Savings Deposit Program for Deployed Troops
By Meghan Northcutt, AFC® Candidate
Although the US military is in a drawdown after engaging in nearly 14 years of war, troops remain very active in deployments. Military Times reports that 49 percent of the surveyed active duty servicemembers describe their operations (ops) tempo as increased when compared to the last five years, while 38 percent describe their ops tempo as unchanged. With a large reduction in force size, it is the Pentagon’s intent that troops will maintain a presence in certain regions.
While maintaining an active deployment schedule, it is extremely important to maintain military family finances. The Savings Deposit Program, also known as SDP, is an excellent opportunity for servicemembers in eligible combat zones or hazardous duty areas longer than 30 days to bolster their savings. SDP accounts will earn up to 10 percent annual interest. It should be noted that this program is separate from contributions to the Thrift Savings Plan.
By visiting the Finance Office or by contacting the Defense Finance and Account Service (DFAS), deployed troops may create an allotment or contribute by check to their Savings Deposit Program account starting on the 31st day of their tour. Up to $10,000 per deployment may be placed into this special savings account. Funds can be contributed at once or incrementally throughout the deployment so long as the deposits are made in five dollar increments; however, deposits may not exceed monthly pay after deductions. All activities can be managed through myPay and incremental contributions will reflect on each Leave and Earning Statement (LES). Should an amount greater than $10,000 be contributed during the deployment, the overage can be withdrawn quarterly.
Contributions must cease upon exiting the hazardous duty area, but the account will continue to gain interest for 90 days after returning to the servicemember’s permanent duty station. The account will be automatically closed at 120 days post-deployment at which time the contributions and earnings will be issued to the servicemember via direct deposit. Funds can be requested via myPay for earlier receipt than the automatic 120 days. In the case of an emergency, early withdrawal would be permitted with approval from the commanding officer for health or welfare emergencies of the servicemember or the servicemember’s immediate family. While the contributions made would remain tax free due to hazardous conditions, earnings from interest within the SDP are taxable.
This high-interest savings account would be very beneficial to help military families reach their financial goals post deployment. Financial Counselors at military installations or Military OneSource are available to assist in creating a savings plan which will ensure the amount saved monthly is comfortable during the deployment.
- Written by Guest Blogger
- Category: Blog
- Published: 22 April 2015