Reserve Retirement: Time In Rank And High-Three Pay

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any other entity. This site may be compensated through the advertiser Affiliate Program. For more information, please see our Advertising Policy.

I’ve written many posts about military retirement, and the system is hugely complicated. (See the related links at the end of this post.)  Instead of trying to cover all of that in a humongous 20,000-word post, I’ve written a big-picture pillar post plus a bunch of shorter posts about specific reader questions.

Today’s post covers Reserve and National Guard retirements, and it explains “retired awaiting pay”. Here’s the reader question about a very confusing issue:

I know that a Reserve Component retirement is no longer based on your highest 36 months of pay, but on the grade that you’ve held for 36 months. If you have 20 qualifying years of service, get promoted, and transfer into the IRR before you’ve completed three years in grade, can your IRR time count towards those three years, even if you don’t earn 50 points per year?

Two concepts are mixed together here, and your retirement indeed still is based on your highest 36 months of pay. However, it’s a little more complicated than that.  First, the time served in the Individual Ready Reserve counts toward time in rank, even if you don’t earn enough points for a good year. Time in rank is only based on the promotion date (not the selection announcement!) and does not depend on drilling status or retirement credit. Points count toward the good years and the pension calculation but they aren’t related to time in rank.

However, all servicemembers have to serve in a rank for at least six months to retire in that rank. The time in grade for O-5 and above is three years. In some cases (like a drawdown) federal law allows this to be waived by the service secretary to two years. Your personnel branch will let you know the likelihood of being approved to retire at a senior rank with only two years at that rank. Remember that this only determines the rank on your retirement certificate.

Image of retirement savings piggy bank photo credit Jah7546 Pixabay |

Only the highest 36 months of pay.

Your retirement pay is determined by the “High Three” average of the 36 months of highest pay.  You may retire at a different rank than you held on active duty, or you might not have enough time in rank to retire at the higher rank you held on active duty, but the pay for that higher rank still counts toward the High Three average used to determine the amount of your pension.

That bears repeating: Reserve/Guard pensions are still based on the highest 36 months of pay. Here’s the really interesting part: it’s the pay tables in effect when the pension starts. When you “retire awaiting pay” (instead of separating or being discharged*) then the time until the pension starts is counted for service longevity as though you’ve been on active duty the entire time. It not only includes the 36 months before your pension starts (at age 60 for most gray area retirees) but it’s also at the longevity as if you’d been on active duty.

If you’re 45 years old in 2015 and retire awaiting pay (gray area, not discharged) then your pension will start at age 60 in 2030. (If you deployed to a combat zone for at least 90 days in a fiscal year after 28 January 2008 then your pension will start three months earlier.  See also the comments below from January 2016 and December 2017 about contingency operations and national emergencies.) When DFAS determines your highest 36 months of pay, they’ll include all the military pay tables between 2016 and 2030 as well as the rest of your service. (This gives your Reserve pension a little protection against inflation.) For almost all Reserve retirees starting their pension in 2030, the highest 36 months of pay will be in those pay tables of 2027, 2028, 2029, and 2030.

Not only will your High-Three pension be calculated from the pay tables in effect when your pension starts, but (because you’re “retired awaiting pay”) it’ll be determined from the longevity in your retirement rank as though you’ve been on active duty the entire time. If you retired awaiting pay as an E-7>20 in 2015 then your High Three calculation would include the E-7>35 column of the pay tables. E-7 pay tops out at >26 in the 2015 pay tables, but that could be different by 2030. Although you retired as E-7>20, your pension is calculated on at least E-7>26 pay. The difference is even bigger for an O-6, where pay tops out at >30.

This means that as soon as you reach time in rank (whether you’re drilling or in the IRR), you can retire awaiting pay (gray area) at that rank. Your longevity will continue to accrue, and you don’t have to hang around in the IRR waiting to go >24 or some other pay boost.

If you’re wondering why DoD is being so nice to gray area retirees, it’s because “retired awaiting pay” means being subject to mobilization until the pension starts. That only happens during a total mobilization (like WWII), but DoD is willing to compensate servicemembers for that availability.

* The only way to avoid the remote possibility of mobilization during the “gray area” years is to retire as “discharged” or “separated”, which means that your pension is frozen at the date you retire. The pension still starts at age 60, but it does not use the pay tables in effect at age 60 and your retirement rank does not accrue longevity. In my two decades of service (and another decade of writing about military finances) I’ve only seen one person who was discharged into retirement.

[Silver piggy bank photo:  Jah7546 from Pixabay through]

Related articles:
Calculating A Reserve Retirement
Military Reserve retirement points and “good years”
Options For National Guard And Reserve Retirement
Military Retirement From The Individual Ready Reserve
Retiring From The Individual Ready Reserve Or National Guard
National Guard and Reserve retirement at the maximum pay
Military Reserve and National Guard Retirement Calculators
Reserve Retirement Eligibility
Military Retirement With Reserve Enlisted And Officer Service

WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

  1. I have gotten different answers from several people about the grade I will retire at.
    I was an E-7 for 17 Months in the Army National Guard. I left when my contract ended. Now, 15 years later I joined the Army Reserves as an E-6 (lost one rank as required in the enlistment AR). I will be eligible to retire in 2.5 years (I will be 55.5 years old).
    The question is: When I am transferred to the retired reserves, what grade will I be? Some say E-7, because I have over 6 months in that grade. Some say E-6, as I do not have 3 years as an E-7. Others say E-6, because that will be my final grade (being an E-7 before doesn’t matter).

    • Great question, Dan, and you’ll want to discuss it with a JAG.

      You’ve probably served satisfactorily as a National Guard E-7, and there’s no minimum time in grade at that rank. No issues there. By the Reserve pension calculation procedures, your pension would also be calculated at the E-7 rank.

      However your new Army Reserve enlistment agreement might have a clause in it which waives your E-7 rank for a re-enlistment rank of E-6. I don’t know enough about those contracts to know whether it affects your retirement rank.

      I recommend that you discuss this with a JAG who’s familiar with the federal law of Title 10 U.S. Code section 1407 for calculating a pension.
      They’ll be able to review your re-enlistment contract (and its references to the federal laws) to determine whether that somehow resets your retirement eligibility to your current rank.

      There’s also a section of federal law (the Army version is Title 10 U.S. Code section 7344 ) regarding your highest rank held. When you’ve reached a combination of 30 years of active service and years on the retired list, you’re eligible to be advanced to the highest grade that you held held satisfactorily. It has limited applicability to the Reserves and National Guard but your pension would eventually be adjusted to reflect your E-7 rank.

  2. Hi Doug,
    I recently found your blog and love all the helpful information you are giving you.

    I recently retired from the Air Force Reserves with 17 “good years” under early retirement due to medical disqualification.
    My retirement, or transfer to the Retired Reserves, is set for the end of the year.

    My question is how do I elect retirement awaiting pay? Is this the default option or do I physically have to declare awaiting pay?

    Thank you so much for all that you are doing.

    • What reg reference should look at for retirement highest rank held in air guard? I’m recently medically discharged with 31 years in air guard and held e-8 for 2yrs?

      • Morris, I’m a little confused by the term “discharged”.

        If you’ve served at least 20 good years in the Air National Guard and have your Notice Of Eligibility for retirement, then a Medical Evaluation Board would consider you for transfer to the Temporary Disability Retired List or a medical (disability) retirement.

        In any case your retirement rank would be subject to federal law Title 10 U.S. Code section 1372, which generally entitles you to the highest rank in which you satisfactorily served. I’m not aware of any minimum time-in-grade requirement for the E-8 rank.

        Your E-8 pension would be calculated using the pay tables in effect during the year when you reach the age to start your pension (generally age 60) and at the longevity for your E-8 rank as though you’d been on active duty the entire time you were “retired awaiting pay”.

        In case I’ve misunderstood any state rules about your state’s Air National Guard billet, you should seek the advice of a JAG who’s familiar with your unit.

    • Great question, AF Guy. The default is indeed “retired awaiting pay” but you’re smart to make sure it’s not inadvertently set to “separated” or “discharged”.

      Each service has a different retirement procedure. You’ll want to talk with your unit’s chain of command or confirm “retired awaiting pay” with the local Reserve center or your service’s Reserve personnel HQ.

      • Where in the Army Regs are you getting this information? I have 19 years in now. Lets say i make e6 tomorrow and retire next year, will I get a retirement pay of an e6 or an e5?

        • Charles, you don’t mention whether you’re active duty or Reserve/Guard, but this post applies to Reserve pensions.

          I’m sure you can find something in Army regulations, but this post is based on federal law and the Financial Management Regulation (DoD 7000.14-R). Army regs will fall within these guidelines. The pension system is complicated, and note all the related articles at the bottom of the post.

          The answer to your second question is “E-6”.

          If you’re a Reservist who is promoted to E-6 and would be eligible to receive E-6 pay (when you’re drilling or on orders), then when you “retire awaiting pay” your pension (typically at age 60) will be based on the E-6 pay tables. It’ll be based on the (future) pay tables in effect when your pension starts, and at the longevity column of the pay tables as if you’d been on active duty the entire time up until your pension starts.

          The Reserve pension is still a complicated High Three calculation based on your point count, but you’d use the E-6 rank in the pay tables.

  3. where can i confirm this information. As A USAF Traditional Reservist I have over 20 years in and was just STEP promoted to MSgt. Everyone i talk to say i have to serve 2 years in the rank. which makes no sense if i am High 3 pay for retirement. could i go into the IRR and still earn TIG

    • Jim, I’d suggest talking with your Reserve unit’s personnel staff or with ARPC. Each service can have its own policies (exceeding the minimums of federal law) for satisfactory time in grade to retire at that rank. Two years may be the Air Force’s rule, not the federal law.

      A High Three pension system is just the average of your highest 36 months of pay for determining your pay base (which is different from base pay) in the pension calculation. For Reservists, it’s calculated at the rank from which you retired, using the pay tables that are in effect when you turn age 60 (or whenever you receive your pension, if earlier), and at the longevity as if you’d been on active duty the entire time up to age 60. If you want a pension at the MSGT rank then you’d have to comply with the Air Force’s rules to “retire awaiting pay” as a MSGT.

      As far as I can tell, time in the IRR counts toward time in grade. We don’t know whether that requires you to earn enough points for a good year, and we’re having a difficult time finding a reference which confirms that. If you can find a way in the IRR to earn your 35 points and get a good year then that absolutely counts for time in grade.

  4. Great article, thanks for sharing! I am an O-4 with over 30 years of creditable service and about 5,000 retirement points. I am considering transferring to the Retired Reserves, but am now wondering if transferring to the IRR would be a better decision. If I understand your information, I can still be promoted and complete the TIG requirements while in the IRR but not in the Retired Reserves, correct? I am 52 years old and have about 7 years left to draw my military pension. I am currently completing ILE via DL so I should otherwise be eligible for promotion.

    • Douglas, you’ve asked a question that we haven’t been able to answer yet.

      If you transfer in “retired awaiting pay” status to the Retired Reserve then you will not be eligible to promote and you won’t earn time in grade.

      If you go to the IRR then you’re still eligible to promote. (That’s unlikely compared to the promotion opportunities in the Selected Reserve, but you’re eligible even in the IRR.) The “problem” with going to the IRR is that it’s very hard to get a good year– especially now that points have mostly been shut off for correspondence courses.

      If you don’t get a good year then I don’t know whether that still counts as satisfactory performance in the O-5 rank. I’ve asked some Reserve and FTS officers to look into it, and those answers may have to come from BUPERS.

      Again, the biggest value of a Reserve pension is the Tricare healthcare and the annual cost-of-living adjustment. Before you decide to go to the IRR, do the math for the pension as an O-5 versus an O-4. If it’s not a big difference to you then go to the IRR or the Retired Reserve (whichever you prefer). If the O-5 pension is a priority then I’d recommend staying Selected Reserve until you meet the time-in-grade requirements.

      If we find out a different answer from BUPERS then I’ll update this post.

  5. Excellent article! I just have a couple questions to make sure I’m tracking. Are there any difference for the enlisted side? According to the promotion instruction for the Air Force Reserve only 2 years are required to retire in grade; unless you attend an in resident class in which case it would be 3 years. Here is my primary question: If I retire after 2 years in my current rank (E-9), with 21 years of service, then I will continue to accrue pay bumps until my 60th birthday (2038) at which point the AF will calculate my high 3 based on the pay valuation range for 38-40 years of service?

    • Good question, Dustin! Every service has different policies which may exceed the minimum requirements of federal law. That seems to be the case with the AF Reserve promotion instruction. I’m not familiar with all the obligation agreements of the various services.

      You are correct on the longevity pay. When you “retire awaiting pay”, then (by federal law) your longevity accrues during the gray area just as though you were on active duty the entire time. If you file for that retire-awaiting-pay status in 2018 with 21 years of service at age 40, then when you turn age 60 in 2038 you’ll use the High Three average of an E-9>40. That’ll involve the pay tables which exist in 2035-2038 for an E-9>38 and >40.

      You can estimate that in today’s dollars by using today’s pay tables. The general idea is that military pay is expected to keep up with the Employer Cost Index while you’re in the gray area, and then after you start your pension it’ll have the same cost-of-living adjustment as Social Security.

      You can read more details at the related link:

  6. Reply
    Roger D. Morgan, Jr. June 26, 2018 at 11:58 PM


    Your research and comments here have been very useful. Unfortunately, I still am not quite grasping a couple concepts that maybe you can help me with in my current situation.

    I am an O-4 in the Navy Reserves and am up for O-5 next year. If I get selected and when I would eventually put it on, I will have to compete for a paid billet through the APPLY process. If I get one – great – have a billet, get paid, keep going. If I do not get a billet, I would go to the training unit (VTU) and go work with a unit assigned to our NOSC to get enough points for a good year until the next APPLY board. I would keep doing this until I get a billet (likely for two years) or keep doing the VTU until I have three years in rank at O-5. Whether I stay after that depends on work and family life, but I would want to stay at least long enough to get the three year time in rank for CDR. I currently have 22 good years for retirement (27 for pay due to previous time in the IRR) and already have my eligibility letter.

    My confusion comes from the phrases “time in rank” and “top 3 for pay.” Are they same thing? I believe if I were to do the entire three years in the VTU it would qualify for time in rank to retire at O-5; however, would that also qualify as “top 3” for retirement pay? Or would that come from the last three years I actually got paid (in this case the last three years I would have had a billet as an O-4)?

    I guess I want to know if selected for O-5, is it worth more than 150+ more retirement points and the title CDR to stay in the VTU – would it be the difference of getting O-4>30 or O-5>30 retirement pay when I turn 60 in nine years.

    Thanks for anything you can offer to clear up my confusion.

    • That’s correct, Roger, and I’m sorry to say that the Navy’s VTU seems to be the same as when my spouse served her time in it nearly 15 years ago.

      The requirements of “time in rank” and “top 3 for pay” are two separate time periods.

      In order to retire as an O-5 you’d need to serve three years’ time in grade. (O-4 time in rank is only six months.) The O-5 time in grade requirement at can be waived by the service secretary to two years, which depends on Reserve manpower needs.

      Three good years in the VTU would definitely qualify toward O-5 time in grade, as would three good years in any pay billet. It’s also possible that simply being in the IRR for three years (good years or not) would also qualify for time in grade, but I have not found a reference to confirm that.

      Whatever rank you retire at in the Reserves or Guard determines the row of the pay tables upon which your pension is calculated. However the pension’s High Three pay base is also the average of the 36 months of the highest pay you’ve earned on active duty.

      Here’s the important part: when you “retire awaiting pay” and turn age 60 and start receiving your pension, that pension calculation uses the pay tables in effect at age 60 as though you’d been on active duty the entire time that you were in gray area. When you turn age 60 in 2027 and your High Three average is calculated from the highest 36 months of your pay, it also includes the pay tables (at your retirement rank) from 2018 through 2027– including 2024, 2025, and 2026. I sure hope those pay tables are higher than any of the pay tables before those years.

      In order to use the O-5 row of those pay tables, you’d have to retire as an O-5… and that means that you’d have to have the three years’ time in grade as an O-5 or at least two years with the service secretary waiver.

      If you promoted to O-5 but only served 23 months before retiring as an O-4, then DFAS would include those 23 months of O-5 pay in their comparison against the O-4 row of the pay tables in 2024-2027. If the O-5 pay in 2020 is higher than the O-4 pay in 2024 then you’d use the 2020 O-5 pay which you actually received. If you were an O-5 in the VTU then DFAS would still use the O-5 pay that you would have actually received.

      From a financial perspective, you’d earn more pension if you stuck around as an O-5 for at least two years (with a waiver) or three years. I agree that doing it in the VTU is a struggle.

      The real value of a Reserve pension is in Tricare Reserve Retired, Tricare (and Tricare For Life), and the pension’s inflation-fighting cost-of-living adjustment. When you do the math between retiring as an O-5>30 or an O-4>30, you might decide that the extra money is not worth the cost of your time away from your civilian career (let alone the loss of your family time). You’re doing the math correctly, but you’d have to decide whether the difference in rank (and the 150+ points, and the three years) is worth the cost. You might already have enough investments in your own assets to be able to retire as an O-4>30 without feeling the need to serve the additional time to retire as an O-5. Either way you’d get the same health insurance and the same annual CPI COLA percentage.

  7. Doug, thank you for the informative email! Just want to double check my specific situation if you don’t mind. I’m an ARNG LTC set to retire at 21 years with less than 3 years as an O-5. The way I understand what you wrote is my retirement certificate will say “Major,” but in 16 years when I reach age 60 I’ll be paid the high 3 (including longevity accrued) from the O-5 table?

    If correct, can you guide me to an official reference?

    Many thanks!


    • Mike, your understanding is not quite correct. Since you have less than three years’ time in grade as an O-5, then you’ll have “Major” on your retirement certificate– and your pension will be based on the O-4 row of the pay tables in effect in 2034 (when you turn age 60).

      However if you have at least two years as an O-5 when you retire at that 21 years, then you can apply for a waiver from your service to retire with the rank (and the pay tables) of an O-5.

      The applicable sections of law are in Title 10 U.S. Code section 1370 paragraphs (3)(A) and (5)(A).

      Let me recap:
      1. If you apply to “retire awaiting pay” with three years in rank as an O-5, your retirement rank is O-5.

      2. If you apply to “retire awaiting pay” with at least two years in rank as an O-5, and a waiver from your service to retire at that rank, then your retirement rank is O-5.

      3. If you apply to “retire awaiting pay” with less than two years in rank as an O-5, then your retirement rank is O-4.

      Once you’re retired awaiting pay (gray area) then your rank longevity accrues as though you’re on active duty until the day your pension starts, and at the pay tables in effect when your pension starts. At the O-4 and O-5 ranks, for the vast majority of Reserve retirees, this is the maximum pay for those ranks.

      In your case, 16 years later in 2034, that would be as an O-4>36. If you had at least two years as an O-5 and were granted the waiver from your service to retire as an O-5, then your column in the pay tables would be O-5>36. In the 2018 pay tables, O-4 pay tops out at >18 and O-5 pay tops out at >22, but Congress and DoD could change the pay tables again (like they did in 2007) to reflect more pay raises beyond those years of service.

      When your pension starts (usually at age 60, perhaps a little younger from deployments qualifying for an earlier pension) then DFAS looks back at all your pay tables in effect over the years that you were in uniform and in gray area. They take the highest 36 months of pay and calculate your High Three pay base by averaging those months.

      If you retired as an O-4, then in 2034 DFAS would note that you received O-5 pay in 2016-1018. If that O-5 pay in 2016-18 was higher than the pay for an O-4>36 in 2034 then they’d include the O-5 numbers in the high three calculation.

      If you retired as an O-5 then in 2034 DFAS would just pick out the highest 36 months of O-5 pay in the pay tables up through 2034. Hopefully military pay continues to rise every year (or at least stay flat) and highest O-5 pay would have occurred during the 36 months of 2031-2034.

      Bottom line for O-5s and above: If you’re not going serve for three years in grade, then get the waiver for two years or retire at the lower rank.

  8. Thanks Doug for trying to decipher the complicated military retirement system. I’ve been trying to figure out what DA form they use to determine your rank for retirement purposes. I am a retired reserve Army CPT but I was prior enlisted before being commissioned. I understand that the 10 year rule requires prior enlisted commissioned officers to spend 10 years of their 20 as a commissioned officer in order to receive officer pay upon retirement rather than the last enlisted rank I was prior to commissioning. According to my DA 5016 Chronological Statement Of Retirement Points I have 10 Qualifying For Retirement Years as Personnel Class COMM. However, based on my actual commission date and my actual retirement date I only have 9 years and 2+ months. Will they use my anniversary date as DA 5016 does to establish my 10 years of commissioned service or will they use some other method such as the effective date of my orders? I haven’t been able to find anyone at HRC that can definitively give me an answer. I’d greatly appreciate your thoughts.

    • Great question, Scott.

      If you’re already “retired awaiting pay” (gray area) and your commissioning date gave you nine years & two months at the date you started gray area, then you’ll stay an Army Reserve CPT.

      When you retire awaiting pay, your longevity continues to accrue as though you were on active duty during the gray area years. Eight months after you retired, you would have reached 10 years of service as an O-3.

      Your longevity will continue to accrue until the day you start receiving your pension (probably at age 60, maybe a little earlier for combat deployments after 28 January 2008). When your pension starts then it’ll be from the future pay tables in effect during the year that your pension begins. If you were enlisted for more than four years of active duty (or had more than 1460 points in the enlisted ranks) then you’d use the O-3E pay tables.

      Here’s another little-known feature of the federal law: even if you’d retired from active duty under those conditions starting in 2011, you would have been approved for a waiver to retire with only eight years of commissioned service. That authority expires in September 2018.

      Here’s a third little-known federal law: even if you had been disapproved for that waiver, when your total years of military service (active duty, Reserve, and retired awaiting pay) reached 30 years then you would have been advanced to the highest rank held during your time in uniform: Army Reserve captain.

      By the time you start your pension you’ll probably meet all three of those situations.

      If you want help calculating your actual pension (estimated in today’s dollars) then feel free to let me know more details. You’ll need your point count and your rank at retirement (O-3 or O-3E). You’ll also need to know the dates of any combat deployments after 28 January 2008 (or possibly some national emergencies). Finally, you’ll need to know whether you’re Final Pay (Date of Initial Entry into Military Service before 8 September 1980) or High Three (DIEMS after 7 Sep 80). You can comment here, or use the “Contact me” form on the blog, or e-mail NordsNords at Gmail.

      Here’s the post to calculate your pension:

      And here’s the post with more details about any combat deployments after 28 January 2008:

  9. Doug, excellent article! Question: what if a TPU (drilling Reservist) officer with 20+ years of service goes on active duty orders for one year then retires. In other words, the last 12 months of the final 36 months of pay is at the much higher active duty level. Is the active duty pay considered in the high-three calculations; or, is normal drilling TPU pay used?

    • Dave, you’ve asked a very logical question, but there’s a different rulebook.

      The military High Three pension averages the highest 36 months of the base pay scale, not the average of the amount of the pay you’ve earned. It just goes straight by the pay tables in effect for your type of pension, not by your total earnings. But you can see how this question rises from the military’s plagiarizing of the civilian high-three pension system.

      When you “retire awaiting pay” from the Reserves and National Guard, that base pay scale also includes the pay tables for the years up until your pension starts *and* at the longevity for your rank at the age your pension starts. In other words the Reserve/Guard pension starts at the pay tables in effect at the future date, just as if you’d been on active duty the entire time you were waiting for that first pension deposit. If you turn age 60 in 2026 (or three months earlier for the right mobilizations of at least 90 days), then your High Three pension will look at the highest pay scales during the years of 2023 – 2026 as well as all of the pay scales back until the year you joined the military. It’ll also be at the longevity for your rank, which (if you joined at age 18 and by the time you turn age 60) could be 42 years. For the vast majority of Reserve/Guard retirements, the pay scale is at the maximum longevity pay of that rank.

      If you go on a year of active duty then you’ll rack up 365 points (another 2.53% for your pension) and you’ll also have a year of additional pay, savings/investments, and active-duty benefits. But the only numbers that count for your High Three Reserve/Guard pension are the numbers on the pay tables.

  10. Very good article, two questions, One you mention “retire waiting for pay” Does that include mandatory separation (28 yrs). I will mandatory separate come 1 Oct 2017 (56 yrs of age), my retirement age has been reduced due to mobilizations etc to 58 1/2 (not necessarily to a combat zone as Vince mentioned).
    Two, Military TSP, I understand I can no longer put money into it, are there penalties for withdrawing (prior to 59 1/2) from this account even though this was a mandatory separation.
    thanks again for taking the time to write the articles, it is great information and helpful

    • Good questions, Tom!

      “Retired awaiting pay” is the status chosen by almost all retiring Reserve/Guard servicemembers. It means that they’re retired from Reserve/Guard duties (and waiting for the pension to start) yet have agreed to remain eligible for a total mobilization (which last occurred in WWII). In exchange for retired awaiting pay (instead of resigning or discharge) they’ll continue to accrue longevity in the pay tables as if they were on active duty, and their pension will be based on the pay tables in effect when they start drawing it.

      You’ll be in retired awaiting pay status, and then a few months before turning 58 years old you should receive the paperwork to start your pension deposits.

      The penalties for early withdrawal of 401(k) accounts (like the TSP) still apply. However there are several ways to tap your retirement accounts (penalty-free and possibly even tax-free) before age 59.5. This post has more details:

  11. If the retirement pay is calculated as if you’ve been active the entire “waiting” time, why do reservists bother to stay in past the 20 year mark? Just for job fulfillment, potential promotion, and the pay you receive from drilling?

    • Good points, James!

      Sometimes it’s blissful ignorance. In one unit a number of the senior members were waiting until they’d crossed the next big pay raise for their years of service (>22, >24, >26) without understanding that they would receive the credit anyway. Once they’d been trained on how “retired awaiting pay” and the pension are calculated, over a third of those members immediately applied for retirement.

      You’re right about the rest– they’re still feeling challenged & fulfilled, or collecting pay, or working on a promotion… perhaps all of the above. It’s not necessarily about the drills, either– if you can score orders to an overseas exercise for a few weeks (perhaps tacking on additional vacation time around it) that might help you meet all of those objectives.

  12. The Guard/Reserve remains the only class of Federal or governmental employees who when they “retire” from service await pay and benefits until a per-defined age, 60. Regardless of their biological age at retirement. Of course we choose to define such as retainer pay, grey area retires, or other descriptive terms for legal or explanatory purposes. The more philosophical question though, and applies equally to the active or full time component is what is the real and future value of military “retirement”? Does it fairly value the requirements and sacrifice of service? And what does the current and future changes to such imply about our nations commitment or obligations to its veterans?

    As a grandfather now I recall when each of my 3 kids at the age when they were prime for military recruitment ask me what I thought of a military career or should they seek such. My counsel was to look in other areas of professional careers. As the military draws 70% of its force from other military families, it really is the “family business” in may aspects. I do not regret my counsel one bit.

  13. Very good point, Vince, thanks for catching it.

    I also didn’t specifically break out National Guard mobilizations for disaster recovery operations. And, of course, the 2015 NDAA correction to the 2008 NDAA that allows mobilizations/deployments after 30 Sep 2014 be counted across fiscal years…

    These details are getting way too complicated. It’s probably time for me to write another separate wrapup post on early Reserve/Guard retirement.

  14. Great article. One small quibble. It is not necessary to be deployed TO A COMBAT ZONE for the reduced retirement age. It is only required to be mobilized or deployed IN SUPPORT OF CONTINGENCY OPERATIONS, regardless of geographical location. Qualifying orders should reference SECTION 12301 (D) of title 10. (I think there may be other subsections, but I know that one counts).

    • I realize this is almost two years after your post, but since things on the internet live on and on, a small quibble with your small quibble: You don’t have to be in support of contingency operations either. The Army’s Human Resource Command has a good write-up ( Bottom line: as a general rule, most periods of active duty a reservist would serve will fall into a category that would reduce their retirement age (especially since 12301(d) includes voluntary CO-ADOS, OP-ADOS, etc)

      • Thanks for pointing that out, Randy! You’re right, and it just makes the retirement date even more complicated (in a good way). Ryan’s linked post at TheMilitaryWallet explains all the changes since 2008.

    Comment? Question? What's on your mind?