The Defense Accounting and Finance Service announced that paydays for military retirees will be changing to the first day of the month versus the first “business day.” The change will affect the October 2011 and January 2012 payments which will be on September 30 and December 30 respectively.
This change effects regular retired pay, Concurrent Retirement and Disability Pay and Combat Related Special Compensation. The new rule also applies to retiree allotments, garnishments and court-ordered former spouse and child support payments. The new rule doesn’t affect annuity (Survivor Benefit Plan) payment dates.
According to DFAS, the 2011 National Defense Authorization Act requires future military retiree pay to be processed on the first day of the month. When that day falls on a weekend or national holiday, the pay date is moved to the previous business day.
As previously noted, the Oct. 3, 2011 will be issued on Sept. 30, 2011 and the payment scheduled for Jan. 3, 2012, will be issued on Dec. 30, 2011. For the calendar year 2011, this means military retirees will receive 13 rather than the normal 12 payments.
Retirees should be aware that the extra payday in the 2011 tax year could affect their taxes. DFAS recommends that retirees speak with a tax advisor, the Internal Revenue Service or their state tax authority to determine if their tax withholding will satisfy federal and state income taxes when they file returns next year.
For tax year 2012 and beyond, retirees will receive their normal 12 payments.
Guidance from DFAS: If retirees need to make changes to their federal or state tax withholding, the quickest and most secure way to do so is through myPay. Available 24 hours a day, seven days a week, myPay enables eligible users around the world to make routine changes to their pay information, including tax withholding, that become effective within days.
Customers who cannot access myPay can change federal withholding amounts by completing a new IRS Form W-4 or W-4P, or change state withholding amounts using a DD 2866. These forms can be found on the DFAS website and should be mailed or faxed to the below address once completed:
Defense Finance and Accounting Service U.S. Military Retired Pay P.O. Box 7130 London, KY 40742-7130 Fax: 800-469-6559
Note: It may take up to 30 days for changes to be made when mailing in a paper form.