For federal employees with prior military service, the buyback is one of the most reliably high-return financial decisions in a federal career. A four-year veteran typically pays a deposit equivalent to one to three years of added pension income — and then collects that extra income for life. The math is almost always favorable. The question is how much interest has accrued since your federal hire date, and whether the pension increase justifies paying it now.
OPM gives you a 2-year grace period from your FERS hire date — no interest during that window. Because interest only starts compounding one year after the grace period ends, the first actual interest charge hits at the end of Year 3. An employee hired January 1, 2022 pays no interest if the deposit is paid before December 31, 2024. After that, 4.25% compounds annually on the unpaid balance. Interest adds up fast — but even a deposit with significant interest usually pays off within the first year or two of collecting extra pension income.
Section I Military Buyback Calculator
Calculate My Military Buyback
Section II Interest Cost Over Time
The longer you wait after the grace period, the more interest compounds on your unpaid deposit. The 4.25% annual rate for 2026 is set by OPM based on Treasury rates. The table below shows what a $3,000 principal deposit costs at different time points after the grace period.
| Years After Grace Period | $3,000 Principal | Interest Accrued | Total Due | Extra Cost vs. Paying Now |
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Section III The Buyback Process
Obtain your estimated earnings via Form RI 20-97
You need a record of your military basic pay for each year of service. If you have your Leave and Earnings Statements, use those. If not, submit Form RI 20-97 (Estimated Earnings During Military Service) to your branch's pay center via DFAS. Allow 4–8 weeks for a response. Your DD-214 shows dates of service but not pay — you need actual pay records for the deposit calculation.
Submit SF-3108 (FERS) to your HR office
FERS employees use SF-3108, Application to Make Service Credit Payment. CSRS employees use SF-2803. Attach your DD-214 and pay documentation. Your HR office forwards the application to your agency's payroll office, which calculates the exact deposit amount including any accrued interest.
Lump sum or payroll deductions — your choice
You can pay the full deposit as a lump sum or set up payroll deductions to spread payments over time. Interest continues to accrue on the remaining unpaid balance while you pay in installments, so a lump sum always minimizes total cost. There is no penalty for either method.
Verify the credit is recorded on your FERS retirement record
Once the deposit is paid in full, your agency records the military service credit. At retirement, OPM adds those years to your civilian service for both eligibility and computation purposes. Request your Official Personnel File (OPF) review about 18 months before your retirement date to confirm the credit is properly recorded.
Section IV Eligibility Rules
If you are receiving military retired pay (a military pension), you generally must waive it to credit the military time toward your FERS pension. The exception: military retired pay based on combat disability or a disability rated as service-connected under Chapter 61 of Title 10 does NOT need to be waived. If you are receiving Reserve/Guard retirement pay under Chapter 1223 (specifically the age-60 annuity), you do NOT need to waive it. If you are unsure whether waiving military retired pay makes financial sense in your specific situation, consult your agency's benefits counselor — the calculation depends on your expected pension amounts under both scenarios.
Section V Frequently Asked Questions
No. The military service credit buyback only affects your FERS pension — it has no impact on Social Security. Your Social Security benefit is calculated independently based on your Social Security earnings record, which includes your military pay regardless of whether you do the buyback. Active-duty military service has been covered under Social Security since 1957, so those earnings are already in your Social Security record.
No — and this is a hard deadline. The deposit must be completed before you separate from federal service. Once you retire, resign, or are otherwise separated, you permanently lose the ability to make a military service deposit. There are no exceptions and no appeals process. If you are planning to retire soon and have not completed the buyback, make this a priority before your retirement date.
Active-duty service in the U.S. Armed Forces that was terminated under honorable conditions qualifies. This includes all branches — Army, Navy, Marine Corps, Air Force, Space Force, and Coast Guard. Service must have been for active duty, not Reserve or National Guard training periods (weekend drills, annual training). Reservists and Guard members who were activated to active duty under Title 10 orders can credit that active-duty time. The key documents needed are your DD-214 (Certificate of Release or Discharge from Active Duty) and your military pay records.
For military service performed between 1999 and 2000, the FERS deposit rate is slightly higher than 3% — it reflects the temporary increase in Social Security-covered wages during that period. The difference is small but affects the calculation for employees whose active-duty service included those years. Your agency's payroll office will apply the correct rate for each year when calculating your official deposit amount. The 3% rate applies to all other years of service before and after that window.