Military Buyback Calculator

What the deposit costs

Both retirement systems set the deposit as a percentage of basic pay paid under section 204 of title 37 — the military basic pay you actually received. FERS, at 5 U.S.C. § 8422(e)(1)(A):

“an amount equal to 3 percent of the amount of the basic pay paid under section 204 of title 37 to the employee or Member for each period of military service after December 1956”

5 U.S.C. § 8422(e)(1)(A)

CSRS uses identical wording at 7 percent (§ 8334(j)(1)(A)). Both are paid “to the agency by which the employee is employed” rather than to OPM.

What counts is narrower than people expect. OPM’s own briefing is blunt about the exclusions: “Does not include allowances, flight pay, combat pay, etc” Housing and subsistence allowances, flight pay and combat pay are all outside the calculation, which is why the deposit is usually far smaller than people assume from their total military earnings.

The 1999 and 2000 rate increase

This is the detail almost every buyback calculator misses. For two years the deposit percentage was raised, then it went back. Under FERS the increase is written directly into the statute:

“The percentage of basic pay under section 204 of title 37 payable under paragraph (1), with respect to any period of military service performed during— (A) January 1, 1999, through December 31, 1999, shall be 3.25 percent; and (B) January 1, 2000, through December 31, 2000, shall be 3.4 percent.”

5 U.S.C. § 8422(e)(6)

CSRS gets to the same place by a different route, and this is worth knowing if you are checking someone else’s figures. § 8334(j)(5) states no percentages at all — it cross-references the ordinary employee payroll deduction rate for the same period:

“Effective with respect to any period of military service after December 31, 1998, the percentage of basic pay under section 204 of title 37 payable under paragraph (1) shall be equal to the same percentage as would be applicable under subsection (c) of this section for that same period for service as an employee, subject to paragraph (1)(B).”

5 U.S.C. § 8334(j)(5)

For a regular employee that rate is 7.25 percent in 1999 and 7.4 percent in 2000, which is what this calculator applies. The § 8334(c) rate for a regular employee is 7.25% for 1999 and 7.4% for 2000. Congressional employees, law enforcement officers, firefighters and nuclear materials couriers have higher § 8334(c) rates for those years, so a CSRS employee in one of those categories owes more than the figures modelled here for post-1998 service.

A period of service that straddles these dates has to be split and each segment charged its own rate. A single day of broken service also makes a separate period. That is the whole reason this is a calculator rather than a multiplication.

Interest, and the two-year free window

Interest is where most published guidance goes wrong, in a way that costs readers money. It does not run from the day you served. Both systems grant a two-year grace period measured from when you first became a federal employee after the service:

“Any deposit made under paragraph (1) of this subsection more than two years after the later of— (A) October 1, 1983; or (B) the date on which the employee or Member making the deposit first becomes an employee or Member following the period of military service for which such deposit is due, shall include interest on such amount computed and compounded annually beginning on the date of the expiration of the two-year period.”

5 U.S.C. § 8334(j)(2)

FERS is identical at 5 U.S.C. § 8422(e)(2), except that the fixed date in the first prong is 1 January 1987 rather than 1 October 1983. So if you are inside that two-year window, the principal shown above is the whole amount. OPM adds that oPM states that if full payment is received by 31 December of the year the bill is issued, no additional interest is charged.

After the window closes, interest compounds annually — but at a rate nobody can look up in the statute:

“Thereafter, the rate of interest for any calendar year shall be equal to the overall average yield to the Fund during the preceding fiscal year from all obligations purchased by the Secretary of the Treasury during such fiscal year under section 8348(c), (d), and (e) of this title, as determined by the Secretary.”

5 U.S.C. § 8334(e)(3)

The applicable rate for any modern year is a variable Treasury-determined yield published by OPM, not a figure fixed in statute. This tool therefore computes principal only and never estimates interest. Any tool that shows you a confident interest figure is either loading OPM’s published composite rates or inventing them. Ask your agency benefits office for the official computation.

If you receive military retired pay

A military retiree faces an extra rule. The wording is identical in both systems — 5 U.S.C. § 8332(c)(2) (CSRS); 5 U.S.C. § 8411(c)(2) (FERS) — identical wording:

“If an employee or Member is awarded retired pay based on any period of military service, the service of the employee or Member may not include credit for such period of military service unless the retired pay is awarded— (A) based on a service-connected disability— (i) incurred in combat with an enemy of the United States; or (ii) caused by an instrumentality of war and incurred in line of duty during a period of war as defined by section 1101 of title 38; or (B) under chapter 1223 of title 10.”

Prong (B), chapter 1223 of title 10, is non-regular (reserve component) retirement. A reserve retiree therefore keeps retired pay AND may credit the service. This exception is far broader than the combat-disability prong and is routinely omitted from summaries.

If neither exception applies, credit is still available but it costs your retired pay. OPM: “However, you can elect to waive the retired pay and have the military service added to your civilian service in computing your FERS annuity. In addition to waiving your military retired pay you MUST pay a deposit for your post 1956 military deposit prior to separating from your agency in order for it to be creditable in your FERS retirement case.” OPM directs the waiver request to the DFAS Retired Pay Operations Center at least 60 days before planned retirement.

Note what the restriction is actually about: military retired pay. A VA disability rating on its own is a different thing and does not trigger this rule.

The deadline and how you pay

The deposit is made through your employing agency, and OPM describes the timing as “Generally, at any time prior to employee's separation from their agency” — so it has to be finished before you leave federal service, not at retirement.

• If the employing agency makes an administrative error in calculating or processing the deposit, the agency may pay any additional interest assessed because of that error — 5 U.S.C. §§ 8334(j)(6), 8422(e)(7).
• A FERS employee who already made a § 8334(j) deposit and never took a refund is credited without a further FERS deposit — 5 U.S.C. § 8411(c)(3).
• Survivors are covered too: “For the purpose of survivor annuities, deposits authorized by this subsection may also be made by a survivor of an employee or Member.” (5 U.S.C. § 8422(e)(5)).

Applying for a federal job and wondering whether the grade makes the deposit worth it? The GS pay calculator shows what a grade and step actually pays in your locality.