Military Deposits and Your Annuity

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By on December 10, 2018 in Retirement with 0 Comments

Close up of cash in the pocket of a military uniform - military benefits, pay

Military deposits may be necessary to receive federal retirement credit for military service that occurred on or after 01/01/1957. HR folks refer to this as “post-56” military service.

01/01/1957 is a long time ago. The New York Yankees were the defending World Series Champs, though they would lose to the Milwaukee Braves in the 1957 fall classic. Elvis hadn’t even been drafted yet either.

The rules on military deposits are slightly different for CSRS and FERS and, as usual, the CSRS rules are more confusing. There are also special rules for military retired.

Military deposits consist of a percentage of your military base pay (7% for CSRS and 3% for FERS) plus interest. The interest rate is calculated based on your “interest accrual date”, generally the anniversary of your entrance on duty. The amount of interest varies from year to year.

Any CSRS employee who was hired after 10/01/82 must make a military deposit in order to have their post-56 military service count for retirement eligibility and to have it count in their retirement computation.

In addition, any FERS employee must make a military deposit in order to have their post-56 military service count for retirement eligibility and to have it count in their retirement computation.

What about CSRS employees who were hired before 10/01/82?

  • If hired before 10/01/82 and a deposit is not made:
    • The military time counts for CSRS retirement eligibility.
    • The military time counts in the CSRS retirement computation until the retiree reaches age 62.
    • If the retiree is eligible for Social Security at age 62, the military time will no longer count in the CSRS retirement computation.  The retiree does not have to have applied for SS; the simple fact that they are eligible for it will result in the CSRS annuity being reduced.
    • If the retiree is not eligible for Social Security at age 62, the time will continue to count in the CSRS retirement computation.  It will continue to count even if the retiree becomes eligible for SS at an age older than 62.
  • If hired before 10/01/82 and a deposit is made:
    • The military time will count for both CSRS retirement eligibility and CSRS retirement computation both before and after age 62.

Military service that is used to compute an active duty military retirement will not count in a civilian annuity unless the military retired pay is waived. There is an exception if the military retirement is due to a combat connected disability. The vast majority of active duty retirees do not waive their military retirement.

Those who have retired from the reserves may make a deposit for the active duty component of their reserve retirement.

Most FERS employees who are not active duty military retirees will make a military service deposit. Most CSRS employees who are not active duty military retirees and who will be eligible for Social Security at age 62 will also make a military deposit.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2019 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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