FERS Civilian Service Deposit and Redeposit: Should You Pay?

Two OPM programs let federal employees buy back retirement credit for prior civilian service that isn't currently counted. One is for pre-1989 work where no FERS deductions were ever withheld. The other is for employees who withdrew their FERS contributions after leaving federal service and later returned. Both can be worth far more than they cost — but the interest clock never stops, and neither program survives your retirement date.

The two scenarios

Federal employees sometimes have civilian service that doesn't automatically count toward their FERS annuity. This happens in two distinct ways:

1. FERS Deposit (non-deduction service before 1989): You worked in a federal position before January 1, 1989, but no FERS retirement deductions were withheld from your pay — typically because the appointment was temporary, intermittent, or otherwise exempt. OPM allows you to make a one-time deposit at 1.3% of your basic pay for that period (plus interest) to have those years counted in your FERS annuity computation.¹
2. FERS Redeposit (withdrawn contributions): You previously left federal service, received a refund of your FERS retirement contributions, and later returned. Without repaying that refund, those years do not count toward your annuity calculation, even though they still count toward retirement eligibility.²

These are separate OPM programs with different cost formulas. Both use the same SF-3108 application form and are subject to the same annual interest rate — 4.25% for 2026.³ Both must be paid in full before your retirement date; OPM will not accept a deposit or redeposit after annuity begins.

Scenario A: FERS Deposit for Pre-1989 Non-Deduction Service

Who this affects

Federal employees who held temporary, excepted service, or certain part-time appointments in the early-to-mid 1980s, before FERS was fully implemented and contributions were consistently withheld, may have years of uncredited service. Examples:

• Summer or seasonal federal jobs in the 1980s under Schedule B appointments
• Intermittent federal positions where deductions weren't taken
• Service in positions that were later converted to FERS-covered roles
• Peace Corps and VISTA service (eligible at 7%, not 1.3%)

Key limit: FERS deposits are only available for service performed before January 1, 1989. Service on or after that date should have had FERS deductions withheld; if it didn't, contact your agency HR to investigate an administrative correction — it's a different process.¹

What it costs

The deposit is 1.3% of your basic pay earned during the non-deduction service period, plus interest compounded annually from the midpoint of the service period. At the 2026 rate of 4.25%, decades of compounding can make a modest 1.3% deposit grow substantially.

What do you get?

If you pay the deposit, those years are credited as full FERS service in your annuity computation. If you do not pay:

• The years generally do not count toward your annuity calculation¹
• Check with your HR office about how any eligibility credit applies in your specific case, since rules vary by appointment type

Break-even example: 3 years of 1985–1988 federal service

• Service period: 1985–1988, average basic pay $33,000/yr
• Base deposit: 3 × $33,000 × 1.3% = $1,287
• With 38 years of interest at 4.25%: estimated ≈ $6,400 today
• High-3 salary at retirement: $135,000
• Annuity increase: 3 years × 1% × $135,000 = $4,050/year for life
• Break-even: $6,400 ÷ $4,050 = 1.6 years after retirement

At a typical federal retirement age and actuarial life expectancy, even a deposit that has grown to $6,400 due to interest breaks even in less than two years and pays out for 20+ years afterward. The math almost always favors paying — the only question is whether you have the cash before retirement.

Scenario B: FERS Redeposit for Withdrawn Contributions

Who this affects

Federal employees who separated from federal service, applied for a refund of their FERS retirement contributions, and later returned to federal employment. This is common among mid-career changers who went to the private sector for a period and came back, or employees who separated before they understood the long-term value of their FERS credit.

Eligibility note: The FERS redeposit option was enacted October 28, 2009. If you withdrew contributions for service that ended before that date, you may still be eligible — consult your HR office and OPM for your specific case.²

What it costs

The redeposit amount is exactly the refund you received, plus interest at 4.25% (2026 rate) compounded annually from the date of the refund.² The original refund amount was your FERS contributions — which varied by hire date:

• FERS employees hired before 2013: 0.8% of basic pay was withheld each year
• FERS-RAE (hired 2013): 3.1% of basic pay
• FERS-FRAE (hired 2014 or later): 4.4% of basic pay

An employee who worked 8 years at an average salary of $70,000 under FERS Original (0.8% rate) had roughly $4,480 withheld and refunded. With 14 years of compounding at 4.25% since the 2012 refund, that redeposit now stands at approximately $8,100.

What do you lose without redepositing?

If you do not make the redeposit:²

• Eligibility (title): The service period still counts toward meeting retirement eligibility milestones — the years apply when determining if you've hit MRA+30, age 60+20, or age 62+5.
• Annuity computation: Those years are excluded from the annuity formula (years × 1% × high-3). You hit the retirement eligibility thresholds but your annuity is calculated as if those years didn't exist.

In practical terms: you retire on time, but your monthly check is permanently reduced for the rest of your life.

Break-even example: 8-year career break, FERS Original employee

• Original FERS service: 8 years (2000–2008), average salary $70,000
• Contributions refunded in 2012: 8 × $70,000 × 0.8% = $4,480
• Interest from 2012 to 2026 (14 years at 4.25%): factor ≈ 1.80
• Redeposit amount today: $4,480 × 1.80 = ≈ $8,064
• High-3 salary at retirement: $110,000
• Annuity increase from restoring 8 years: 8 × 1% × $110,000 = $8,800/year
• Break-even: $8,064 ÷ $8,800 = less than 1 year of retirement

The FERS-FRAE case (4.4% contributions) illustrates the important difference: higher contribution rates mean a larger refund, which means a larger redeposit. The break-even still looks good at 3.6 years, but it's not as immediately obvious as the FERS Original cases. A federal benefits advisor can run the exact numbers for your tier and timeline.

Why timing matters

Interest on both deposits and redeposits compounds annually until the date you make full payment — or the date your annuity begins, whichever is earlier. Two consequences:

1. Every year of delay costs money. At 4.25%, an outstanding $10,000 balance grows by $425 per year. That's money you're paying for no additional annuity benefit.
2. The opportunity closes at retirement. OPM will not accept a deposit or redeposit after you separate for retirement. There's no grace period, no retroactive option. If you miss it, the credit is permanently lost.

Unlike the military buyback, there's no two-year interest-free grace period for civilian deposits — interest starts accruing from the midpoint of the service period (deposit) or from the refund date (redeposit) immediately.

How the annuity credit interacts with other factors

The 1.1% multiplier threshold

Under FERS, employees who retire at age 62 or older with 20+ years of service receive a 1.1% multiplier instead of 1.0%. Restoring service years via a deposit or redeposit can push you over the 20-year threshold — potentially increasing your annuity by more than just the restored years. If you have 19 years and restore 2 via a redeposit, every year of your annuity (not just the 2 new ones) grows from 1.0% to 1.1%.

FERS supplement eligibility

Restored service years count toward the 30-year service requirement for an immediate retirement at MRA. Crossing that threshold unlocks the FERS supplement, which can be worth $1,000–$2,000 per month for a GS-13 or GS-14. In those cases, the deposit or redeposit pays for itself in the first month of retirement — not the first year.

FEHB 5-year rule

FEHB coverage in retirement requires you to have been enrolled in FEHB for the 5 consecutive years immediately before retirement. Service years restored via deposit/redeposit do not affect this countdown — it's based on enrollment dates, not service credit. This is not a reason to skip the deposit.

How to apply: SF-3108 process

1. Request an OPM estimate. Before committing, you can ask your agency HR to request an estimate from OPM of the exact deposit or redeposit amount. This gives you the actual figure — not a calculation estimate — to make the decision.
2. Complete SF-3108. OPM Form SF-3108 (Application to Make Service Credit Payment — FERS) is the official form for both deposits and redeposits. Submit it to your agency HR office, not directly to OPM.
3. HR routes to OPM. Your agency HR forwards SF-3108 and supporting documents. OPM calculates the final amount (with interest through the payment date) and sends a billing statement.
4. Pay in full. You can pay as a lump sum or via payroll deduction installments. Partial payments do not give partial credit. Only a completed, fully paid deposit counts — if you make 80% of the payments and then retire, you receive zero annuity credit for those years.
5. Verify your SF-50. After OPM confirms receipt of full payment, your Notification of Personnel Action (SF-50) should reflect the updated years of creditable service. Review it before you submit your retirement application.

Deposit vs. redeposit: a quick comparison

Common questions

Can I make partial credit payments and still get partial annuity credit?

No. Only a completed deposit or redeposit gives you annuity credit. Partial payments reduce the remaining balance (and stop interest on the paid portion), but the credit does not vest until the account is paid in full. If retirement arrives before you finish, no credit is granted for the unpaid service.

Does restoring civilian service years affect my TSP balance or matching?

No. The SF-3108 deposit is a separate OPM transaction. It has no effect on your TSP account, contribution limits, or future agency matching. TSP and the FERS annuity are independent components of your retirement.

How does this compare to a military buyback?

The military service deposit rate is 3% of military basic pay — more than double the 1.3% civilian deposit rate. Both use the same 4.25% annual interest rate for 2026. Both use SF-3108 and must be paid before retirement. See the military buyback guide for the military-specific rules, including the retired pay waiver trap.

I'm under CSRS, not FERS. Do the same rules apply?

No. CSRS has different deposit rates (3% for most service), different rules for what credit you get without paying, and different redeposit mechanics. The CSRS deposit rules also distinguish between pre-1957 and post-1956 service. A federal benefits specialist can walk through CSRS deposit calculations if you're one of the remaining CSRS employees.

I took a refund before October 2009. Can I still redeposit?

The redeposit provision for FERS was enacted October 28, 2009. Whether pre-2009 refunded service qualifies can depend on when you returned to federal service and how your agency recorded it. Check with your HR office and request an OPM determination — this is an area where a federal benefits specialist's knowledge of OPM adjudication patterns is valuable.

Can I use payroll deductions to spread payments over time?

Yes. OPM allows you to make installment payments via payroll deduction. Interest stops accruing on the amounts actually paid; the remaining balance continues to grow. The key constraint is that all payments must be complete before your retirement date. Build in a meaningful buffer — payroll adjustments can take pay periods to process, and missing by even one pay period could delay your retirement.

Sources

1. OPM — FERS Service Credit: Deposit service (1.3% of basic pay for pre-1989 non-deduction service).
2. OPM — FERS Refund Fact Sheet: redeposit mechanics, annuity impact without payment, October 2009 eligibility date.
3. OPM Benefits Administration Letter 26-301 — Calendar Year 2026 Interest Rate: 4.25% for FERS service credit deposits and redeposits.
4. OPM Form SF-3108 — Application to Make Service Credit Payment (FERS): deposit and redeposit application.
5. OPM — FERS Creditable Service: what counts, what doesn't, and what requires a deposit.

Deposit rates and 2026 interest rate verified against OPM BAL 26-301. OPM adjusts the interest rate annually each January; confirm the current rate at OPM.gov before making financial projections.

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