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Benefits of Buying Back Your Military Years Buying back military service can be very advantageous to your FERS retirement. It can increase your creditable years of service, bringing you closer to retirement and increasing your retirement pension.

Can You Buy Back Time With No Interest? There is an interest free 'grace period' of two years. If your military service was before your federal career, the grace period generally starts the day you were hired under FERS or CSRS.

As a general rule, military service in the Armed Forces of the United States is creditable for Federal retirement purposes if it was active service terminated under honorable conditions, and performed prior to separation from civilian service for retirement.

You should apply to make a payment by completing a Standard Form 3108 Application to Make Service Credit/FERS. If you are within six months of retirement, you should submit your request to make the deposit or redeposit at the same time you submit your application for retirement. You can use a form or letter to do this.

The Military Buyback Program is a benefit for all veterans with active duty military service time to receive credit for their military service time to be added to their years of civil service with the government and increases their retirement annuity.

The deposit amount is, generally, 1.3% of salary plus interest. Interest is charged from the midpoint of periods of service and is compounded annually. Interest is charged to the date the deposit is paid in full or annuity begins, whichever is earlier.

First, let's get the facts straight about buying back your military time. You have a 24-months interest-free grace period that begins on the day you're hired as a civilian federal employee under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).

The formula for how much the buyback will cost you would be the total amount of base pay received while in the military and not contributing to retirement, and multiplying this by 3% if in FERS, or 7% if in CSRS.