

Your buy-back time will increase the number of years used for your annuity calculation. However, it does not count toward the minimum time needed for retirement. In other words, if you hire into the federal service at say, age 58, you must work at least 5 years to be eligible to collect an annuity – not counting buyback time.

For FERs retirement eligibility, in the situation just mentioned, if you purchased back 4 years of military time, you would be able to retire at age 63 with 9 years toward retirement. Instead of receiving an annuity calculated at 5% of your average high-3 salary at age 63 after working 5 years, it would increase to 9% of your high-3 average salary.

For CSRS eligibility, if you served on active duty and will be eligible to collect Social Security, your CSRS annuity will be reduced by the number of years that you served unless you buy back that time. For example, if you served in the armed forces for 4 years, your annuity will be reduced by 8%. You can buy back your military time to avoid this reduction and collect your annuity and whatever Social Security benefits that you are entitled to.

For CSRS employees the military deposit equals 7% of military base pay, plus interest. For FERS employees, the military deposit equals 4% of military base pay, plus the applicable interest. There is a two-year interest-free grace period on all military deposits. After the two-year grace period, interest is accrued and compounded annually. The interest rate is an annual variable rate.

Military deposits must be paid before you retire. Generally, if an employee hasn’t paid their military deposit, they can submit the deposit paperwork and the check with their retirement paperwork. The deposit is paid to the finance office before being submitted to OPM. This counts as being paid before you separate from service.