Establishing a Retired Pay Account

Much of the preparation for the retired pay account should be done before separation. Retired Pay Operation will answer any questions you may have concerning the establishment of your retired pay account.

Your retired account will not be established until your active duty account reflects the fact that you have been released from active duty. This is required to expedite the establishment of your account. It is important that your command closes your active duty account. Your account cannot be established until this action is accomplished.


The following documents/events form the basis for the establishment of your retirement account and are to be completed as part of your pre-retirement preparation.

Data for Payment of Retired Personnel (DD 2656)

This form is available in your disbursing office (Navy), Military Personnel Flight (Air Force) your installation’s RSO (Army) or is sent to Marines along with their retirement order. It must be completed and submitted in accordance with your branch of service’s policy. The form must be completed prior to your retirement / transfer date. It requires you to provide DFAS with dependency information, your SBP election, beneficiary information to whom unpaid retired pay will be paid at the time of your death, and withholding information for Federal and State tax purposes. All of this information is used to build your retirement pay account.

SBP Election Statement for Former Spouse Coverage (DD 2656-1)

In addition to the DD 2656, if you elect some type of Former Spouse SBP coverage, you must also complete a DD 2656-1.

Allotment Authorization

You can start, stop, or change current allotments by requesting action by the office that takes care of your active duty pay account. Ensure that your allotment total will not exceed your retirement pay. All necessary adjustment to your allotments should be made at least 30 days prior to retirement. Retirees are permitted to have a maximum of 6 allotments, classified as discretionary allotments; those that are discretionary have been identified with the word “Discretionary”.

  1. —  The following allotments cannot be carried forward to your retired accounts:
  • •  Charity allotments, except contribution to Navy/Marine Corps Relief Society, Army Emergency Relief or Air Force Assistance Fund
  • •  Education allotment
  1. —  The following allotments may be carried forward to your retired pay account if at least one month’s payment was made while on active duty:
  • •  Loan repayment to Red Cross
  • •  Saving Allotment – Discretionary
  • •  Home Loans – Discretionary
  • •  U.S. Saving Bond (Bonds established for safekeeping while on active duty cannot be carried forward to your residence other than your own) – Discretionary
  • •  Dependency allotment (To spouse, former spouse (s), children, grandmother, and/or anyone having a permanent residence other than your own) – Discretionary
  • •  National Service Life Insurance – Discretionary
  • •  Commercial Life Insurance – Discretionary
  • •  Navy/Marine Corp Mutual Aid Insurance – Discretionary
  • •  Repayment of a debt to a federal agency and tax levy assignment to the Internal Revenue Service (IRS)
  • •  Charitable contributions to Navy/Marine Corps Relief Society, Army Emergency Relief, or Air Force Assistance Fund
  • •  Repayment of loan to Navy Relief Society, Army Emergency Relief, or Air Force Aid Society
  • •  Veterans Group Life Insurance – Discretionary
  • •  TRICARE Retired Dental Program – enrollment and withdrawal must be done through Delta Dental – Discretionary

The following is general information for starting/changing allotments after your retirement:

The dollar amount of allotment may not exceed your gross retired pay less deduction for SBP and federal withholding tax and any other deduction. To request an allotment start, stop, or change, furnish DFAS with the month of start, termination, or change; the amount, and the full name and address to which the allotment is to be sent. Request for allotment action can be made by:

  • •  Letter must include your signature and your social security number.
  • •  Employee Member Self Service (See Maintaining your pay account).
  • •  Air Force members may elect allotment changes at their local Finance Services Office (FSO).
  • •  Start, stop or adjustment actions for either National Service Life Insurance or Veterans Group Life Insurance should be sent to DFAS via the Department of Veterans Affairs or Office of Serviceman’s Group Life Insurance, respectively.
  • •  It is not necessary to provide the policy numbers for changes to insurance allotments. You must request starts, stops, and changes by referencing the monthly premium amount and the name of the company.
  • •  Excess allotment payments made on your behalf are a matter solely between you and the payee. We cannot take steps to recover the payment.

Payment Method/Schedule

Your net retired/retainer pay should be sent to your financial institution by Direct Deposit unless you reside in a foreign country in which Direct Deposit is not available. Your retired pay will be deposited to your account on the first business day of the month following the end of the month. Complete the appropriate sections of Part I of the DD 2656 with the Routing Transit Number (RTN), Financial Institution Name and Address, your Account Number and whether or not your account is a Checking or Savings account. Direct Deposit enables your payment to be deposited directly to the bank, saving and loan association, or credit union of your choice. Direct Deposit has the following advantages:

  • •  It eliminates the possibility of your check being lost, stolen, forged or destroyed in delivery. Treasury Department statistics show that over one million checks are either lost or stolen each year.
  • •  It eliminates the inconvenience of cashing and depositing your check.
  • •  It assures deposit of your pay on the first business day of the month following the month for which payment is due.
  • •  It assures the delivery, deposit, and availability of your pay while you travel.
  • •  After you retire, you will need to notify retired pay whenever you change your financial institution. Do not close your old bank account until you receive the first deposit in the new financial institution.

Leave a comment