All honorable, active-duty military service can be credited for retirement purposes under the Civil Service Retirement System (CSRS). Types of creditable military service include honorable active-duty service in the Army, Navy, Air Force, Marines, Coast Guard, service in the regular or reserve corps of the Public Health Service (if performed after June 30, 1960), and service as a commissioned officer of the National Oceanic and Atmospheric Administration (NOAA) if performed after June 30, 1961.
This lesson is a preview from Graduate School USA's Federal Employee Benefits course.
Crediting National Guard Service
National Guard service can be credited toward retirement only when specific conditions are met. The individual must have been activated or drafted into the actual services of the United States, the service must have been performed under the authority of section 233(d) of the Armed Forces Reserve Act of 1952, or it must have been authorized under the provisions of Title 10 of the U.S. Code.
Documenting Military Service
To receive CSRS credit, military service must be performed before separation for retirement. The DD 214, Certificate of Release or Discharge from Active Duty, is the primary document used to verify service. This document must show that the service was honorable or under honorable conditions, which can include a general discharge. It must also specify that the military service was active duty rather than relying on the date of enlistment or induction.
Types of Military Service
Inactive service in reserve components of the uniformed services is generally not creditable for CSRS retirement purposes. Such inactive service may qualify for credit under certain military retirement provisions but does not count toward CSRS benefits.
Active duty within the reserve components may be creditable for CSRS purposes. This includes service during annual training periods, also known as active duty for training (ADT).
An honorable discharge is a separation from active duty under honorable conditions. The following types of separations are considered honorable for CSRS purposes:
- Under honorable conditions
- Separation because of hardship
- Transfer to a retired list because of age or disability
- Transfer to Fleet Reserve
- Furlough to Reserve Forces
- General discharge (under honorable conditions)
- Death in action
The following types of service are not creditable for retirement:
- National Guard service that does not meet the stated requirements
- Lost time, AWOL, or confinement time
- Inactive duty training
- Nonduty time in reserve components
Military Retired Pay (MRP)
Individuals who receive military retired pay (MRP) while employed as federal civilian employees generally cannot receive CSRS credit for military service unless they waive their MRP. However, CSRS employees are not required to waive their MRP if the retired pay was awarded because of a disability incurred in combat or caused by an instrumentality of war, or if the retired pay was granted under Chapter 1223, Title 10, U.S. Code.
A waiver is also not required if the military service in question was not used to compute the retired pay. Examples include enlisted service performed as a cadet or midshipman by an individual who later retires as an officer, military service exceeding 30 years, or fractional years of service less than six months (or less than one month if the MRP begins or is recomputed on or after October 1, 1983).
OPM’s Guide to Processing Personnel Actions provides instructions for verifying the type of MRP awarded.
Post-1956 Military Service
Military service performed before January 1, 1957, is credited toward CSRS retirement eligibility and included in the annuity computation. Military service performed after that date is known as post-1956 military service.
CSRS employees with post-1956 military service have two options:
- Option 1: Pay a military deposit for the period of military service.
- Option 2: Choose not to pay the deposit, which may affect whether the service is creditable for eligibility and annuity computation.
Several factors determine how post-1956 service is credited, including whether a deposit was paid before retirement, when the employee was first covered by a CSRS appointment, whether the employee will qualify for Social Security benefits at age 62, and the employee’s age at retirement.
The military deposit is generally 7% of the military base pay earned after January 1, 1957, plus interest. Deposits must be paid to the employing agency prior to retirement. Under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), the deposit may be lower in certain cases.
CSRS employees have a two-year interest-free grace period. After that period, interest accrues annually, compounded each year.
How Interest Accrues on Military Deposits
For employees first hired on or after October 1, 1983, interest on military deposits accrues as follows:
- Interest begins two years after the individual is first employed in a CSRS-covered position.
- The first interest accrual date occurs one year later.
If military service occurs after CSRS-covered employment and after October 1, 1983, interest begins two years after the employee returns to CSRS-covered service.
The interest accrual date (IAD) marks when accrued interest is added to the outstanding deposit amount. Each subsequent IAD falls on the anniversary of the first accrual date until the deposit is fully paid. One full year of interest is charged on the unpaid balance as of the day before each IAD. The U.S. Department of the Treasury determines interest rates annually.
Options to Consider
Agencies must ensure employees understand how post-1956 military service may affect a CSRS benefit. The rules surrounding military deposits, creditability of service, interest accrual, and interactions with Social Security can significantly impact retirement outcomes.
