10 U.S.C. § 1409 — Retired pay multiplier

(a) Retired pay multiplier for regular-service nondisability retirement. When calculating a uniformed-service member’s retired pay, except pay under chapter 61 or chapter 1223, or calculating retainer pay for a member transferred to the Fleet Reserve or Fleet Marine Corps Reserve under section 8330, use the percentage determined under subsection (b). (b) Percentage. (1) General rule. Subject to paragraphs (2) and (3), the percentage is 2½ multiplied by the member’s years of “creditable service,” stated as a percentage. (2) Reduction for certain members. If a member first joined after July 31, 1986, elected a bonus under the specified former section 322 or section 354 of title 37, has fewer than 30 years of creditable service, and is under 62 at retirement, reduce that percentage by 1 percentage point for each full year below 30, plus 1/12 of 1 percentage point for each month remaining after full years are counted. (3) More than 30 years. (A) For retirement before January 1, 2007, a member with more than 30 years of creditable service uses 75 percent. (B) For retirement after December 31, 2006, the percentage is 75 percent plus 2½ multiplied by the member’s creditable-service years over 30, for the conditions the Secretary of Defense authorizes during a designated period. (4) Modernized retirement system. (A) For a member who first joins on or after January 1, 2018, or who makes the election in subparagraph (B), called a “full TSP member,” apply the rules by using 2 instead of 2½ in paragraph (1)(A), 60 percent instead of 75 percent in paragraph (3)(B)(i), and 2 instead of 2½ in paragraph (3)(B)(ii)(I). (B) A member serving on December 31, 2017, with fewer than 12 years of service then may elect, under (C), to receive Thrift Savings Plan contributions under section 8440e(e) in exchange for these reduced multipliers. (C) The election period normally runs from January 1 through December 31, 2018. The Secretary concerned may extend it for a hardship. A member returning after a break during that period must elect within 30 days after reentry. A cadet, midshipman, or Senior ROTC member must elect on or after becoming a commissioned officer or otherwise beginning basic pay, and no later than 30 days after that date or the election-period end, whichever is later. A reserve member not in active status must elect on or after transfer to active status or active duty, and no later than 30 days after that date or the election-period end, whichever is later. (D) An election cannot produce TSP contributions for any period before the election date. (E) The Secretary concerned must issue implementing regulations. (c) Years of creditable service defined. “Years of creditable service” means the years of service counted in computing retired or retainer pay, including 1/12 of a year for each full month beyond the member’s full years of service.