There are many ways to save money as a member of the U.S. military including savings bonds, allotments, and interest-bearing savings accounts. But not all of them cater to those serving in hostile fire zones.
One option is provided directly from the Department of Defense and is intended to help service members on deployments and similar missions. The DoD Savings Deposit Program or SDP is offered to those who have served in a combat zone for at least 30 days in a row or “at least one day in each of three consecutive months”.
SDP accounts may earn up to 10% interest annually. While troops are not permitted to close SDP accounts until they have left the combat zone, the money invested continues to draw interest for up to 90 days after the return to a permanent duty station.
Troops who become eligible for SDP (see below) can sign up for it at the military finance office in the theater of operations where the deployment is happening.
SDP Versus Traditional Savings Accounts
The savings account is one of the best-known ways to build a nest egg and prepare for the future. But the chief complaint about savings accounts is the interest rate which according to some reports can be as low as .08% nationally. And so called high-yield accounts offer rates around two percent.
Compare that to the interest rates you will pay on a conventional, fixed-rate mortgage loan which may feature rates that can vary between three and four percent depending on the nature of the housing market, investor behavior that influences mortgage rates, etc.
As mentioned above, the DoD Savings Deposit Program offers a comparatively higher interest rate on the savings account and the ability to earn interest on as much as $10,000 dollars saved per deployment.
The Savings Deposit Plan: Who Can Use It and When
The Savings Deposit Plan (SDP) is unfortunately not available to all service members. It’s offered to those serving in designated combat zones, certain hazardous duty locations, and approved contingency operations for a minimum of 30 consecutive days, or one day in each of three consecutive months according to the Defense Department.
Sign-Ups Are Required for SDP
SDP is not automatic. As mentioned earlier, this program requires the service member to enroll after having spent enough qualifying time serving in combat zone. Military members are required to draw hostile fire pay to participate.
How the Savings Deposit Plan Works
The Savings Deposit Plan allows qualifying service members to contribute up to $10,000 per deployment into a special, non-permanent savings account that accrues 10% interest annually.
This account may not be closed until the service member has departed the combat zone. Once the account is closed, funds are returned to the military member 120 days later.
Those who qualify for this program can sign-up by calling the base finance office to create an allotment to be paid into the SDP program. This may be done on the service member’s behalf with a power of attorney if the spouse or family member helping out is specifically authorized. This additionally can be done with the broader general power of attorney that gives blanket authorization to the bearer.
When SDP Allotments Begin
Allotments begin 31 days into your deployment. That is described as the only time the service member or family may initiate them, but deposits can be cancelled at any time.
Savings Deposit Plan Allotment Deposit Limits
The amount of your deposit cannot be more than the amount of money you would receive in your monthly pay, minus deductions. SDP deposits are required to be in amounts divisible by five. You are permitted to deposit a maximum of $10,000 per deployment.
Why would military members choose to have the entire amount of monthly pay deposited? For some, reaching the SDP program limit of $10,000 per deployment in the account as early as possible is the goal. The longer your $10,000 earns 10% interest for the duration of the deployment, the better.
Others can’t commit to the entire monthly pay amount because of family commitments, bills, or other obligations. But putting as much aside as possible to get to the “magic number” of $10,000 is a goal that makes sense in terms of taking advantage of the high interest rate on SDP accounts.
When You Can Make SDP Withdrawals
Current guidance allows withdrawals when the servicemember’s SDP account reaches a $10,000 balance. In those cases, funds over $10,000 can be withdrawn on a quarterly basis.
Any emergency withdrawals must be approved by your commanding officer. Approval depends on your commander making the determination that the withdrawal “is necessary for the health and welfare of you or your family” according to DoD literature.
In cases where the service member needs funds before the 120-day period ends, their myPay account “provides an automated request option for Savings Deposit Program participants”.
SDP withdrawals, emergency or otherwise, can be arranged via MyPay, or by mail, fax, or e-mail (see below).
Important Things to Remember About Withdrawals from The Savings Deposit Plan
- When your SDP account is closed at the end of your deployment, all funds will be scheduled to be sent direct deposit 120 days after leaving the combat zone.
- You can send a withdrawal request including your name, SSN, and date of departure from the combat zone by email: [email protected]
- You can submit a request by fax to (216) 522-5060 “Attention: SDP.”
- Withdrawal requests can be made by mail to DFAS-Cleveland Center (DFAS-CL), ATTN: SDP, Special Claims, 1240 East 9th St., Cleveland, OH 44199-2055.
Funds can be sent to the direct deposit account on record. Service members are permitted to request a deposit in a different account if the service member submits a request with the name of the financial institution plus all routing and account numbers required to make the transfer.
Learn more, sign up, or get assistance with an existing Savings Deposit Plan account by calling 1-888-332-7411 or commercial 216-522-5096 and DSN 580-5096.
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