FERS Deposit for Temporary Service: How to Buy Back Non-Deduction Time

What Non-Deduction Service Means

When you worked in a federal position where retirement deductions weren't withheld from your pay — typically an eligible temporary appointment, an intermittent position, or a period covered only by FICA (Social Security) rather than FERS — that time doesn't automatically count toward your FERS annuity. For FERS, civilian non-deduction service is generally depositable when it was performed before 1989, subject to limited exceptions. To get credit for it, you need to make a deposit covering the retirement deductions you would have paid, plus any accrued interest.

This is distinct from a military service deposit (which covers active duty time) and from a redeposit (which applies when you previously received a refund of retirement contributions after leaving federal service). Deposits for temporary/civilian non-deduction service are governed by SF 3108, Application to Make Service Credit Payment.

Why the Deposit Matters

The deposit directly increases your creditable service for annuity calculation. If you worked two years as a temporary federal employee before converting to a career appointment, those two years are sitting uncredited. Under the standard FERS formula (1% × High-3 × years of service), two additional years translates to 2% of your High-3 salary added to your monthly annuity — permanently.

For someone with a High-3 of $100,000, that's $2,000 per year in additional retirement income. Over a 25-year retirement, that's $50,000 in gross annuity payments from a deposit that might cost $3,000–$5,000 to make. The return on investment is exceptional.

The deposit can also help you reach service milestones. If you need 20 years of creditable service to retire at 60 without a reduction, and you have 18 years of career service plus 2 years of temporary time, making the deposit gets you to the threshold.

How the Deposit Is Calculated

The deposit amount is generally 1.3% of basic pay earned during eligible non-deduction service, plus interest. The 1.3% rate applies regardless of the FERS employee contribution rate that would have applied at the time.

Interest begins accruing on the unpaid balance after two years from the date you first become covered under FERS — not from the date of the non-deduction service itself. The interest rate is set annually by the Treasury Department and compounds on the outstanding balance. Interest continues on the unpaid balance until the deposit is completed.

Your agency's HR office can request an estimate of the deposit amount from your payroll provider. They'll calculate the base amount from your historical pay records and add the accumulated interest through the estimated payment date.

The Process Step by Step

1. Contact your HR office and request a deposit estimate for your non-deduction service periods. Provide the dates of employment as precisely as possible — agency name, position title, appointment type, and pay rates help HR locate the records.

2. HR requests the computation from the payroll provider (National Finance Center, DFAS, or your agency's designated payroll office). This can take several weeks.

3. You receive the SF 3108 with the computed deposit amount, including principal and accrued interest. Review the service dates and pay figures for accuracy.

4. Make the payment to OPM as instructed, using Pay.gov or another accepted method. You can pay in a lump sum or in installments of at least $50, but interest continues on the unpaid balance.

5. Keep the paid-in-full receipt once OPM confirms the deposit is complete. Keep it as proof that the service is now creditable, and include it in your retirement package.

Timing Is Critical

The deposit does not have to be paid before your separation date. OPM allows an eligible civilian-service deposit to be completed after separation when you are entitled to a current or future retirement benefit; if you are within six months of retirement, submit the deposit request with your retirement application. The service is not credited for retirement eligibility or annuity computation unless the deposit is paid in full.

Given that the HR computation alone can take weeks, and installment plans may run for months, start this process early — ideally 12 to 18 months before your target retirement date. Rushing a deposit in the final weeks before retirement is stressful and leaves less time to verify service dates and payment records before your retirement application.

Breaks in Service and Their Impact

A break in service — any period where you weren't a federal employee — doesn't automatically disqualify prior service from being creditable. What matters is whether retirement deductions were withheld (or a deposit was made) for each period of employment.

However, breaks in service create complications for FEHB and FEGLI eligibility. For the FEHB five-year test, a break in service is not counted as an interruption if you reenroll within 60 days after returning to federal service. If you returned after a break, verify with HR that your FEHB enrollment was re-established and that the five-year service period is documented correctly.

For annuity computation, breaks in service between qualifying positions are simply excluded from creditable service. Your total creditable service is the sum of all qualifying periods, skipping over any breaks. Making deposits for non-deduction periods within those qualifying employment spans adds them to the total.

Common Situations That Create Non-Deduction Service

• Temporary appointments (not to exceed, seasonal, intermittent) where FERS deductions weren't withheld
• FICA-only coverage periods — you paid Social Security tax but not FERS retirement deductions
• Periods before conversion from a non-covered position to a FERS-covered career appointment
• Re-employment after a refund — if you took a refund of your retirement contributions when you left federal service and later returned, you may need to make a redeposit (different from a deposit, handled on the same SF 3108)

The FERS Retirement Application Guide includes a deposit and redeposit tracking worksheet that maps each service period to its deposit status, estimated cost, and payment deadline — so you know exactly what needs to be settled before your retirement date.

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