Buying back military time for federal retirement

Your active-duty years count toward a FERS pension only if you pay a deposit, and it has to be complete before you leave federal service. The interest-free window is measured from the day you started the job.

If you're in a federal job under the Federal Employees Retirement System (FERS) and you served on active duty, your military years don't count toward your pension on their own. For service after 1956, FERS credits the time only if you pay a deposit for it. The deposit has to be complete before you separate from federal service.

For most service the price is 3% of your military basic pay, as OPM's service credit page shows. It carries no interest if you pay in full before your third anniversary in the job. After that, interest is added at a rate the Treasury sets each year. For calendar year 2026 it is 4.25%, and the rate charged on a 2026 accrual date runs from 4.375% on January 1 to 4.25% on December 31, per OPM's November 2025 letter.

Whether to pay is your decision, and OPM says no one is required to. Getting the job itself is covered in the guides on the federal résumé and USAJOBS and veterans' preference.

Who can pay, and which service counts

Only people currently covered by FERS can make the deposit. If you've already separated, you can't, apart from the narrow belated-deposit requests covered under the deadline below.

The service has to be honorable active service in the armed forces, or in the Public Health Service or NOAA commissioned corps from the dates in the table below. OPM's training deck lists four discharges that don't count: dishonorable, clemency, neutral or uncharacterized, and officer dismissal. OPM's Handbook (April 1998) counts a general discharge under honorable conditions as honorable, so ask HR if your discharge type isn't clear. Service before January 1, 1957 needs no deposit.

Active duty under federal orders (Title 10) counts, annual training on those orders included. Drills don't. Full-time Guard duty under Title 32 (sections 316 and 502 through 505) counts in one narrow case. It must be full-time, entitle you to federal pay (even if you waived it), interrupt creditable service in a federal job, and be followed by USERRA reemployment on or after August 1, 1990. Guard duty before your federal job doesn't count.

How the deposit is figured

Take your military basic pay for the period, multiply by 3%, and round to the nearest dollar. Allowances, flight pay and combat pay aren't in the base.

The rate follows the year you served: 3.25% for calendar 1999, 3.4% for 2000 and 3% for every other year. If your service ran across one of those years, your agency works out the amounts.

Your agency needs proof of what you were paid: your actual military pay records, or an estimate from your branch's pay center on OPM form RI 20-97. Tax records and Social Security earnings statements won't do, because they include allowances.

Each distinct period of service is its own deposit. Consecutive service with no break is one period, and a one-day break makes two. A period counts only if you pay all of it, so a gap between enlistments can mean more than one deposit to finish.

Two cases change the math. If you left a federal job for military service and came back under USERRA, the deposit is the smaller of 3% of your military basic pay or the retirement deductions that would have come out of your civilian pay over the same time.

The other is the older Civil Service Retirement System (CSRS). For military service from before your move to FERS, CSRS rules set a 7% deposit (7.25% for 1999 service, 7.4% for 2000). If you were first covered by CSRS before October 1, 1982, that service is credited without a deposit, but dropped from your annuity at 62 if you are then eligible for Social Security and haven't paid. Ask HR which rules apply.

When interest starts

The clock runs from the day you were first appointed to a position covered by FERS, or from the day you returned to one if you left a federal job for military service. If you were rehired after a break, ask your HR office which date it uses.

Interest begins to accrue on your second anniversary, but a deposit completed before the end of the following year carries no interest. The regulation's dated example: someone who becomes subject to FERS on March 1, 1988 has interest begin on March 1, 1990, but owes none if the deposit is complete by February 28, 1991.

So the second anniversary is when interest begins to accrue, and the third is the first interest accrual date, the date each year when interest is charged. Your agency writes it on your application for each period. A payment must be in the hands of the authorized agency official by close of business on the last business day before that date. A mailed payment's postmark doesn't count.

The Treasury sets the rate each year: 4.25% for calendar year 2026, down from 4.375% for 2025. The rate charged on a given accrual date blends the rates in effect during the 12 months before it, so it slides through the year. In OPM's 2026 table it is 4.375% on January 1, 4.354% on March 1, 4.277% on October 14 and 4.25% on December 31.

Interest is added to the unpaid balance on the accrual date and compounds yearly. Say your first accrual date is October 14, 2026 and you owe $3,000 on October 13. At that date's 4.277% rate, interest is $128.31 ($3,000 times 0.04277). Your agency works out the real figure. If your agency's error adds interest, the agency may pay the extra.

The forms, and who handles them

Your employing agency handles the deposit, not OPM. You file with its office, and it computes what you owe, tells you how to pay, collects the money and sends it on to OPM. OPM expects agencies to notify new appointees within 90 days of entry on duty, listing the documents you need, the computation, your payment options and a contact.

The application is SF 3108A, "Application to Pay Military Deposit for Military Service Performed After December 31, 1956," part of the SF 3108 package. You complete sections 1 through 11 on the front of the SF 3108, fill in the SF 3108A, add a copy of your DD 214 and your pay documentation, and give it all to your agency. Only the June 2013 edition is usable. If you don't have your DD 214, here is how to get a copy.

For the pay figure, request an estimate on RI 20-97, "Estimated Earnings During Military Service." Only the February 2026 edition is usable. Complete blocks 1 through 11 and send it, with your DD 214 and any pay or promotion records you have, to your branch's pay center, which can't estimate earnings without verified active duty. If you served in more than one branch, use a separate form for each.

Where each request goes, from the reverse side of the form:

• Army: DFAS Indianapolis Center, Attention: Verifications Section (Estimated Earnings), 8899 East 56th Street, Indianapolis, IN 46249-0865.
• Navy and Marine Corps (each on its own form): DFAS Indianapolis Center, JFVBB, Attention: Verifications Section (Estimated Earnings), 8899 East 56th Street, Indianapolis, IN 46249-0875.
• Air Force: DFAS Indianapolis Center, Attention: Verifications Center (Estimated Earnings), 8899 East 56th Street, Indianapolis, IN 46249-0875.
• Coast Guard: Commanding Officer (ADV/SV), Coast Guard Pay and Personnel Center, 444 Southeast Quincy Street, Topeka, KS 66683-3591. Phone 785-339-2200.
• NOAA Commissioned Corps: NOAA Commissioned Personnel Center, 1315 East-West Highway, Room 12100, Silver Spring, MD 20910-3282.
• Public Health Service: Division of Commissioned Personnel and Readiness, Commissioned Corps Compensation, 1101 Wootton Parkway, Plaza Level, Suite 100, Rockville, MD 20852. Phone 240-276-8799.

The four DFAS addresses share one phone line, 1-800-729-3277, option 4, and an online upload tool, Ask DFAS, that the form says expedites processing. The form lists no Space Force entry, so ask your HR office where a Space Force request goes.

What the deposit changes

Under FERS the deposit is all or nothing for a period of service. Per OPM's training deck, paid means full credit for both title (eligibility) and computation, and unpaid means none for either.

Your MRA depends on your birth year. OPM's table runs from 55 for people born before 1948 to 56 for 1953 through 1964 and 57 for people born after 1969.

Annual leave is its own track, and it needs no deposit. If you're not a military retiree, your honorable active service counts in full toward your leave-earning rate. Retirees get credit in three cases: war or authorized-campaign service, a disability retirement from armed conflict or an instrumentality of war, and a grandfather clause for employees in place on November 30, 1964.

If you get military retired pay

If you receive military retired pay, the service that pay is based on can't also count toward your FERS annuity unless you waive the retired pay or an exception applies. The agency that authorized your retired pay decides which periods it is based on.

A period your retired pay isn't based on isn't barred, though you would still pay the deposit for it. OPM's Handbook (April 1998) gives service beyond 30 years, and enlisted cadet or midshipman service by someone who retires as an officer, as examples. OPM's retired pay page words the bar more broadly, so ask your HR office which periods are affected before you waive anything.

Three kinds of retired pay don't trigger the bar. One is pay for a service-connected disability incurred in combat with an enemy of the United States. Another is pay for a disability caused by an instrumentality of war and incurred in line of duty during a period of war as defined by 38 U.S.C. 1101. The third is Reserve retired pay under chapter 1223 of title 10, or chapter 67 as it read before the Reserve Officer Personnel Management Act, which OPM's regulation still cites. You still pay the deposit to get the credit.

Otherwise you waive the retired pay. OPM's retired pay page says to send the waiver to Defense Finance and Accounting Service, U.S. Military Retirement Pay, 8899 E 56th Street, Indianapolis, IN 46249-1200, or fax it to 1-800-469-6559. Send it at least 60 days before your planned retirement. OPM's Handbook (April 1998) names DFAS as the waiver office for Army, Navy, Air Force and Marine Corps retired pay. OPM's page gives no waiver address for Coast Guard, Public Health Service or NOAA retired pay. If yours comes from one of those, ask your HR office or retired pay center where to send it.

OPM's suggested wording waives your retired pay for Civil Service Retirement or Federal Employees Retirement System purposes, effective the day before your annuity begins. The Handbook (April 1998) says the request must say so. A waiver made for another purpose, such as VA benefits, doesn't satisfy it.

Suppose that, after January 1, 1997, you waive retired pay that is subject to a court order served on the Secretary concerned under 10 U.S.C. 1408. The service then counts only if you authorize OPM to withhold from your annuity what would have gone to the former spouse. If you also receive VA disability compensation, ask OPM and DFAS how a waiver fits with it before you send one. A waiver also affects survivor coverage; see the Survivor Benefit Plan guide.

Military leave during a federal job

Short training and drill periods run on paid military leave. Federal employees in the Guard or Reserve, or in space force active status, whose appointment isn't limited to one year earn 20 days of paid military leave per fiscal year, prorated for part-time career employees, and can carry up to 20 days over. It was 15 days before Public Law 118-159, effective December 23, 2024.

OPM's Handbook (April 1998) credits active military service on military leave from a civilian position as civilian service, not military service. For the annuity supplement, OPM's Handbook (March 2022) counts time on military leave with pay or leave without pay only with a military deposit paid under USERRA rules, so ask your HR office whether any of your leave periods need a deposit. Your USERRA rights are in the Guard and Reserve guide.

A longer absence is different. Leave without pay for military service can count toward FERS service credit. But active-duty time after 1956 is military service, and FERS credits it only if the deposit is paid. OPM's SF 3108 information sheet says a military deposit may be allowed for leave without pay from a FERS position while you serve on active military duty. For qualifying Title 32 Guard duty during leave without pay, OPM's BAL 95-101 says credit is available if and only if the deposit is paid.

OPM lists four conditions for the USERRA treatment. You gave your agency advance notice unless military circumstances prevented it. You were released from uniformed service under honorable conditions. You served no more than a cumulative 5 years. And you applied for restoration within the appropriate time limits. When it applies, your agency prepares both deposit computations (see "How the deposit is figured"), and your interest clock starts the day you return to a FERS position.

Deadline, payment and refunds

The deposit must be complete, and paid to your employing agency, before you separate from federal service. Retirement, resignation, removal and termination all count as separation. Postponing an MRA+10 annuity doesn't extend it. A payroll deduction schedule that ends on your last paycheck counts as on time, even if that check is dated after you separate.

Running out of time is not an administrative error. OPM's letter says the regulations don't define the term. In general it means your agency, answering your question, gave you material misinformation about the deposit and the consequences of not making it before you separated, or an answer so indirect, inaccurate or incomplete that it confused you about the amount or effect. OPM also counts some errors found after separation, such as a deposit computed under the wrong retirement system or from the wrong interest accrual date.

A former employee who believes an administrative error kept them from finishing can file a specific written request with OPM to make a belated deposit. The same letter applies a different standard to involuntary and disability retirements, where documents show you could not have paid in full before separating. Only OPM, the Merit Systems Protection Board and its reviewing court decide these requests.

You can pay in a lump sum or in installments, and an agency doesn't have to accept installments under $50. Agency notices list payroll deduction and personal check as payment options.

A period counts only when it's paid in full, so a partial payment earns nothing for that period. Payments on an unfinished period are refunded when you retire or become eligible for a refund of your contributions. A completed deposit comes back only if you separate and take a refund of your contributions, or retire without waiving your military retired pay, plus one narrow alternative-annuity case on OPM's information sheet. After a refund, you can't pay the deposit again.

One example, start to finish

Example (fictional) Dana Whitaker is a fictional former Army sergeant who served four years on active duty in one enlistment, with an honorable discharge, ending in 2018. She started a federal job covered by FERS on October 21, 2024. It's early October 2026. Her W-2s include allowances, so they can't prove her basic pay, and she asks for an estimate.

Dana fills in blocks 1 through 11 of the February 2026 RI 20-97, attaches her DD 214 and sends it to the Army's estimate address in Indianapolis. The estimate shows $98,437 of basic pay for the four years (a made-up figure). Her agency multiplies by 3% and gets $2,953.11, which rounds to $2,953. One unbroken enlistment is one period, so it's one deposit.

She completes the SF 3108 and SF 3108A, adds the estimate and her DD 214, and gives the packet to HR. HR confirms her interest accrual date and tells her how to pay. She asks for a payroll schedule that finishes before October 20, 2027.

What the deposit buys is credited years, not a dollar amount. Her period runs from entry on active duty to discharge, four years, so a completed deposit adds four years to the service OPM counts. The FERS formula applied to those four years, with no pay or age assumed, is arithmetic and not a prediction of her annuity.

The four years also count toward the retirement tests in the table above. OPM computes Dana's real annuity, and decides what service counts, when she applies to retire.

This is general information, not advice about whether to make a deposit and not an estimate of your annuity. Your agency's human resources office computes the deposit, and OPM decides what service counts when you apply to retire, so start with HR: OPM tells employees to ask their local servicing personnel center and to seek counseling from their employing agency.