In the early 1990’s the Army reduced its end strength and many Soldiers in the active component ended up applying for and taking the Voluntary Separation Incentive (VSI) which was intended to alleviate the impact of a Soldier not getting an active duty retirement. For a Major with 14 years of service, the VSI amount could total almost $400,000 which was paid out annually over a specified period. To receive the VSI payment the Soldier had to stay in a Reserve Component unless involuntarily separated. Many Soldiers have remained in the Reserves long enough to be eligible for non-regular (Reserve) retirement at age 60 but because they received a VSI, they must repay the full gross amount of VSI via recoupment BEFORE they can start receiving their full reserve retired pay. Recoupment is made at a rate of 40% of monthly adjusted gross retired pay (i.e., after any VA disability pay is subtracted). To many this is a daunting prospect and clouds their retirement financial picture. But maybe it’s not as bad as it seems once the actual numbers and recoupment time are known.
In three easy steps, the MyArmyBenefits Help Desk can assist Soldiers or Grey Area Reservists in calculating the number of months it will take to repay the VSI: