As a general rule, all honorable active duty military service is potentially creditable under FERS.

Exceptions:

• Employees in receipt of military retired pay receive no credit for military retired pay unless the military retirxed pay is waived.  Waiver request must be submitted at least 60 days before separation from federal service so that it will take effect when FERS annuity commences. (Waives only monthly check; it does not waive other military benefits.), or
• The active duty military service was not included in the computation of military retired pay (to include service as a cadet or midshipman in the U.S. Naval Academy, U.S. Military Academy, U.S. Air Force Academy, or the U.S. Coast Guard Academy).

However, credit is allowed if retired pay is based on combat-connected disability or age and service in the reserves (under chapter 67, title 10, USC).

FERS: Military Service Credit (Military Service "Buy-Back")

• No deposit is due for military service performed before 1-1-1957.
• A deposit is required in order to receive credit for military service performed after
  12/31/1956. (The deposit is necessary to get credit for both eligibility and computation purposes.)
• The military deposit is 3% of the basic pay earned during the post-1956 military service,
  plus interest.
• Interest starts and is compounded annually beginning 2 years from the date of the first
  employment under FERS. Interest is charged at the variable market rate.

If you transferred to FERS and have a CSRS component, you continue to be under the CSRS military deposit rules for service performed before the transfer.  Under the CSRS rules, the deposit equals 7% of base pay and 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 2 years from the date of transfer to FERS; posted on the third year).

FERS Employees With A CSRS Component

If you were first hired prior to October 1, 1982 and your military service is in a CSRS component, the military service will be credited for eligibility and annuity computation.  However, you must consider the potential reduction based on Catch-62.  If you are not eligible for Social Security at age 62 or at retirement, if later, Catch-62 will not impact your annuity. 

If you were first hired on or after October 1, 1982, a deposit is required for the service to be creditable, regardless of eligibility for Social Security.

Note:  The Office of Personnel Management (OPM) will only check with Social Security for eligibility the year that you turn age 62 or at retirement, if later.

Catch-62 Example

If you do not make a deposit of 7% of basic military pay for your post-56 service subject to CSRS rules, your annuity will be computed:

Age at retirement - 55
Years of service - 30 (military and civilian)
Years of military service - 10 (post-56)

At age 62, if eligible for Social Security, annuity will be recomputed eliminating the 10 years of post-56 service.

With over 10 years of service, the annuity formula uses 2% for each year over 10; therefore, the annuity will lose 2% X 10 (military service) or 20%.