FERS Service Credit: Deposit & Redeposit Calculator and Decision Guide

Many federal employees have a gap in their FERS service record — either a period of civilian employment where no FERS deductions were taken, or a prior stretch of federal service for which they took a contribution refund when they left. In both cases, you can pay to reclaim that service credit toward your pension. For most employees the math strongly favors paying — but how much interest has accrued changes the calculus significantly.

Quick overview: Deposit vs. Redeposit

Break-Even Calculator

Toggle between the two situations below. The calculator estimates your total cost (base amount + interest), the annual pension increase, and how many years of retirement income it takes to recoup the payment.

Type 1: FERS Deposit for Non-Deductible Civilian Service

What it is

Some federal employees have a stretch of government employment during which FERS deductions were never taken from their pay — usually because they were in a temporary, excepted-service, or otherwise non-covered appointment. Federal law allows you to make a deposit to receive credit for that service toward your FERS pension.²

The amount owed is 1.3% of the basic pay you received during that period, plus interest. Interest accrues from the midpoint of the service period, compounded annually at the rate OPM sets each year (4.25% for 2026).³

Eligibility limitation

There is a significant catch: with limited exceptions, FERS law does not permit a deposit for non-deductible service performed on or after January 1, 1989. Most FERS deposit situations therefore involve service from the 1980s. If your non-deductible service occurred in 1989 or later, check with your HR Benefits office — the exceptions are narrow (certain Peace Corps and VISTA volunteer service have different rules).²

What happens if you don't pay

Unlike the redeposit scenario, an unpaid deposit for non-deductible FERS service is fully excluded from your retirement record. That service does not count toward retirement eligibility and is not included in your pension computation. There is no partial credit, no actuarial reduction option — it simply disappears from your record until and unless you pay the deposit before retirement.²

Type 2: FERS Redeposit for Refunded Contributions

What it is

This is the more common situation. You worked as a federal employee, contributed to FERS through payroll deductions, then left government service and applied for a refund of those contributions (using SF-3106). Years later you returned to federal employment. You now have a prior block of service that was paid into but then cashed out.

A FERS redeposit lets you repay that refund — plus interest — to have those years re-credited toward your FERS annuity. The amount owed is simply the original refund amount plus interest from the date OPM paid the refund to you, compounded annually at the current OPM rate (4.25% for 2026).⁴

Who this applies to

You must have been covered under FERS on or after October 28, 2009 (the date Public Law 111-84 took effect) for FERS redeposit to be available. Employees covered only under FERS before that date face different rules — consult your HR Benefits office.¹

What happens if you don't pay

This is the crucial distinction from the deposit situation. Under PL 111-84, if you do not complete the redeposit, your refunded service years are not counted in your annuity computation — but they can still be counted toward determining your eligibility to retire (i.e., reaching the service-year threshold for the retirement category you're aiming for).

In practical terms: if you need those years to qualify for retirement but don't need them for the pension formula, you might still retire on schedule — but your monthly check will be smaller, as will any survivor annuity for your spouse. For most employees who are already eligible to retire without the refunded years, the entire value of redepositing is the pension increase itself.

Estimating your original refund if you don't have the paperwork

FERS contribution rates depend on when you joined federal service:

• 0.8% of basic pay — employees under FERS through December 31, 2012 (standard FERS rate)⁴
• 3.1% of basic pay — FERS-RAE, employees who first joined FERS in 2013⁴
• 4.4% of basic pay — FERS-FRAE, employees who first joined FERS January 1, 2014 or later⁴
• Special category (LEO/FF/ATC): higher rates — check OPM or your SF-50

To estimate your original refund: multiply your average basic pay during that service period by the applicable contribution rate and by the number of years. For a FERS-standard employee who averaged $75,000/year over 8 years: 0.8% × $75,000 × 8 = $4,800 (before interest). For a FERS-FRAE employee at the same salary: 4.4% × $75,000 × 8 = $26,400 — nearly six times more to redeposit for the same pension increase.

The FERS deposit is separate from the military buyback

Federal law provides a different rule for military service credit: the deposit rate is 3% of military basic pay (not 1.3%), and it covers active-duty service that may have occurred decades later than 1989. The military buyback and the civilian deposit or redeposit are completely independent — you can make one, both, or neither, depending on what's in your service history.

Similarly, if you have prior CSRS service that you refunded before switching to FERS, that situation involves different OPM rules. A CSRS redeposit within a FERS record may trigger an actuarial reduction to the annuity rather than a full exclusion — speak with your HR Benefits office to understand the exact treatment.

How the interest really accumulates

The 4.25% rate for 2026 is a significant decrease from 4.375% in 2025 — a reflection of declining Treasury yields. But because the rate changes annually and OPM applies the rate in effect for each calendar year to your running balance, the true cost of waiting is compound growth at the current year's rate applied to the prior balance.

What this means practically: a $10,000 deposit from 2000 that you've never paid would now be roughly $23,500–$25,000 depending on the exact year-by-year rates, not simply $10,000 × (1.0425)^26. The calculator above uses a simplified uniform 4.25% as an approximation; your HR Benefits office will compute the exact balance using OPM's rate schedule for each year.

Decision framework

• Break-even under 4 years: Almost always worth paying, assuming reasonable life expectancy in retirement. The annuity is a guaranteed annualized return on the payment.
• Break-even 4–8 years: Still favorable for most employees. FERS pensions are indexed to inflation (FERS COLA after 62), increasing the long-run value.
• Break-even over 10 years: Model more carefully. High interest accrual (large original refund + many years elapsed) erodes the math. Consider your health, planned retirement age, and whether you have TSP and other assets to cover a longer period.
• Redeposit and eligibility: If you need the refunded years to reach a retirement threshold — for instance, to hit 20 years at 60, or 30 years at MRA — the eligibility value adds to the pure pension-increase math.
• Timing: Payment must be completed before your retirement date. You can pay in a lump sum or set up installment payments with payroll deduction through your agency. Waiting longer increases the balance owed.

How to apply (SF-3108)

1. Get the form. Download Standard Form 3108 — Application to Make Service Credit Payment (FERS) from OPM.gov or your agency HR portal.⁵
2. Submit to your HR Benefits office. HR forwards the form to OPM's Retirement Services group, which computes the exact amount owed including accrued interest through the current date.
3. OPM issues a billing statement. The statement shows the principal and interest breakdown. You'll have the option to pay in full or set up payroll deduction installments.
4. Pay before retirement. Payments can continue up through your retirement date. Any unpaid balance at retirement is not forgiven — it simply means that service is excluded from your annuity computation.
5. Keep the confirmation. OPM sends an updated retirement record when payment is complete. Verify your official service record (typically through your SF-50 history and HR office) reflects the credited service before you file for retirement.

Interaction with TSP and your overall retirement income

The FERS pension is the fixed floor of your federal retirement. Because TSP withdrawals and Social Security fill the income gap above the pension, a larger pension directly reduces the TSP balance you need. If paying the redeposit adds $8,000/year to your pension, that's equivalent to having an extra $200,000 in TSP at a 4% withdrawal rate — a comparison that changes how you think about redeposit value relative to other uses of cash.

For IRMAA planning: the redeposit itself has no immediate tax consequence (it's paying back post-tax contributions you already received). The higher pension you receive in retirement is taxable — though partially excludable using the IRS Simplified Method.