Crediting Military Service for FERS While Receiving Military Retired Pay

Crediting Military Service for FERS While Receiving Military Retired Pay: Understanding the Rules and Implications

For federal employees under the Federal Employees Retirement System (FERS), military service can play a significant role in calculating retirement benefits. However, when a federal employee is also receiving military retired pay, certain considerations and rules come into play when crediting military service for FERS. Understanding these rules is crucial for federal employees with military backgrounds to make informed decisions about their retirement.

Overview of FERS and Military Service

FERS allows federal employees to count their active military service towards their federal civilian retirement if they meet certain conditions. This credit can increase the number of years of service and potentially lead to higher retirement benefits. However, if an employee is also receiving military retired pay, there are additional factors to consider.

Military Retired Pay and FERS Credit

If you are receiving military retired pay, you generally cannot count that same period of military service toward your FERS retirement. The fundamental reason is to avoid double-dipping: receiving both military retirement and credit for the same service under FERS. However, there are exceptions to this rule, which include:

1. Combat-Related Disability Retirement: If your military retired pay is due to a combat-related disability, you can still credit your military service toward FERS without waiving your military retired pay. Combat-related disabilities are typically defined by the Department of Veterans Affairs (VA) and include injuries sustained during combat, related training, or certain hazardous duties.
2. Service-Connected Disability Retirement: If your military retirement is due to a service-connected disability, it may also be exempt from the requirement to waive military retired pay. This exemption ensures that those who retired due to a disability are not penalized for their service.
3. Chapter 1223 Retired Reserve Pay: If your military retired pay is from reserve service (under Chapter 1223), you can also credit this military service toward FERS without waiving your military retired pay.

Waiving Military Retired Pay to Credit Military Service for FERS

For other types of military retired pay, such as length-of-service retirement, you must waive your military retired pay to credit your military service toward FERS. This waiver must be in writing and submitted to the appropriate military finance office. The waiver process involves:

1. Notifying the Military Finance Office: If you choose to waive your military retired pay, you must submit a written request to the military finance office responsible for your retired pay. This request should indicate that you wish to waive your military retired pay to credit your military service for FERS retirement.
2. Paying the Deposit for Military Service: To credit military service under FERS, you must pay a deposit based on a percentage of your military base pay plus interest. The deposit varies depending on your length of service and other factors. You can make this deposit at any time before retiring from federal service.

Considerations Before Waiving Military Retired Pay

Before deciding to waive military retired pay to credit military service for FERS, there are several factors to consider:

1. Financial Impact: Understand the impact on your total retirement income. In some cases, it may be more beneficial to retain military retired pay and not credit the military service under FERS.
2. Benefits and Healthcare: Consider the effect on military-related benefits, such as Tricare and other healthcare provisions, if you choose to waive military retired pay.
3. Survivor Benefits: Assess the impact on survivor benefits, including the Survivor Benefit Plan (SBP), which is part of military retired pay.
4. Consulting with Experts: Given the complexity of these decisions, consult with a financial advisor or retirement specialist experienced in both military and federal civilian retirement systems. They can help you evaluate the best course of action based on your specific situation.

Conclusion

Crediting military service for FERS while receiving military retired pay involves careful consideration of the rules and implications. While some exceptions allow you to credit military service without waiving retired pay, others require a waiver. Understanding these requirements and evaluating the financial impact is crucial for making informed retirement decisions. If you're in this situation, take the time to consult with experts and weigh your options to ensure you make the best choice for your future.

Ameer Cox

Federal Benefits Consultant | Helping Federal Employees Maximize Retirement Benefits | Providing Strategic Financial Solutions for a Secure Retirement"

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