Military Retirement Benefits

Discussion in 'Military Academy - USMA' started by PlebeBound, Apr 23, 2017.

  1. PlebeBound

    PlebeBound Member

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    Hello, I was recently appointed to the USMA Class of 2021. My dad is currently active duty in the military, and he was talking to me about the new military retirement plan that is going into effect on January 1st 2018. It essentially shrinks the pension you would typically receive and supplements it with a 401k type thing. I know that if I go to West Point I will be considered active duty and I will be in the Army, but my time there won't count towards my retirement benefits. Will I be forced into the new retirement plan system or will I be able to choose the the old pension system upon taking my Oath? I know retirement is much further down the line, I just want to know my options. Thanks!
     
  2. Squidler4

    Squidler4 New Member

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    Are you assuming that the "401k type thing" is not as good as the older retirement system?
     
  3. PlebeBound

    PlebeBound Member

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    No, each has its benefits. One could be better than the other depending on how long someone is planning on staying in the service. I just want to know if I have the option to choose between either one.
     
  4. brovol

    brovol Member

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    I believe you will not have a choice, and will have the blended system. Others will be able to answer that for sure. When I looked at the new system though it sure looked more than competitive to me; especially compared to strict contribution plans that everyone is now getting in the civilian world. It provides both a defined benefit as well as a contribution plan, with an employer match. The defined benefit is less than what it used to be, but not much less, considering the other half of the plan.
     
  5. Capt MJ

    Capt MJ 10-Year Member

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    I posted this in General Discussion a few days ago on a thread on this topic; it's an opinion piece.

    http://www.moaa.org/Content/Publica...egis&utm_medium=email&utm_campaign=BRSLumpSum

    From official sources:

    http://militarypay.defense.gov/BlendedRetirement/

    https://www.defense.gov/LinkClick.aspx?fileticket=QQkwCNPESKc=&portalid=1


    http://www.militaryonesource.mil/footer?content_id=290760


    http://www.navy.mil/ah_online/documents/1607_FAQforBRS.pdf


    I am NOT an official resource on this, but the way I read it was if you raise your right hand to enter the Army before 1 Jan 2018, you will have a choice. I would love it if the sharp-eyed folks here on SAF find the details on the go-no go date for SA cadets and mids, and ROTC, or share what they are being briefed on.

    My Pay Entry Base Date (PEBD) was the day I was inducted at OCS and entered active duty in an under instruction status. It counted for retirement years calculation. My promotions were based on my commissioning date several months later.

    Your 4 years at USMA do not count for eligibility for a 20-year military retirement. You can count them if you go into Federal civil service and apply your SA years as part of AD years toward a civil service retirement.

    One thing I am sure of - you will get briefs on this. I am sure the AD people here on SAF, as well as current cadets and mids, will have some insight on this hot topic.

    I am happily well out of it, very fortunate to have the full 50% retirement plan which pre-dates the "high 3" plan.

    The personnel accounts are always one of the biggest elements in the DOD budget. The military pension plan, as people retire from AD and live longer lives, requires an enormous amount of money to be earmarked for those pay streams, as well as the medical and dental retirement benefits. Very expensive to sustain. This new plan aims to give something to those not doing a full 20, and tries to save money over the long haul with those who do. It's the proverbial camel designed by the horse committee.

    There will be a lot of concern over those who will take the lump sum and simply spend it on things that bring no return or not lay a foundation for future financial security.

    @brovol makes a good point - the fact there is a defined benefit plan (non-self-contributing pension) is an increasingly rare option in the civilian world.

    Two topics always of interest and life-long discussion to military and vets: pay/benefits and uniforms.
     
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  6. kinnem

    kinnem Moderator 5-Year Member

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    I agree with brovol that I don't think you'll have a choice, but I'm no expert. However, if you DO have a choice, keep in mind that the time that one spends in the service doesn't always go according to YOUR plans. Injuries, RIF, family, and even "failure to launch" can impact how long you stay, Many things are outside your control. Just keep this in mind as you choose.

    To me, for someone starting out, the 401K sounds like a great deal.
     
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  7. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    @Stealth_81 posted this in 2016:
    "The eligibility for the retirement plans is based on Date of Initial Entry Into Military Service (DEIMS). For Military Academy cadets this is your date of entry into the academy. For ROTC cadets it is the date of the scholarship contract or the date the cadet began the advanced ROTC course, whichever is earlier.
    Stealth_81"

    Source: https://www.serviceacademyforums.co...-retirement-plan-impact-on-2020-cadets.48693/

    Here is an FAQ on the new blended system;
    http://militarypay.defense.gov/Port...tions 8.08.2016.pdf?ver=2016-08-08-092540-300

    IF the eligibility is based on DIEMS, then this may be of interest:

    Here is an ARMY definition of Date of Initial Entry into Military Service (DIEMS) as it pertains to Service Academy cadets/mids and ROTC.
    The Date of Initial Entry into Military Service (DIEMS) is the date an individual was initially enlisted, inducted, or appointed in a regular or reserve component of a uniformed service as a commissioned officer, warrant officer, or enlisted member. Breaks in service do not affect a DIEMS date. Military Academy cadets (date of entry into the academy), ROTC cadets (date of scholarship contract or date the cadet began the advanced ROTC course, whichever is earlier) and members of the delayed entry program (Date enlistment contract signed, regardless of when the Soldier entered active duty.) are considered under these provisions. The DIEMS is the initial contract signed via the Soldier; obligating the Soldier to any type of military service, even if it was later voided and determines which of the retired pay formulas a Soldier is eligible to utilize upon retirement. The DIEMS date is utilized to determine the length of service and associated benefits.

    Source: https://www.hrc.army.mil/TAGD/Date of Initial Entry into Military Service
     
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  8. MidwestDad

    MidwestDad Member

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    Let me say that if you are 401K eligible try your darndest to contribute the maximum amount from day 1. No 50 year old ever regretted that; plenty the opposite. Wont be easy but will be worth it.
     
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  9. runslikeajohndeere

    runslikeajohndeere 5-Year Member

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    I'll have to ask DS what ROTC Army shared.
     
  10. kinnem

    kinnem Moderator 5-Year Member

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    If doing the max out the door is tough, one could try what I did in the civilian world. I started at the max they would match, but not the max I could contribute. Every time I got a raise I upped my contribution 1%-2%. Got to the max fairly quickly and never missed the money.
     
    Last edited: Apr 24, 2017
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  11. ktnatalk

    ktnatalk Sailor. Shipmate. Parent.

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    That is what I read too. The DIEMS on the LES of both my 2/C and Plebe at USNA shows "0". What does the Cadets' say?
     
  12. LineInTheSand

    LineInTheSand USCGA 2006 10-Year Member

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    It's upon commissioning (when you graduate).

    I wish we had had a 401(k) option when I was in.
     
  13. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    From the Vanguard Website: This is a great illustration of what starting early does.....

    Make retirement your first priority, especially early on

    It might seem backwards to worry about the last money you'll need before you think about meeting any other financial goals. But because compounding is so powerful, starting early gives you more flexibility later on in life.

    Imagine you start saving at age 25 and dutifully put away $10,000 a year, including any matching contributions your employer offers. But at age 40, you need to stop saving for some reason.

    Your friend starts saving at age 35 and saves the same $10,000 a year for the next 30 years, until you both retire.

    At that point, all else equal, you'll have more money than your friend, despite having put away only half as much.

    With time, you can invest less money but have more to spend in retirement
    [​IMG]
    This hypothetical illustration assumes an annual 6% return. The illustration doesn't represent any particular investment, nor does it account for inflation.


    Source:
    https://investor.vanguard.com/retirement/savings/when-to-start
     
  14. ktnatalk

    ktnatalk Sailor. Shipmate. Parent.

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    LITS, were you responding to my question? That is what I originally thought, as in Class of 2017 is the last class that have a choice. I have yet to get clarity on who is eligible to choose.
     
  15. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    This is just an opinon...not official:

    If we assume that @Stealth_81 is correct in that it is the date of DIEMS then the following would apply:
    • SA cadets and mids would have a choice if they entered the academy BEFORE 1/1/2018. SA cadets and mids who enter the academy ON or AFTER that date would be locked in to the new blended system.
    • ROTC cadets and mids would use the scholarship date or the date they began the advanced course.
     
  16. -Bull-

    -Bull- 10-Year Member

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    I don't have a lot of time to type out a full response, however you can find it at militarypay.defense.gov. Go to the Blended Retirement tab, then you should see a Policy Letter tab. On page 7 of that policy letter under eligibility you'll see the requirements. About a page or two in that section it specifically lays out guidance for Cadets/Midshipmen. Essentially, as stated above, it goes off DIEMS/DIEUS date. Mine is the day I signed my ROTC contract and took that first oath in 2010.

    Better yet:

    http://militarypay.defense.gov/Port...ntationGuidance.pdf?ver=2017-02-27-084532-740
     
    Last edited: Apr 24, 2017
  17. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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  18. ktnatalk

    ktnatalk Sailor. Shipmate. Parent.

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    Thank you, @-Bull- and @AROTC-dad.

    (5) Any midshipman or cadet attending an academy of one of the Uniformed Services or the U.S. Merchant Marine Academy, or enrolled in the Senior Reserve Officer Training Corps of one of the Uniformed Services as of December 31, 2017, who has signed an agreement to serve as a commissioned officer in a Uniformed Service upon graduation, who:

    (a) Has a DIEMS/DIEUS on or before December 31, 2017; and,

    (b) Is in receipt of basic pay or inactive duty pay under Sections 204 or 206, respectively, of Title 37, U.S.C., on or after December 31, 2017; and,

    (c) Elects to enroll, following commissioning, in the BRS under provisions outlined in section 9.b.


    I guess I would have less doubt about it if their LES show the date of their Induction Day respectively instead of a "zero". I imagine some lawyers somewhere in DoD is still trying to interpret their eligibility date either the date they sign "2 for 7" at the beginning of Seconf Class year, or the date they are commissioned.

    Still curious though: what does the block for DIEMS on a cadet's (USMA and USAFA) LES say? "zero" or the date they report for PS/Beast?

    @-Bull-: you are commissioned now, correct? Did you get LES while in ROTC? Any official document shows your DIEMS while you were a contracted ROTC student?
     
  19. Capt MJ

    Capt MJ 10-Year Member

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    I knew this group could produce some specific references.
     
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  20. -Bull-

    -Bull- 10-Year Member

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    Yes, I've been commissioned for a few years now. And I did get an LES all 4 years while in ROTC, my DIEMS has always reflected the same date that I signed my contract with ROTC.

    If someone's LES is reflecting 0 then that would definitely be something to be corrected. That may require some help with producing the contract to DFAS in order to show the date that should be the DIEMS.