Veterans Buying Back Military Time Often Miss This One Crucial Deadline

Key Takeaways

• If you served in the military and now work in the public sector, buying back your military time can significantly increase your pension—but there is a strict deadline that, if missed, could cost you thousands in retirement.

• The interest-free grace period to complete your military service credit deposit is limited, and once it passes, interest accrues rapidly each year.

What Buying Back Military Time Actually Means

• Also Read: Dropping FEGLI Sounds Smart—Until You Realize What It No Longer Covers After Retirement
• Also Read: Hitting 20 Years in Law Enforcement? Here’s What You Can Expect From Your Pension
• Also Read: Think You Understand FERS? These Three Rules Still Confuse Even Longtime Government Employees

When you transition from military service to a civilian job in the public sector, particularly within federal employment under FERS or CSRS, you may be eligible to “buy back” your active-duty military service. This process allows you to credit those military years toward your civilian retirement pension.

By making a deposit equal to a percentage of your military base pay (not including allowances), your military time can count toward both your service length and annuity calculations. This can be especially valuable if you’re looking to retire earlier or maximize your monthly pension.

But here’s the problem: most veterans don’t realize the deadline to buy back that time interest-free is sooner than they think.

The 3-Year Interest-Free Clock Starts Ticking Immediately

Under FERS, you must complete your military service deposit within three years of the date you were first hired in a civilian position covered by retirement deductions. That means:

• If you were hired in 2022, your interest-free window expires in 2025.

• After the three-year mark, your unpaid balance begins accruing annual interest based on the Treasury rate, which can be substantial over time.

Many veterans assume they can deal with the buyback process later in their career. Unfortunately, by then, the accrued interest may have made the cost prohibitively expensive—often increasing the deposit by thousands of dollars.

Why the Deadline Is So Commonly Missed

There are several reasons this deadline catches people off guard:

• Lack of awareness: New civilian employees often aren’t informed about military buyback during onboarding.

• Delays in documentation: Retrieving military pay records (DD 214 and earnings) can take months.

• Bureaucratic confusion: The process involves multiple agencies including DFAS and OPM, which can be confusing without guidance.

• Procrastination: Many assume they have until retirement to decide, not realizing the interest-free window is early and fixed.

What Happens If You Miss the Deadline?

Missing the three-year interest-free period doesn’t mean you lose the right to buy back your time—but it does mean you’ll owe interest, which compounds annually.

For instance, if your deposit would have been $3,000 in 2022, but you wait until 2025 to make the payment, you could owe over $3,600 due to interest. The longer you delay, the worse it gets. Over 10 years, that cost could more than double.

In some cases, the increased cost discourages veterans from completing the buyback, even though it could still be financially beneficial long-term.

How to Begin the Buyback Process

To avoid missing this deadline, start as early as possible. Here’s a general outline:

1. Get your DD 214: This document proves your military service and discharge status.

2. Request your military earnings: You’ll need your estimated base pay for the period you want to buy back.

3. Submit SF-3108 and RI 20-97 forms: These help you determine how much you’ll owe and where to submit the deposit.

4. Make your deposit: Payments can usually be made as a lump sum or through payroll deductions, but earlier is always cheaper.

Be sure to contact your human resources office and retirement specialist for specific forms and assistance.

How Much You’ll Pay—and How Much You Could Gain

The amount you owe depends on:

• The number of years you’re buying back

• Your basic military pay during those years

• Whether you’re under FERS (3% of base pay) or CSRS (7% of base pay)

Even with interest added, buying back military time usually leads to a higher lifetime pension. For example, adding 3 years of creditable service could raise your pension by hundreds per month.

In most cases, the payback period is short. You often break even within a few years of retirement, with the rest representing long-term gain.

Special Cases That Can Affect the Process

Certain conditions may alter your buyback timeline or options:

• Prior federal service before 1984: You may fall under CSRS instead of FERS.

• Interrupted civilian service due to activation: You may have protections under USERRA.

• Disability retirements: In some cases, military service may not be creditable.

• Guard and Reserve members: Only active-duty time counts toward buyback eligibility.

It’s critical to understand your employment history and how it intersects with your service record.

Avoiding the Common Pitfalls

Here are key steps to protect yourself from costly mistakes:

• Don’t delay paperwork: Request your military records and earnings early.

• Double-check your start date: The three-year clock starts from your first civilian appointment—not necessarily when you were hired permanently.

• Track your deposit progress: Confirm that payments are received and processed.

• Use official calculators carefully: Tools can estimate costs, but only OPM or your HR office can provide an official calculation.

And above all, talk to someone who understands the process. The longer you wait, the harder it becomes to untangle errors or recalculate with interest.

When in Doubt, Seek Expert Help

Because this process touches multiple agencies and deadlines, don’t try to go it alone. A retirement counselor or a licensed professional listed on this website can walk you through the process, help interpret your service documents, and ensure your payment is submitted properly and on time.

Even if you’re still early in your civilian career, it’s worth a quick consultation to avoid a five-figure mistake later.

Don’t Let Time Cost You Your Benefits

Buying back your military time could be one of the best financial moves you make in your public sector career—but only if you act within the deadlines. Missing that three-year grace period can significantly increase your cost and potentially derail your retirement strategy.

If you’ve served and now work in the civilian government workforce, take action now. Reach out to a licensed professional listed on this website for guidance on calculating your deposit, navigating the forms, and making timely payments.