If you served on active duty and now work a FERS-covered federal job, you can "buy back" that service: pay a deposit of 3% of the basic pay you earned, and every year you buy counts toward your federal pension and your retirement eligibility. Pay it within 2 years of starting your civilian job and there is no interest. Here is what yours costs and how long the larger pension takes to pay it back.
1. Your military basic pay
2. Timing and interest
3. Your federal retirement
How the buyback works
The deposit. Under FERS you pay 3% of the military basic pay you earned during the years you buy. BAH, BAS, special pays and bonuses do not count. (CSRS employees pay 7%.)
The 2-year window. No interest is charged if you finish paying within 2 years of the day you started your first FERS-covered job. After that, interest is charged on the unpaid balance once a year and compounds. You can pay in a lump sum or by payroll deduction, but it must be finished before you retire.
What you get. Each year you buy adds 1% of your high-3 to your FERS pension for life (1.1% if you retire at 62 or older with at least 20 years). The years also count toward when you can retire: buying 6 years can move a 30-year retirement at your minimum retirement age forward by 6 years. That eligibility gain is often worth more than the pension math above.
What it does not change. The FERS supplement (the bridge to Social Security for early retirees) is based on civilian service only, so buying military time does not raise it.
Frequently asked questions
Is the military buyback worth it?
Almost always, if you plan to retire under FERS. The deposit is 3% of your basic pay, and each year bought adds 1% of your high-3 to your pension for life. For a typical 4-year enlistment the deposit is a few thousand dollars and the pension pays it back within the first few years of retirement. The main exception is a military retiree who would have to give up retired pay for the same years.
How do I start a military service deposit?
Ask your agency HR office for the deposit packet. You submit form RI 20-97 to your branch's finance center (DFAS for Army, Navy, Air Force and Marine Corps) to get your earnings, then form SF 3108 (FERS) to your agency, which calculates the amount and sets up payroll deductions or a lump sum.
When does interest start on the military deposit?
Interest begins 2 years after you start your first FERS-covered civilian job. After that, interest is charged once a year on the unpaid balance and compounds. The 2026 rate is 4.25% (OPM Benefits Administration Letter 26-301).
Do reserve and Guard drill periods count?
Only active duty service counts toward the deposit, including active duty for training. Weekend drill (inactive duty training) does not. Your DFAS earnings estimate lists the periods that qualify.
Check it against the official source
- OPM: Military service credit
- OPM BAL 26-301: CY2026 interest rate (4.25%)
- OPM BAL 26-101: 2026 deposit rates (FERS 3%)
- DFAS: Request estimated military earnings (RI 20-97)
This is an estimate for planning. For a binding answer, talk to your finance office or a free Personal Financial Counselor at your installation (find yours).