Military Buyback Guide for Federal Employees
If you served in the military before joining the federal civilian workforce, you can buy back that time to increase your pension and potentially retire earlier. Here's everything you need to know about the process, costs, and whether it's worth it.
See How Military Time Changes Your Pension
Enter your service years with and without military time to see the dollar impact.
What Is the Military Buyback?
The military service credit buyback lets federal employees with prior active-duty service add those years to their civilian retirement calculation. You pay a deposit based on your military earnings, and in return your pension increases as if you had worked those additional years as a civilian.
The buyback affects two things: your pension amount (more years = higher pension) and your retirement eligibility (military years count toward service thresholds like MRA+30 or age 60+20).
How Much Does It Cost?
The deposit is a percentage of your military basic pay (not including BAH, BAS, or special pay).
| System | Deposit Rate | Notes |
|---|---|---|
| FERS | 3% | For most service periods (slight variations 1999-2000) |
| CSRS | 7% | Higher rate but higher pension multiplier |
Example: 4-Year FERS Veteran (E-4/E-5)
If paid within the ~3-year interest-free window. After that, add 4.25% annually on the outstanding balance.
Is It Worth It? The Math Says Yes.
For most federal employees, the military buyback is one of the best financial decisions you can make. The return on investment is significant and the break-even period is short.
4-Year Veteran, $100K High-3
6-Year Veteran, $110K High-3
Retire Earlier, Not Just Richer
Military years also count toward eligibility. A veteran with 4 years of military and 26 years of civilian service reaches MRA+30 instead of needing 30 civilian years. That could mean retiring 2-4 years earlier.
What Service Qualifies?
| Service Type | Qualifies? | Notes |
|---|---|---|
| Active duty (Army, Navy, Air Force, Marines, Coast Guard, Space Force) | Yes | Honorable discharge required (DD-214) |
| Reserve/Guard on Title 10 orders | Yes | Deployments, mobilizations, etc. |
| Service academy time | Yes | Can be bought back separately |
| Reserve/Guard on Title 32 (state) orders | No | State-controlled service does not qualify |
| Active duty for training (Title 10) | Yes | Title 10 orders count as active duty |
The Interest-Free Grace Period
The law gives you a 2-year grace period from your first day of FERS-covered civilian employment. Because interest compounds annually (not daily), the first actual interest charge does not hit until the end of the third year. This gives you an effective 3-year window to pay interest-free.
After that window closes, interest accrues at the rate set by the U.S. Treasury. For 2026, the rate is 4.25%, compounding annually. On a $5,000 deposit, that adds about $1,100 after 5 years of accrual.
Start Early
The DFAS earnings estimate alone takes 2-6 months. If you want to finish before the interest-free window closes, start the process within your first year of federal civilian service. The total process from start to completion is typically 3-9 months.
Step-by-Step Process
Timeline Expectations
| Step | Duration |
|---|---|
| Request DD-214 (if needed) | 2-12 weeks |
| DFAS earnings estimate | 2-6 months |
| HR deposit calculation | 2-4 weeks |
| Total from start to completion | 3-9 months |
Key Forms
- RI 20-97: Estimated Earnings During Military Service (send to DFAS)
- SF-3108: Application to Make Service Credit Payment (FERS)
- SF-2803: Application to Make Deposit or Redeposit (CSRS)
- DD-214: Certificate of Release or Discharge from Active Duty
Military Retirees: The Pension Waiver
You Cannot Double Dip
If you receive a military longevity retirement pension, you must waive your military retirement pay to use those years for FERS/CSRS credit. You cannot receive credit in both systems for the same years of service.
Exceptions to the waiver requirement:
- Reserve/Guard retirees (Chapter 1223, Title 10): Can buy back active-duty time without waiving reserve retirement pay
- Combat-related disability retirement: Exempt from the waiver
- VA disability compensation: Not affected by the buyback. You can receive both VA disability and FERS pension.
The CSRS "Catch 62" Trap
This is critical for CSRS employees. If you have post-1956 military service, are eligible for Social Security at age 62, and did not pay the military deposit, your CSRS annuity will be recomputed at age 62 to remove the military service credit. That means a reduction of roughly 2% per year of military service.
Example: 4 Years of Military Service Under CSRS
FERS employees are not subject to Catch 62. However, FERS employees still must pay the deposit to receive any credit for post-1956 military service.
Military buyback also matters for the High-3 trap with special pay.
If you are a 1811 criminal investigator, LEO, or air traffic controller post-military, your military buyback years interact with LEAP, AUO, and the LEO/ATC retirement multipliers. The High-3 calculation with special pay is the most-misunderstood part of federal LEO retirement math, and military buyback years count toward the LEO 20-year minimum. See the special pay matrix for what counts where.
Read the LEAP / AUO / Premium Pay Pension guide →Survivor benefits depend on having paid the deposit.
If you die in service, your spouse's FERS Basic Employee Death Benefit (2026: $43,800.53 plus 50% of final salary) is calculated using only creditable service. Unpaid military buyback years do not count toward the survivor annuity formula either. The 2025 Social Security Fairness Act also changed the math substantially for CSRS surviving spouses (GPO repeal worth ~$1,190/month on average).
Read the Federal Survivor Benefits guide →