Ask The Experts: Retirement

By Reg Jones

Military buyback

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Q. I retired in 2003 with 30 years of active Army service. I have been drawing full military retirement pay since then. I am now a GS employee with seven years of federal service. Can I still buy back my military time and combine the two for a federal retirement?

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Military buyback

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Q. I retired from the Air Force in 2003 after 26+ years of active service. I am divorced and split the retirement 50/50 with my ex-wife. I’m a GS employee with 10 years under FERS. Can I buy back my time? If so, would it even be beneficial to do so?

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Military buyback

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Q. I recently spoke with an individual from the Office of Personnel Management’s retirement services regarding offset of FERS pension for Veterans Affairs disability. The individual told me that my VA disability would not be offset from my FERS pension if I was combining my military time with my civil service time. However, the individual also told me that if I buy back my military time and then waive my military retired pay all of my military benefits, medical, ID card, commissary, etc., would also be stopped. Has the law changed?

A. I’m not aware that anything has changed. However, neither someone at OPM nor I are qualified to tell you what happens to your other benefits if you waive your military retired pay. You’ll have to check with your branch of service.

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Military buyback and reservists

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Q. You answered a question March 1 about military buyback from a person who had 21 years of active-duty retirement. You said, “If you make a deposit for your active-duty service, you’ll have to waive your military retired pay when you retire from your civilian job.” Does that apply to reservists?

I am a retired reservist who had planned to buy back 10 years of active duty in 2013-14. I began drawing retired pay last year when I turned 60. As a reservist drawing retirement, will I also have to waive my retired pay when I retire from civilian service if I buy back my active duty time?

A. Because you’ll be receiving reserve retired pay, if you make a deposit to get credit for your active-duty service, you won’t have to waive that pay when you retire. Only employees entitled to or receiving military retired pay based on their active-duty service are required to do that.

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Military and civil service retirement pay

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Q. I have 26 years as an Air Force Reserve technician; I have been offered an Active Guard Reserve tour that would give me 20 years’ active duty in five years. Will I lose my civil service retirement if I retire on the military side with 20 years, or will I be able to draw both since I have worked both?

A. If you will be receiving military retired pay, to get credit for your years of active-duty service in your civilian annuity, you’ll have to make a deposit to the retirement fund and waive that pay when you retire. If you will be receiving Reserve retired pay, you’ll have to make a deposit for only your active-duty service. Your Reserve retired pay wouldn’t be affected.

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Military buyback

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Q. I receive military retirement pay for 21 years of service in the Air Force. I started working as a federal civilian employee (GS 9 step 1) two months ago. I have not bought back my military time. I am 41. If I continue to work as a federal civilian for another 20 years and buy back my military service, which would give me 40 years total, does my combined retirement/annuity add up to more than if I wouldn’t buy back my military time, keeping my separate military retirement check and my separate FERS annuity check?

A. You are asking me to do your homework. I can’t do that. What I can tell you is the formula for calculating a FERS annuity: .01 x your highest three consecutive years of average basic pay x your years and full months of service. That period of service can either be pure FERS or FERS plus active-duty military service for which you’ve made a deposit. If you make a deposit for your active-duty military service, you’ll have to waive your military retired pay when you retire from your civilian job.

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Military buyback

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Q. I served for 13 years and four months in the active-duty Air Force after graduating from a service academy. After taking a job in the airline industry, I continued serving in the Air Force Reserve for another 10 years. I turned 60 in March and started drawing reserve retirement pay in April. I am considering employment as a Federal Aviation Association air safety inspector when I retire from my airline job, perhaps this year.

I’ve been told by a friend at the FAA that all of my active-duty time plus my time at the service academy will count toward federal retirement if I buy back some military time. He was not sure how long I’d have to work for the FAA at a minimum to be “fully vested” for federal retirement, but he thought that it could be as few as three years (13 active + 4 service academy + 3 for a total of 20). Also, based on some of the Q&As here, it sounds as though I may have to stop my reserve retirement pay and perhaps pay back any that I’ve received to start federal employment.

Can you explain this and clear up any misunderstandings that I may have?

A. If you go to work for the federal government, you could make a deposit to the civilian retirement system and get credit for all of your military service academy and active-duty time. Because you are receiving reserve retired pay, you wouldn’t have to waive that pay when you retired from your civilian job.

For service before Jan. 1, 1999, the deposit equals 3 percent of your basic military pay (not allowances or differentials). For periods of service during 1999, the deposit is 3.24 percent. For periods of service in 2000, 3.4 percent. For any periods of service after 2000, it’s 3 percent.

To be vested in the civilian retirement system, you would have to have five years of actual civilian service. Once you had that, the active-duty service for which you made a deposit would be creditable for retirement. Your annuity would be calculated using the following formula: .011 x your highest three consecutive years of average basic pay x your years and full months of creditable service (actual and active-duty service for which you made a deposit). The first multiplier would be .011 instead of .01 because you’d be at least age 60 and have at least 20 years of service.

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Military buyback

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Q. I am a FERS employee considering buying back my service time. I retired after 23 years in the Army. I’m 49 years old and have five years of federal time as of 2013. Would it be in my best interest to buy back my military time and put it toward federal retirement? What would be the impact?

A. Here’s the upside. If you make a deposit to get credit for your active-duty service, you’d have 28 years of creditable service. If you retired at your minimum retirement age (56), you’d have 35 years of service and your annuity would be 35 percent of your highest three consecutive years of average basic pay. You’d also be entitled to the special retirement supplement, which approximates the amount of Social Security benefit you earned during those 12 years while you were a FERS employee.

Here’s the downside. To get credit for those years of active-duty service, you’d have to waive your military retired pay before you retire.

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Combining military, civilian service

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Q. I have 20 years of active-duty service (Army E-6) and have just retired (actual retired date will be Dec. 1). I have been hired by the federal government as a GS-11. Would it be financially beneficial for me to buy back my military time and contribute it to my federal civilian retirement down the road? If I buy back my military time, will that 20 years allow me to retire from my civilian position early, maybe in 10 years with a total of 30 years of service? What is the impact or consequence of this on my military retirement?

A. Combining your active-duty and civilian service would allow you to retire with 30 years total service but only if you have reached your minimum retirement age. MRAs range between 55 and 57, depending on your year of birth. If you make a deposit to get credit for your active-duty service, do it as soon as possible. You’ll have an interest-free window that’s at least two years long. After that, interest begins to accumulate. One cautionary word: If you decide to make that deposit, when you retire, you’ll have to waive your military retired pay.

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Military buyback

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Q. After serving 15 years of active duty with the Army I ETS’d to pursue a federal position (FERS) and continued my military career as a reservist. I’ve bought back the 15 years. I was involuntarily mobilized and attained enough active duty to retire under the sanctuary program. What happens to the 15 years that was already bought back as a reservist prior to retirement?

A. If you retired from the Reserve, that will have no effect on your FERS retirement. You’ll get full credit for the time for which you already made a deposit. If you want to get credit for the time when you were recalled to active duty, you’ll need to make a deposit for that period of service, too. In no case will that have any effect on your reserve retired pay. On the other hand, if you retired from active duty and are entitled to military retired pay, you’d have to waive that retired pay to get credit for any of the bought-back service.

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Military buyback

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Q. I left the active-duty Army with 15 years of service to take a federal law enforcement position (6c). I’ve bought back all 15 years of service, and now I have the opportunity to go back on active duty with the Army (I’ve been in the Reserve) and complete five years for an active-duty retirement. What happens to the buyback time and money when I return to my federal job if I complete the active-duty retirement after I’ve finished the military buyback payments and I have an updated service computation date?

What if I finished the federal retirement first with the military buyback years, then went on to finish my active-duty retirement? Would I lose the federal time and money from the military buyback?

A. If you were called to active duty, meaning that you had no option but to go, and returned to your former covered position, that service would be credited toward your eligibility to retire under the more generous law enforcement officer formula but only if you made a deposit to the retirement system. If you volunteered to go on active duty and returned, you’d still have to make a deposit to get credit for that time, but it wouldn’t count as covered service. Note: The active-duty service for which you have already made a deposit isn’t creditable toward a law enforcement retirement. It, like the voluntary service I referred to above, would be treated as regular service and computed accordingly.

If you retired and then went on active duty, the outcome would depend on whether you were eligible for military or reserve retired pay. If you were retired from the Reserve, receiving that pay would have no effect on your civilian annuity. However, if you retired as an active-duty member of the military, you would have to waive your military retired pay to get credit for the 15 years of earlier active-duty service. If you didn’t, those years would be deducted from your civilian annuity and you’d receive a refund of your deposit for that time.

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Catch-62

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Q. I am about to retire under CSRS, under which I have worked since 1977. I am now receiving a disability pension from the Veterans Affairs Department for a service-connected disability. I was on active duty from 1969 to 1973. In the past, I had received my disability pension from the military. I have been told that my records show that my military time will count toward my CSRS retirement, but I have to pay for my military time.

I see that in the Effect of Military Retired Pay section of OPM Form 1515, for my military service to count toward my CSRS retirement, I must waive my military retired pay, or have been awarded retired pay because of a service-connected disability incurred in combat with an enemy of the U.S., or awarded because of a service-connected disability caused by an instrumentality of war, or awarded under the reserve retiree provision (Chapter 1223 of title 10, U.S. Code).

I do not plan to waive my VA pension, and I was not hurt in combat with an enemy or by an instrumentality of war. I was never in the active reserve.

Since I did not make my military service deposit years ago, to pay it now would be a hefty sum. So I want to make sure my military service will count toward my CSRS retirement.

Additional info: My service computation date leave on my leave and earnings statement includes my military service. My military service was added to my SCD leave some time in 2000. The reason I was given for the change is, it was corrected by a tiger team.

I’m 62 and I qualify for Social Security.

A. Because you were first employed by the federal government before Oct. 1, 1982, you’ll get credit for your active-duty service in determining your total length of service and in your annuity computation.

However, if you don’t make a deposit into CSRS for those years of active-duty service, you’ll be subject to what’s popularly called Catch-62. Because you are eligible for a Social Security benefit, when you retire, those years of active-duty service will be eliminated and your annuity computed without them. Note: The fact that you are receiving a disability pension from VA will have no effect on your civilian retirement. You won’t have to waive that benefit.

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Buyback and military retirement

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Q. I am a reservist eligible for an active-duty retirement (21 years active duty and four years reserve duty). I have not retired yet. If I obtain a federal civilian position prior to retiring from the Reserve, will I be eligible to buy back my 20+ years of active duty? Or does the fact that I am eligible for an active-duty retirement (i.e. will receive retired pay immediately after retiring from the Reserve) make me ineligible to buy back my military time?

A. Yes, you could make a deposit to get credit for your active-duty service. However, to get credit for it in your annuity computation when you retired from your civilian job, you’d have to waive your military retired pay.

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Military buyback and creditable service

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Q. I retired in 2000 with 20 years of active-duty time. I spent the next 10 years collecting a pension (E-6) and working as a contractor. I’ve been working in the federal government for the past two years as a GS-12, Step 10. Would it make sense for me to put the amount of cash necessary to retire at 30 years by buying back my 20 military years? Am I even eligible to do this? Would I have to do it now?

A. Yes, you can make a deposit for those 20 years of service, However, when you retire, you would have to waive your military retired pay to get credit for it in determining your total years of service and in your annuity computation. Making a deposit for 20 years would increase your civilian annuity by 20 percent (1 percent per year x 20 years). If you decide to make a deposit, the sooner you do so the better. That’s because interest accrues on the unpaid balance.

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Military time and disability pay

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Q. I am a FERS employee and a disabled vet. I was given a medical retirement for injuries I received during my tour of duty in the Navy in 1972-75. I waived my military retirement in lieu of a Veterans Affairs Department pension about 15 years ago. I have made the service credit deposits required so that my military time will be credited to my FERS retirement. I recently attended a retirement seminar and was told that I will have to sign a waiver of military retired pay when I file for my FERS retirement. Does this mean I will lose my VA pension?

A. No, you won’t because you aren’t receiving military retired pay.

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Military time status

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Q. I bought back active-duty time as a FERS employee and a reservist. Afterward, I was involuntary mobilized and served enough years as a reservist to receive an active-duty retirement (sanctuary program). I have since than returned as a FERS employee. What happens to the previous military time I bought back when I was a reservist? Am I able to keep it without having to waive military pension since it was bought back when I was a reservist?

A. No, your entitlement to military retired pay changed the game. If you want to get credit for your periods of active-duty time, you’ll have to make a deposit for that new period of service and, at retirement, waive your military retired pay. If you don’t waive that pay, the deposit you previously made (and any future deposit) will be returned to you.

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Waiving military retired pay

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Q. I have seen some questions recently concerning federal annuities and
waiving military retired pay. Iis there any benefit in doingso? Why would anyone want to do this? Is it better to get one check or two?

A. It’s worth it if making a deposit and waiving your military retired pay results in your being able to retire sooner from your civilian employment with a larger annuity than two separate ones would provide. You need to make the decision based on what you gain when compared with what you lose. Note that waiving your military retired pay will not affect any other entitlements you have based on your military service.

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