Ask The Experts: Retirement

By Reg Jones

Leave without pay and creditable service

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Q. In 2011, I left my civil service job for 175 days to deploy to Afghanistan as an active-duty officer. While deployed, I used a day or two of annual or military leave every pay period to pay for my health care benefits. FERS payments also were made on the days I was on paid leave.

When I got back from my deployment, I was told I had to buy back the time, and I put in paperwork with DFAS to do so. However, I just read in my agency’s furlough FAQ that: The amount of a CSRS or FERS annuity paid by the Office of Personnel Management (OPM) is based primarily on the amount of creditable service an employee performs and the employee’s high-3 average salary.

Both CSRS and FERS allow service credit for up to 6 months of nonpay status in any calendar year. If a furlough period does not cause an employee to be in a nonpay status for more than 6 months in a calendar year, the furlough period will be included as creditable service in determining the employee’s total creditable service used in the annuity computation. If the total amount of time an employee spends in a nonpay status in a calendar year exceeds 6 months, the amount of nonpay status in excess of 6 months in the calendar year will not be creditable for retirement purposes.

Based upon this, it looks like as long as I was not in a nonpay status for six months that calendar year, I do not have to buy back that time for it to count toward my retirement. Am I correct in my interpretation of this? If so, is there a way to verify how many creditable years I have?

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Military buyback in FERS

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Q. I am a GS employee who was fully employed by my agency from 1992 to July 2004 and then involuntarily recalled to active duty (reservist), title 10, for two years. I am still affiliated with the agency and have an active SF-50. I am also still on active duty, but on voluntary orders with a five-year limit. Can I buy back my Title 10 military service for a FERS employee while on LWOP-US or annual leave while on voluntary military orders? The result would be 14 years of federal service, to include two years of military service and 12 years of civilian service.

A. You may make a deposit for military service only where you are called to active duty in the service of the United States, and then only when you have returned to your civilian position. As a rule, voluntary service isn’t creditable. To be sure of your status, check with your personnel office. If there’s a question, officials there can check with OPM.

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Leave without pay

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Q. Would you please explain the differences between using leave without pay and leave without pay-uniformed services and how it impacts someone at retirement? Am I automatically placed on LWOP-US when activated for Reserve training (title 32), or can I request LWOP and not have to make a deposit? I have been making deposits for a lot of LWOP-US over my career and would hate to find out I didn’t have to make those payments for stints less than six months.

A. No, you don’t have a choice. When called to active duty, you are automatically placed on LWOP-US unless you elect to use annual leave for some or all of that time.

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Going back on active duty

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Q. I am currently working as a General Schedule employee, and I have bought back my eight years active duty. It is paid in full. If I go back on active duty, would I get that deposit paid back to me, or do I lose it?

A. It would only be paid back in you separated from the government and asked for a refund of all your retirement contributions. Doing so would void all future entitlement to a retirement annuity.

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Refund of military buyback deposit?

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Q: I was active-duty Navy for five years, then worked for the U.S. Postal Service under the Federal Employees Retirement System for seven years, during which time I bought back my military time. After 9/11, I went back into military service (active-duty Army), and I will retire with 20 years active service. Who do I need to contact to get a refund of my deposit with the USPS?

A: While you can’t get a refund solely of your deposit for active-duty service, you can get a refund of all your contributions and deposits to the retirement fund. Download a copy of Standard Form 3106, Application for Refund of Retirement Deductions, fill it out, and send it to the Office of Personnel Management. Alternatively, you can leave that money in the retirement fund and apply for a deferred annuity at age 62.

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Military buyback deadline?

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Q: I am a reservist and had 8 1/2 years of civilian federal service (under FERS) when I was recalled to active duty right after 9/11. I have been a reservist on active duty for the past 10 years and am still on leave without pay status (LWOP) with the agency I was recalled from. How long would I have to return to the agency in order to make a deposit on my 10 years of active duty? I have about 80 hours of leave on the books. Is there a certain time period that I would have to return to the agency to make the deposit or could I come off of LWOP status, go into LV status, make the deposit and then separate? I’d plan to apply for a deferred retirement when I’m eligible. Also, is the deposit 3 percent of military base pay?

A: There isn’t any time limit on the amount of time that you’d have to remain on your agency’s roll if you returned to your civilian position. However, in practical terms, it would have to be long enough to complete the process of making a deposit to the civilian retirement system. First, you’d have to apply to your branch of service to find the amount of basic pay you earned while on active duty. Then you’d need to take that information to your payroll office and arrange to make the deposit. If all your active duty service was performed after December 31, 2000, you’d only need to deposit 3 percent of your basic military pay. If you did that within two years of the day you re-entered your civilian position, no interest would be charged. After you completed the process and resigned from the government, you’d be eligible for a deferred annuity at age 62; however, if you waited to resign until you had a total of 20 years of combined service, you could apply for a deferred annuity at age 60.

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Military buyback and benefit computation

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Q: I am 58 years old, and I started work for the government in 1981. I have 30 years of service as a Defense Department civilian employee and four years as an active-duty service member. I am under the Civil Service Retirement System and plan to retire at age 62 with 38 years of total service. I have not bought back any of my active-duty time. What impact will that have on my retirement annuity and what impact will that have if I decide to take another job after I retire?

A: Because you were first hired before Oct. 1, 1982, you have a choice as to whether to buy back your military time: If you don’t make the deposit, you’ll get credit for the time in determining your years of service and your annuity computation; however, if you are eligible for a Social Security benefit after you retire, those years will be subtracted and your annuity recomputed downward.

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Buying back military time

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Q: If I buy back my military time, can I collect both military retirement and Federal Employees Retirement System benefits?

My situation is this: I am 58 years old, and I started a job with the federal government Sept. 26, 2010. My prior military service consists of nine years on active duty and 14 years in the reserves. I have submitted the forms to the Defense Finance and Accounting Service and have received my cost calculation to buy back my active-duty years.

I am eligible to collect my military retirement when I turn 60. I plan to continue working for the federal government until age 70, which would give me 12 years of actual federal service plus the buyback of the nine active-duty years. Can I collect my military retirement at age 60 as scheduled, and when I retire at age 70, collect both retirements? Is that considered double-dipping, because the nine active-duty years are used to complete the required military time to qualify for retirement?

I have read answers that go both ways; some say I can collect both, others say I will need to sign a waiver to decline my military retirement pay in lieu of FERS pay. If the latter is the case, does that mean I can collect my military retirement until such time that I retire from federal service, then sign a waiver to decline further military retirement and receive FERS pay? If that is so, is that financially to my benefit?

A: Because you are retiring from the reserves, making a deposit for your years of active-duty service won’t have any affect on the timing or amount of your reserve retired pay. It will be used to increase your years of civilian service and be used in your annuity calculation. Only members of the military who are retiring from active duty are required to both make a deposit for that time and waive their military retired pay.

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Buybacks

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Q: I was in the National Guard from January, 1970 until January, 1976. I was only on active duty for six months then; the rest of the 5 ½ years were weekends and two weeks a year on active duty. Can I buy any of that time back?

A: Only the six months that you were on active duty.

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Military buyback and reserve retirement

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Q: If I buy back my active-duty military time to put it toward my Federal Employees Retirement System retirement, do I then lose that time toward my Navy Reserve retirement?

A: No. Making a deposit for your period(s) of active-duty service will have no affect on reserve retired pay. You’ll get full credit for that time.

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The basics of military buyback

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Q: I served in the Marine Corps for more than 13 years, entering Dec. 27, 1979, and leaving active service in November 1987. I re-entered the Corps on Dec. 7, 1989, and was involuntarily but honorably discharged in the middle of 1995 as part of force reduction after the first Gulf War. I did not retire, but I did receive a separation allowance, all of which I have paid back. I paid back the money by not receiving any disability pay for about 12 years (20 percent disabled for service-connected foot and back injuries).

In the spring of 2001, I became a permanent-hire working for the Navy Department at the rate of NT-802-4 (GS-12). I’m currently maxed out in that grade. What steps do I have to take to get credit for my military time applied to my civil service time? What are the exact advantages? And what rate of repayment do I have to make?

A: You can get credit for your years of active-duty service by making a deposit to the civilian retirement fund. The deposit equals 3 percent of your basic military pay, excluding differentials and allowances. To find out how much you would owe, fill out form RI-20-97, Estimated Earnings During Military Service, and mail it to the finance office for your branch of service along with a copy of your DD 214, Report of Transfer or Discharge. When you get an answer, take that document, a copy of your DD 214 and Standard Form 3108 to your local payroll office. They’ll figure out how much you owe, including any accumulated interest. If you decide to make a deposit, you can do so either by periodic deposits or deductions from your paycheck.

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Army Reserve benefits and military buyback

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Q: I have 31 years in the Army, six years of which is active duty, and I’m still on reserve status. I’ve been working at a Veterans Affairs Department hospital for more than 20 years and plan to stay there until I have 30 years of service. I’m presently buying back the six years of active-duty time, and it is going to cost $12,000. First of all, is it worth it for me to buy back this time? I have heard when you retire from the federal government, you will only get either your federal retirement with your active-duty buyback time added, or you will get your military retirement, but not both. I am wondering if it is in my best interest to buy back this active-duty time, and if I do, will I get both my Army Reserve retirement and my federal retirement, or just one of those two? If I only get one, how to I figure out which one to take?

A: It will be easier for you to make a decision after I clear up a misunderstanding: Making a deposit to get credit for your years of active-duty service in you civilian annuity won’t have any affect on your Army Reserve retired pay. You’ll be able to receive both benefits without a reduction in either of them.

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Military Reserve Retirement

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Q: In May of 2002 I retired from the U.S. Army Reserves. At that time I had 29 years of military service, almost five of which was spent on active duty from 1972 -1977 and the remainder was in the Active Reserves. I will collect my military reserve pay in two years at age 60. I have just recently taken a job with the Department of Justice and am in FERS. My question is: If I buy back my active duty military time within FERS (approximately five years) will these same five years be factored into my Reserve Retirement Pay calculation when I do start to receive a military retirement check in two years or will those five years be taken away from the overall calculation of my monthly military retirement check? I do not want to do anything that would alter my military “take home” pension. Also, if I do choose to buy back my active duty military time to credit FERS, do I need to complete this purchase BEFORE receiving my first military retirement check? Thank you for your time and expertise.

A: Making a deposit for your years of active duty service will have no affect on your military retired pay. Although you’ll need to complete the deposit before you retire from your civilian job, when you do that is up to you. However, since interest will continue to accumulate on the basic amount you owe, the sooner you make the deposit the less you’ll have to pay in total.

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Social Security earnings test

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Q: I provide financial services to federal employees and have been posed with a question I have not had before. My client has recently retired under Federal Employees Retirement System and has been an Army reservist for 20-plus years. Will his reservist earnings count against his FERS supplement earnings test? If he is called to active duty, are there any other considerations? And lastly, am I correct in understanding that military or reservist retired pay does not count as earnings against the FERS supplement earnings test?

A: The Social Security earnings test applies to earnings from wages or self-employment. Having been on active duty in the armed forces and served in the reserves, I know that my pay was always treated as earned income when filing my federal and state taxes. I’m not aware of any exception that would exempt active duty or reserve pay from the Social Security earnings test.

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Service credit

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Q: I was in the Air Force from May 1980 to June 1993. I took a separation incentive. I have been in Federal Employees Retirement System from 1993 to present. What do I do to get the best possible retirement pay? Buy back time? Would I have to pay back the separation incentive? I am 48 years old.

A: If you want to get credit for your years of active duty service, you’ll have to make a deposit to the civilian retirement fund. In your case, that would be 3 percent of your basic military pay, not including any allowances or differentials, plus accrued interest. Doing so would add that time to your civilian service credit record and increase your annuity by at least 13 percent when you retire. You wouldn’t have to pay back your special separation incentive.

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Military service and retirement

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Q: I have nine years of military service that began Nov. 28, 1980, and ended Dec. 3, 1989. My federal service began Dec. 4, 1989, and I am still employed by the Federal Aviation Administration. I am under the Federal Employees Retirement System. On Nov. 27, I will have 30 years of continuous service if you include the military time. Does that qualify me for the any-age minimum retirement age under FERS with 30 years of government service?

A: Because you are covered by FERS, those years of active-duty military service would only be considered to be creditable service for retirement purposes if you have made a deposit for that time to the civilian retirement fund. If you have made a deposit and will have 30 years of creditable service, you can retire at your MRA. If you haven’t, you can’t.

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