For federal employees with prior active duty military service, the "Military Buyback" program is one of the most powerful tools available to increase your FERS pension and potentially retire earlier. This guide explains what it is, how it works, and the critical steps you need to take.

What Is Military Buyback?

Military Buyback is the common term for making a deposit into the FERS retirement fund to have your active duty military service treated as creditable civilian service for your pension calculation.

Eligible Service Includes:

• Honorable active duty in the Army, Navy, Air Force, Marines, and Coast Guard.
• Time at a service academy (e.g., West Point, Annapolis), if you graduated.
• Active Guard and Reserve (AGR) time.

What does NOT count: Traditional weekend drills and annual training for Guard/Reserve members (inactive duty) are not eligible.

How Much Does It Cost?

The cost is surprisingly low, especially if you act quickly. The deposit is calculated as:

• 3% of your total basic military pay earned during your eligible service.
• Plus interest, which begins to accrue after a 2-year, interest-free grace period from your civilian service entry date. This grace period does not start when you begin the process, but from your first day of federal employment under FERS.

The Post-9/11 Combat Tax Exclusion

A crucial detail for many post-9/11 era veterans is that tax-exempt pay earned in a designated combat zone is **not** included in the basic pay calculation for the 3% deposit. This can significantly reduce the cost of your buyback. You must provide documentation (like your LES from that period or other official records) to your payroll office to prove the service was in a tax-exempt combat zone.

Is It Worth It? The Breakeven Analysis

For nearly every FERS employee, the answer is an overwhelming yes. Buying back your military time is one of the best returns on investment available.

Example: An employee with 4 years of military service earned $60,000 in basic pay. Their deposit is 3% of that, or $1,800 (if paid within the grace period). Those 4 years add 4% to their pension calculation. If their High-3 salary is $100,000, that's a $4,000 per year increase to their pension, for life. They break even in less than 6 months of retirement.

🎁 Other Benefits: Faster Leave Accrual

Beyond increasing your pension, completing your military buyback provides another valuable benefit: it accelerates your annual leave accrual. The years of service you buy back are added to your Leave Service Computation Date (SCD-Leave). This means you can qualify for the higher leave-earning categories (moving from 4 to 6, or from 6 to 8, hours per pay period) much sooner in your civilian career.

Clarifying Special Scenarios

The "Double-Dipping" Rules for Military Retirees

You generally cannot receive two federal retirement checks for the same period of service. This is known as "double-dipping."

• If you are receiving a military retirement pension for active duty service, you cannot buy back that time for FERS credit unless you agree to waive your military pension when your FERS annuity begins.
• Exception: If your military retirement is based on a Reserve (gray area) retirement, you CAN receive both your military pension and buy back any periods of active duty to count toward your FERS pension.

VA Disability Compensation: A Key Exception

This is one of the most important and frequently misunderstood rules. You **can** receive VA disability compensation and also buy back your military time for FERS credit **without any waiver or offset**. VA disability compensation is not considered military retired pay and is not subject to the double-dipping rules. You can receive both benefits concurrently.

A Note for National Guard/Reserve Technicians

Dual-status technicians often face confusion about their service. To be clear:

• Time served as a National Guard or Reserve Technician (wearing the uniform daily in a civilian role) is already considered **creditable federal civilian service** and does not need to be bought back.
• Only periods of active duty service, such as deployments under Title 10 or certain Title 32 active duty orders, are eligible for a military service deposit.

🛠️ How to Start the Buyback Process Step-by-Step

The process requires coordination between you, your military finance center, and your agency's HR office.

1. Request Your Military Earnings History: Complete form RI 20-97, Estimated Earnings During Military Service, and mail it to the finance center for your branch of service. This can take several weeks or months.
2. Receive Your Estimated Earnings: The finance center will return the completed form to you. This document is required for the next step.
3. Request Your Deposit Calculation: Submit the completed RI 20-97, your DD-214s, and form SF 3108, Application to Make Service Credit Payment, to your agency's HR or benefits office.
4. Receive Your Calculation and Pay: Your HR office will calculate the exact deposit amount (principal and interest) and provide instructions on how to pay it, either in a lump sum or through payroll deductions.

Payment Strategy and What Happens If You Don't Finish

You can pay the deposit via a lump sum check or through payroll deductions. The payment is made with post-tax dollars and is not tax-deductible. Some agencies may allow credit card payments. It's critical to know that you must pay the deposit in full before you retire to receive credit. Partial payments do not grant partial credit; it is an all-or-nothing benefit.

📎 Official Sources & Forms

• OPM FERS Handbook, Chapter 22: Service Credit
• SF 3108: Application to Make Service Credit Payment
• RI 20-97: Estimated Earnings During Military Service

Note for CSRS Employees: The rules for buying back military time under the older Civil Service Retirement System (CSRS) are different, including a 7% deposit rate.