What is a “Gray Area” Retiree and What Impact Does that have on Military Divorce?

 A “gray area” military retiree is qualified for a “non-regular” retirement as a member of the Reserves or National Guard who has been place in the “retired, awaiting pay” status.  Gray area retirees in “retired, awaiting pay” status do not drill, so they accrue no additional points creditable toward retirement.  They do, however, continue to accrue longevity pay increases from the date placed in “retired, awaiting pay” status to the date payment of retired pay commences, which usually is at age 601,2

For example, a Reserve or National Guard servicemember qualified for a non-regular retirement who retired as an “E-7 over 24″ years service for pay longevity purposes, and has 14 years before they turn age 60, will end up at commencement of retired pay as an “E-7 over 38” years of service.  This has a significant impact on that servicemember’s calculation of high-36 months base pay.  It starts with the current pay table for E-7 over 38 and goes backwards to the 36th month.

When military divorce occurs with the servicemember is in the gray area, the former spouse’s interest in pay longevity must be cut-off as of the date of divorce or an earlier date, such as the date of a Mediated Settlement Agreement.  So, if divorce occurs when the gray area retiree, awaiting pay, is an E-7 over 28, that is the point from which the servicemember is hypothetically retired.  The former spouse no longer can enjoy any additional pay longevity increases.  They former spouse continues to enjoy retiree COLAs from the date of divorce to commencement of retired pay and thereafter.  This effect was established by the 2018 National Defense Authorization Act, when it modified the definition of “disposable retired pay” in the Uniformed Services Former Spouse Protection Act, the latter codified at 10 U.S.C Sec. 1408, for Reserve and National Guard servicemembers not yet receiving retired pay3,4.

For further information, speak with a qualified military divorce attorney.

Author Jim Cramp is a retired active duty colonel and the founder and principal attorney at the Cramp Law Firm, PLLC.  The firm provides a spectrum of family law-related services to clients in the greater San Antonio region, across the United States and throughout the world.  The firm specializes in Federal Civil Service and Military Divorce matters.

Note 1 – See 10 U.S.C. Sec. 1407(d)(1)(A) (stating that retired servicemembers entitled to a non-regular retirement continue to accrue pay longevity, as if they had been on continuous active duty, until commencement of retired pay).

Note 2 – See 10 U.S.C. Sec. 12731(f)(1)-(2) (stating retired pay for non-regular retirees commences at age 60 unless the servicemember has special qualifying service described in Sec. 12731(f)(2).

Note 3 – See 2018 National Defense Authorization Act (NDAA), Public law 115-91-Dec. 12, 2017, Sec.624 (stating for non-regular retirees awaiting pay that disposable retired pay is the pay the member would have been eligible to received had they retired at divorce).

Note 4 – See 10 U.S.C. Sec. Sec. 1408(a)(4)(B)(ii) (implementing the 2018 NDAA, Sec. 624).