FERS Military Service Credit Deposit: How to Buy Back Your Military Time

What Military Buyback Actually Does

If you have active, honorable U.S. military service from after 1956, that time can count toward your FERS retirement — but only if you make a post-1956 military service deposit. Without the deposit, OPM excludes that military time from the annuity calculation entirely. No partial credit. No retroactive option after separation.

The financial impact is real. Four years of military service at the 1.0% accrual rate on a high-3 salary of $100,000 adds $4,000 per year to your annuity. Over a 25-year retirement, that's $100,000 in additional lifetime benefits — for a deposit that might cost $3,000–$8,000 depending on your military pay and when interest started accruing.

How the Deposit Is Calculated

The base deposit is a percentage of your basic military pay for each period of active service. The rates vary by when you served:

To determine the base amount, you need your Estimated Earnings During Military Service, documented on Form RI 20-97. Request this from the military finance center for your branch of service — the Defense Finance and Accounting Service (DFAS) handles most branches. Processing takes several weeks, which is why the 6-month pre-retirement mark is the recommended time to submit the request.

Interest Accrual

Here's where the cost can surprise people. Interest begins accruing on the unpaid deposit balance three years after you first become covered under FERS. The interest rate is set annually by the Department of the Treasury and compounds on the outstanding balance.

If you entered federal service at age 25 after four years of military service, and you're now 58 and approaching retirement, that interest has been accruing for roughly 30 years. Depending on the rates across that span, the interest can exceed the original deposit amount. The earlier you pay, the less interest accumulates — paying in your first few years of civilian service avoids the interest charge entirely if you're within the three-year grace period.

The Process: SF 3108 and Payment

Step 1: Request RI 20-97

Submit a request to the military pay center for your estimated military earnings. The returned form documents your basic pay for each period of active service. You'll need your DD-214 (Member Copy 4) to identify the exact service dates.

Step 2: File SF 3108

Standard Form 3108 (Application to Make Service Credit Payment) is the formal application to make the deposit. Your agency's HR or payroll office completes the calculation based on your RI 20-97 earnings data, applying the appropriate percentage rates and any accrued interest. They'll provide a deposit balance statement showing exactly what you owe.

Step 3: Make the Payment

Payments go to your employing agency's payroll office, not to OPM. You can pay in a lump sum or through payroll deductions over time. But the full balance — principal plus interest — must be paid in full before your separation date. Any unpaid balance at separation results in permanent forfeiture of that military service credit.

Some employees spread the deposit over 12–24 months of payroll deductions to manage the cash-flow impact, which works fine as long as the final payment clears before separation.

Step 4: Get the Receipt

Your agency payroll office issues a paid-in-full receipt once the deposit is complete. This receipt is a required attachment to your SF 3107 retirement application — specifically to Schedule A (Active Military Service). Without it, OPM will not credit the military time, even if you made every payment on schedule.

Special Situations

Military Retired Pay

If you're receiving military retired pay (not to be confused with a military service deposit), different rules apply. Generally, you must waive your military retired pay to receive FERS credit for that service. Exceptions exist for service-connected disability retirement and certain reserve retirement scenarios. This is documented on Schedule B of SF 3107.

Reserve and Guard Service

Reserve and National Guard service that involved active-duty orders (typically documented on DD-214s) may qualify for credit through the same deposit process. Weekend drill and annual training alone usually don't qualify unless they involved activation to active-duty status.

Social Security Coordination

Since the Social Security Fairness Act repealed the Windfall Elimination Provision (WEP) in January 2025, making a military deposit no longer creates a WEP exposure. Previously, some employees debated whether the deposit was worth it because crediting military service to FERS could trigger WEP reductions to their Social Security benefit. That calculation is now moot — WEP is repealed for benefits payable January 2024 onward.

Don't Leave Money on the Table

The FERS Retirement Application Guide includes a deposit payment tracking checklist and the complete timeline for requesting RI 20-97, filing SF 3108, and ensuring the paid-in-full receipt reaches your retirement package before your separation date.

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