Military Service Credit: How to Convert Your Military Time for Federal Jobs

Note: The process of gathering military earnings records and receiving a deposit calculation from OPM can take several months, sometimes up to six months or longer. Do not wait until close to retirement to begin the process.

Who Can Buy Back Their Military Time?

All non-retired military veterans can buy back their military service time through a Military Service Credit Deposit. You should consider buying back your military time even if you don’t think you will work for the federal government for a long time, you only need five years of federal service to qualify for a deferred annuity, which is a pension you can begin drawing at age 62. Even a small pension will be valuable in your retirement years.

Graduates from the Service Academies can also buy back their academy time. Since Service Academy cadets only earned a small stipend during their academy days, the cost to buy that time back is inconsequential compared to the long-term return in federal service time and annuity value.

Members of the Guard and Reserves are able to buy back their active duty time and work toward dual pensions, applying active duty time toward their FERS retirement while also working toward a separate Reserve or Guard retirement at age 60.

Federal law prohibits retired active duty military members from buying back their military time and adding it to their FERS pension, since they are already receiving compensation for their military retirement. Military retirees should still look into getting credit for their Service Computation Date for Leave, however.

Benefits of Buying Back Your Military Time

When you buy back your military service dates, you receive a day-for-day accrual of your time as an active duty service member. Every single day counts towards your FERS annuity pension plan, so the longer you served, the more valuable buying back your time will be.

The FERS pension is based on your years of service and the average of your highest three years of pay. For example, a veteran earning an average of $100,000 a year for their final three years of service with 20 years of creditable service would receive a $20,000 annual pension. With 25 years of service at the same pay rate, that increases to $25,000 per year. Like military retirement pay, the FERS pension plan is adjusted annually for COLA, so it increases in most years.

Who Should Buy Back Their Military Time?

Almost everyone who is eligible. There are only a few edge cases where it doesn’t make sense to buy back your time, but those instances are rare. In all cases, you should run the numbers to be sure, the deposit cost is typically far outweighed by the long-term pension and service computation date benefits.

If you are unsure whether buying back your time makes sense for your specific situation, speak with your agency’s HR benefits specialist or a fee-only financial planner familiar with federal employee benefits before making a decision.

Meet the Author

Ryan Guina is The Military Wallet's founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Tennessee Air...

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