FEDweek

Making Military Credit Deposits

Last week I defined active duty service, so we’d all know what you can get credit for when determining your civilian length of service and computing your annuity. I went on to describe the difference in the rules governing CSRS and FERS employees. This time I want to talk about how much you’d have to pay to get that credit and how to make a deposit if you decide to do that.

CSRS deposits

For periods of post-1956 active duty service the deposit equals 7 percent of your basic military pay (not including allowances or differentials) for all years except for 1999 (7.25 percent) and 2000 (7.4 percent).

FERS deposits.

For periods of post-1956 active duty service the deposit equals 3 percent of your basic military pay (not including allowances or differentials) for all years except for 1999 (3.25 percent) and 2000 (3.4 percent).

If you will have a CSRS component in your annuity, the interest rates for military service performed before becoming a CSRS employee or that interrupted a period of CSRS service will be computed using the CSRS rate listed above.

How to make a deposit

The first thing you’ll need to do is find out how much basic pay you earned while on active duty. To do that, you’ll need to complete Form RI 20-97, Estimated Earnings During Military Service, and send it to the military finance center for your branch of service, along with a copy of your DD Form 214, Report of Transfer or Discharge.

When you get the answer, take it to your payroll office along with a copy of your DD 214 and a Standard Form 2803 (CSRS) or 3108 (FERS) and ask for them to estimate the deposit you’ll be required to make. They’ll compute the amount you owe, plus accrued interest. (Note: If you make the deposit within two years on the date you first enter on duty as a civilian employee, you won’t owe any interest.)

Once you know how much you’ll owe, you can decide whether to make the deposit. If you decide to do that, you can do it in a lump sum or on a regular schedule of payments. In either case, the payments are made to your agency, not OPM. And they must be completed before you retire. If they aren’t, at retirement you’ll receive a refund of what you did deposit and get no credit for your active duty service.

If you have more than one period of active duty service, you can decide to make a deposit for any one or more of them.

What if I’m receiving military retired pay?

With one exception, if you are receiving military retired pay, you not only must make a deposit to get credit for that service but you must waive that pay when you retire. If you don’t, the amount you deposited will be returned to you and you won’t receive any credit for that time.

Here’s the exception. You won’t have to waive military retired pay if you were awarded it on account of a service-connected disability 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. However, you’ll still have to make a deposit for that service.

Note: If you are receiving retired pay from a reserve component of the armed forces, you are not required to waive that pay, only make a deposit for any periods of active duty service if you want to get credit for that time.