Expert's View

Last week I surveyed some of the most common types of civilian employment that are considered to be creditable for retirement purposes. This week I want to talk about military service that may also be combined with your civilian service if you want to do that.

ADVERTISEMENT

Want to do that? Why wouldn’t you. Well, once again, it depends on a number of factors: when your period(s) of military occurred, whether you retired from the military, and which retirement system you are in.

Post-1956 military service – not retired military

If you are a CSRS employee who was first employed before October 1, 1982, you have two choices. You can either make a deposit for any period(s) of active duty service or not make it. Not making it entails a gamble. If you retire before age 62 and are eligible for a Social Security benefit at age 62, that period of service will be eliminated and your annuity recomputed downward. If you retire after reaching age 62 and are eligible for a Social Security benefit at that time, the reduction will occur on the day you retire.

On the other hand, if you are a CSRS employee who was first hired after September 30, 1982, you’ll have to make a deposit to get credit for that time. The amount of the deposit equals 7 percent of your basic military pay (not including any allowances or differentials) for any active duty service before January 1, 1999. The deposit for service during 1999 equals 7.25 percent, during 2000, 7.4 percent, and after December 31, 2000, 7 percent.

ADVERTISEMENT

If you are a FERS employee, you have no choice. To get credit for any period(s) of active duty, you’ll have to make a deposit for that time. The deposit equals 3 percent of your basic military pay prior to January 1, 1999. In 1999 it equals 3.25, in 2000, 3.40 percent and after December 31, 2000, 3 percent.

Post-1956 military service – retired military

If you are retired from active duty in the armed forces, in most cases you will have to do two things to get credit for your active duty service: make a deposit for that time under the rules and deposit requirements mentioned above, and, when you retire, waive your military retired pay.

There are two exceptions to that second requirement. You won’t have to waive your military retired pay if it was:

* awarded based on a 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; or

ADVERTISEMENT

* granted under the provisions of Chapter 67 of Title 10 of the U.S. Code. In other words, if you retired from a reserve component of the armed forces.

Since a key ingredient in your eventual annuity is your basic pay, next week I’ll spend some time helping you to understand what is included in it…and what isn’t.