Who Qualifies and How to Start

The Defense Department’s Savings Deposit Program pays up to 10% interest on pay set aside by deployed service members. What many troops need to know first is whether their deployment qualifies and how to start.

Related: Military Families Finally Get More Money During Deployments

Who Qualifies

The Savings Deposit Program is open to uniformed service members serving in a designated combat zone or receiving hostile fire or imminent danger pay in a Qualified Hazardous Duty Area or a designated direct support area, according to the Defense Finance and Accounting Service, which administers the program. Federal law sets the basis: 10 U.S.C. 1035 lets members on a permanent duty assignment outside the United States deposit unallotted current pay and allowances; and lets the secretary of defense authorize deposits by members on temporary duty outside the United States in support of a contingency operation. The president sets the interest rate, which the law caps at 10% a year, and interest is paid on no more than $10,000 per member.

Army National Guard members on active duty under Title 10 or full-time National Guard duty under Title 32 are eligible if assigned to a designated duty assignment outside the United States, according to the Army’s benefits site.

Related: Military Pay Calculator

The 30-Day Clock

DFAS says deposits can begin after 30 consecutive days in a covered area, or at least one day in each of three consecutive months. It also describes an update to Chapter 51 of the Defense Department’s Financial Management Regulation: The first deposit is now limited to pay earned starting the day after those 30 consecutive days. Before the change, members could deposit pay earned during the first 30 days.

Deposit Limits

• Each deposit must be at least $5, and the account balance cannot exceed $10,000, DFAS says.
• Each transaction is capped at the total military pay earned in the 30 days before the deposit. A commanding officer’s letter can authorize a larger deposit but cannot backdate interest.
• Travel allowances, advance pay and pre-deployment savings cannot be deposited.
• Amounts over $10,000 earn no interest. Balances above that level can be withdrawn quarterly through myPay, DFAS says.

Related: Savings Deposit Program: The 10% Solution

How to Start

DFAS lists two routes to start depositing. The first is a payroll allotment, set up through the servicing branch’s administrative or finance office. Allotments must be stopped by individuals once the account reaches $10,000, except in the Marine Corps, where they stop automatically. The second is an Eagle Cash card, cash or personal check at a military finance office. Army, Air Force and Navy collections go to DFAS Indianapolis, and Marine Corps collections go to DFAS Cleveland.

The Army’s benefits site adds that Army allotments process only if the member receives hostile fire or imminent danger pay of $225 a month, and that the last day to deposit is the member’s departure date from the assignment.

After Deployment

DFAS says deposits keep earning interest for up to 90 days after the member returns from deployment, and the full balance, with interest, is paid automatically 120 days after leaving the combat zone, by electronic transfer to the bank account on record. DFAS describes the interest as compounded monthly and paid quarterly. The Consumer Financial Protection Bureau says the interest is not tax-exempt.

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