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Should I sell back my Military service? - Should I sell back my Military service?
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JAMES  
#1 Posted : Friday, October 14, 2011 4:19:26 AM(UTC)
GYSGTJORDAN

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I'm hearing different things from different people and my HR office is no help either. I'm considering selling back my military time and credit it toward my civilian time. These are the only facts I know: I could accrue 8hrs leave per pay period vice 4hrs, I could retire from federal service in 10 years, and since I since I served over 20 years, I would have to pay the gov close to $17,000 to get this done. The confusion comes in when I ask about what happens to my retired military pay. Some say it stops, others say it would continue until I reach retirement age and then I would get one check. Can someone who as if done this or is smarter than the avg Bear please respond.

P.S. I've only been working for the gov for less than 1 year, so I'm within the 3 years no interest grace period.

Thanks.
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martyb  
#2 Posted : Friday, October 14, 2011 4:42:47 AM(UTC)

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If you are retired from active duty, then no, it would almost certainly not be a good idea financially for you to buy your military time.  It's actually buying it back, not really "selling it back" since you're paying money for it.   In reality, it's making a deposit for the years that you weren't contributing to your civilian retirement.  My advice is absolutely not, if you are a military retiree.

If you do it, you will at some point lose your military retired pay.  You won't continue to receive them both indefinitely.  There are some guys on the ARTs board on this forum who have talked about this subject in some depth, you might try over there.

It would be a good idea for you to post your question to Ed Zurndorfer on the Q & A board on this forum, as well.
martyb2011-10-14 12:53:12
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Fedgrrl  
#3 Posted : Friday, October 14, 2011 4:58:25 AM(UTC)

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I don't know about getting the 8 hours, but I do know that when you sell back your military time, you sign a paper agreeing to waive your military retirement pay once you retire (not before.)
 
Whether selling back the military time is in your best financial interest depends on how long you want to work as a fed and what grade you think you'll be.  The formula is years of service x .01 (.011 if over 62) x high three. 
 
Don't Sell Back Example:  20 years of service x .011 x 100,000 = 22,000 annual annuity
                                         add in annual military pay (2K x 12)  = 24,000 annual
                                                                                                    $46,000
Don't forget retired military pay isn't subject to the diet cola rule for FERS, so over time will increase.
 
Sell back:  40 years of service x .011 x 100,000 = 44,000 annual annuity
plus the cost ($18K) of selling back
 
There are plenty of websites that deal with retirement that can explain it better than I can.  Good luck 
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hustonj  
#4 Posted : Friday, October 14, 2011 5:16:44 AM(UTC)
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Gunny Jordan,
 
   I went through and did the math on this myself, looking into what it would cost and what the benefit would be.
 
   I retired as an E-7 with 25 years of service.  In order for a civil service retirement to provide me the same gross cash for the same period of time, I would need to be a GS 14 Step 8 or a GS 15 Step 3 for the entire high-3 calculation (and that assumes the 1.1% per year of service, not the flat 1%).  NOT LIKELY.  Well, not without going to DC . . ..
 
Now, those last 5 years saw a significant increase in my cash compensation, so the closer you were to 20 when you retired, the lower the civilian paygrade you would need to reach in order to match the actual income.  ((calculated base retirement pay*12)/(years of service/100))=base civilian salary needed for the saem retriement cash benefit (at the flat 1% - add 10% of your years of service to get the vlaue at 1.1%).  That military check is a better value than you might think it is.
 
The way it was explained to me, if I bought my active duty time as civil service time, I would continue receiving my military retirement check (and VA disability check) UNTIL I retired from the civil service, and then the military check would stop.  Cold.  The VA check should continue, however.
 
Choosing NOT to buy my active duty time as civil service time, when I retire from the civil service I will continue to receive my full military retirement(, VA disability check, ) and add my civil service retirement check, my social security check, and my TSP pay-outs/purchased annuity checks.
 
The active service buy-in works well for those who left uniform without retiring.  I haven't met a retiree yet who thought it was a good idea . . ..  I guess somebody medically retired early on might, though.  I'm not gonna play with that math.
hustonj2011-10-14 13:48:30
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JAMES  
#5 Posted : Friday, October 14, 2011 5:30:29 AM(UTC)
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Thanks.  My wife keeps telling me the same thing on this subject.  She says "If the goverment gives you something that you have earned, never give it back willingly".
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Scott  
#6 Posted : Friday, October 14, 2011 6:33:56 AM(UTC)
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Gunny,
 
I retired at E-8 with 26yrs of service.  The simple math I did said its not worth it.  I have been told that you would recieve your retirement check up until the month you leave federal service, then it becomes 1 annuity.  I plan on doing 17 more, will be over MRA, and receiving 2 checks from Uncle Sam.
 
Scotter
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Knight  
#7 Posted : Friday, October 14, 2011 9:00:30 AM(UTC)

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I too am retired (AF 24 years) and was told not to do it. I have never done the math myself.
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JAMES  
#8 Posted : Friday, October 14, 2011 9:40:24 PM(UTC)
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Thanks.  You guy have been a great source of wise knowledge.  I just wanted to confirm what I was thinking all along.  The funny thing is, I have yet to meet anyone who has done it.  And like one of the previous post stated, most of those those guys are in DC problably GS 14 or 15.
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upandup  
#9 Posted : Sunday, October 16, 2011 12:31:44 PM(UTC)

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If you retired from a low enlisted rank with many years of service and then got a fed job at the very top of the pay scale for just a few years of service (think SES), then maybe it would make sense. For most people, though, it doesn't. These situations aren't very common.

Your buyback amount is a percentage of your actual base military wages. Your actual FERS retirement is based on years of service and High-3. Therefore, when the disparity between military and civil service wages is extreme, then it can be a good idea for a retired servicemember to do the buyback.
upandup2011-10-16 20:39:05
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mothers finest  
#10 Posted : Thursday, November 10, 2011 10:11:53 AM(UTC)

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All that has said so far is true: military retired pay doesn't stop until you begin to receive civilian annuity check, etc. But I haven't seen anyone mention the Special Retirement Supplement that FERS employees receive if they retire under age 62 with a full, immediate annuity. That additional sum of money (which is based on estimated Social Security benefits) may make the military buyback worth it.
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Window Clerk  
#11 Posted : Thursday, November 10, 2011 10:36:19 AM(UTC)

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The formula for the FERS Special Retirement Supplement excludes military time.
 
It is based solely on civilian service.
 
 
mothers finest wrote:
All that has said so far is true: military retired pay doesn't stop until you begin to receive civilian annuity check, etc. But I haven't seen anyone mention the Special Retirement Supplement that FERS employees receive if they retire under age 62 with a full, immediate annuity. That additional sum of money (which is based on estimated Social Security benefits) may make the military buyback worth it.
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mothers finest  
#12 Posted : Thursday, November 10, 2011 10:56:21 AM(UTC)

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That's right, the formula does exclude military time, but, say for instance the military retiree only has 18 years civilian time when they reach MRA (minimum retirement age). If they were to buy back 20 years of military time, they would then receive an unreduced federal annuity check based on 38 years service, and the Special Retirement Supplement calculated using 18 civilian years service. This last check would stop once the individual reached age 62.
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Window Clerk  
#13 Posted : Thursday, November 10, 2011 11:10:04 AM(UTC)

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mothers finest wrote:
That's right, the formula does exclude military time, but, say for instance the military retiree only has 18 years civilian time when they reach MRA (minimum retirement age). If they were to buy back 20 years of military time, they would then receive an unreduced federal annuity check based on 38 years service, and the Special Retirement Supplement calculated using 18 civilian years service. This last check would stop once the individual reached age 62.


All hypothetical.

Don't forget though that he would have to waive his military retirement pay doing it in your example whereas if he worked to age 60 with a minimum of 20 years of service he would get both his civilian and military retirement.

Am I mistaken?
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Guts  
#14 Posted : Thursday, November 10, 2011 12:01:18 PM(UTC)

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Window Clerk wrote:
mothers finest wrote:
That's right, the formula does exclude military time, but, say for instance the military retiree only has 18 years civilian time when they reach MRA (minimum retirement age). If they were to buy back 20 years of military time, they would then receive an unreduced federal annuity check based on 38 years service, and the Special Retirement Supplement calculated using 18 civilian years service. This last check would stop once the individual reached age 62.


All hypothetical.

Don't forget though that he would have to waive his military retirement pay doing it in your example whereas if he worked to age 60 with a minimum of 20 years of service he would get both his civilian and military retirement.

Am I mistaken?


You are right WC, and He could collect the supplement also, until age of 62. This option would be a very nice one, if he had 18 years of civilian time the OP does not have.



Guts2011-11-10 20:13:44
TANSTAAFL
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mothers finest  
#15 Posted : Thursday, November 10, 2011 10:22:34 PM(UTC)

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Window Clerk wrote:

mothers finest wrote:
That's right, the formula does exclude military time, but, say for instance the military retiree only has 18 years civilian time when they reach MRA (minimum retirement age). If they were to buy back 20 years of military time, they would then receive an unreduced federal annuity check based on 38 years service, and the Special Retirement Supplement calculated using 18 civilian years service. This last check would stop once the individual reached age 62.


All hypothetical.

Don't forget though that he would have to waive his military retirement pay doing it in your example whereas if he worked to age 60 with a minimum of 20 years of service he would get both his civilian and military retirement.

Am I mistaken?


I am a military retiree and have 15 years with the USPS. I plan (knock wood!) to retire from federal service prior to age 60. I did not learn of the Special Retirement Supplement until about 3 years ago. Of course I still have the option to buy back my military time, but lots of interest has accrued to the original amount. If I had known about the Supplement at the beginning, the math would have very different, and I almost certainly would have done the buy back. I'm just saying that everyone should be aware of ALL their options, so they can make their best choice.
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PlatoLeMonjello  
#16 Posted : Friday, November 11, 2011 12:28:57 AM(UTC)

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It's only worth if if you didn't retire from the military. 
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Out of the Hole  
#17 Posted : Sunday, November 20, 2011 12:39:51 AM(UTC)

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It should be stated somewhere here that a Reserve Component (vs Active Duty) retirement has no effect on FERS retirement, so it is usually worth it to make a military deposit in this instance.
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Glenn  
#18 Posted : Monday, November 21, 2011 5:43:41 AM(UTC)
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mothers finest wrote:
All that has said so far is true: military retired pay doesn't stop until you begin to receive civilian annuity check, etc. But I haven't seen anyone mention the Special Retirement Supplement that FERS employees receive if they retire under age 62 with a full, immediate annuity. That additional sum of money (which is based on estimated Social Security benefits) may make the military buyback worth it.
 
re: "all said...." Actually, it's almost (so far) true..
 
First, this subject is not simple and it's not clearly articulated in one place, document, or other periodical.  Additionally, I found a good bit of mis-information about the subject. It's taken several years and a bit of digging through various publications and asking questions to learn all of these "wonderful" tidbits. 
 
To be credited with military time, it is a two-step process, a military retiree must (typically in this order): 
  • pay the post-56 military deposit,
  • waive the military retirement annuity
Most importantly, military retired pay does not (automatically) stop when a (civil service) retiree begins to receive the civilian annuity check. 
  • A federal (civilian) employee (who is also a military retiree), who desires to be credited with military service, must submit the signed documents to DFAS to waive the military retirement annuity before you stop working for the government in order for OPM to credit military service towards the civil service retirement. 

  • OPM recommends military retirees submit these documents to DFAS not later than 90 days before the desired civil service retirement date.

If a military retiree fails to waive the (military) retirement annuity (even if a military deposit has been made), the military service will not be credited and the military deposit will be refunded to the military retiree.  If the civil servant is:

  • eligible to retire (meets MRA and minimum service) ~ only the civilian service is credited for retirement.  

  • not eligible to retire (based only the civil service time) ~ the prospective civil service retiree may be eligible to retire with a deferred retirement (could be subject to a penalty depending on age), or likely would be have to continue to work until retirement eligibility is met.

  • If minimum time is not met, hopefully the agency retirement specialist will advise the employee of this fact before one in effect resigns from federal service.
Another interesting item: 
  • If, at time of civilian retirement, the military retiree who has already paid the post-56 military deposit decides to not have the military service considered for civilian retirement purposes, the military deposit is refunded and only the civilian time is credited for (civil service) retirement computation.

  • Note:  The military deposit is refunded without interest.
Last, the information previously stated about the FERS annuity supplement eligibility is accurate.  To be fully clear, the FERS annuity supplement eligibility is not related to military retirement.  Assuming all other criteria is met, a civilian retiree is eligible to receive the supplement whether or not he/she pays the post-56 military deposit and waives the military retirement annuity.
IT-Fed2011-11-21 13:53:24
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JAMES  
#19 Posted : Wednesday, December 21, 2011 2:40:36 AM(UTC)
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Wow!  I had no idea this topic still had legs.  I had decided to talk to an experience HR lady here and ask about Special Retirement Supplement under FERS, as this is another wrinkle to this saga.  I must say that your very simple break down of the facts were very impressive IT-Fed.  Thanks everyone for your help and more importantly your service.
 
Gods Speed..... 
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Glenn  
#20 Posted : Wednesday, December 21, 2011 2:52:47 AM(UTC)
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GYSGTJORDAN wrote:
Wow!  I had no idea this topic still had legs.  I had decided to talk to an experience HR lady here and ask about Special Retirement Supplement under FERS, as this is another wrinkle to this saga.  I must say that your very simple break down of the facts were very impressive IT-Fed.  Thanks everyone for your help and more importantly your service.
 
Gods Speed..... 
 
Glad to assist.  My information is based on years of research and ferreting out facts from fiction. 
 
I just submitted my military deposit.  Assuming it's still there (given the latest banter on the hill about potentially doing away with the supplement), being able to retire early (before 60 or later) is important to me.  The FERS supplement will be around 60K, so this amount will more than pay for the military deposit.
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