As a general rule, military service is creditable to your CSRS retirement, provided it was active duty and ended with an honorable discharge.

Waiver of military retired pay for credit 

With few exceptions, employees who are in receipt of military retired pay cannot receive credit for their military service toward retirement eligibility or for the computation of annuity unless military retired pay is waived.   The waiver does not take effect until date of civilian retirement.  

If you do not waive your military retired pay, your retirement rights (and those of your surviving spouse, if any) will be based on your civilian service only and military service will not be included in computing the annuity. You may then receive both your military retired pay and your civil service annuity at the same time.

Click here to view Deciding Whether to Waive Military Retired Pay

Credit for military service prior January 1, 1957

• You will receive credit for military service performed prior to January 1, 1957, without making any deposit.   

• You will not have your annuity recomputed at age 62 even if you become eligible for Social Security benefits. (But if you also have military service after 1956, a reduction may be required as explained below).  However, using the military service performed prior to January 1, 1957, in computing your CSRS retirement benfits will eliminate any credit you might have received from Social Security for that period of service.

Credit for military service after 1957

Beginning January 1, 1957 military service became subject to Social Security. Treatment of military service under CSRS depends on whether it was performed after December 31, 1956 (referred to as "post-56" military service.)

Hired as CSRS before 10-01-82

• If you are eligible for Social Security Benefits at retirement or at age 62 and:

Deposit paid:  Your post-56 military service will be credited for title (eligibility for retirement) and computation of the annuity.  
 
Deposit not paid:  Your post-56 military service will be credited for title.  If you are not eligible for Social Security at retirement, but will become eligible at age 62, your Post-56 military service will be credited for computation of your annuity until age 62.  At that time the credit for post-56 military service is eliminated.  Your annuity will be recomputed by subtracting the years of post-56 service from the total number of years of combined civilian and military service.  This typically reduces the CSRS annuity by 2% for each year of Post-56 military service.  For example, an employee age 55 with 30 years of combined service (4 years of which is post-56 military service) would be eligible for retirement.  However, if he/she does not make a military deposit and becomes eligible for Social Security at age 62, his/her annuity would then be recomputed and reduced by 8% (4 years X 2% = 8%).  If you are eligible for Social Security at the time of retirement (normally age 62 or older), the post-56 service will not be used in the computation of your annuity.

• If you will not be eligible for Social Security at 62 (or retirement, if later)

No deposit is required and you will receive full credit for post-56 military service with no future reduction.

 Hired as CSRS on or after 10-01-82:

A deposit is required to receive credit for retirement eligibility and annuity computation purposes.

How is your military "buy-back" deposit computed?

The deposit equals 7% of base pay (not allowances earned during the post-56 military service).  The earliest interest begins to accrue is October 1, 1986 or your 3rd anniversary of entry into a CSRS position.
 
As with civilian deposits, variable rates of interest are assessed.  No interest is charged if you pay the deposit, in full, before the first interest accrual date (IAD).