Just like the civilian world, military members don't always get to remain in the service as long as they would like. There are many reasons why a service member may be required to leave the military. It can be stressful and confusing. Thankfully, there are quite a few benefits that may be available to involuntarily separated troops. The most confusing, and most valuable, of these benefits is typically Involuntary Separation Pay. This one-time, lump sum payment is paid shortly after the service member is separated from military service.
Eligibility for Involuntary Separation Pay
There are several basic criteria that must be fulfilled to be considered for involuntary separation pay. You may qualify if:
- you have finished your first term of enlistment or period of obligated service, and
- you have at least six years of service, and
- you are separating involuntarily, and
- you are not eligible for retirement, and
- you are not separating under adverse conditions.
Disqualification for Separation Pay
There are quite a few things that can disqualify you for separation pay. These include:
- choosing not to reenlist,
- leaving active duty during your initial term of enlistment,
- eligibility for retirement pay, including Temporary Early Retirement Authority (TERA),
- separation as the result of a court-martial,
- separation under other than honorable conditions,
- separation for unsatisfactory performance, or
- separation for misconduct.
Paperwork for Involuntary Separation Pay
I do not have personal experience with this, but (of course!) documentation is important to ensure that you receive involuntary separation pay. The exact forms are service-specific and while I have endeavored to get everything right here, you should always do extra research about something this important.
For the Army, you should have a DA Form 3340 (Request for Reenlistment or Extension in the Regular Army) to validate their denial of continuation on active duty, and a ready reserve service agreement on a DA Form 4187 (personnel action request.)
For the Navy, you should have a working copy of the DD214, and a PG 13 outlining requirements for involuntary separation pay, copies of the last two evaluations, and an advancement profile sheet.
I don't currently have the information on documentation that separating Air Force and Marine Corps members should have. If you know about this, please let me know!
Levels of Involuntary Separation Pay
There are two levels of involuntary separation pay: full and half.
To qualify for full separation pay, your discharge must be honorable, and you must be full qualified for retention at the time of retention. Common reasons for separation with full separation pay include falling under Reduction in Forces actions, or reaching High Year Tenure (Retention Control Points for you Army folks.) In most cases, you must agree to serve in the Ready Reserve or comparable reserve component for three years. If the service member has an existing reserve obligation, they must serve an additional three years after their existing obligation.
To qualify for half separation pay, your discharge must be honorable or general. Common reasons for separation with half separation pay include failing physical readiness requirements, security clearance issues, or inability to create a family care plan. Half pay may also be authorized for service-specific programs such as the Army's Qualitative Management Program.
How Involuntary Separation Pay Is Calculated
Involuntary separation pay is based upon the service member's base pay at the time of separation and their years and months of service.
Full separation pay is calculated by multiplying:
- monthly base pay, times
- twelve, times
- ten% (.10), times
- years of service (with months calculated as 1/12 of a year)
Half separation pay is one half of full separation pay.
Taxes on Involuntary Separation Pay
Taxes will be withheld on involuntary separation payments. The withholding is typically 25% of the payment. This actual tax may increase or decrease when it is considered as part of your total tax picture on your yearly income tax return. If the amount withheld was too much for the tax owed, you will receive a refund of the overpayment.
Repaying Involuntary Separation Pay
In certain situations, involuntary separation pay may need to be repaid as the result of future events. The two most common times this occurs is when the veteran is in receipt of disability compensation from the Department of Veterans Affairs (VA) or if the veteran earns military retirement through service in the National Guard or reserves.
There are a ton of regulations relating to involuntary separation, both at the Department of Defense level and specific to each branch. If you're facing involuntary separation, take the time to learn the process thoroughly to ensure that you're receiving the benefits to which you are entitled.
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