21 Dec What Is the DOD Savings Deposit Program?
Savings would be the furthest thing from your mind if you are getting a combat deployment. However, achieving financial security in the midst of deployment is actually quite crucial. You will know that your family’s interests are covered, especially if anything were to happen to you. But how does one gather up the resources before getting deployed?
The DOD Savings Deposit Program might be a great option.
Administered by the Defense Finance and Accounting Service (DFAS), the Department of Defence SDP is an excellent choice if you are getting a combat deployment and are looking for a risk-free return on the money saved.
But, before we move on to how this program actually works, let’s get to know more about it.
What Is the Department of Defense Savings Deposit Program (SDP)?
The Department of Defense Savings Deposit Program is a savings program that provides a guaranteed annual return on savings up to $10,000. This program is specially curated for service members who are given combat deployment.
To participate in this program, you must be serving in a combat zone, specific contingency operation, or a qualified hazardous duty area outside America for at least 30 consecutive days or at least one day for each successive month.
With DOD Savings Deposit Program, you can receive up to 10% return on a saving of up to $10,000 during single combat.
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How Does SDP Work?
To get started with SDP, you can visit the finance office located near your deployed location. They’ll also help you with the documentation process and eligibility criteria. The last day to deposit in the account is the day you depart from the deployment.
After making the initial deposit, you will start earning 10% of your deposit. For instance, if you have made a deposit of $6000, you’ll earn 10% interest, i.e., 408.3, after 90 days of returning from the deployment.
Deposits can be made in cash, traveler’s check, personal check, or through the Eagle Cash Card. Moreover, you must submit deposits divisible by 5, like $50, $125, etc.
Here You can make multiple deposits every month, and the minimum deposit amount is $5. are some tips you can follow while creating an SDP deposit-
- You or your family members can start the allotment on your behalf with the help of an attorney.
- The funding can be increased or decreased upon the request of family members.
- You can get an attorney by contacting the S. Armed Forces Legal Assistance locator.
- The first deposit can only be made after 30 days of joining the mission. This means that you can start depositing from the 31st day of being located in an SDP area.
- You can stop making deposits at any time you want.
- You can not deposit more than your monthly pay, excluding all the deductibles and including all the bonuses.
Who Can Contribute to a DOD Savings Deposit Account?
To open a DOD savings deposit account, you must satisfy the eligibility criteria defined by the department.
For starters, you must be deployed overseas in an eligible combat zone or a qualified hazardous area. Moreover, you will no longer qualify the day you leave the combat zone.
Here are the requirements you must satisfy to qualify-
- You are an active duty member or a national guard/reservist, deployed overseas and receiving Imminent Danger Pay or Hostile Fire Pay.
- You are serving in a combat zone or are directly linked to a combat zone for more than 30 consecutive days. However, if you are in a special operations unit, you must serve at least one day for three straight months.
- You are deployed in the Arabian Peninsula area like the Persian Gulf, Iran, Iraq, Israel, Saudi Arabia, UAE, etc.
How Can You Make Savings Deposit Program Contributions?
To make DOD savings deposit program contributions, you must keep the following things in mind-
Maximum Amount You Can Deposit
The maximum amount you can deposit is $10,000. However, as stated above, you will not be able to deposit more than your monthly payment. This monthly payment includes additional incentives and bonuses while excluding all the deductibles.
While your limit can reach beyond $10,000, you won’t be able to earn interest for more than this. You’ll continue to make 10% interest for 90 days after returning from deployment unless you decide to withdraw all the funds before that.
When You Can Start Making Contributions
After serving at least 30 consecutive days in a combat zone or a hazardous area, you can start depositing.
Where You Can Deposit
You can contact the finance office near the combat zone to make deposits to your savings deposit account.
The 10% Rate of DOD Savings Deposit Program
The interest associated with your savings deposit account will compound monthly. Meaning, you will earn interest every month.
The interest you receive will be 10% of the deposits made. This can go up to $10,000. Any amount exceeding this limit will not compound interest.
You can make a deposit yourself or ask your family member/spouse to make it for you.
How Do You Make a Withdrawal?
In most cases, the withdrawal is a one-time payment and is received once the service member reaches home. However, in the case of an emergency, you can withdraw the amount during your deployment.
Here are some of the general rules that are applied while withdrawing the amount-
- After your service, the Defense Finance and Accounting Service will post your account balance alongside your earning statement. The amount deposited will start compounding interest from the day you deposit the amount.
- If you go through health welfare or a family emergency, you can apply for withdrawal during the deployment. For this, you’ll need the permission of the commanding officer or unit commander. After receiving the consent, you can submit your appeal to the DFAS.
- Because any amount above $10,000 will not compound interest, you can ask for the withdrawal of the amount that exceeds the limit.
To make a withdrawal, you must follow the following procedures:
After returning from deployment, you will receive the amount automatically in the same account where you receive your monthly pay. To withdraw the funds as a retiree or a reservist, you must submit a withdrawal request to DFAS. Moreover, your appeal must also include the bank account information where you want your funds. In case you want a check, you must also attach the current address with the appeal.
What Are the Benefits of the Savings Deposit Program?
Generally, a traditional savings account compounds up to 1% to 2% of your savings. However, through the savings deposit program, you can earn up to 10% interest on savings up to $10,000.
In addition to this remarkable combat benefit, here are other merits you might want to consider-
- You can deposit as much as you want in this account. Interest usually compound monthly, providing 10% interest on savings up to $10,000. While you cannot deposit more than your monthly pay, exceptions may apply. For this, you’ll need the permission of the unit commander.
- You can continue to earn interest monthly for up to 90 days after returning from home.
- You can accumulate while serving in a combat deployment, which would be almost next to impossible in general cases.
- You can electronically manage your account through myPay, where you can check your leave and earning statement regularly.
- No penalties would apply if you chose not to deposit in the account.
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Should You Participate in the SDP?
The DOD savings deposit program is a great way to accumulate savings while serving overseas in a combat zone or a hazardous area. You can earn interest every month and pay your debts or help your family financially after returning from deployment.
Moreover, you can choose to withdraw your deposits at any time during the deployment, given you have the permission of your unit commander. You can also choose to stop depositing into the account at any time you want.