Buying back refunded FERS service: the complete 2026 guide

1. What a FERS redeposit is and why 2009 matters

Some federal employees leave government, withdraw their FERS retirement contributions as a refund, and then return to federal service years later. The years they worked the first time still happened — but whether those years count toward their eventual pension is governed by a specific provision of FERS law, and the rule changed dramatically in 2009.

A FERS redeposit is the payment of refunded FERS contributions, plus compound interest, back into the retirement fund — restoring credit for the prior service in your eventual pension calculation. The mechanics are simple. The decision is not.

Before October 28, 2009, FERS law was unforgiving. If you took a refund of your FERS contributions, the corresponding years of service were permanently forfeited for retirement annuity purposes. You couldn’t redeposit. You couldn’t recapture the time. Those years simply didn’t count toward your pension, regardless of what you did afterward.

Public Law 111-84 (Section 1904 of the NDAA for FY2010) changed that — but only for FERS employees on the rolls on or after October 28, 2009. Since that date, departed FERS employees who return to federal service can make a redeposit to restore credit for the refunded years. This brought FERS into parity with CSRS, where redeposits have always been allowed.

What buying back the service actually changes:

• Without redeposit: Refunded years count for eligibility (when you can retire and what door you go through) and for high-3 (the salary base of your pension), but not for the annuity formula itself.
• With redeposit: Refunded years count for everything — eligibility, high-3, and the annuity formula. They look identical to service you never refunded.

For most federal employees who took a refund and returned to government, the choice is whether to pay the redeposit and recover the annuity value of those years, or to leave the refund alone and live with a smaller annuity. The math determines which is better.

2. Eligibility — who can buy back FERS service

Not every FERS employee with a prior refund qualifies for the redeposit option. Eligibility is narrowly defined by the 2009 law, and three conditions all have to be met.

1. You must be covered by FERS on or after October 28, 2009. This is the date PL 111-84 took effect. If you separated from federal service before that date and have not returned to FERS coverage since, you cannot make a FERS redeposit. The law is not retroactive — it opened the door for employees on the rolls from October 28, 2009 forward.

2. You must have received a refund of FERS contributions for prior FERS service. The redeposit must correspond to a specific period of FERS-covered service for which you previously withdrew contributions. Refunds from non-FERS service (e.g., CSRS, separate Foreign Service systems) are handled under their own rules.

3. You must apply before final adjudication of your retirement annuity. Once OPM finalizes your annuity calculation, the redeposit option closes. The latest practical deadline is the same as your retirement application — best practice is to submit the redeposit application at the same time or earlier.

The decision tree:

One important nuance for “mixed” service. If you have a CSRS component (typically from service before 1984) that’s now being credited under FERS rules, redeposit eligibility for that period follows CSRS rules. The redeposit window for CSRS refunds has always been open — it’s not subject to the 2009 cutoff. This matters mainly for employees with very long careers spanning both systems.

Disability retirement is different. If you’re applying for FERS disability retirement, the redeposit rule is stricter — you generally must pay the redeposit to receive credit for the refunded service in the disability formula. The “credit toward eligibility but not annuity” rule that applies to regular retirement does not apply to disability. (For the broader disability picture, see FERS Disability Retirement: When and How to Apply in 2026.)

The 2009 law brought FERS into parity with CSRS on redeposits — but only for employees actively under FERS on or after October 28, 2009. If you separated before that date and never returned, the door is permanently closed. If you returned afterward, the door is open and the decision is yours.

3. The cost — refund plus compound interest

The redeposit amount is the original refund you received, plus compound interest accumulated from the date of refund to the date the redeposit is paid in full.

The interest is the part that surprises most returning employees. FERS contribution refunds typically aren’t enormous — 0.8% of pay (the FERS employee contribution rate for most enrollees) over a few years adds up to a few thousand dollars. But that refund has been earning interest for OPM’s books since the day you withdrew it, and you owe that interest as part of the buyback.

Interest mechanics:

• Charged from the date of refund
• Compounded annually
• Based on market rates published by OPM each year via Benefits Administration Letter
• Continues accruing until full payment is made or the date the annuity begins, whichever is earlier

Recent OPM interest rates have ranged from roughly 1% (during the low-rate years of 2020-2021) to 4.5% as rates rose:

A worked example. An employee refunded $4,000 in 2015 and decides to redeposit in 2026 — 11 years of compounded interest:

The interest can equal half or more of the original refund amount over a long delay. The math is symmetric: the longer you wait, the more interest accrues, and the larger the eventual redeposit becomes. There is no benefit to waiting, and there is a real cost.

Payment options:

• Lump sum — submit the full amount via Pay.gov once OPM provides the calculation
• Installments — minimum $25 per payment
• Payroll deduction — many agencies will set up automatic deductions from your paycheck

Whichever path you choose, the redeposit must be paid in full before final adjudication of your annuity. OPM will not finalize a retirement that has an outstanding redeposit balance — your annuity payments will be held up until the balance is cleared, or your case will be adjudicated without the credit, leaving the years uncredited.

4. The benefit — what bought-back service actually buys

The redeposit restores your refunded years for the annuity formula. To understand what that’s worth, walk through what an additional year of service does in the FERS pension formula.

The basic FERS formula:

The multiplier is 1.0% for most retirements; it becomes 1.1% if you retire at age 62 or later with at least 20 years of service. Every year of credited service contributes one percentage point (or 1.1) of your high-3 to your annual pension, for life.

A worked example. An employee with a high-3 of $90,000 considers whether to redeposit for 3 years of refunded FERS service:

That $2,700-$2,970 annual increase is permanent. Every year of retirement, for as long as the annuity is paid (and the survivor annuity if applicable), the bought-back service produces that recurring income.

The benefits aren’t only the recurring pension increase.

• Survivor annuity goes up too. If you’ve elected a survivor annuity, your spouse receives a percentage of the annuity that includes the redeposit-restored service. The lifetime value to the household typically exceeds your own expected lifetime alone. (See FERS survivor benefit elections.)
• COLAs compound the boost. Once you’re receiving regular FERS COLAs (typically starting at age 62), the bought-back portion of your annuity grows with inflation alongside the rest. Over a 25-year retirement, COLAs roughly double the cumulative value of the recurring pension increase.
• Eligibility threshold crossings. Bought-back service might push you across the 20-years threshold that unlocks the 1.1% multiplier (if retiring at 62+), turning a 1.0% benefit into a 1.1% benefit on all your service — not just the bought-back portion. That can be a substantial bonus.

5. Break-even analysis — when redeposit pays off

The financial question reduces to: how long does the redeposit have to pay for itself before it produces a net gain? The simple break-even formula:

Using the example above ($5,837 redeposit cost for 3 years of service producing $2,700/yr boost):

For most realistic FERS redeposit scenarios, break-even is under 5 years. Federal retirees live decades after retirement — average life expectancy at 62 is well above 20 years. The math overwhelmingly favors redeposit for almost any retiree expecting a normal retirement lifespan.

Three refinements that strengthen the case further:

Add the COLA effect. The base pension grows with COLAs, so the bought-back portion does too. Over 25 years at average 2% COLAs, the cumulative value of the redeposit-restored service is meaningfully higher than the simple sum suggests.

Add the survivor value. If you’re married and elected a survivor annuity, the spouse continues to receive a percentage of the redeposit-boosted pension. The lifetime value to the household typically extends 10-15 years beyond your own expected lifespan.

Consider the time-value-of-money counter-argument. The redeposit dollars could instead be invested. If you can reliably earn higher returns than the FERS interest rate plus the pension’s effective yield, the investment alternative might compete with redeposit. In practice, the pension’s inflation-protected, lifetime-guaranteed return is hard to beat with comparable risk-adjusted investments.

When the math doesn’t favor redeposit: very short refund periods (under 1 year), retirees expecting unusually short lifespans, or scenarios where the cash is genuinely needed today for other essential purposes. These are edge cases. The default for most returning FERS employees is that redeposit pays.

6. The SF-3108 process — how to actually do it

The redeposit application uses Standard Form 3108 — Application to Make Service Credit Payment (FERS). The process has three stages.

Stage 1: Complete Part A of SF-3108. This is your section. You identify yourself, the period of refunded service you want to repay, the agency you worked for at the time, and your contact information. The form is available from your agency HR or directly from OPM at opm.gov/forms/standard-forms.

Stage 2: Submit to your agency HR. Your agency completes Part B, certifying your prior service, and forwards the application to OPM. They confirm the dates, the salary basis, and the refund amount on file.

Stage 3: OPM calculates and issues the bill. OPM Retirement Services calculates the exact redeposit amount, including all accrued interest, and sends you a statement. You then have several payment options:

• Pay in full via Pay.gov — the federal payment portal. Direct ACH from a bank account is the simplest path.
• Installment payments — minimum $25 per payment. OPM accepts installments at intervals you specify.
• Payroll deduction — your agency can deduct from each paycheck and forward to OPM. Discuss this with your agency benefits specialist.

Where to send the form:

• If currently employed: Submit to your agency HR. They handle the certification and forwarding.
• If separated and within 30 days: Submit to your former agency HR.
• If separated more than 30 days: Submit directly to OPM.

Timing relative to retirement. Best practice is to start the redeposit application at least 6 months before your retirement date, ideally earlier. This gives OPM time to calculate the amount, gives you time to pay (especially via installments), and ensures the redeposit is paid in full before your annuity is adjudicated. If you’re within 6 months of retirement, submit the SF-3108 simultaneously with your retirement application (SF-3107) and indicate that you intend to pay the redeposit before annuity start.

One administrative note: The redeposit itself is not taxable on the way in — it’s restoration of after-tax contributions. The annuity it generates will be taxable on the way out, in the normal way. (See The Federal Retirement Application: How to Actually File for how this fits into the broader retirement-filing process.)

7. Special situations — disability, survivors, and alternative annuity

A few specific scenarios deviate from the general redeposit framework.

Disability retirement. As mentioned in section 2, the rule that “refunded service counts for eligibility but not annuity” doesn’t apply if you’re retiring on disability. For disability retirees, the redeposit must be paid for the refunded service to be credited. If you intend to apply for FERS disability and have prior refunded service, the redeposit becomes effectively mandatory if you want that service counted.

Survivors. If a FERS employee dies in service and a survivor is entitled to a survivor annuity, the survivor can make a redeposit before the survivor annuity is adjudicated. This restores credit for the deceased’s refunded service in the survivor annuity calculation. The decision is the survivor’s, and the math runs the same way — cost vs. annual survivor annuity boost vs. expected survivor lifespan.

Alternative form of annuity. Some retirees elect a one-time lump-sum payment at retirement equal to their FERS contributions, in exchange for a reduced lifetime annuity. If you elect this alternative form of annuity and have an unpaid redeposit, the unpaid amount is “deemed paid” through a reduction in the eventual annuity. This is more complex than a straight redeposit and rarely the optimal path for someone considering buying back service — discuss carefully with your agency benefits counselor if it’s on the table.

Mixed CSRS-FERS service with refunds. If your career spans CSRS and FERS, with refunds from both periods, the redeposits are handled separately under each system’s rules. CSRS redeposits have their own framework (with the “March 1, 1991” cutoff date that introduces an actuarial reduction option for older refunds). If you have mixed service with multiple refunds, work with your agency benefits specialist to map each one to the correct rule.

8. The decision framework — should you redeposit?

A practical decision framework for any FERS employee considering a redeposit:

Step 1: Confirm eligibility. Were you covered by FERS on or after October 28, 2009? If no, the redeposit isn’t available. If yes, proceed.

Step 2: Get the cost figure. Submit SF-3108 (or have your HR specialist run a preliminary estimate) to find out exactly what your redeposit costs in today’s dollars. Don’t guess — the actual interest accumulation can be larger than rough estimates.

Step 3: Calculate the annual pension boost. Years of refunded service × your projected high-3 × 1.0% (or 1.1% if you’ll retire at 62+ with 20+ years). This is your recurring annual benefit.

Step 4: Run the break-even. Divide the cost by the annual boost. If break-even is under 10 years, the math favors redeposit for any retiree with a normal life expectancy. If break-even is 15+ years, the case is weaker and depends on your specific situation.

Step 5: Add the qualitative factors. Survivor annuity boost, COLA compounding, potential 1.1% multiplier threshold crossing, the security of inflation-protected lifetime income. All of these strengthen the case.

Step 6: Compare alternatives. What else would you do with the redeposit dollars? If they’d otherwise sit in low-yield savings, the pension’s effective return is dramatically better. If they’d otherwise pay down high-interest debt, that calculation differs. If you’d invest them in a diversified portfolio with reasonable expected returns, the comparison is closer — but the pension’s lifetime guarantee and inflation protection still typically win.

Step 7: Decide and act. Once decided, don’t delay. Interest compounds. The longer you wait, the higher the cost. Start an installment plan if necessary, but start.

For most federal employees who took a refund and returned to FERS service, the answer is yes — the redeposit pays for itself in a few years and produces decades of additional pension income. The 2009 law opened a door that’s genuinely valuable; walking through it usually rewards the choice. (For the parallel buyback option covering military time, see Military Service Buyback for FERS.)