A lot of federal employees I meet with spent time on active duty before they ever walked into a federal building. Some of those employees have years of service showing on their DD-214 that aren’t showing up on their FERS annuity estimate. That gap is what the Military Buyback Program is for.

The program lets a federal employee make a deposit to credit qualifying prior military service toward their FERS retirement calculation. It’s not free — the deposit is calculated under a specific formula — but for many employees, the long-term annuity increase is several times the cost.

What the buyback actually does.

When you make a military buyback deposit, OPM treats your active-duty service as if it had been federal civilian service for retirement purposes. That means it counts toward your years of creditable service for the FERS pension calculation, and it can move you closer to MRA+10, age 60+20, or 30-and-out eligibility.

It does not, however, make you eligible for any FERS-only benefits during the buyback-eligible period you’ve purchased. The service is treated as civilian service for the annuity, not as a federal employment record for things like TSP matching, FEHB enrollment, or leave accrual. Those distinctions matter at the edges.

Who is eligible.

Almost any federal employee with qualifying active-duty military service can buy it back. The qualifying service generally includes:

  • Active-duty service in the Army, Navy, Air Force, Marines, Coast Guard, or Space Force.
  • Active-duty service in a reserve component, in some cases.
  • Active-duty training that exceeds certain thresholds in some cases.

In general, service that has already been used to qualify for a military retirement cannot be bought back unless the military retired pay is waived (and we’ll cover that in a separate article).

What the deposit covers.

The buyback deposit is calculated as a percentage of your basic pay during the period of military service, with interest. The exact formula depends on when the service was performed and what retirement system you’re in. The current FERS deposit rate is 3% of basic pay for most service periods, plus interest.

The interest-free grace period is a separate, powerful provision: if the deposit is completed within three years of the federal employee’s hiring date, the interest component can be zero. After the grace period, interest accrues at a rate set by OPM and compounded annually.

The honest answer to “is it worth it?”

For most federal employees with more than a couple of years of active-duty service, the answer is yes — usually emphatically yes. The deposit buys a permanent increase in the FERS annuity and often unlocks earlier retirement eligibility.

The cases where the answer is more nuanced are short military careers (under three years), situations where the retiree would otherwise already reach retirement eligibility without the service, and situations where the military service is being used to qualify for a separate military pension.

The next decision.

If you have active-duty service showing on a DD-214 and you’re a federal employee under FERS, the next decision is whether to ask HR for a deposit calculation. The form is RI 20-97, the estimate comes back from your agency’s benefits office, and the decision can sit on the page while you decide what to do with it. Most employees who get the estimate and look at the long-term annuity increase are surprised how quickly the math favors the buyback.