Reg Jones Expert's View

Last week we looked at the rules governing retirement benefits for employees who served on active duty but didn’t retire from the military. This time let’s focus on employees who served on active duty and are receiving (or will be receiving) military retired pay.

Active duty service includes uniformed service in the Army, Navy, Air Force, Marine Corps, Coast Guard, the regular Corps or Reserve Corps of the Public Health Service, and as a commissioned officer of the National Oceanic and Atmospheric Administration. Other creditable service includes attendance as a Midshipman at the U.S. Naval Academy and as a Cadet at either U.S. Military Academy, U.S. Air Force Academy, or the U.S. Coast Guard Academy.

Post-1956 military service – retired military

• Retirement credit: If you are retired from active duty in the armed forces, as a rule you’ll have to do two things to get credit for your active duty service.

First, you’ll have to make a deposit for that time. If you are a CSRS employee, the amount of the deposit equals 7 percent of your basic military pay (not including allowances or differentials) for any active duty service before January 1, 1999. The deposit for service during 1999 is 7.25 percent, during 2000, 7.4 percent, and after December 31, 2000, it’s back to 7 percent. If you are a FERS employee, the deposit equals 3 percent of your basic military pay prior to January 1, 1999. In 1999 it’s 3.25, in 2000, 3.40 percent and after December 31, 2000, it’s once more 3 percent.

Second, when you retire from your civilian job, as a rule you’ll have to waive your military retired pay unless you were awarded it on account of a service-connected disability either incurred in combat with an enemy of the United States and incurred in the line of duty during a period of war. However, even if you meet that definition, you’ll still have to make a deposit to get credit for that time.

Post-1956 military service – retired reservist

If you retired from a reserve component of the armed forces, you won’t have to waive your reserve retired pay if it was granted under the provisions of Chapter 67 of title 10 of the U.S. Code. You will, of course, have to make a deposit for any periods of active duty service – not including weekend drills or annual active duty for training – to get credit for that time as outlined above.