Q. My husband (born in 1961) served in the Air Force from 1980-2000 and retired. He has been receiving his military retirement pay since then. In early 2001, he went to work full time in FERS. He plans to retire when he reaches age 60/20 or perhaps at age 62. Because his projected high-3 is likely to be significant, we are considering making a deposit (3 percent of base pay and interest) to buy his military time. We understand that there are positives and negatives to doing this — one of which is that he would have to waive military retirement pay. We would like to clarify two points we decide if he should buy his time:
1. Can we make the election/deposit now (form 1515) to avoid future interest accrual and still continue to receive his military retirement check until he is ready to retire from federal service — i.e., waive the military retirement just before FERS retirement even though he paid the deposit now?
2. Assuming we can: If we make the deposit now and later determine that including his military years would not benefit his FERS annuity calculation as much as we had hoped, could we receive a refund of the deposit? Or at the very least, assuming no refund is possible, could we decide not to waive his military pay?
A. The sooner he begins to make the deposit to get credit for his active-duty service — and the sooner he completes that deposit — the less interest he will have to pay. He can continue to receive his military retired pay until he is close to retirement; then he can waive that pay if he decides it makes good financial sense to do so. If it doesn’t, he can ask for a refund of his deposit and have his civilian annuity based solely on his FERS service.