Credit for Military Service for Federal Retirement Annuities 

Time spent on active duty in the Armed Forces of the United States can be added to your federal employment years of service, thus increasing the amount of your federal retirement annuity. I’ve written about this before, but I want to do it again because it can have such a significant impact on your retirement benefit. 

In short, you can get credit for your active-duty service in the armed forces if it was terminated under honorable conditions and was performed before you retire from your civilian job. The term “armed forces” includes the Army, Navy, Air Force, Marine Corps and Coast Guard. It also includes service in the Regular or Reserve Corps of the Public Health Service and if you were a commissioned officer of the National Oceanic and Atmospheric Administration. 

If you are – or will be – receiving military retired pay and want to have your active-duty service used in the computation of your civilian annuity, you’ll have to make a deposit to the civilian retirement system and – with one exception – waive your military retired pay. Here’s the exception: You won’t have to waive that pay if it was awarded for a service-connected disability incurred in combat with an enemy of the United States or caused by an instrumentality of war and incurred in combat in the line of duty during a period of war. 

If you are – or will be – receiving reserve retired pay under the provisions of Chapter 67, Title 10, U.S. Code (which relates to retirement from a reserve component of the Armed Forces), you won’t have to waive that pay. You’ll only have to make a deposit for that time. Note: Weekend drills are never considered to be creditable service for retirement purposes. Nor are annual active duty for training periods that occur while you are a federal employee. That’s because they are treated as if you were still on the job. 

If you don’t make a deposit to get credit for your active duty service, your annuity will be based solely on your civilian service. Whether to make the deposit is a financial decision you’ll have to make. In other words: will what you put it now be worth what you’ll get in return at a later date? If you decide not to make a deposit and later change your mind, you can do that as late as when you are about to retire. The only downside to delaying that decision is that interest will have accrued on the amount you owe. The longer you wait, the greater that amount will be. 

Source: Reg Jones, FEDweek-August 15, 2023