7 Essential Things Civilian Military Employees Should Know About Buying Back Their Military Service

Key Takeaways:

• Buying back your military service time can significantly increase your federal retirement annuity, but it requires understanding the process, costs, and timelines involved.

• The buyback process isn’t automatic—you must take proactive steps, meet deadlines, and ensure proper documentation to maximize your retirement benefits.

Understanding Military Buyback and Why It Matters

If you served in the military and now work as a civilian for the federal government, you have a unique opportunity to boost your retirement benefits. The military buyback program allows you to

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1. How Does Military Buyback Work?

The military buyback process enables you to purchase your military service time and have it count toward your civilian retirement. This means that your years of active-duty service can be added to your civilian service, increasing the length of service used to calculate your annuity.

Who Is Eligible?

You are eligible to buy back your military time if:

• You have honorable active-duty military service.

• You are a federal civilian employee under FERS or CSRS.

• You are not already receiving a military retirement pension (with some exceptions).

• You served in active duty, not reserve duty (unless the reserve duty included active-duty orders).

2. What Are the Deadlines to Buy Back Military Time?

Timing is crucial. The sooner you initiate the process, the less you’ll have to pay in interest. Here’s what you need to know:

• You can apply for military buyback at any time during your federal career.

• However, interest starts accruing after your third year of civilian employment. If you complete the buyback process within the first three years of your federal service, you avoid paying extra interest on your deposit.

• If you wait, interest compounds annually, making the cost significantly higher the longer you delay.

• If you are near your retirement eligibility date, you must complete the process before separating from federal service to ensure your military time is credited.

3. How Much Will It Cost You?

The cost of buying back military time depends on:

• Your basic military pay (not including bonuses or special pay).

• The percentage of pay required under FERS or CSRS.

• The amount of interest accrued, if applicable.

For FERS employees, the military deposit is typically 3% of your basic military pay. For CSRS employees, it’s usually 7% of basic pay. Interest is added if you delay beyond the three-year window.

Can You Use a Payment Plan?

Yes! Many agencies allow you to pay the deposit in installments through payroll deduction, making it easier to manage the cost. However, keep in mind that interest will continue accruing until the full amount is paid.

4. The Step-by-Step Process to Buy Back Your Military Time

Buying back your time requires several steps. Here’s how you do it:

Step 1: Obtain Your Earnings Statement

• You’ll need to request your Estimated Earnings During Military Service (RI 20-97) from your branch of service.

• Submit the completed form to the Defense Finance and Accounting Service (DFAS) or the equivalent office for your branch.

• This document provides proof of your basic pay during military service, which is necessary to calculate your buyback amount.

Step 2: Fill Out the Military Deposit Application

• Complete Form SF 3108 (for FERS) or Form SF 2803 (for CSRS) and submit it to your agency’s human resources or payroll office.

• This form initiates the buyback process and alerts your agency to begin calculating your deposit.

Step 3: Receive and Pay the Deposit Amount

• Your agency will calculate the exact deposit amount, including any accrued interest.

• You can pay the deposit in full or through payroll deductions.

• Once fully paid, request written confirmation that your deposit has been processed.

Step 4: Verify Your Military Service Credit

• After your deposit is processed, check your SF 50 personnel record to confirm that your military service has been credited toward your federal retirement.

• If there are errors or missing service credit, contact your HR office immediately.

5. How Buying Back Time Impacts Your Retirement Benefits

By buying back your military time, you increase your creditable years of service, which directly affects your retirement eligibility and annuity calculation. Here’s how:

• Boosts Your High-3 Average Salary Calculation: Your retirement annuity is based on your highest three years of salary multiplied by years of service. More service years mean a bigger pension.

• Reduces Your Minimum Retirement Age (MRA): If your additional service years push you past retirement eligibility, you could retire earlier.

• Removes the Reduction for Early Retirement: If you’re considering an early MRA+10 retirement, buying back time may help you avoid penalties.

• Enhances Your Survivor Benefits: If you have dependents, additional service credit can increase their survivor annuity should something happen to you.

6. Can You Buy Back Time If You’re Receiving Military Retirement Pay?

It depends. You cannot receive both a military retirement pension and count that same time toward your FERS/CSRS annuity, except in specific cases:

• If your military retirement is due to disability, you may be able to buy back your time.

• If you’re receiving Reserve retirement pay, you can buy back your active-duty time and still receive your military pension.

• If you waive your military retirement pay, you can buy back the time under FERS/CSRS.

7. Common Mistakes to Avoid

Many federal employees make costly mistakes when attempting to buy back military time. Here are some key pitfalls to avoid:

• Waiting too long to apply – Delays mean more interest accrual, increasing costs.

• Failing to verify completion – Ensure you receive confirmation of full deposit payment.

• Not understanding how it impacts Social Security – If you have a military pension and plan to claim Social Security, be aware of the Windfall Elimination Provision (WEP).

• Assuming it’s automatic – Buying back time requires paperwork and proactive steps on your part.

What Should You Do Next?

If you’re considering buying back your military service time, take action now. The longer you wait, the more expensive it gets. Here’s what you can do:

1. Request your military earnings statement.

2. Calculate your deposit amount (with your HR office).

3. Decide whether to pay in a lump sum or installments.

4. Submit the necessary forms and track your progress.

5. Verify your service credit is applied correctly.

Buying back your military time is one of the smartest financial moves you can make as a federal employee. It ensures a higher retirement annuity, potential early retirement, and greater financial security in the years ahead.

Get Help from a Licensed Agent

Need guidance through the military buyback process? Speak with a licensed agent listed on this website. They can help ensure you maximize your federal retirement benefits and avoid costly mistakes.