(Click here to read Part One)
To get credit for any period of military service, you need to deposit an amount that equals a percentage of your basic military basic pay, not including any allowances or differentials you may have received. The amount of the deposit depends on two things: whether you are covered by Civil Service Retirement System or Federal Employees Retirement System, and when the military service occurred.
For CSRS employees, the deposit equals 7 percent of your basic pay for periods of service performed before January 1, 1999, 7.25 percent for periods of service during 1999, 7.4 percent for periods of service during 2000, and, finally, 7 percent for all service performed after December 31, 2000. For FERS employees, the amounts are 3 percent, 3.25 percent, 3.4 percent and 3 percent, respectively. (The percentages are one-half percent higher for special category employees, such as law enforcement officers, firefighters and air traffic controllers.)
You don’t have to make the deposit in a lump sum. You can make it in amounts as small as $50. However, In order to get any credit for your period(s) of military service, you must pay the total amount due before you retire. Note: If you have more than one period of military service, you have the option of making a deposit for any or all of those segments for which you want credit.
As a rule, post-1956 military service deposits must be made to your employing agency. The only exception is for former CSRS employees who are eligible for a deferred annuity, but only if they separated from the government between September 9, 1982 and September 30, 1983, and their survivor spouses. Such deposits can be made in a lump sum to the U.S. Office of Personnel Management at any time before the final adjudication of their case.
The Department of the Treasury sets the interest rates for military deposits, which begin on January 1 and end of December 31 each year. From January 1, 1948 through December 31, 1984, the rate was set by law at 3 percent. Since then, the amount has been based on market rates, which can change every year. In 1985, the rate was 13 percent, in 1990, 8.75, in 1995, 6.875, in 2000, 5.875, and in 2008, 4.875. In recent years the rates have declined dramatically. In 2010 the rate was 2.75 percent, in 2012, 2.25 and, in 2013 and 2014, 1.625.
Interest begins to accrue after a two-year grace period after you are first hired by the federal government. If you are called to active duty while already employed, the same grace period also applies to that new period of military service when you return to your civilian job. Note: As a rule, interest isn’t posted until the end of a calendar year. Therefore, if you complete your deposit before the end of the third year, you won’t be charged any interest.
Making a Deposit
If you want to find out how much you would have to deposit to get credit for your military service, fill out a copy of form RI 20-97, Estimated Earnings During Military Service, attach a copy of your DD-214, Report of Transfer or Discharge, or its equivalent, and mail it to the finance center for your branch of service. You can get a copy of form RI 20-97 from your personnel office or download a copy at opm.gov/forms/pdf_fill/RI20-97.pdf.
If you don’t have proof of your military service, you’ll have to fill out a copy of Standard Form 180, Request Pertaining to Military Records, which you can download from www.archives.gov/research/order/standard-form-180.pdf. Once you’ve filled it out, send it to your branch of service. They will provide you with a new DD-214 or its equivalent. Once you have it, you can attach a copy to your completed RI 20-97 and mail it to the finance center for your branch of service.
When you have a statement of your earnings while on active duty, you can fill out a copy of either Standard Form 2803 (CSRS) or 3108 (FERS), Application to Make Deposit or Redeposit, both of which are available in your personnel office or downloadable. Go to www.opm.gov, click on Forms. When the screen appears, click on Standard Forms and scroll down to the one you want to download.
Take the Standard Form, the response you received from your military finance office, and a copy of your DD 214 or equivalent to your agency payroll office.
They’ll be able to determine how much you owe, plus accrued interest, if applicable. Depending on how long the gap is between when you serviced and when you get an estimate of what you owe from your payroll office, you may either be pleasantly surprised or dumbfounded.
The decision about whether to make a deposit for your military service is one you’ll have to make based on what you’ll get in return for what you’ll have to give.
Reg Jones was head of retirement and insurance programs at the Office of Personnel Management. Email your retirement-related questions to firstname.lastname@example.org, and view his blog at blogs.federaltimes.com/