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New law means military retirees will get a 13th 'monthly' payment this year

A quirk in the calendar combined with a change in federal law means that roughly 2.3 million U.S. military retirees will receive what amounts to an additional or early monthly payment this year.

The reason, explained Defense Finance and Accounting Service spokesperson Steve Burghardt, is that Congress changed the law this year to require that DFAS pay retirees on the first of each month, unless that day happens to fall on a weekend or a holiday.

In those cases, the payment is to be made on the last business day before the first of the month. Because New Year’s Day, Jan. 1, is always a federal holiday, that means that going forward retirees will always receive their January pay in the previous December.

DFAS announced the change Monday, emphasizing that it might have significant tax implications for individual retirees. The change affects regular retired pay, concurrent retirement and disability pay and combat-related special compensation.

“The big thing for retirees is that … it moves a payday that normally would occur in tax year 2012 moves it into 2011,” Burghardt said. “The first of December 2011, we will get paid per normal. [The normal January payment] is being moved to the end of December. So there’s your number 13.”

The 13th payment is not technically an extra amount, but it will be an earlier payment of money that veterans would have been entitled to in the following year. However, in a press release, DFAS emphasized that there will never be a year in which veterans would receive only 11 monthly payments in order to make up for the 13th payment in 2011.

Officials at national veterans advocacy groups said they hadn’t focused on the change.

“As we go through the gymnastics of it, I don’t think it’s a bonus. They’re getting the payment ahead of time, and at that point the question is, is the spouse going to have to recoup that money back to the government whenever the veteran dies?” said Barry Seale, director of national security at the American Legion.

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