Annuity
Military Buyback Calculator
Military service can be added to your federal pension, but only if you pay for it. This works out what the deposit costs today — principal plus every year of interest OPM has added since you were hired — and what the extra years are worth once you retire.
Informational only — not professional advice. This is an independent estimate, not an official one. Only your agency can compute the deposit you owe, and only your branch of service can certify the basic pay it is based on. FedAnnuity is not affiliated with OPM, the Department of Defense or the U.S. government.
Buying this service back would cost $3,146.03 today — $2,340.00 of principal and $806.03 of interest added on 13 anniversaries of the day you were hired. Your pension would rise by $3,840 a year for life, so the deposit pays for itself after less than a year of retirement.
5 U.S.C. § 8422(e) · unpaid, this service counts for nothing
| Basic pay earned outside 1999–2000$78,000 × 3% | $2,340.00 |
|---|---|
| PrincipalWhat the deposit would have cost on your first day | $2,340.00 |
| Accrual date | Added | Balance |
|---|---|---|
| May 16, 2014composite rate 1.625% | + $38.03 | $2,378.03 |
| May 16, 2015composite rate 1.766% | + $42.00 | $2,420.03 |
| May 16, 2016composite rate 2% | + $48.40 | $2,468.43 |
| May 16, 2017composite rate 1.953% | + $48.21 | $2,516.64 |
| May 16, 2018composite rate 1.969% | + $49.55 | $2,566.19 |
| May 16, 2019composite rate 2.359% | + $60.54 | $2,626.73 |
| May 16, 2020composite rate 2.563% | + $67.32 | $2,694.05 |
| May 16, 2021composite rate 1.922% | + $51.78 | $2,745.83 |
| May 16, 2022composite rate 1.375% | + $37.76 | $2,783.59 |
| May 16, 2023composite rate 1.563% | + $43.51 | $2,827.10 |
| May 16, 2024composite rate 2.578% | + $72.88 | $2,899.98 |
| May 16, 2025composite rate 3.984% | + $115.54 | $3,015.52 |
| May 16, 2026composite rate 4.328% | + $130.51 | $3,146.03 |
| Total owed on September 1, 2026$806.03 of it is interest — 34.446% of the principal | $3,146.03 |
| Service added to the computationCounts toward the 20- and 30-year retirement rules, never toward the five years of civilian service FERS requires | 4 years |
|---|---|
| Annuity factor1% of high-3 for each year of service | 1% |
| Added to your pension$96,000 × 1% × 4 years | $3,840/yr |
| Years of retirement to repay the depositBefore tax, before COLAs and before any survivor reduction — all three move this figure | 0.8 |
Unpaid, this military service is worth nothing under FERS — not a day of it. It counts toward neither your eligibility date nor your annuity, and the deposit must be complete before you separate. There is no partial credit, and no way to pay after you retire. You must also generally waive military retired pay to take the credit, unless it was awarded for a service-connected disability or under a reserve retirement at 60.
The deposit is paid to your employing agency, not to OPM, and interest stops the day it is paid in full. The 2-year grace period runs from the day you were first covered, so a newly hired veteran has three years before a single dollar of interest is charged. See what the added years do to your whole pension in the FERS annuity calculator, and to your retirement date in the eligibility date finder.
How this is calculated
A military buyback — properly, a deposit for post-1956 military service — is one of the few things in federal retirement that is unambiguously cheap. It is priced against what you were paid decades ago, not what you earn now, and it buys credit valued against your final salary. The arithmetic below is in two halves: what the deposit costs, and what it buys.
The principal: a percentage of military basic pay
deposit principal = military basic pay × the rate for the year it was earned
| System | Before 1999 | 1999 | 2000 | 2001 on |
|---|---|---|---|---|
| FERS | 3% | 3.25% | 3.4% | 3% |
| CSRS | 7% | 7.25% | 7.4% | 7% |
The two-year bump is real rather than a transcription error: employee contributions were temporarily raised for calendar 1999 and 2000, and the military deposit followed them. It is the reason this form asks for those two years separately instead of one lifetime total.
Basic pay means basic pay. Not BAH, not BAS, not hazardous duty or combat pay, not bonuses, not allowances of any kind. The authoritative figure comes from your branch as an Estimated Earnings During Military Service statement, requested on form RI 20-97, and the deposit application itself is SF-3108 for FERS or SF-2803 for CSRS.
The interest: once a year, on your own accrual date
This is the half that separates a correct answer from a plausible one. Interest on a military deposit is not a flat percentage of the balance. Three rules from Handbook chapter 23 decide it:
- Your interest accrual date is the month and day you were first coveredby FERS or CSRS — not the dates of your military service. Interest is assessed on that date, once a year, on whatever is unpaid.
- The grace period is 2 years, so the first charge lands at 3. Because nothing is ever charged between anniversaries, a deposit paid in full before the 3rd anniversary costs principal only. A day later, it costs a full year.
- The rate is a composite of two calendar years. The twelve months an assessment covers straddle a year end, so OPM blends the two rates on a 30/360 basis.
composite = last year’s rate × F1 + this year’s rate × F2
F2 = ((month − 1) × 30 + (day − 1)) ÷ 360
An accrual date of 1 January is therefore charged the previous year’s rate outright; one of 31 December is charged the current year’s. OPM publishes the resulting rate for every day of the year in its annual interest-rate letter, so this is checkable rather than asserted — our implementation is tested cell by cell against BAL 26-301, Table 1 (PDF).
The rate itself is set by the Treasury each year and published by OPM every November. It has been as high as 13% (1985) and as low as 1.375%; for 2026 it is 4.25%. A balance left untouched for fifteen years compounds through a dozen different rates, which is precisely what a single-rate calculator cannot represent.
What the deposit buys
added annuity = high-3 × 1% (or 1.1%) × years of military service
payback = deposit ÷ added annuity
Bought-back years are ordinary creditable service: they earn the same 1% of your high-3 as any other year, or 1.1% if you retire at 62 with at least 20 years. The payback period is the figure the decision actually turns on, and for most people it is short — the deposit is priced on a private’s pay from 2003 and repaid out of a GS-13’s pension. It is stated before tax, before cost-of-living adjustments and before any survivor reduction, all three of which move it.
The rules that decide whether any of this applies
- FERS: no deposit, no credit — for anything. 5 U.S.C. § 8411(c) credits post-1956 military service only where the § 8422(e) deposit has been paid. Unpaid, the service counts toward neither your annuity nor your eligibility date, and the deposit must be complete before you separate.
- CSRS: “Catch-62”. 5 U.S.C. § 8332(c) credits the service to an employee first hired before 1 October 1982 without a deposit — then removes it at 62 if they are eligible for Social Security. The annuity is cut decades after the decision that caused it.
- Military retired pay must generally be waived to receive the credit. The exceptions are retired pay awarded for a service-connected disability and reserve retired pay under 10 U.S.C. chapter 1223, neither of which has to be given up.
- Five years of civilian service is still required for any FERS annuity. Bought-back military years count toward the 20- and 30-year retirement rules, never toward that five.
- Pay your agency, not OPM.The deposit is administered by your employing agency’s payroll office, and instalment plans are normal — interest simply follows whatever remains unpaid.
What this does not model
- Instalment schedules.The tool computes one balance paid in full on one date. Paying by allotment reduces the balance as you go, so the interest is lower than shown — the figure here is the cost of paying it all at once on the date you name.
- Service academy time and lost time. Time at a service academy is not creditable military service, and days lost within a period of service are excluded from it. Enter service you know counts.
- The retired pay waiver decision. Whether giving up military retired pay is worth the credit depends on figures this form does not ask for. The tool states the rule and stops.
- The value of CSRS credit. CSRS accrues on a tiered 1.5 / 1.75 / 2% scale, so bought-back years are worth whatever bracket they land in. Run the totals through the CSRS annuity calculator instead.
- Tax. The deposit is made with after-tax money and is not deductible. It does raise the tax-free portion of your annuity slightly, which is not modelled here.
- Rates that do not exist yet. Payment dates beyond 2026 carry the 2026 rate forward, and the tool labels every posting that relies on that assumption rather than presenting it as published.
Sources
- 5 U.S.C. § 8422(e) — the FERS deposit for post-1956 military service, and § 8334(j) — the CSRS deposit.
- 5 U.S.C. § 8332(c) — CSRS credit for military service and its removal at 62, the rule known as Catch-62.
- OPM CSRS/FERS Handbook, Chapter 23 — Service Credit Payments for Post-1956 Military Service (PDF) — the percentages, the interest accrual date, and the composite interest formula at § 23A3.1-5.
- OPM Benefits Administration Letter 26-301 (PDF) — the 2026 rate of 4.25%, and the published composite rates this tool is tested against.
- OPM Form 1514, Military Deposit Worksheet (PDF) — the published variable interest rates for 1948 through 2005.
- OPM — FERS Creditable Service — the retired pay waiver and its exceptions.
Last reviewed: August 2026
Frequently asked questions
How much does a military buyback cost?
Under FERS the deposit is 3% of the military basic pay you earned — 3.25% for pay earned in 1999 and 3.4% for 2000 — plus interest. Under CSRS it is 7%. Basic pay means basic pay only: no BAH, no BAS, no hazardous duty pay, no allowances, which is why the figure is usually far lower than people expect. Four years of enlisted service commonly comes to two or three thousand dollars before interest.
How long do I have to pay before interest starts?
2 years from the day you were first covered by FERS or CSRS — but because interest is only ever charged on an anniversary of that date, the first charge lands on the 3rd anniversary. Pay in full before then and the deposit costs principal and nothing else. Afterwards, interest is added once a year, every year, and compounds on the balance until it is paid off. That single date is the most valuable thing on this page for a newly hired veteran.
How is the interest on a military deposit calculated?
Not at a flat rate. Interest is assessed once a year on your interest accrual date, at a composite rate that OPM blends from the two calendar years the preceding twelve months fall in, and it compounds on the unpaid balance. The Treasury sets a new rate each year — they have ranged from 13% in 1985 to 1.375%, and the 2026 rate is 4.25%. A balance left for fifteen years therefore compounds through a dozen different rates, which is why a calculator that multiplies by one rate gives the wrong answer.
What happens if I never pay the deposit?
Under FERS, the military service counts for nothing — not toward your annuity, not toward your retirement eligibility date. There is no partial credit, and the deposit cannot be made after you separate. Under CSRS the trap is reversed and known as "Catch-62": if you were first hired before 1 October 1982 the service is credited anyway, then removed from your annuity at age 62 if you qualify for Social Security. Either way the decision is made long before it is felt.
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