CSRS and FERS: Service Credit Rules
All periods of service as an employee of the federal government are creditable under CSRS or FERS. To be considered a federal employee, an individual must be: engaged in performing federal functions under authority of an Act of Congress or Executive Order; hired by a federal officer in his or her official capacity as such; and working under the supervision and direction of a federal officer.
Service also is creditable for employees who hold federal appointments, are engaged in activities jointly administered by the United States and a state or other outside agency, and are under the supervision and control of federal officials. However, if such persons are not federally appointed or are supervised and controlled by officials of the state, land grant college, or other cooperating organization, the service is not considered federal for retirement purposes. Service performed as an employee of the District of Columbia government is creditable under CSRS and FERS, for individuals hired by that government before October 1, 1987.
Employees in leave without pay status can generally credit up to six months in any calendar year toward retirement.
Employees with full-time appointments who are receiving benefits from the Office of Workers' Compensation Programs who work part of the day and who are on approved leave without pay for part of the day are given full-time credit, under Benefits Administration Letter 07-103 at www.opm.gov/retirement-services/publications-forms/benefits-
administration-letters. However, if an employee is not under a full-time appointment (for example, part-time flexible or limited tour), service is computed using part-time rules. The full-time credit policy does not apply to re-employed annuitants.
See below for policies regarding service for which no retirement deductions were made, or for which deductions were made but taken as a refund at a break in service. Also see the CSRS and FERS Handbook for Personnel and Payroll Offices at www.opm.gov/retirement-services/publications-forms/csrsfers-handbook.
Questions about service credit should first be addressed to the local personnel office or the designated agency retirement counselor at agency headquarters. To request a formal determination of service credibility, complete an Application to Make Deposit or Redeposit (Standard Form 2803) for CSRS, or Application to Make Service Credit Payment (SF 3108) for FERS, and submit it to: Office of Personnel Management, Retirement Operations Center, P.O. Box 45, Boyers, PA 16017-0045. The forms are available from personnel offices or at www.opm.gov/forms.
Denied Credit—P.L. 115-41 of 2017 authorized the Secretary of the Department of Veterans Affairs to deny service credit for an employee of that department convicted of a felony that influenced the individual’s performance while employed there, for the time between the date the department determines the activity began until the individual voluntarily left or was involuntarily separated from the department.
In such situations, the employee must be given notice and 10 business days to respond, and a final agency decision must be made within 15 business days of the notice. The employee then would have the right to appeal to the Office of Personnel Management under policies to be set by that agency. The same policies apply to those no longer working for the department at the time of the notice, including those already retired, except that the law specifies that they would have seven business days to appeal to OPM, which would have to issue its decision within 30 business days.
Those who have service denied under those provisions would be entitled to receive a refund of their contributions toward their retirement benefits for the pertinent time.
Credit for Unused Sick Leave
CSRS—Generally, under CSRS, the service of an employee who retires on immediate annuity or dies leaving a widow or widower entitled to a survivor annuity is increased by the days of unused sick leave that the worker accrued under a formal leave system. There is no upper limit to the amount of sick leave time that can be credited, and leave is fully credited even if it causes an annuity to exceed the 80 percent of high-3 salary limit that otherwise applies to CSRS annuities.
FERS—Full crediting is granted for new annuities based on retirement (or for survivor annuities based on the death of an active employee) as of calendar year 2014 and after, under 5 U.S.C. 8415 as amended by Section 1901 of P.L. 111-84.
That law had made 50 percent of unused sick leave creditable for new FERS annuities based on retirement or death in service from its effective date of October 28, 2009 through December 31, 2013. Previous to the effective date of that law, unused sick leave was not creditable under FERS except that: it was fully creditable for registered nurses in the Veterans Health Administration; and individuals who transferred to FERS with a CSRS annuity component could receive credit toward the CSRS component for the lesser of the amount of unused sick leave they had at the date of transfer or at the date of retirement. Those exceptions remained in place during the transition period.
Phased Retirement—Unused sick leave is not included in the calculation of a phased retirement annuity; instead, it remains to a phased retiree’s credit during that period of part-time employment and the amount at full retirement is included in the benefit recalculation then. See Phased Retirement in Section 1 of this chapter.
Conversion Formula—In an effort to provide retirees with 12 equal monthly annuity payments a year, the Office of Personnel Management treats all months as having 30 days. To find the retirement-credit value of each sick leave day, OPM divides 360 into the congressionally mandated number of work hours in a year, 2,087. The result is that 5.797+ hours of sick leave equals one day and 173.916+ equals one month. In the annuity calculation, OPM uses a conversion chart based on six-hour days, inserting five-hour days at appropriate intervals. For example, an employee with 1,003 hours of unused sick leave is credited with an additional five months and 23 days. (A slight variation in crediting of unused sick leave applies to an employee who has an uncommon tour of duty.) See the accompanying sick leave conversion chart.
Extra days of sick leave beyond a full month may only be counted for another month of credit if, when added to credit earned through regular service for hours beyond the last full month (which are credited under the same formula applying to unused sick leave), the total amounts to at least 30 days under this conversion formula. Any hours that don’t add up to a full month of credit are discarded. As an example, in the situation described above, 1,003 hours of unused sick leave translated into five months and 23 days of service credit. If the employee in that case had 41 hours of actual service beyond the last full month, those hours would be converted to service days under that formula to equal seven days. When combined with the 23 days of credit for unused sick leave beyond the last full month, it would and add up to the 30 days needed to obtain one full month of additional credit for retirement purposes. In contrast, if that worker had an excess of actual service of less than 41 hours, all time beyond the last full month would be discarded. When unused sick leave is counted as time served in a retirement calculation and the retiree returns to work for the government, that leave is not recredited to the returning retiree’s sick leave entitlement as an employee. However, any unused sick leave that was not counted in the retirement calculation (pertinent only to FERS benefits beginning before 2014, as described above) will be recredited.
Detailed guidance is in Benefits Administration Letter 11-102 at www.opm.gov/retirement-services/publications-forms/benefits-administration-letters.
Note: Unused sick leave cannot be used in the computation of a high-3 salary or for meeting the minimum length of service for retirement eligibility. It also is not creditable toward a deferred annuity.
Employees who took a refund of their contributions from a federal retirement system and return to work for the government will receive credit for that time in determining their eligibility to retire. However, for the time to be credited in the computation of their annuities, those who took a refund on or after March 1, 1991, must repay that money, plus interest. See the Interest Rates table in this section for the applicable rates.
Employees who took a refund of CSRS retirement contributions (including FERS employees with a CSRS annuity component) before March 1, 1991 and return to federal service can either repay the outstanding amount plus interest using the Application to Make Deposit or Redeposit (Standard Form 2803), or elect to have their annuity actuarially reduced, for the time to be credited in the computation of their annuities. The reduction is based on an employee’s age at the time of retirement and calculated so that over a typical (actuarial) lifetime, the total difference in the annuity would equal the outstanding amount. To make this calculation “present value factors” are used—see the Present Value Factors table in Section 7 of this chapter. For example, a CSRS employee retiring at age 62 would have a present value factor of 214.6, which would be divided into the amount owed to determine the monthly annuity reduction. If he owed $10,000, the monthly reduction would be $45.60.
For the first two decades of the FERS system’s existence, there was no provision allowing FERS employees who withdrew their FERS contributions and later returned to federal service to recapture that time in the computation of their annuity. However, P.L. 111-84 amended 5 U.S.C. 8422 to allow FERS employees to recapture service time by making a redeposit with interest, effective with separations of FERS employees on or after October 28, 2009.
Employees wishing to make a FERS redeposit should complete the FERS Application to Make Service Credit Payment (SF 3108), indicate on the application that the period of service was refunded and send the completed application through their agency for certification. They should not make a payment with the application; as soon as the OPM processes the application, a bill and instructions for making payments will be sent to the employee.
Re-employed annuitants working under FERS on or after October 28, 2009 may pay a redeposit for refunded service not credited if their original retirement was before that date, but the redeposit will not have an effect on the original retirement. The redeposit would only affect credit for the refunded service if the re-employed annuitant works long enough to qualify for and receive a redetermined annuity that is based on a separation from re-employment on or after October 28, 2009. See Chapter 4, Section 4.
Detailed guidance on FERS redeposits is in BAL 11-103 at www.opm.gov/retirement-services/publications-forms/benefits-administration-letters.
Under both systems, a redeposit may be made in one or more installments.
Redeposits must be made prior to the final adjudication of the individual's application for retirement (note: for phased retirees, redeposits must be made before entering phased retirement), or, in the case of a death in service, prior to the final adjudication of an application by a spouse or former spouse for survivor benefits. A redeposit cannot be made in an application for survivor benefits associated with the death of a retiree. For procedures, see Creditable Service: General Rules, above.
Non-deduction service (at one time referred to as optional service) is a period of federal employment during which no retirement deductions were taken from salary.
Under CSRS, such periods always are creditable for determining eligibility to retire. However, for such time to be used in the computation of a CSRS annuity:
• For service on or after October 1, 1982, the employee must make a deposit.
• For service before October 1, 1982, the employee may make a deposit; if the employee doesn’t, the annuity will be reduced by 10 percent of the amount, plus interest, that is owed.
In general, the circumstances that led to service being performed without deductions from pay being required were eliminated at the time FERS was enacted. Under FERS, periods of non-deduction service performed before January 1, 1989, count for eligibility and computation purposes if the employee makes a deposit. Such periods starting in 1989 or after generally are not creditable for either eligibility or computation purposes nor may an employee make a deposit to get credit for that service. The required deposit is equal to the deduction that would have been made to the applicable retirement system at the time the service was performed—generally, 7 percent for CSRS and 1.3 percent for FERS (regardless of whether the deductions would have been taken at that rate) plus interest. See Required Contributions from Employees in Section 2 of this chapter. Interest is charged at the rates shown in the Interest Rates table in this section. The forms to use are the same as those for redeposits as described above. (Note: For phased retirees, any payments to capture credit for non-deduction service must be made before entering phased retirement.)
Deemed Deposits and Redeposits
If you are eligible to receive the Alternative Form of Annuity when you retire and elect it (see Section 7 in this chapter), any unpaid redeposit and most deposits for service that you still owe at that time will be deemed to have been paid. However, this option is available only if you have a life threatening medical condition. In other words, if you elect the Alternative Form of Annuity, you would not actually have to pay the deposit or redeposit. OPM would simply consider it paid when determining the amount of your creditable service. The deemed deposit/redeposit would also be added to your total lump-sum credit used in determining the amount by which your annuity must be reduced under the Alternative Form of Annuity option.
Creditable Military Service
If you are receiving military retired pay, you generally must waive that pay (and make a deposit to the federal retirement fund for your military service time) in order for your military service to be added to your civilian service for purposes of computing your federal annuity. The exception is that you can get credit for military service time toward your federal annuity (if you make the required deposit) and also receive military retired pay if that pay was awarded on account of: a service-connected disability incurred in combat with an enemy of the United States; or a service-connected disability caused by an instrumentality of war and incurred in the line of duty during a period of war. If you are receiving reserve retired pay under 10 U.S.C. 67, which relates to retirement from a reserve component of the armed forces, you may receive that pay and a full civilian annuity. However, a deposit to the civilian retirement system may be required to get credit for any periods of active duty service in determining your length of service and in your annuity computation. Receipt of Social Security benefits has no effect on granting civil service retirement credit for military service performed before 1957. (For information on contributions that must be made to purchase credit for military service performed on or after January 1, 1957, see Payments to Capture Military Service Credit, below.)
For information on earnings during military service, complete OPM form RI 20-97, Estimated Earnings During Military Service, available from your personnel office or at www.opm.gov/forms, and send it to the appropriate address:
Army Military Pay Operations
Attn: Verifications Section
8899 E. 56th St.
Indianapolis, IN 46249-0865
Phone: (877) 734-6202
Fax: (317) 275-0123
1240 E. 9th St.
Cleveland, OH 44199-2005
Phone: (888) 332-7411
Fax: (216) 367-3666
Attn: Verifications Section
8899 E. 56th St.
Indianapolis, IN 46249-0875
Phone: (877) 734-6202
Fax: (317) 275-0123
1240 E. 9th St.
Cleveland, OH 44199-2005
Phone: (888) 332-7411 (option 2)
Fax: (216) 367-3614
National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Hwy., Rm. 12100
Silver Spring, MD 20910-3282
Coast Guard Pay and Personnel Center
444 S.E. Quincy St.
Topeka, KS 66683-3591
Phone: (785) 339-2200
Fax: (785) 339-3784
Public Health Service
Division of Commissioned Personnel
Parklawn Bldg., Rm. 4-50
5600 Fishers Lane
Rockville, MD 20857
Phone: (301) 594-2963
Fax: (301) 443-0064
Capture Military Service Credit
Federal employees may make a deposit into the civilian civil service retirement fund to gain credit for the military service under the applicable civilian retirement system. See 5 CFR 842.307.
Military service for this purpose is honorable active duty service in the following uniformed services: Army, Navy, Air Force, Marine Corps, and Coast Guard and, after June 30, 1960, in the Commissioned Corps of the Public Health Service, and after June 30, 1961, service in the Commissioned Corps of the National Oceanic and Atmospheric Administration and its predecessor agency. It also includes military service as a midshipman at the U.S. Naval Academy or as a cadet at the U.S. Military Academy, U.S. Air Force Academy, or the U.S. Coast Guard Academy (under Section 1115 of P.L. 110-181, which codified a prior administrative practice of granting credit for such time), and service when called to active duty or training duty as a member of the Naval or Marine Corps Reserve Officers Training Corps or the Army Reserve Officer Training Corps.
You also may receive credit for Army National Guard or Air National Guard service that is followed by federal civilian re-employment occurring after August 1, 1990, when all of the following conditions are met:
• the service must interrupt civilian service creditable under CSRS or FERS and be followed by re-employment in accordance with the appropriate chapter of the laws concerning veterans benefits;
• it must be full-time, not inactive duty; and
• it must be under a specified law and you must be entitled to pay from the U.S. (or have waived pay from the U.S.) for the service. Employees who perform active duty service while in a leave without pay status (LWOP-US) only need to make a deposit for the time they were not receiving civilian pay subject to retirement deductions—for example, reservists who elect to use their annual two weeks of military leave with pay when called to active duty for a protracted period.
Note: No deposit is required for military service before January 1, 1957.
No interest will be computed if a deposit for military service is made within two years after the date you first became employed. If the deposit is not completed in the two-year period, interest will be posted to your account one year after the two-year period; thus the total effective interest-free period is three years minus one day. Any interest charged is assessed at the rates listed in the Interest Rates table in this section. Agencies are required to provide accurate and complete counseling to all employees who seek to make a military deposit; this includes counseling as to the effect of paying or not paying the deposit(s) as well as the proper calculation of the deposit(s). However, it is the employee’s responsibility to seek such counseling and to assemble the needed documentation and make the deposit as described below.
Any required deposit generally must be made before retirement (or separation for reasons other than immediate retirement) in order for it to be creditable for federal retirement eligibility or computation purposes. (Note: Payments made via payroll deduction are considered to be made on or before the date of separation even if the date of the final salary payment is after the date of separation.) However, a separated employee who believes that an administrative error occurred and resulted in the inability to complete the military deposit before separation may file a specific written request with OPM to make a belated deposit.
In general, an administrative error for this purpose occurs if the employing agency provides material misinformation concerning the deposit and the consequences of not making the deposit prior to separation; if its response misrepresents the dollar amounts in question; or is so indirect, inaccurate, or incomplete as to confuse the employee as to the amount required or the effect of failure to make the deposit.
If OPM, the Merit Systems Protection Board or a federal court determines that an administrative error occurred and orders an extension of time, OPM will notify the individual’s last employing agency to provide an opportunity to make or complete the deposit to that agency within the allotted time.
For procedures for requesting extensions of time due to alleged administrative error and other guidance, see Benefits Administration Letter 17-101 at www.opm.gov/retirement-services/publications-forms/benefits-administration-letters.
Note: Processing time for a request for military service earnings and for the cost of buying the time typically is a number of months, and processing of a submitted deposit takes additional months; in some cases both steps can take much longer. Therefore this process should be started well before retirement.
An unofficial estimate of earnings, and the cost of buying time, can be obtained immediately through www.dfas.mil/civilianemployees/militaryservice
/militaryservicedeposits/estimator.html by providing certain information as described there. This estimate cannot be used to formally apply to buy time but it could be valuable in deciding whether to pursue doing so.
Employees also have the option of not making a deposit and accepting the rules governing length of service and annuity computation, which differ according to the retirement system and when the service was performed, as described below.
If you die as an employee, your surviving spouse will have the option to make a deposit for your military service for purposes of calculation of survivor benefits.
If you are retired military, you may combine your active duty military service and civilian service for one annuity. This requires a deposit into the civilian retirement system for the active military service and generally you must waive your military retired pay effective with the beginning of the civilian annuity. However, you do not have to waive your military retired pay if it was awarded for a disability incurred in combat or caused by an instrumentality of war, or awarded for reserve service under 10 U.S.C. 67.
In sum, a period of military service may be credited for title to and computation of federal retirement and death benefits, subject to the following conditions:
• the military service was performed before the date of separation upon which title to an annuity is based;
• it was active duty;
• it was not included in the computation of military retired pay, or if it was included in retired pay, the retired pay was awarded based on disability incurred in combat with an enemy of the United States or caused by an instrumentality of war and incurred in the line of duty during a period of war; or granted under 10 U.S.C. 67;
• it was honorable service; and
• a deposit is made for military service (see below for special considerations for those first employed under CSRS before October 1, 1982).
FERS—If you are covered under FERS, you will receive retirement credit for military service only if a deposit for military service is made. The deposit equals 3 percent of basic military pay (not including allowances or differentials) you received for the military service, except for periods of service performed during 1999 (3.25 percent) and during 2000 (3.40 percent).
The 3 percent rate also applies to FERS employees first hired, or returning after a break in service with less than five years of previous creditable service, in 2013 and later who pay higher basic retirement contributions, as described in Required Contributions from Employees in Section 2 of this chapter.
Also see Benefits Administration Letter 13-102 at www.opm.gov/retirement-services/publications-
FERS with a CSRS Component—If you transferred to FERS and have a CSRS component, you continue to be under the CSRS military deposit rules (see below) for service performed before the transfer. The earliest interest begins to accrue is October 1, 1986, or your third anniversary of entry into a CSRS position (if no CSRS component, interest begins to accrue two years from the date of transfer to FERS; posted on the third year).
If you are not eligible for Social Security at age 62, no deposit is required for the military service. If you were first hired on or after October 1, 1982, a deposit is required even if you are not eligible for Social Security. Note: OPM will only check with Social Security for eligibility the year that you turn age 62 or at retirement, if later.
CSRS—If you were first employed under CSRS on or after October 1, 1982, you will receive retirement credit for military service only if a deposit for the military service is made. The deposit equals 7 percent of basic military pay (not allowances or differentials) you received for the military service, except for periods of service performed during 1999 (7.25 percent) and during 2000 (7.40 percent). If you were first employed under CSRS before October 1, 1982, you have two options:
• make the deposit; or
• receive service credit but have your annuity recomputed to eliminate the military service. This reduction, known as “Catch-62,” only occurs if you are eligible for Social Security at age 62 or at retirement, if later. Any survivor annuity payable to your spouse after your death would also be recomputed to eliminate all credit for military service when you become eligible for Social Security benefits. If you do not currently have enough quarters to be eligible for Social Security benefits and will not have enough quarters by age 62 or when you retire, if later, there is no advantage to making a military deposit.
Making the Deposit—Complete Form RI-20-97, Estimated Earnings During Military Service, and mail it to the appropriate military finance center (see above), with a copy of your DD Form(s) 214, Report of Transfer or Discharge. The completed form or letter showing the estimated earnings will be returned to you. Take that letter, a copy of your DD Form(s) 214, and Standard Form 2803 (CSRS) or 3108 (FERS) to your local payroll office to request an estimate of deposit required. Your payroll office will compute the amount you owe, including interest, and arrange with you to make the payment in a lump sum or on a schedule of regular payments. Any required deposits for military service must be made to your employing agency before you separate for retirement. The forms are available from your personnel office and at www.opm.gov/forms.