A surprising number of postal employees are veterans who haven’t completed their military service deposit. Some don’t know it’s an option. Others started the paperwork and never finished. And many just keep putting it off without realizing that every year they wait, the interest charges grow.
If you have military service and haven’t done the buyback, this is one of the single highest-return financial decisions you can make as a postal employee. Here’s how it works.
What the Military Buyback Does
When you make a military service deposit, your active duty time gets added to your creditable service under FERS. This affects your retirement in two direct ways:
1. It increases your annuity. Your FERS pension is calculated as 1% (or 1.1% if you retire at 62+ with 20+ years) of your high-3 salary multiplied by your years of service. Every year of military time you add increases your annuity by 1% of your high-3. If your high-3 is $70,000, each year of bought-back military service adds roughly $700/year ($58/month) to your pension — for life.
2. It can let you retire earlier. If you need 30 years for MRA+30 or 20 years for Age 60+20, military time counts. Four years of military service could mean retiring four years sooner.
What It Costs
The deposit amount is 3% of your military base pay for each period of service. Not your total military compensation — just base pay. For someone who served four years as an E-4, total base pay might have been roughly $80,000–$100,000, making the deposit around $2,400–$3,000 before interest.
Interest starts accruing 3 years after you start federal civilian employment (for FERS employees, or 2 years after October 1, 1982 for CSRS). The interest rate is set annually by the Treasury Department and compounds. If you’ve been at USPS for 15 years without paying, the interest can be substantial — sometimes doubling the original deposit amount.
Step-by-Step: How to Do the Buyback
Step 1: Get your military earnings record. Request your military pay records from the Defense Finance and Accounting Service (DFAS). You’ll need to submit a Standard Form 180 (Request Pertaining to Military Records). You can do this online at eVetRecs or by mailing the form to DFAS. Request your “statement of service and earnings” — this shows your base pay for each period of active duty.
Step 2: Complete SF 3108. Fill out Standard Form 3108 (Application to Make Deposit or Redeposit — Federal Employees Retirement System). This is the official form that tells HR you want to make the military service deposit. Attach your military earnings statement.
Step 3: Submit to your HR office. Turn in the completed SF 3108 and your earnings records to your installation’s HR/personnel office. They’ll calculate the exact deposit amount including any accrued interest and send you a bill.
Step 4: Pay the deposit. You can pay in a lump sum or through payroll deductions. Many employees choose payroll deductions to spread the cost out. The key is to start — interest stops accruing once you begin making payments.
Step 5: Verify your SCD. After the deposit is complete, check your PS Form 50 or eOPF to confirm your service computation date (SCD) has been adjusted to reflect the added military time. If it hasn’t been updated, follow up with HR.
What If You Receive a Military Pension?
If you’re receiving (or will receive) a military retired pay, you generally cannot receive credit for the same military service under FERS unless you waive the military retirement pay. There are exceptions for disability retirement and reserve retirement at age 60, but the rules are complex. If you’re in this situation, consult with your HR office or a federal benefits specialist before proceeding.
If you served but did not retire from the military (which is the case for most veterans at USPS), this restriction does not apply to you. You can buy back your service without any complications.
The Math: Why It’s Almost Always Worth It
Let’s say you have 4 years of military service and your high-3 salary will be $75,000. The buyback deposit is around $3,500 (including some interest).
Those 4 years add $3,000 per year ($75,000 × 1% × 4 years) to your FERS annuity — that’s $250 per month, every month, for the rest of your life. You break even in about 14 months. If you live 25 years in retirement, that $3,500 deposit returns over $75,000 in additional pension payments.
There are very few investments that offer that kind of guaranteed return.
See how additional years of service affect your FERS annuity under all four retirement paths.
Open the FERS Calculator →Don’t Wait
If you’re a veteran working at USPS and you haven’t completed your military buyback, start the process today. Request your SF 180 from DFAS, get your earnings records, and submit SF 3108 to HR. Every pay period you wait costs you more in interest and delays the adjustment to your service computation date.
This is especially important right now. With the USPS financial crisis creating uncertainty and potential early retirement offers on the horizon, having your full service time on the books could make the difference between qualifying for a buyout and missing it.
Sources: OPM FERS military service deposit regulations, DFAS military pay records procedures, Standard Forms 180 and 3108, USPS Employee and Labor Relations Manual (ELM) Chapter 580.