Periods of active duty military service can be added to your civilian service. Sometimes a deposit for that time is required; in others, it isn’t.
With one exception, if you are receiving military retired pay, you’ll have to both make a deposit for that time and waive your military retired pay to get credit. Here’s the exception. You don’t have to waive your military retired pay if it was awarded 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.
Note: There is no bar to your getting credit for active duty military service and receiving retired pay from a reserve component of the armed services.
CSRS Rules—If you were first employed under CSRS before October 1, 1982, you’ll get credit for your active duty military service in determining your eligibility to retire. However, when it comes to determining if those years will be included in your annuity computation, you’ll have a choice. You can either make a deposit for that time or you can decide not to.
See also, Military Service Credit for Federal Retirement at ask.FEDweek.com
If you don’t make a deposit, are retired, and become eligible for a Social Security benefits at age 62 (or when you retire if it’s later than age 62), those years of military service will be eliminated from your total service credit and your annuity recomputed downward. So, if you’re sure you won’t be eligible for a Social Security benefit at those two points in time when OPM checks with the Social Security Administration, you can forget about making a deposit.
If you were first hired after September 30, 1982, you won’t receive any credit for that time unless you make a deposit.
FERS Rules—Just as with the post-September 30, 1982 rules for CSRS employees, you won’t get any credit for your active duty military service unless you make a deposit.
If you will have a CSRS component in your annuity, any military service that occurred before you transferred to FERS will be handled under CSRS rules; any service that occurred after the transfer will be handled under FERS rules. Military service occurring before the transfer will be credited to the CSRS component; and occurring after will be credited to the FERS component.
If you are considering making a deposit for your active duty military time and want to find out how much you would owe, plus accrued interest, you’ll need to complete a copy of RI-20-97, Estimated Earnings During Military Service, at www.opm.gov/forms. Send that and a copy of your DD Form 214, Report of Transfer or Discharge, to your military finance center. When that form comes back to you, take it and a copy of your DD Form 214 to your local payroll office. They’ll compute the amount you owe plus accrued interest. If you decide to make a deposit, they can work out a payment schedule for you.