Last Updated: August 5, 2026 Reading Time: 7 min

Thousands of feds took a refund of their FERS contributions when they left government, came back years later, and assume those years are either safely counted or permanently gone. Both assumptions are wrong. The years count toward when you can retire and add zero dollars to your annuity until you buy them back, and the buyback price grows at compound interest every year you wait.

The Eligibility-vs-Computation Trap

When you leave federal service and take a refund of your FERS contributions, the check feels like closure. If you later return, the personnel system quietly splits those old years in two.

For eligibility, they still count. Your minimum retirement age combinations, the 5-year vesting requirement, MRA+30, 60-and-20: the refunded years all help you cross those thresholds. Your HR summary will show them as creditable service, which is exactly why the trap works.

For computation, they count as nothing. OPM's own guidance says it plainly: without a redeposit, "you will receive credit for that period of service for eligibility for retirement, but not for the computation of your annuity." The formula that actually pays you, years times 1% times your high-3, skips them entirely.

So a returning employee with 6 refunded years can retire earlier because of those years while being paid as if they never happened. Most people meet this trap in their final year of service, when the interest bill is at its maximum and the paperwork clock is shortest.

What Buying the Years Back Costs

The redeposit is your refunded amount plus compound interest at OPM's variable annual rate, set each year in a Benefits Administration Letter. The 2026 rate is 4.25%, the highest in years; the rate has ranged from 1.625% to 4.25% over the past decade.

A planning example: a $15,000 refund taken 10 years ago costs roughly $18,000 to $22,000 to redeposit in 2026, depending on which rates applied across the decade. The exact figure comes from OPM after you file, but that range is the right mental budget, and it grows every year you don't act.

Two rules that surprise people:

  • There's no partial credit. Pay 80% of the redeposit and you get 0% of the computation credit. The deposit must be complete before OPM adjudicates your retirement.
  • You didn't always have this option. FERS redeposits only became legal with the FY2010 NDAA (Public Law 111-84, Section 1904). Employees who asked HR before late 2009 were correctly told "no" and often never asked again. The answer changed.

The Return Math

Here's the worked case for a GS-12 with a $90,000 high-3 deciding whether to redeposit 6 refunded years for about $20,000:

Without redeposit With redeposit
Years in the computation 0 of the 6 all 6
Annuity from those years $0 $5,400/yr (1% × 6 × $90,000)
At the 1.1% multiplier (retiring 62+ with 20+ years) $0 $5,940/yr
Breakeven on the ~$20,000 never ~3 to 4 years of retirement

Over a 25-year retirement, that $20,000 redeposit returns roughly $135,000 to $148,000 before COLAs. There are few guaranteed returns like that anywhere in retirement planning, which is why the real question is rarely whether to redeposit but how early, since every year of delay adds compound interest to the price.

Run your own version in the free FERS Retirement Calculator: compute your annuity with and without the refunded years, and weigh the difference against OPM's bill.

Redeposit vs. Military Buyback: Different Animals

These two get conflated in nearly every forum thread, so here's the split:

FERS redeposit Military buyback
What it buys Refunded civilian FERS years Active-duty military years
Cost basis Your old refund + compound interest 3% of military base pay + interest after the grace window
Form SF-3108 (service credit payment) RI 20-97 → SF-3108 with DD-214
Who it applies to Rehired feds who took a refund Veterans now in FERS

You can owe both at once, and paying one does nothing for the other. The military buyback guide covers that side of the ledger.

One more contrast worth knowing if you read general retirement advice: CSRS employees who skip a redeposit can often still get computation credit in exchange for a permanent actuarial reduction to their annuity. FERS has no actuarial-reduction option. Advice written for the CSRS world quietly misleads FERS employees into thinking an unpaid redeposit is survivable. Under FERS, it's just zero.

How to Actually Do It

  1. Reconstruct your service history. You need the dates and the refund. If you separated and your records live at OPM, the new Document Request Service emails former feds their full eOPF, which is the fastest route to the SF-50s you'll need.
  2. File SF-3108. Complete Part A and hand it to your HR office, which certifies your service and forwards the package to OPM.
  3. Wait for OPM's bill. OPM computes the exact redeposit, interest included, and sends the amount. Expect months, not weeks; file early.
  4. Pay it off. Lump sum, installments, or rollover from the TSP or an IRA. Whatever the method, it must be finished before OPM finalizes your retirement.
  5. Keep the receipt and confirm the paid-in-full status lands in your retirement record.

If you're years from retiring, this is a today problem anyway: the interest compounds annually, and 2026's 4.25% rate is the most expensive waiting has been in a decade. And if you're newly back in government after a break, check your leave-and-earnings statement and your SF-50 history this month, because the redeposit conversation is cheapest the day you're rehired.

Frequently Asked Questions

What happens to my refunded FERS years if I never redeposit?

They count toward retirement eligibility but add nothing to your annuity computation. You can retire earlier because of them and be paid as if they never existed.

How much does a FERS redeposit cost?

Your refunded contributions plus compound interest at OPM's variable rate, 4.25% in 2026. A $15,000 refund from 10 years ago runs roughly $18,000 to $22,000 today.

Who is allowed to make a FERS redeposit?

Any rehired FERS employee with refunded service, under 5 U.S.C. 8422(e) as created by the FY2010 NDAA. Before October 28, 2009, FERS redeposits weren't allowed at all.

Is a redeposit the same as a military buyback?

No. A redeposit repays refunded civilian FERS contributions; a military buyback purchases credit for active-duty time at 3% of military base pay. Different money, different forms, and you can owe both.

Can I pay part of a redeposit and get partial credit?

No. FERS gives no partial computation credit. The redeposit must be paid in full before OPM adjudicates your retirement.

How does CSRS handle unpaid redeposits differently?

CSRS offers an actuarial-reduction option that preserves computation credit without full payment. FERS does not, which is why CSRS-era advice misleads FERS employees.

Sources: OPM Creditable Service, 5 U.S.C. 8422(e), OPM BAL 26-301, Public Law 111-84 §1904, SF-3108.