Many 'High-3' Retirees May Never See Back Pay

"...Last November an independent audit of the Military Retirement Fund uncovered a “significant deficiency” in the way the Defense Finance and Accounting Service (DFAS) has been calculating retired pay for about 15 percent of 370,000 retirees who are under a “High-3” retired pay formula.

The result is that 55,500 retirees who first entered service on or after Sept. 8, 1980, have been getting a little less in monthly retired pay than the law directs. That’s because DFAS, for this High-3 generation, has not been applying a pay protection tool from 1975 called the “Tower Amendment.”

If DFAS were to apply Tower protection retroactively, as auditors recommend, these retirees could expect a lump sum average payment of about $1000, the Congressional Budget Office reports.  Individual amounts would vary base on time retired, with the largest payments going to those who retired in fall of 2000 with the first wave of “High-3” retirees.

But if the Department of Defense has its way, DFAS will never have to make those payments..."

Read more at Stripes

Estimate Your Retirement Pay

The Department of Defense uses a multi-step formula to compute your retired pay. The amount generally is based on your length of service or your disability percentage. Factors such as the year you entered service and your  retirement type also affect your pay.

Retired Pay Formula

All of the retirement plans determine your monthly pay by multiplying your retired pay base by a service percentage:

Retired Pay Base
x Service Percent Multiplier
= Gross Retired Pay

Your gross retired pay is rounded down to the nearest dollar.

What is My Retired Pay Base?

Final Pay:
If you entered active or reserve military service before September 8, 1980, your retired pay will be based on your final basic pay.

High-3:
If you entered active or reserve military service after September 7, 1980, your retired pay base is the average of the highest 36 months of basic pay. If you served less than three years, your base will be the average monthly active duty basic pay during your period of service.

What is My Service Percent Multiplier?

ACTIVE DUTY
The longer you stay on active duty, the higher your retirement pay. Each year of active duty service is worth 2.5 percent toward your service percent multiplier.

A retiree with 20 years of service would have a service percent multiplier of 50 percent:

2.5% x 20 years = 50%

RESERVE
Reserve service is “converted” to active service by dividing retirement points by 360.

7200 points divided by 360 = 20 years of active duty service

2.5% x 20 years = 50%

CSB/REDUX
If you retired under CSB/REDUX, your retired pay multiplier will be reduced by 1 percent for each full year. This reduction remains in effect up to the age of 62 when your retired pay will be restored to the same amount paid under the High-3 System.

DISABILITY RETIREMENT
The multiplier for disability retired pay is either:

2.5 percent for each year of service, or
disability percentage assigned by the service at the time you retire
Either way, the multiplier is limited to 75 percent by law. If you are on the Temporary Disability Retired List, the minimum multiplier is 50 percent while on the TDRL.

DFAS uses the method that results in the largest payment. But if you’d like to choose the other method, please send DFAS your request in writing.

Source: dfas.mil

2012 Tax Statement Reminder

"...Retiree and annuitant pay customers of the Defense Finance and Accounting Service are scheduled to receive their 2012 tax statements between mid-December through January. Most of the 1099 forms will be available a week earlier via the online myPay pay account management system for retired military members and annuitants. Retirees and annuitants must keep their contact information current to avoid delays. For more information about..."

Read more at military.com

Beware of DFAS Email Scam

"...Fraudulent e-mails are being sent to military members, military retirees, and civilian employees, which appear to be sent by Defense Finance and Accounting Services (DFAS). Although the email appears to come from DFAS and displays a .mil email address it is actually from a non-government email account. The e-mails indicate that individuals who are receiving disability compensation from the Department of Veterans Affairs (VA) may be able to obtain additional funds from the IRS..."

Read more at military.com

TSP Roth Option Rollout for Military is Complex

"...The Defense Finance and Accounting Service's efforts to roll out a new Roth option for the Thrift Savings Plan are complicated by the balkanized, multiple pay and personnel systems its customer agencies use.

The Roth option — under which TSP participants invest after-tax dollars, instead of the standard before-tax contributions — will be available to many federal employees May 7. But military service members and federal civilians whose pay is handled by DFAS will have to wait. The Roth option is expected to be rolled out to Marine Corps service members in June, to DFAS-covered civilians in July, and to Army, Navy and Air Force service members in October..."

Read more at FederalTimes.com

Increase Federal Tax Withholding on Military Retirement Pay

"...Because your military retirement pay is deposited electronically each month, it may be "out of sight--out of mind." But not having enough federal tax withheld can leave you owing money in April you hadn't planned on. Fortunately, the Defense Finance and Accounting Service (DFAS) in Cleveland makes it easy to adjust your withholding tax..."

Read more at eHow.com

1099-R and DFAS Information

1099Rs are now available on myPay. Retirees and annuitants who normally get a print copy in the mail, can expect it by the end of January. If it doesn’t arrive or you lose it, the easiest way to get a 1099R is using myPay.

1. Go to https://mypay.dfas.mil.
2. Enter your Login ID and password on the home page.
3. Click “Go.”
4. On the "Main Menu" click "Tax Statement."
5. View, print or save your tax statement. If you have trouble reading the graphic version, click the "Text Version" link.

If you can’t use myPay, you can request a 1099R copy using our automated phone system:

1. Call R&A Pay at 800-321-1080.
2. Select option 1 to request a 1099-R 24 hours a day, seven days a week, without waiting to speak to a customer service representative.
3. Enter your Social Security Number using your touch-tone keypad when prompted.
4. You should receive your 1099R in 7 to 10 business days.

Source: dfas.mil