Military retired pay or FERS credit: should you waive your retired pay?

By the OnPAR Federal Retirement Education editorial team · Last updated November 2, 2026

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If you receive military retired pay, the military service it is based on generally can't also count in your FERS pension. To count it, you must waive the retired pay and pay the post-1956 military deposit before you leave federal service [1][2]. Two kinds of retired pay are exceptions, and that service can be credited without a waiver [1][2][3].

The basic rule

Federal law lets FERS employees count active-duty military service toward their civilian pension. Service after 1956 counts only if you pay a deposit [2][4]. There's a catch for military retirees: under 5 U.S.C. 8411(c)(2), if you're awarded retired pay based on a period of military service, your FERS service "may not include credit for such period" unless one of the exceptions applies [2]. OPM's regulation says the same thing: credit isn't allowed while you're receiving military retired pay for that period [3].

In practice, you get one benefit for those years, not both. You can keep the military retirement check, or you can waive it and fold those years into your FERS pension.

The two exceptions

OPM lists two kinds of military retired pay that don't block FERS credit [1]:

• Combat or war-related disability retired pay. This is retired pay awarded for a service-connected disability that was either incurred in combat with an enemy of the United States, or caused by an instrumentality of war and incurred in line of duty during a period of war [1][2].
• Reserve retired pay under chapter 1223 of title 10, U.S. Code (retirement from a reserve component, often called "gray area" or age-60 Reserve retirement) [1][2]. OPM's regulation also refers to the earlier version of this law, chapter 67 of title 10 [3].

Even when an exception applies, the post-1956 deposit is still needed for that service to count [1]. Whether your retired pay falls into an exception is decided by the agency that pays it, and OPM accepts that agency's determination [3]. Ask your military pay center for a written statement if you think you qualify.

Who this usually affects

• 20-year active-duty retirees who are now federal civilians. Their retired pay is normally not one of the exceptions, so the waive-or-keep choice applies.
• Medically retired members. It depends on whether the disability was combat- or war-related as described above. Get the paying agency's determination.
• Guard and Reserve retirees under chapter 1223. Their Reserve retired pay is an exception, so the deposit is the main question.
• Veterans who separated without retiring. This rule doesn't apply to them. They just need the deposit; see Should I buy back my military time?

How to waive military retired pay

OPM tells employees to write to the Defense Finance and Accounting Service (DFAS) Retired Pay Operations Center at least 60 days before your planned retirement [1]. OPM lists the address as DFAS, U.S. Military Retirement Pay, 8899 E 56th Street, Indianapolis, IN 46249-1200, and a fax of 1-800-469-6559 [1]. OPM's suggested wording waives retired pay "effective (the day before your annuity begins)" and authorizes OPM to withhold from your annuity any retired pay paid after that date because of processing delays [1]. OPM accepts the paying agency's word on the waiver's effective date [3]. Confirm the current address and process on OPM's page before you send anything.

Remember the order of steps: the deposit has to be paid in full to your employing agency while you're still employed [4][3]. The waiver itself is filed around retirement, effective the day before your annuity starts [1]. Missing the deposit deadline means the years won't count even if you waive.

Worked example: keep or waive? (illustration only)

These are made-up numbers, not anyone's real benefit. Pat retired from the Army after 20 years and gets military retired pay. Pat then worked 15 years as a federal civilian under FERS and retires at 62 with a high-3 of $100,000.

• Keep the retired pay: FERS service is 15 years. At 62 with under 20 years, the factor is 1%: 1% × $100,000 × 15 = $15,000 a year [5]. Pat keeps the full military retirement check too.
• Waive and credit the military years: FERS service becomes 35 years. At 62 with 20 or more years, the factor is 1.1%: 1.1% × $100,000 × 35 = $38,500 a year [5]. That's $23,500 more FERS pension, but Pat gives up the military retired pay and must have paid the deposit.

So the comparison is simple: is the extra FERS pension bigger than the military retired pay you'd give up? In this example, waiving wins only if Pat's military retired pay is less than $23,500 a year. Crossing 20 total years can also unlock the 1.1% factor at 62, which is why the math sometimes favors waiving [5]. The extra service can also change your eligibility date (for example, reaching 30 years for an unreduced MRA+30 retirement) [6].

What else to weigh

• COLAs differ. FERS annuities generally don't receive COLAs until age 62 for regular retirees [6]. Ask DFAS how your military retired pay is adjusted.
• Survivor benefits. Waiving moves value into your FERS annuity, so your FERS survivor election matters more. Your military survivor coverage is a separate decision; ask DFAS what happens to it.
• VA disability compensation. If part of your retired pay is already waived to receive VA compensation, see VA disability and a FERS pension before deciding.
• The FERS supplement uses only civilian FERS service, so crediting military years doesn't raise it [6]. See FERS supplement and MRA timing for veterans.

We can't tell you how your military retired pay, its COLAs or your military survivor benefit would change after a waiver. Those come from DFAS and your branch, so get them in writing before you decide.

Step-by-step

1. Ask HR for a deposit estimate and pay the deposit in full before you separate [4].
2. Get your gross military retired pay amount from DFAS, plus a written determination if you think an exception applies [3].
3. Run both scenarios in the FERS Pension Calculator (FERS service with and without the military years).
4. If waiving wins, write to DFAS at least 60 days before retirement [1].
5. Report the military service, deposit and retired pay details on your retirement application [6].

Run the numbers → open the FERS Pension Calculator

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Official sources

1. OPM: Military Retired Pay (crediting service and how to waive)
2. 5 U.S.C. 8411: Creditable service (military service and retired pay)
3. eCFR: 5 CFR 842.306-842.307 (military service credit and deposits)
4. OPM: Service Credit (military deposit rates and rules)
5. OPM: FERS Computation
6. OPM: Types of Retirement (eligibility, MRA, disability, FERS supplement)

Checked against the official sources above on November 2, 2026. Education only, not legal or financial advice. Not affiliated with OPM, VA, DoD or any government agency.