FERS Creditable Service: Deposits, Military Time, and Sick Leave

FERS creditable service is the sum of federal service that counts toward your retirement under the Federal Employees Retirement System, and you need at least five years of creditable civilian service to qualify for any FERS annuity at all.¹ Some service counts automatically. Some counts only if you make a deposit. And some categories never count, no matter how long you worked them. Knowing which bucket your service falls into, and handling any required deposits early, is the difference between a full annuity and a smaller check for the rest of your life.

Civilian Service With Retirement Deductions

The baseline category is straightforward. If you held a federal position where FERS retirement deductions were automatically withheld from your paycheck, that time counts toward both eligibility and the annuity computation without any further action on your part. Five years of this service makes you vested, meaning you have a legal right to a future annuity whether you retire immediately or defer the start.¹

Full-time service is credited from your hire date to your separation date. Part-time service counts at the same calendar rate for meeting the five-year threshold and other eligibility requirements, but the annuity itself is prorated: OPM compares your actual hours worked to the full-time hours you could have worked during the same period, rounds the result to the nearest percent, and applies that factor to your calculated annuity.² A career spent half-time produces roughly half the annuity a full-time employee would receive at the same salary and years of service.

Military Service

Active-duty military time can be added to your FERS service total under 5 U.S.C. § 8411, provided the service was performed under honorable conditions.³ Whether you owe a deposit depends on when you served.

Military service before January 1, 1957, is credited without any payment. For service after that date, the deposit is 3 percent of the basic military pay you earned during those years, plus accrued interest.⁴ Slightly higher rates apply to service performed during 1999 (3.25 percent) and 2000 (3.4 percent).⁵ Skip the deposit and the military time counts for nothing: not eligibility, not the annuity computation.

The Two-Year Interest-Free Window

FERS gives you two years from your first day in a covered federal position to make the military deposit without interest. After that window closes, interest begins to accrue and compounds annually.⁶ The variable interest rate for 2026 is 4.25 percent.⁷ Putting off the deposit a decade or two can add thousands in interest to a bill that started small.

Peace Corps and VISTA Volunteer Service

Time as a Peace Corps or VISTA volunteer counts as civilian service for FERS, but only if you pay a deposit equal to 3 percent of the stipend or readjustment allowance you received during the volunteer period, plus interest.⁸ Without the deposit, the time is not used for either eligibility or computation.

If you have both military and volunteer service, the deposit rules are not interchangeable. Military deposits follow 5 CFR § 842.307, while Peace Corps and VISTA deposits follow the civilian service deposit rules. Both appear on the same Standard Form 3108, but the rates and the earnings records required are different.⁹

Pre-1989 Civilian Service Without Deductions

If you held a federal job before January 1, 1989, where no retirement deductions were withheld (a temporary appointment, for example), you can pay a deposit to make that time creditable. The deposit is 1.3 percent of the basic pay you earned during those periods, plus interest computed from the midpoint of each service period and compounded annually.¹⁰

The cutoff is hard. Non-deduction civilian service performed on or after January 1, 1989, generally cannot be made creditable under FERS, with limited exceptions.¹¹ If you started your career in a post-1989 temporary job, those years are gone for retirement purposes even if you later converted to a permanent position.

Redepositing Refunded FERS Contributions

If you left federal service and took a refund of your FERS retirement contributions, you can redeposit that money after returning to a FERS-covered position. The redeposit equals the refund plus interest.¹²

The consequence of skipping the redeposit is subtle but important. The refunded service still counts toward meeting the age-and-years-of-service combinations that make you eligible to retire. It does not, however, get included in the annuity computation, which means a smaller monthly check and a smaller survivor annuity.¹² The refunded time gets you through the door but does not increase the check waiting on the other side.

Unused Sick Leave

When you retire, remaining sick leave hours are converted into additional months and days of service for the annuity calculation. Under 5 U.S.C. § 8415(m), 100 percent of unused sick leave is included in the computation for anyone separating after December 31, 2013.¹³ The conversion uses a 2,087-hour work year as the baseline, so 1,044 hours of unused sick leave translates to roughly six additional months of service credit.

Sick leave has one strict limit: it can only increase the annuity amount. It cannot be used to meet the five-year vesting requirement, reach any age-plus-service eligibility threshold, or inflate your high-3 average salary.¹³ You must independently qualify for retirement through actual service before sick leave adds anything. The same credit also flows into survivor annuities.¹¹

Leave Without Pay

Extended leave without pay eats into your creditable service. OPM allows up to six months of leave without pay in any calendar year to count as creditable service. Anything beyond six months in the same year is subtracted from your service computation.¹⁴

The six-month rule applies per calendar year, not per leave period. Three months of leave in the spring and four in the fall of the same year means one month drops off your record. Splitting an extended absence across two calendar years, when possible, can preserve all of it as creditable service.

Service That Does Not Count

Several categories of federal work earn no retirement credit at all, and they tend to surface at the worst moment: the retirement planning meeting.

Temporary appointments of one year or less generally do not qualify because no retirement deductions are withheld.¹¹ Work performed as an independent contractor or under a 1099 arrangement is excluded entirely; those roles are not federal employment for retirement purposes, however closely they resembled a regular federal job.

Intermittent positions, sometimes called “when actually employed,” generate credit only for the days actually worked, not the full span of the appointment. Breaks in service also matter: a separation of four or more calendar days counts as a break and is subtracted from your total creditable service, while a separation of three days or fewer is not treated as a break.¹⁵ For employees who moved between agencies or took brief breaks between appointments, small gaps can add up over a career.

How to Make a Service Credit Deposit

Whether you are buying back military time, crediting Peace Corps service, or depositing for pre-1989 civilian work, the process starts with Standard Form 3108, the Application to Make Service Credit Payment.¹⁶ List each period of service you want credited and submit the form to your agency’s human resources office or directly to OPM. The agency verifies your records and returns a statement showing the exact deposit amount.

Military deposits need DD Form 214, the Certificate of Release or Discharge from Active Duty, to confirm your service dates and discharge status.¹⁷ Civilian deposits need earnings records for the specific periods. If records are incomplete, OPM can use estimates, but verified records produce a more accurate calculation.

Interest and Timing

Interest on civilian service deposits is computed from the midpoint of each service period and compounds annually until the deposit is paid in full or your annuity begins, whichever comes first.¹⁰ Military deposits have the two-year interest-free grace period, then the same compounding kicks in. The 2026 variable interest rate is 4.25 percent.⁷

Within six months of retirement, OPM recommends submitting the SF 3108 at the same time as your retirement application.¹⁸ Waiting that long, though, means decades of compounded interest on money that could have been deposited cheaply years earlier. Running the numbers in your first few years of federal service is the single best way to keep the cost manageable and make sure every year you have earned ends up in your retirement record.

1
Office of the Law Revision Counsel. 5 USC 8410 – Eligibility for Annuity
2
U.S. Office of Personnel Management. CSRS and FERS Handbook – Chapter 55: Computation for Part-Time Employees
3
Office of the Law Revision Counsel. 5 USC 8411 – Creditable Service
4
eCFR. 5 CFR 842.307
5
Office of the Law Revision Counsel. 5 USC 8422 – Deductions From Pay; Contributions for Other Service
6
U.S. Office of Personnel Management. Military Deposits
7
U.S. Office of Personnel Management. Benefits Administration Letter 26-101
8
Peace Corps. Federal Retirement
9
U.S. Office of Personnel Management. Crediting Peace Corps Service
10
eCFR. 5 CFR 842.305 – Deposits for Civilian Service
11
U.S. Office of Personnel Management. FERS Information – Creditable Service
12
U.S. Office of Personnel Management. FERS Refund Fact Sheet
13
Office of the Law Revision Counsel. 5 USC 8415 – Computation of Basic Annuity
14
U.S. Office of Personnel Management. Effect of Extended Leave Without Pay (LWOP) (or Other Nonpay Status) on Federal Benefits and Programs
15
U.S. Office of Personnel Management. Guide to Processing Personnel Actions – Chapter 35
16
U.S. Office of Personnel Management. Standard Form 3108 – Application to Make Service Credit Payment
17
National Archives. DD Form 214 Discharge Papers and Separation Documents
18
U.S. Office of Personnel Management. Service Credit