Does Your Overtime Count Toward Your High-3?

Updated August 2026 · Educational only — not financial, tax, or legal advice

The short answer for most federal employees is no. Overtime is explicitly excluded from the pay that builds your pension.

But if you're a firefighter, a law enforcement officer, a criminal investigator, a customs officer, or a Border Patrol agent, the short answer is wrong — and the difference can be tens of thousands of dollars over a retirement. The exceptions aren't buried in agency policy. They're a numbered list in the statute.

Where the rule comes from

Your high-3 is defined in 5 U.S.C. 8401(3) as the largest annual rate produced by averaging your rates of basic pay over any three consecutive years, each rate weighted by how long it was in effect. So everything turns on what "basic pay" means.

5 U.S.C. 8401(4) answers that by pointing at 5 U.S.C. 8331(3). And 8331(3) does two things: it lists what is included, then closes with what is excluded — "bonuses, allowances, overtime pay, military pay, pay given in addition to the base pay of the position … uniform allowances, or lump-sum leave payments."

That exclusion is why the general answer is no. The inclusions are subparagraphs (B) through (I), and that list is where covered employees live.

The premium pay that does count

Note the pattern in the last three: the statute counts overtime that is scheduled and inside the regular tour, and leaves out overtime that is extra, irregular, or outside it. That distinction does most of the work in practice.

Firefighters: the 2,756-hour rule

This is the most intricate case, and the one most often estimated wrong.

5 U.S.C. 5545b applies only if two things are true: your position is classified in the firefighter occupation under the GS-081 standard, and your normal work schedule, as in effect throughout the year, consists of regular tours of duty averaging at least 106 hours per biweekly pay period. If you're a GS-081 on a straight 40-hour administrative schedule, this section isn't yours.

For everyone else, ordinary federal pay conversion divides the annual rate by 2,087 to get an hourly rate (5 U.S.C. 5504(b)(1)). For a covered firefighter on 24-hour shifts, 5545b substitutes 2,756 — which is 53 hours a week across 52 weeks, the same 106 hours biweekly that triggers the section in the first place.

There are two variants:

• Tour is generally 24-hour shifts, with no basic 40-hour workweek (5545b(b)): the hourly rate is the annual rate ÷ 2,756, and basic pay for retirement includes that hourly rate for all hours in the regular tour, overtime hours included.
• Tour includes a basic 40-hour workweek (5545b(c)): the normal 2,087 conversion applies to hours inside the 40, the 2,756 conversion applies to hours outside it, and basic pay includes both — the 40-hour amount plus the straight-time value of the out-of-40 hours that fall within the regular tour.

Your overtime is paid at 1.5 times that hourly rate, and a covered firefighter receives overtime under 5542 but no other premium pay from this subchapter (5545b(d)(1)). The FLSA section 7(k) work-period rules are reconciled with all of this at 5545b(d)(2), which is why the same statute that shapes your schedule also shapes your pension.

Why this matters more if you're covered

High-3 is a multiplier, so an error in it scales through everything. For special-provisions employees it scales harder, because the first 20 years of service are computed at 1.7% rather than 1.0%. A high-3 understated by $6,000 costs about $2,040 a year on those first 20 years alone — every year, for life, before you count the supplement or the effect on survivor benefits, which are computed from the same base.

It also cuts the other way. Overestimating your high-3 by counting gross overtime produces a retirement plan built on a pension that won't arrive.

What to verify, and how

1. Identify which premium pay you actually receive — standby, AUO, LEAP, firefighter regular-tour pay, customs overtime, Border Patrol supplemental. The name matters because each enters through a different statutory paragraph, and one of them (AUO) only counts if you're a law enforcement officer.
2. Confirm retirement deductions are being withheld on it. If a premium is basic pay, your FERS contributions should reflect it. A premium with no retirement withholding is a flag worth raising in writing.
3. For firefighters, confirm the GS-081 classification and the 106-hour average — both are conditions, and a schedule change can move you in or out of 5545b.
4. Don't estimate from your W-2. Ask your payroll office for your annual rate of basic pay as reported for retirement purposes, for each of the three years in your window.

Coverage determinations and pay determinations are separate questions, both made by your agency. If you're unsure whether your position is covered at all, start with is your position actually covered?