§1415 — Title 10 Armed Forces | U.S. Code

Summary

An eligible member who is entitled to covered retired pay may choose to get a one-time lump-sum now instead of part of their monthly pay until they reach retirement age. They can take a lump sum equal to the discounted present value of either 50% or 25% of the retired pay they would get from retirement until retirement age. If they take the 50% lump option, their monthly pay during that period will be 50% of the normal monthly retired pay. If they take the 25% lump option, their monthly pay during that period will be 75% of the normal monthly retired pay. Covered retired pay means retired pay under Title 10, Title 14, the NOAA Commissioned Officer Corps Act of 2002, or the Public Health Service Act. An eligible person is someone who first joined a uniformed service on or after January 1, 2018, or who made the election described in section 1409(b)(4)(B) or 12739(f)(2) of this title, and who does not retire or separate under chapter 61. Retirement age is the age defined in Social Security law (section 216(l)). The Secretary of Defense will estimate future retired pay with cost-of-living adjustments under section 1401a and then discount that total using average personal discount rates and standard actuarial methods to get the lump sum. The election must be made no later than 90 days before retirement. The lump sum must be paid within 60 days after retirement, or for reserve members within 60 days after the earlier of turning 60 or first becoming entitled to retired pay. Once the lump sum is paid, the amount cannot be challenged later because of changes in COLAs, actuarial assumptions, or similar factors. After the member reaches retirement age, their monthly retired pay will be recomputed effective the first month after that date to reflect the COLAs that would have applied under section 1401a. If no election is made, the person gets the normal retired pay. The Secretary of Defense must create rules to carry this out.

Title 10, §1415

Armed Forces — Source: USLM XML via OLRC

(a)In this section:

(1)The term “covered retired pay” means retired pay under—

(A)this title;

(B)title 14;

(C)the National Oceanic and Atmospheric Administration Commissioned Officer Corps Act of 2002 (33 U.S.C. 3001 et seq.); or

(D)the Public Health Service Act (42 U.S.C. 201 et seq.).

(2)The term “eligible person” means a person who—

(A)(i)first becomes a member of a uniformed service on or after January 1, 2018; or

(ii)makes the election described in section 1409(b)(4)(B) or 12739(f)(2) of this title; and

(B)does not retire or separate under chapter 61 of this title.

(3)The term “retirement age” has the meaning given the term in section 216(l) of the Social Security Act (42 U.S.C. 416(l)).

(b)(1)An eligible person entitled to covered retired pay (including an eligible person who is entitled to such pay by reason of an election described in subsection (a)(2)(A)(ii)) may elect to receive—

(A)a lump sum payment of the discounted present value at the time of the election of an amount of the covered retired pay that the eligible person is otherwise entitled to receive for the period beginning on the date of retirement and ending on the date the eligible person attains the eligible person’s retirement age equal to—

(i)50 percent of the amount of such covered retired pay during such period; or

(ii)25 percent of the amount of such covered retired pay during such period; and

(B)a monthly amount during the period described in subparagraph (A) equal to—

(i)in the case of an eligible person electing to receive an amount described in subparagraph (A)(i), 50 percent of the amount of monthly covered retired pay the eligible person is otherwise entitled to receive during such period; and

(ii)in the case of an eligible person electing to receive an amount described in subparagraph (A)(ii), 75 percent of the amount of monthly covered retired pay the eligible person is otherwise entitled to receive during such period.

(2)The Secretary of Defense shall compute the discounted present value of amounts of covered retired pay that an eligible person is otherwise entitled to receive for a period for purposes of paragraph (1)(A) by—

(A)estimating the aggregate amount of retired pay the person would receive for the period, taking into account cost-of-living adjustments under section 1401a of this title projected by the Secretary at the time the person separates from service and would otherwise begin receiving covered retired pay; and

(B)reducing the aggregate amount estimated pursuant to subparagraph (A) by an appropriate percentage determined by the Secretary—

(i)using average personal discount rates (as defined and calculated by the Secretary taking into consideration applicable and reputable studies of personal discount rates for military personnel and past actuarial experience in the calculation of personal discount rates under this paragraph); and

(ii)in accordance with generally accepted actuarial principles and practices.

(3)An eligible person shall make the election under this subsection not later than 90 days before the date of the retirement of the eligible person from the uniformed services.

(4)An eligible person may elect to receive a lump sum payment under this subsection in a single payment or in a combination of payments.

(5)An eligible person who makes an election under this subsection shall receive the lump sum payment, or the first installment of a combination of payments of the lump sum payment if elected under paragraph (4), as follows:

(A)Not later than 60 days after the date of the retirement of the eligible person from the uniformed services.

(B)In the case of an eligible person who is a member of a reserve component, not later than 60 days after the earlier of—

(i)the date on which the eligible person attains 60 years of age; or

(ii)the date on which the eligible person first becomes entitled to covered retired pay.

(6)An eligible person who accepts payment of a lump sum under this subsection may not seek the review of or otherwise challenge the amount of the lump sum in light of any variation in cost-of-living adjustments under section 1401a of this title, actuarial assumptions, or other factors used by the Secretary in calculating the amount of the lump sum that occur after the Secretary pays the lump sum.

(c)(1)Subject to paragraph (2), an eligible person who makes an election described in subsection (b)(1) shall be entitled to receive the eligible person’s monthly covered retired pay calculated in accordance with paragraph (2) after the eligible person attains the eligible person’s retirement age.

(2)The retired pay of an eligible person who makes an election described in subsection (a) shall be recomputed, effective on the first day of the first month beginning after the person attains the eligible person’s retirement age, so as to be an amount equal to the amount of covered retired pay to which the eligible person would otherwise be entitled on that date if the annual increases, in the retired pay of the eligible person made to reflect changes in the Consumer Price Index, had been made in accordance with section 1401a of this title.

(d)An eligible person who does not make the election described in subsection (b)(1) shall be paid the retired pay to which the eligible person is otherwise entitled under the applicable provisions of law referred to in subsection (a)(1).

(e)The Secretary of Defense shall prescribe regulations to carry out the provisions of this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The National Oceanic and Atmospheric Administration Commissioned Officer Corps Act of 2002, referred to in subsec. (a)(1)(C), is title II of Pub. L. 107–372, Dec. 19, 2002, 116 Stat. 3082, which is classified principally to chapter 43 (§ 3001 et seq.) of Title 33, Navigation and Navigable Waters. For complete classification of this Act to the Code, see

Short Title

note set out under section 3001 of Title 33 and Tables. The Public Health Service Act, referred to in subsec. (a)(1)(D), is act July 1, 1944, ch. 373, 58 Stat. 682, which is classified generally to chapter 6A (§ 201 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see

Short Title

note set out under section 201 of Title 42 and Tables.

Amendments

2018—Subsec. (e). Pub. L. 115–232 struck out “concerned” after “The Secretary of Defense”. 2016—Subsec. (b)(1)(B)(ii). Pub. L. 114–328 inserted period at end.

Statutory Notes and Related Subsidiaries

Effective Date

Implementation Section effective Jan. 1, 2018, with certain implementation requirements, see section 635 of Pub. L. 114–92, set out as an

Effective Date

of 2015 Amendment; Implementation note under section 8432 of Title 5, Government Organization and Employees.

§1415 Lump Sum Payment of Certain Retired Pay

Summary

Title 10, §1415

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Short Title

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata