OPM Military Service Deposit: Forms, Rates, and the Payment Deadline

How OPM Defines a Military Service Deposit

Under 5 U.S.C. § 8422(e) for FERS and § 8334(j) for CSRS, a military service deposit is a payment that converts your active-duty time into creditable civilian retirement service. OPM sets the statutory rules, but the actual processing happens across multiple agencies — DFAS for earnings verification, your employing agency's HR for the deposit calculation, and the civilian payroll office for payment collection.

The deposit is based on a percentage of military basic pay — not total compensation. BAH, BAS, flight pay, hazardous duty pay, and all other allowances are excluded.

Deposit Rates by System and Service Period

FERS and CSRS use different base percentages, and both had briefly higher rates during 1999–2000:

FERS rates:

• Service through December 31, 1998: 3.00%
• January 1 – December 31, 1999: 3.25%
• January 1 – December 31, 2000: 3.40%
• January 1, 2001 – present: 3.00%

CSRS rates:

• Service through December 31, 1998: 7.00%
• January 1 – December 31, 1999: 7.25%
• January 1 – December 31, 2000: 7.40%
• January 1, 2001 – present: 7.00%

For a FERS employee who served four years of active duty earning an average of $2,200/month in basic pay, the base deposit would be roughly $3,168 before interest.

The Two Forms: SF 3108 vs SF 2803

Which form you complete depends entirely on your retirement system:

SF 3108 is the FERS form — officially titled "Application to Make Service Credit Payment for Civilian Service," though it covers military deposits too. You complete Part A (personal data and service dates), attach your certified RI 20-97 and DD-214 copies, and submit the package to your agency HR specialist.

SF 2803 is the CSRS equivalent — "Application to Make Deposit or Redeposit." Same workflow: Part A completed by you, remainder certified by your agency.

Your HR benefits specialist fills in the calculation sections — base deposit, interest accrual date, accumulated interest, and total amount due — then forwards the package to your payroll office.

The Interest Accrual Date

Interest does not begin on your military discharge date or your federal hiring date. It begins on the third anniversary of your first retirement-covered civilian appointment — a date OPM calls the Interest Accrual Date (IAD).

You effectively have a three-year window to pay the full deposit interest-free. After the IAD, interest compounds annually at variable Treasury rates. Those rates have ranged from 1.375% (2021–2022) to 3.75% (2024). Each year's unpaid balance carries forward and the next year's rate applies to the entire accumulated total — base deposit plus all prior interest.

The Separation-Day Deadline

The deposit must be paid in full and recorded by your employing agency before your date of final separation from federal service. This is a hard statutory deadline under 5 CFR § 842.307 — there is no grace period, no post-separation payment window, and no administrative workaround.

What catches people: "paid in full" means the payment has posted in the payroll system, not just that you clicked "submit" on Pay.gov. Electronic payments can take up to four business days to settle. Payroll deductions don't post until the pay period closes. If you're within 90 days of retirement, a lump-sum payment with enough lead time for processing is the safest route.

After Payment: The Verification Steps Most People Skip

Paying the deposit is necessary but not sufficient. You also need to:

1. Get the paid-in-full letter from your civilian payroll office (DFAS Civilian, NFC, or IBC depending on your agency)
2. Deliver a copy to your HR benefits specialist — payroll does not automatically notify HR
3. Verify your SCD-Retirement has been updated in the payroll database
4. Confirm the certified SF 3108/2803 is filed in your eOPF — OPM pulls records electronically through the eIRR system, and a missing form can delay adjudication by months

The Military Buyback Guide includes a verification tracker for each of these steps, plus the exact checkpoints to audit before you submit your Online Retirement Application through OPM's ORA platform.

See more United States guides →