Expert's View

Last time I talked about Catch-62 and the adverse effect it can have on the annuities of certain retirees. That topic always generates a lot of interest along with questions about what constitutes creditable military service for retirement purposes. In this article I’ll spell that out.

Creditable military service includes active duty in the Army, Navy, Air Force, Marines and Coast Guard, as a Regular or Reserve Corps member of the Public Health Service, or as a Commissioned Officer of the National Oceanographic and Atmospheric Administration; as a midshipman in the U.S. Naval Academy or a cadet at the U.S. Military Academy, Air Force Academy or Coast Guard Academy; and periods of active duty service performed while enrolled in the Naval or Army Reserve Officers Training Corps. Not considered creditable is service in the U.S. Merchant Marine, in the Air Force ROTC, or the National Guard (unless called or drafted into the actual service of the United State.

All such active duty service performed before January 1, 1957, is automatically creditable in determining an employee’s eligibility to retire and in his annuity computation. And there is no requirement that a deposit be made to the civilian retirement system to get that credit.

Active duty military service performed after December 31, 1956, by anyone who was first hired before October 1, 1982, is also fully creditable in determining an employee’s eligibility to retire and in his annuity computation. However, as noted in my last article, the annuities of retirees who were first hired before October 1, 1982, got credit for their active duty military service when their annuities are computed, didn’t make a deposit to the retirement system for that time, and become eligible for a Social Security benefit at age 62 (or when they retired if was after they reached age 62), will have that time eliminated and their annuities recomputed downward. While their annuities will be reduced, Catch-62 will have no effect on their eligibility to retire.

Retirees hired before October 1, 1982, who aren’t eligible for a Social Security benefit at age 62 (or when they retire), won’t be affected by Catch-62.

On the other hand, active duty service performed by anyone who was first hired after September 30, 1982, is only creditable for retirement purposes if a deposit is made to the civilian retirement system.

For those who are considering making a deposit, I’ll repeat what I wrote in my last article. First, you’ll need to find out how much you owe. To do that, fill out Form RI 20-97, Estimated Earnings During Military Service, and mail it to the finance center for your branch of service along with a copy of your DD-214, Report of Transfer and Discharge (or its equivalent). Then, when the response comes back, attach a copy of your DD-214 (or its equivalent) and a completed Application to Make Deposit or Redeposit (Standard Form 2803 (CSRS) or 3108 (FERS)), and take it to your local payroll office. They will figure out how much you owe and tell you how to go about making the deposit, if you decide to do that. The RI and Standard From are available online. Go to www.opm.gov and click on Forms.

One final note.If you are receiving retired military pay and make a deposit to get credit for that time, in most cases you’ll have to waive the receipt of that pay when you retire. The only exception is if you were awarded that pay because 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.