The root of all of your financial goals stems from where and how you can create some sort of savings account and consistently add money to it. Depending on your circumstances, you could be able to get some outside help or government assistance in growing your wealth. The U.S. Department of Defense has the Savings Deposit Program available for eligible members of the military who have served a minimum amount in a designated combat zone.
What Is the Savings Deposit Program?
The SDP is a military compensation, finance and accounting service which provides members of the uniformed services who are serving in designated combat zones the opportunity to build their financial savings. The return on earnings is much higher in SDP accounts as you earn 10% interest annually.
How the Savings Deposit Program Works
It will probably be no surprise that the DOD has strict rules and regulations when it comes to its programs, especially in the finance office. The maximum amount you can deposit is $10,000, on which you can earn up to 10% interest annually.
The money should stay in your SDP account, but if you need to make an early withdrawal there are two allowances:
- Emergency withdrawals: Your commanding officer must approve this type of early withdrawal and does so if it is deemed both emergent and necessary for your best welfare or that of your family.
- Exceeded the maximum deposit: If you go past the maximum of $10,000, you can then make withdrawals over that amount, and can do so quarterly.
Be aware that all accounts will be closed and your funds will be returned to you via direct deposit 120 days after you leave the combat zone.
Is the Savings Deposit Program Taxable?
Taxation can be tricky when it comes to different types of military pay and accounting. For example, though the interest accrued on earnings deposited in an SDP account is taxable, any federal income you earn in hazardous duty zones is tax-free.
Who Is Eligible for the Savings Deposit Program?
Those eligible for the SDP include service members who are receiving Hostile Fire Pay and have been deployed for at least 30 consecutive days. The other allowance would be if you have been deployed at least 1 day in each of three consecutive months. When applying, you will need to provide the following information:
- Name
- Social Security number
- Date of departure from the combat zone
- Electric funds transfer information such as bank name, routing number, account number and type of account.
Final Take To GO
Earning interest at a high rate is definitely worth looking into if you are an active member of the armed forces. Make sure to check your eligibility as you could greatly grow the amount of money you have saved while on deployment. Even though you have to close your account after you leave the combat zone, you can still continue to accrue 90 days after your departure so let your money earn the most it can.
FAQ
Here are the answers to some of the most frequently asked questions regarding the Savings Deposit Program.- What is the Savings Deposit Program?
- The DOD Savings Deposit Program is a service that provides members of the uniformed services actively serving in designated combat zones the opportunity to build their savings. Qualified members will earn 10% interest annually on a maximum of $10,000.
- Who is eligible for the Savings Deposit Program?
- The service members eligible for the Savings Deposit Program include the following:
- -Those who are receiving Hostile Fire Pay.
- -Those who have been deployed for at least 30 consecutive days in a designated combat zone.
- -Those have been deployed at least 1 day in each of three consecutive months in a designated combat zone.
- The service members eligible for the Savings Deposit Program include the following:
- What information do you need to supply for an SDP account?
- When setting up your SDP account you'll need to provide some basic information such as your name, Social Security number, date of departure from the combat zone and electric funds transfer information such as bank name, routing number, account number and type of account.
- Is the Savings Deposit Program taxable?
- Yes, in part as the interest accrued on earnings deposited in an SDP account is taxable. However, it is worth noting that federal income earned in hazardous duty zones is tax-free.