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Military Pay Newsletter |
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Newsletter archives:
Jan 2008 -
Mar 2008 -
Jun 2008 -
Sep 2008 -
Dec 2008 -
Mar 2009 |
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June
2009 |
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Savings
Deposit Program (SDP) |
The Savings
Deposit Program can help eliminate warfighters'financial
concerns with benefits far beyond those available outside
today's combat theaters in terms of security and growth.
For qualified military personnel, SDP offers savings accounts
with a guaranteed interest rate significantly higher than
rates offered through commercial banks and credit unions.
DFAS Cleveland is responsible for maintaining SDP accounts for
all military services.
SDP accounts earn up to 10 percent annual interest compounded
quarterly on deposits up to a maximum of $10,000 while a
service member remains in a designated combat zone. Accounts
will continue to accrue interest up to 90 days after departure
from those zones. SDP account balances are automatically
distributed to the individual's direct deposit account 120
days after the member leaves the combat zone unless the member
requests the funds sooner.
In order to qualify, military personnel must be serving in a
designated combat zone or in support of contingency operations
and be receiving Hostile Fire Pay. Eligible personnel must be
deployed to those areas for a minimum of 30 consecutive days
or at least one day in each of three consecutive months.
SDP accounts can only be created after a member has entered a
designated combat zone. Any military finance office can create
an account. It is not necessary for a member to restrict SDP
business to a finance office from their particular military
service; any military finance office can help any military
member.
Once an SDP account has been established, it cannot be closed
until the member has left the combat zone. Withdrawals other
than the final distribution of account funds may be made on a
quarterly basis for accounts over $10,000. Emergency
withdrawals may also be made when authorized by the member's
commanding officer. SDP account balances are automatically
distributed to the individual's direct deposit account 120
days after the member leaves the combat zone unless the member
requests the funds sooner.
DFAS officials urge military personnel preparing for
deployment to review their personal finances to determine how
SDP can help establish or increase their financial health. It
is also a good time to talk face-to-face with spouses
regarding deposit amounts that will not put a strain on family
budgets.
Eligible personnel can get more information on SDP and start
an account at any in-theater finance office. |
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Do's
and Don'ts |
1. DON'T
purchase 'insurance' policies or enroll in an "investment"
program that requires you to share your myPay PIN with anyone
or to circumvent the rules in place for starting allotments in
myPay.
Your branch of service wanted you to have the convenience of
starting certain allotments via myPay, but specified no
insurance allotments. Ask yourself why that is. The answer is
because there are laws and Department of Defense policies in
place that protect your rights that are violated when you
start an insurance allotment on myPay.
One of the most important rights that you have is a seven day
cooling off period after you sign an insurance policy. That
means you have seven days from the date you sign the policy to
change your mind. We don't like to think there are people who
will take advantage of those who protect our country, but they
have gone to a lot of trouble to create businesses that appear
legitimate to do just that. If anyone offers you an insurance
policy that will pay you unheard of dividends in the future
and says that you have to start a discretionary allotment via
myPay, or even worse to provide them with your myPay user ID
and PIN so that they can start it for you, don't just walk,
run the other way. They are trying to violate your right to
the seven day cooling off period, which can only be enforced
when you start insurance allotments via your finance office.
They are also trying to disguise their identity by having you
start a generic 'dependent' allotment to a bank account
they've set up at a financial institution that does not
identify them as an insurance or investment company.
2. DO take advantage of the opportunity to invest in your
future by contributing to the Thrift Savings Plan (TSP). This
is a major benefit open only to members of the military and
federal employees. Over 27.6% of military members already
invest. While TSP offers all the advantages of a 401K plan, it
includes a wide variety of funds for your investment. And
while the Thrift Board doesn't encourage loans against your
contributions, the option is there if you ever need it.
Repayment terms are very generous, with very low interest
(one-half percent above prime). The added convenience of loan
payments being deducted directly from your pay is another
plus. What 401K plan offers that option? Just remember you are
borrowing from your retirement nest egg, so don't make the
decision to request a loan from your TSP savings lightly.
3. DON'T cancel your Thrift Savings Plan contributions to buy
into investment schemes that offer returns on your investment
that sound too good to be true (because they usually are).
4. Finally, DO take advantage of the Servicemembers Group Life
Insurance (SGLI) program, Family SGLI, and TRICARE Dental
insurance. When compared to the cost of privately obtained
life insurance for either you or your spouse, or out of pocket
dental bills for yourself, your spouse and especially for
children, you can't find a better bargain available to the
general public.
In summary
DON'T purchase 'insurance' policies or enroll in an
'investment' program that requires you to share your myPay
PIN.
DO invest in TSP.
DON'T cancel your TSP contributions to buy into investment
schemes.
DO enroll in SGLI, Family SGLI, and TRICARE Dental. |
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State
Income Tax Withholding Changes |
The
following states had state income tax withholding formulas and
rates updated: Arkansas, California, Colorado, Connecticut,
Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kentucky,
Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana,
Nebraska, New Jersey, New Mexico, North Carolina, North
Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico,
Rhode Island, Vermont, Virginia and Wisconsin.
The following states had one-time payment tax withholding
percentage updated: Alabama, Colorado, Connecticut, Delaware,
Iowa, Maryland, Massachusetts, Minnesota, New Mexico, New
York, North Dakota, Oklahoma, Pennsylvania, Rhode Island,
Utah, Vermont and Wisconsin.
These changes were implemented March 25, 2009. It affected all
pay computed March 25, 2009 and later for Air Force, Army and
Navy. |
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Stop-Loss Special Pay |
Stop-Loss
Special Pay is authorized by Public Law 110-329 for members
involuntarily extended beyond their Expiration Term of Service
(ETS) or retirement date.
Involuntarily extended members receive $500 per month for each
month or portion of a month the member is retained on active
duty as a result of stop-loss authority. The entitlement is
retroactive to October 2008.
This new entitlement is currently slated for disbursement
through September 30, 2009. The Army is currently the only
service paying the entitlement.
Stop-Loss Pay is eligible for the Combat Zone Tax Exclusion if
the member is in a combat zone tax excluded area in a month
that the Stop-Loss Special Pay is earned. DFAS-Indianapolis
coordinated with G1 of three components, Active, Reserve and
National Guard, in developing a process to pay the new
entitlement. Army G1 provides a listing by component to DFAS
each month containing the names of Soldiers entitled to
receive Stop-Loss Pay. DFAS-Indianapolis then posts the
entitlements to the entitled Soldier's pay account.
Nearly 30,000 Army members have received payments for this
special pay. Checks were sent to the addresses of record to
those soldiers who were entitled on or after October 1, 2008,
but have since separated from the service. |
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Web
search helps troops! |
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Launched
April 23, 2009, by the National Association of Insurance
Commissioners (NAIC), the tool at https://eapps.naic.org/restitution
allows a search by first and last name. More than 14,000
troops who bought life insurance products from American
Amicable Life Insurance Company of Texas or its two
affiliates, Pioneer American Insurance Company and Pioneer
Security Life Insurance Company, are still owed money. Under
the settlement, service member policyholders or their named
beneficiaries of "Horizon Life" policies issued between
January 1, 2000, and July 28, 2006, may be eligible to receive
compensation and/or increased policy benefits. |
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Family Supplemental Subsistence Allowance |
FSSA was
established May 1, 2001, to supplement a service member's BAS
and to remove or prevent the need for assistance under the
Food Stamp Program. All active duty members, including those
serving outside of the United States, may apply for FSSA.
The program is especially designed to help large military
family households.
Currently, FSSA is payable at a monthly rate of up to $500,
depending on the service member's income and family size. It
is designed to raise the member's household income to 130% of
the federal poverty level, and non-taxable and is payable in
addition to all other pays and allowances.
To be eligible for FSSA a member must be on active duty and
receiving BAS, meet the gross income guidelines for household
size as determined by the United States Department of
Agriculture (USDA), and must have applied and been certified
at a certain payment level by the appropriate office. Members
must re-certify annually in February and upon the advent of
any of the following: promotion, acceptance of a Permanent
Change in Station (PCS), increase in household income by $100
or change in family size.
When re-certifying, it is important for members to adhere to
the reapplication period time-lines so that their entitlement
does not lapse. Members may reapply for FSSA up to 30 days
before and 30 days after an event requiring re-certification
without a lapse in entitlement. Reapplication after 30 days of
an event that would otherwise terminate entitlement will be
treated as an initial application.
To learn more about the FSSA entitlement, see the DoDFMR Vol.
7A, Chapter 25, Basic Allowance for Subsistence (BAS),
paragraph 2502 at: http://www.defenselink.mil/comptroller/fmr/07a/07a_25.pdf
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(Source:
Defense Finance and Accounting Service. Military News Network
is not affiliated with the United States Department of
Defense) |
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Military Pay Newsletter
