Author Topic: minor badassity  (Read 3395 times)

moneypitfeeder

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minor badassity
« on: August 20, 2020, 04:28:01 PM »
I'm a gov civilian and just got my military buy-back amount and found out instead of sending in a check, you can pay online via credit card. I was able to pay my buy-back with a card that has 1% cash back on  the "all-others" category, so while I'll pay the card off in full when the payment is due and not pay any interest, I'll get that 1% back as basically a discount to the amount I would have had to pay if it were a check-only option or payroll deduction. Just a heads-up for anyone else looking for a military buy-back.
« Last Edit: August 20, 2020, 04:35:11 PM by moneypitfeeder »

Catica

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Re: minor badassity
« Reply #1 on: August 20, 2020, 07:56:55 PM »
I'm a gov civilian and just got my military buy-back amount and found out instead of sending in a check, you can pay online via credit card. I was able to pay my buy-back with a card that has 1% cash back on  the "all-others" category, so while I'll pay the card off in full when the payment is due and not pay any interest, I'll get that 1% back as basically a discount to the amount I would have had to pay if it were a check-only option or payroll deduction. Just a heads-up for anyone else looking for a military buy-back.
What is a buy-back?

moneypitfeeder

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Re: minor badassity
« Reply #2 on: August 21, 2020, 03:34:38 PM »
The fed retirement calculation is based on years served (percent x average of high 3 yrs of salary x years served), so if you buy-back your military time (i.e., I served on Active Duty, but not long enough to retire from) it increases the amount of my years served as a civilian, and increases the amount of the annuity I will receive at 62. You pay a fee for those years and months you served, and they increase your civilian years. I was National Guard, but I was deployed for a lengthy tour back in '03, so this adds about 2 years time to my calculation. I should make the deposit I paid back in short order of annuity payments, and then it is just extra money in the annuity from then on.

erutio

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Re: minor badassity
« Reply #3 on: August 21, 2020, 03:37:55 PM »
Is buy back of military time always worth it?  Around how much are the actual amounts you have to pay?

moneypitfeeder

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Re: minor badassity
« Reply #4 on: August 21, 2020, 04:02:42 PM »
It is often worth it, the amount you pay is based on the years you served and the rank and pay you received. So they vary greatly. Here are a few resources that help define better what the benefit is:
https://myfedbenefitshelp.com/benefits/military-time/#:~:text=But%2C%20if%20they%20make%20the,their%20total%20lifetime%20pension%20earnings.

https://www.fedsmith.com/2019/08/27/buy-back-military-time/

At a minimum, if you don't buy you time back as a fed you should make sure your HR has your dd-214s and credits the time you served because even without buying back your time, it will increase the amount of leave you are given every pay period. Without buying it back from the time I initially was hired, I was earning leave at a higher rate than an initial entry civilian much sooner than if I was a complete new hire.

spartana

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Re: minor badassity
« Reply #5 on: August 22, 2020, 08:10:13 AM »
I did a military buy-back on a state (CalPERS) pension. Some state agencies allow this but usually just for public safety pensions (LEOs, firefighters, etc) but I believe all Fed gov jobs allow this. I bought mine back as a tax-deferred withdrawal from my pay spread over a few years. I did the calculations to see if it might have been more valuable just to keep that money and invest but it worked out much better investing it tax-deferred in my state pension system. Besides that tax advantage while working (and I was still allowed to max out tax deferred 457 and TIRA) I had a guareentee 6% return if I chose to withdraw it once old enough to get the pension (50 in my case) or just do the monthly annuity benefit (what I chose). I left my job years before I'd be eligible to start collecting my pension but having those extra years added to my future pension was pretty great.

moneypitfeeder

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Re: minor badassity
« Reply #6 on: August 22, 2020, 06:31:54 PM »
@spartana, That's pretty much what I am doing, I'm not staying until I reach retirement age, but I'll be vested come January 10th, and then when I turn 62 I'll be eligible to pull a (small) annuity. I'm doing the 5 yrs to vest plus my active time, really only gets me to 7 yrs, so it won't be much, but will be guaranteed. It was a small amount to pay now that will help backfill later.

Car Jack

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Re: minor badassity
« Reply #7 on: August 23, 2020, 04:45:11 AM »
Time to get a citi double cash or fidelity visa to get 2%.

moneypitfeeder

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Re: minor badassity
« Reply #8 on: August 23, 2020, 05:31:21 PM »
@Nords  can probably explain better than I can, but the buy-back is a once and done, not like a monthly total purchase cash-back return from a credit card. The small amount I paid increases the 5 to a 7 times factor, then times the average of the highest salary I achieve, times a percentage, for life after 62. It will still be small because I'll only have 7 yrs service vs 20, 30, or 40, but it still is an increase worth more than my initial investment if I live a little bit above 62. The women in my family live to (on average) to 97, so I think it is money well spent.

Nords

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Re: minor badassity
« Reply #9 on: August 23, 2020, 05:47:42 PM »
Time to get a citi double cash or fidelity visa to get 2%.

@Nords  can probably explain better than I can, but the buy-back is a once and done, not like a monthly total purchase cash-back return from a credit card. The small amount I paid increases the 5 to a 7 times factor, then times the average of the highest salary I achieve, times a percentage, for life after 62. It will still be small because I'll only have 7 yrs service vs 20, 30, or 40, but it still is an increase worth more than my initial investment if I live a little bit above 62. The women in my family live to (on average) to 97, so I think it is money well spent.
I'm amazed that a federal or state OPM would take a credit card as payment for a military service credit deposit, but it's a great deal for hitting the minimum spend on a rewards card!

The whole program is complicated enough (and has enough bureaucratic delays) that I'd hesitate to tell vets to go get a rewards card first... although if HR screws it up then it's tempting to be able to tell them that you'll just dispute the charge with your card company.

The whole purpose of the military service credit program is to encourage vets to take those civil-service careers even if they're older and not able to work for an entire 20-30 years.  And if the federal or state govts are going to encourage corporations to hire vets, then they might as well lead by example.

spartana

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Re: minor badassity
« Reply #10 on: August 23, 2020, 06:27:40 PM »
Time to get a citi double cash or fidelity visa to get 2%.

@Nords  can probably explain better than I can, but the buy-back is a once and done, not like a monthly total purchase cash-back return from a credit card. The small amount I paid increases the 5 to a 7 times factor, then times the average of the highest salary I achieve, times a percentage, for life after 62. It will still be small because I'll only have 7 yrs service vs 20, 30, or 40, but it still is an increase worth more than my initial investment if I live a little bit above 62. The women in my family live to (on average) to 97, so I think it is money well spent.
I'm amazed that a federal or state OPM would take a credit card as payment for a military service credit deposit, but it's a great deal for hitting the minimum spend on a rewards card!

The whole program is complicated enough (and has enough bureaucratic delays) that I'd hesitate to tell vets to go get a rewards card first... although if HR screws it up then it's tempting to be able to tell them that you'll just dispute the charge with your card company.

The whole purpose of the military service credit program is to encourage vets to take those civil-service careers even if they're older and not able to work for an entire 20-30 years.  And if the federal or state govts are going to encourage corporations to hire vets, then they might as well lead by example.
I don't think my state pension would allow for a service buy back using a CC but I never even though about it so who knows! Calif (CalPERS) has many different types of pension plans within the various agencies and most don't allow for a military buy back. Mine did but you could only buy back 6 years max (one hitch) no matter how long you were in. Not sure if other states do that but worth it for vets to check it out. Being able to add another tax deferred account to the usual ones us extra years onto a pension was a good deal. Especially if you can pay over time rather then do a lump sum since it can be pricey.

ETA: Sadly while a military service credit buy back will add years to your pension plan, that time (at least in my state) isn't counted toward retiree medical. Or vesting. If you need x amount of years for get retiree medical or vest ya gotta work. I had 10 years working a state job plus 6 military buy back (although I was in 12) towards my pension but I needed 20 working years for retiree medical and would have had to work at least 10 more years.

ETA again: Just looked it up and it does look like CalPERS does allow the buy back for all pension types but only 4 years max now (or maybe only 4 years for non-LEOs/ non-public safety pensions). Couldn't find anything about the ability to use a CC though but did see that you couldn't either..
« Last Edit: August 23, 2020, 07:06:39 PM by spartana »

moneypitfeeder

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Re: minor badassity
« Reply #11 on: August 24, 2020, 05:25:39 PM »
@Nords, yes, you are spot on, I wouldn't go out and get a rewards card (esp one you had to make a minimum purchase in so many months), but I already have an Amazon prime card that I use, so I'll get cash back for it. It took months, about 4-5 to process the paperwork, and yes, while C-19 might have had a hand in it, my process-time was still in-keeping with the standard. I submitted my paperwork, had to get my time & pay (from those periods) calculated, then submit to an out-of-state hr to process and give me another form, then send to DFAS to get the "bill," then submit payment. I'm still waiting for DFAS to send me the "cleared" notice, which then I need to submit to hr, because the 2 hands do not speak to another. I cannot understand why they make the process so difficult. The paperwork alone is very confusing. But yes, now at https://www.pay.gov/public/home you can submit payment via cc, for the gov, I think that might be leaps and bounds improvement!

Chris Pascale

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Re: minor badassity
« Reply #12 on: September 14, 2020, 11:10:59 AM »
Bought my time in 2017, and am glad I did. Approaching 11 years in January now as a result.

@moneypitfeeder what dept do you work for?

moneypitfeeder

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Re: minor badassity
« Reply #13 on: September 30, 2020, 05:50:02 PM »
Bought my time in 2017, and am glad I did. Approaching 11 years in January now as a result.

@moneypitfeeder what dept do you work for?

I work for the dept. of the Army
« Last Edit: September 30, 2020, 07:36:48 PM by moneypitfeeder »

Chris Pascale

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Re: minor badassity
« Reply #14 on: December 30, 2020, 04:19:44 PM »
When I went back to the Treasury Dept., I bought my 5 years. It cost something like $2800.

If retire with 20 years making $120,000, yearly pension would be $24,000, or $2,000 per month.

Beyond the ROI on the time (which, seriously, why isn't it already counted as federal service?) the real value is that I can retire sooner.