Military Service Credit: How It Affects FERS And CSRS Benefits

Military service credit can significantly impact retirement benefits under the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS). Understanding the eligibility criteria for receiving military service credit is essential for federal employees with military service who wish to maximize their retirement benefits.

To be eligible for military service credit, federal employees must have performed honorable active duty service in the military. This includes service in the Army, Navy, Marine Corps, Air Force, Coast Guard, or certain reserve components of these services. In most cases, members of the National Guard and Reserves are also eligible for military service credit if they were called to active duty.

Generally, to receive military service credit, federal employees must make a deposit to the retirement system. The deposit amount is based on the length of the military service and is calculated according to a specific formula. Employees must make the deposit while they are still employed by the federal government in order to receive credit for their military service in calculating their retirement benefits.

It’s important to note that there are certain exceptions and special rules that may apply to military service credit eligibility. For example, some types of military service may not be creditable under certain circumstances, such as service academy time or service that is already being used to calculate another federal retirement benefit.

Calculating Military Service Credit In FERS And CSRS

Calculating military service credit in the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS) involves determining the length of military service that can be credited towards your federal retirement benefits. This calculation is crucial, as it can significantly impact the amount of your retirement pension.

In both FERS and CSRS, military service credit is calculated based on the length of your military service and the deposit you make to the retirement system. The deposit amount is determined by multiplying your military service credit by a percentage of your military basic pay at the time of your deposit, plus interest. The percentage varies depending on when you were first hired as a federal employee.

For FERS employees hired before January 1, 2014, the percentage is 3% for most military service. For those hired on or after January 1, 2014, the percentage is 3.25% for military service performed after December 31, 2013. CSRS employees generally pay a percentage of their military basic pay for their deposit.

To calculate your military service credit, you’ll need to gather documentation of your military service, such as your DD-214 form, and complete the necessary forms provided by your agency’s human resources office. They will assist you in calculating the deposit amount required to receive credit for your military service.

It’s important to note that the rules and calculations for military service credit can be complex, and it’s advisable to seek guidance from a retirement counselor or specialist to ensure that you understand the process fully and make informed decisions regarding your retirement benefits.

Military Service Credit And Thrift Savings Plan (TSP) Contributions

Military service credit can have implications for Thrift Savings Plan (TSP) contributions and benefits under the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS). Understanding how military service credit affects TSP contributions is important for federal employees with military service who are planning for retirement.

For FERS employees, military service credit does not directly impact TSP contributions. Employees can contribute to the TSP regardless of whether they have military service credit. However, military service credit can indirectly affect TSP contributions by influencing the overall retirement benefits calculation, which may impact how much employees choose to contribute to the TSP.

CSRS employees with military service credit can contribute to the TSP, but their military service deposit may impact the tax treatment of their TSP contributions. If a CSRS employee makes a deposit for their military service, their TSP contributions attributable to that military service will be considered tax-deferred contributions. This means that these contributions and their earnings will be taxed when withdrawn from the TSP.

On the other hand, if a CSRS employee does not make a deposit for their military service, their TSP contributions attributable to that military service will be considered after-tax contributions. This means that only the earnings on these contributions will be taxed when withdrawn from the TSP.

Exceptions And Special Rules For Military Service Credit

Exceptions and special rules for military service credit in the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS) can impact how military service is credited towards retirement benefits. Understanding these exceptions and rules is important for federal employees with military service who are planning for retirement.

One exception to the general rule of military service credit is for service academy graduates. Under both FERS and CSRS, service academy time is not creditable for retirement purposes unless the individual was first employed under a covered position before October 1, 1982, and paid a deposit for their service academy time. This exception applies to graduates of the United States Military Academy, the United States Naval Academy, the United States Air Force Academy, the United States Coast Guard Academy, and the United States Merchant Marine Academy.

Another exception applies to military service performed while receiving retired pay. In general, military retirees cannot receive credit for their military service towards their federal retirement benefits unless they waive their military retired pay. However, there are certain exceptions to this rule, such as for service-connected disability retirees or those who served in the Reserves or National Guard after retiring from active duty.

Special rules also apply to military service performed during specific periods, such as during wartime or certain military operations. For example, under CSRS, military service performed during certain periods of war or national emergency may be creditable without a deposit.