Getting credit for active duty service in the military used to be a simple thing. It still is for anyone whose service was performed before January 1, 1957. If you are one of them, you’d get credit for that time in your annuity computation without paying a deposit. Everybody else with military service has to wrestle with the matter.
This being the federal government, there are two sets of rules that govern whether you are required to make a deposit in order to get credit for your period(s) or military service.
f you were first employed before October 1, 1982, you have two options. The decision you make hinges on whether you expect to be eligible for a Social Security benefit at age 62 (or later if you retire after age 62). If you don’t expect to be eligible for a Social Security benefit, you can decide not to pay the deposit and your annuity will remain unchanged.
If you do expect to be eligible for a Social Security benefit, it’s probably in your interest to make a deposit. If you don’t, those years of military service will be dropped and your annuity recomputed downward. And it’s highly unlikely that what you’ll receive from Social Security will come close to matching what you will lose in your CSRS annuity.
On the other hand, anyone hired after October 1, 1982, must make a deposit for their military service time in order to get credit for it in their annuity computation.
The amount to be deposited is based on two things, the amount of your military base pay (not including allowances) and a percentage. If you don’t know what your base pay was, you can get that information by completing OPM form RI-20-47 and sending it in to your military finance center. You can get a copy of the form from your personnel office or download it from OPM’s website at www.opm.gov. Just click on the Federal Forms icon.
The percentage of base pay required depends on the retirement system you are in. If you are covered by CSRS, it’s 7 percent for all periods of military service between 1957 and 1958. For periods of service in 1999, it’s 7.25 percent; for 2000, it’s 7.40. For all periods of service after that, it’s back to 7 percent. For FERS during the same time periods, it’s 3 percent, 3.25, 3.40, and 3. If you transferred to FERS from CSRS, and your military service occurred before or during the time you were covered by CSRS, you’ll follow CSRS percentage rules. If after transferring, you’ll follow FERS rules.
If a deposit for military service isn’t made within two years after you first became employed, interest will be charged to your account one year after that two year period ends. In effect, you have three years minus on day to complete an interest-free deposit. After that, interest is added. So, the longer you wait to make a deposit, the bigger the bill will be. Note: If you decide to make a deposit, it will have to be completed before you retire. If you don’t, the amount you deposited will be refunded to you and you’ll get no credit for that time.
One last point. Some of you will have retired from the military. In most cases, you will not only have to make a deposit for that time but you will have to waive your military retired pay. Only those who were awarded that 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 will be allowed to receive both their military retired pay and their civilian annuity without a reduction in either. Your branch of service will have to determine if you meet that criterion.