If you don’t make a deposit, you could not only retire with a smaller annuity, but you could end up paying a much larger deposit if you delay too long in making it. Image: Kellis/Shutterstock.com
By: Reg JonesFederal employees with military service time: Attention!
If you served in the armed forces and will be eligible for Social Security at age 62 (or later if you retire after age 62) and haven’t paid a deposit for your military service, those years won’t be included when calculating your eventual federal retirement annuity.
Note: The rules I’m writing about here apply only to those who served in the military after 1956, but we’re assuming that anyone who served before that already is retired.
If you were first employed in a position subject to CSRS or FERS on or after October 1, 1982, you can only receive civil service credit for military service if you deposit an amount equal to a percentage of the military basic pay you earned, plus interest. For CSRS, the amount is generally 7 percent, for FERS generally 3 percent.
You don’t have to make the deposit in a lump sum. Deposits can be made in increments as small $50. However, the full amount must be deposited before retirement for you to get credit for that military service.
Note: If there are any of you CSRS employees who were first employed before October 1, 1982, it’s up to you whether to make a deposit. If you expect to become eligible for Social Security benefits, it may be worth doing. If you don’t, you are free to pass up the opportunity.
To find out what you owe, go to your personnel office. If you have a DD-214 or its equivalent, you need to attach it to a copy of form RI 20-97, Estimated Earnings During Military Service (which they will provide you) and mail it to your branch of service. (The addresses are on the back of the form.) The service center will verify your earnings.
If you can’t locate a form that verifies your service but do have complete pay records, your personnel office can use those to calculate your military deposit. However, if you lack both a DD-214 and complete pay records, you’ll have to fill out a SF-180, Request Pertaining to Military Records (available from your personnel office or online at www.opm.gov click on Forms) and send it to the branch of service with which you served. (The addresses are on the back of the form.) The records center will provide you with a new DD-214 or its equivalent. Attach a copy of that form to a completed RI 20-97 and mail it to your branch of service to get an estimate of your earnings.
If you decide to make a deposit to cover your military service, you’ll have to take that paperwork to your personnel office and fill out a SF-2803, Application to Make Deposit or Redeposit. They’ll take it from there.
Note: If you don’t make a deposit, you could not only retire with a smaller annuity, but you could end up paying a much larger deposit if you delay too long in making it. That’s because interest on unpaid deposits really mounts up.
For those employed under CSRS, prior to October 1, 1983, interest began to accrue on October 1, 1985. If you were first employed after October 1, 1983, interest started 2 years after you were first employed in a position subject to CSRS. If you were employed under FERS prior to January 1, 1987, interest started to accrue January 1, 1989. If you were employed under FERS after that date, there’s a two-year grace period before interest kicks in. Under either system, there’s a two-year grace period if you leave the system for military service and then return to a job under the same employment system.
Interest rates on military service deposits are set by the Department of Treasury and computed on a calendar year basis, January 1 through December 31. Rates have ranged from 13 percent in 1985 to a low of 1.375 in 2021. OPM has provided agency personnel offices with interest rate tables that will help you to figure out how much interest you would owe.
FYI: The more time you take trying to decide whether to make a deposit, the more it could cost you. Therefore, if you have any post-1956 military service, don’t delay. Visit your agency personnel office now. The benefits counselors there can help you to sort out the options and expedite the paperwork if you decide to make a deposit.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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