FORT RILEY, Kan. -- When it comes to planning for retirement, time can work against Soldiers if they are not both knowledgeable and actively engaged in the process.
That might seem to make little sense; after all, a career with the Department of the Army can last anywhere from 20 to more than 40 years. There's plenty of time, right?
Not really, according to Michael Gooden, Army Benefits Center-Civilian Branch manager, especially when it comes to getting credit toward retirement for previous military or civilian service through a buyback system for government employees who have either previous military time or federal employment that took place before a break in that service.
Kristine Tiroch, human resources specialist at the ABC-C, agrees, adding "the retirement planning process includes determining whether the employee is entitled to credit for either previous military or civilian service."
Typically, Gooden said, employees will fall into two main categories: one is a former military person with a number of years in the active-duty military who enters government service and wishes to apply that active duty time towards their civilian service. The other is a civilian worker who was employed for a time as a government worker, left that service to pursue other interests or opportunities, then wishes to reenter government service again.
But in either case, for every year that goes by without the employee buying back their time, interest accumulates and the cost of doing so rises.
For those with previous military service
For former military persons, the key concept is buying back military time served so it can be applied to the total civilian retirement time. This way military service can boost the total time creditable for service toward retirement.
For example, a person employed under the Federal Employees Retirement System, who has been in civilian government service for 10 years, and has five years of military service can pay into the retirement plan. Then he or she will then have 15 years of total service creditable toward retirement.
"By making this deposit they would be paying into the civilian retirement system," Gooden said. For those with previous military, the Post-56 Buyback method uses a formula that requires the deposit be equal to a certain percentage of base pay over the entire military service period, plus interest.
"The main thing to remember is, if I served six years on active-duty military, based on my earnings (over that period), I can make a deposit to have that military service count toward my civilian service and retirement contributions," Gooden said.
To begin the Post 56 buyback process the employee can visit the ABC-C website at https://www.abc.army.mil/retirements/FERSPost56.htm for FERS employees or https://www.abc.army.mil/retirements/CSRSPost56.htm for Civil Service Retirement
System/CSRS Offset and follow the four-step process.
Even those who have retired after a 20-year or more career can use the buyback method, but to do so they must waive the pension after retirement from government service is attained, and buy back the time through payments deducted each month.
"Some people will do that, but it has to make good financial sense to them," Gooden said. "To buy back that much military service requires a considerable investment. Most elect to receive their military retirement check separately and simply add it to their income."
In any case, however, employees should contact the ABC-C staff to be sure of the process and the buyback amounts required for credit. The military deposit must be paid in full prior to retirement to receive credit. The Post-56 military buyback process could take 6 months or longer to complete.
For those with previous government service
According to the ABC-C website, if the work history of a civilian employee in FERS includes a period of service during which retirement contributions were not withheld from the salary, contributions are needed to ensure that time is credited to his or her civilian retirement.
The FERS-covered employee must pay a deposit of 1.3 percent of the basic pay earned during the non-deduction service, plus interest, in order to receive credit for that period of service. The interest will vary based on the date the civilian service was performed.
Also, according to the ABC-C website, FERS employees can only make a deposit for service prior to Jan. 1, 1989. Non-deducted service after this date is not creditable and payment cannot be made to receive credit.
In other words, Gooden said, "non-deductive service -- that is service in which retirement deductions were not contributed to the FERS retirement system -- that is performed prior to Jan. 1, 1989, can be credited toward an employee's retirement after the deposit is made."
On the other hand, employees who worked for the government, quit and took a refund of their civilian retirement deductions may make a redeposit of those funds. If the service is credited under FERS rules, you must pay a deposit of 1.3 percent of the basic pay received during the period of refunded service, plus interest.
Again, time is critical.
"We're getting a large number of employees that say they had their non-deducted service (service for which no retirement funds were withheld) back in the 1980s," Gooden said. "Now, they are getting ready to retire and no one ever told them about this deposit or re-deposit and now they have all this back interest. And they are getting all this right when they are getting ready to retire. So ideally, if they do the estimate early and this service can be identified three to five years prior to retiring, which will give them time to make those payments."
Gooden said that frequently a spouse will travel with his or her Soldier and work in temporary appointments in places like Germany or Korea and are not paying into the retirement system. Those are the years that are eligible for the buyback program for government employees. But if they wait for 15, 20 or 25 years before using the buyback system, Gooden added, then interest will have accumulated over that time.
"I've seen it countless times where the actual deposit, if they had made it early, would have been around a couple hundred dollars. But by the time you add 20 years of interest, you're talking around a thousand dollars on top of the original $200. So now they're paying $1,200, $1,300."
Employees with questions should contact the folks at ABC-C, 785-240-2222, or toll-free at 877-276-9287, as soon as possible to begin, or continue, retirement planning. Benefit specialists are available from 7 a.m. to 5 p.m., Central Standard Time, Monday through Friday.
Employees can receive guidance on a variety of topics. "We handle retirements, deposits, redeposits and estimates," Gooden said.
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