Enlistment bonuses and reenlistment bonuses are just one way that the military entices people to join the military or choose to reenlist for additional service. These bonuses aren’t available to everyone, however. Bonuses are most often used as a tool to get people to sign up for hard to fill jobs, those which require a lot of training, and jobs that offer high paying jobs in the civilian sector. Let’s take a look at enlistment and reenlistment bonuses, including how much they can run, how they are paid out, and what you can expect if you receive one.
Some jobs in the military are eligible for an initial enlistment bonus of up to $40,000. Keep in mind this is only for the most difficult to fill positions, and bonuses are not available for every job. The size and availability of bonuses depends on your branch of service, job specialty, and the length of your enlistment (typically between 3 and 6 years). As you can imagine, a 6 year enlistment bonus generally pays more than a 3 year enlistment bonus. If your job is eligible for a bonus, you will typically receive it after you finish your basic training and initial technical training.
Reenlistment bonuses may be available to current service members when they reenlist for another term, again, usually in 3 to 6 year increments. As previously mentioned, reenlistment bonuses aren’t available for every career field. Each branch of service is able to determine which specialty (Rating, MOS, or AFSC) is eligible for a reenlistment bonus.
You may be eligible for a reenlistment bonus if you are a member of the uniformed service who:
- has completed at least 17 months of continuous active duty (other than for training) but not more than 20 years of active duty;
- is qualified in a military skill designated as critical by the Secretary of Defense, or by the Secretary of Homeland Security with respect to the Coast Guard when it is not operating as service in the Navy; and
- reenlists or voluntarily extends the member’s enlistment for a period of at least three years in a regular component of the service concerned; or in a reserve component of the service concerned, if the member is performing active Guard and Reserve duty (as defined in section 101 (d)(6) of title 10).
- You are not currently receiving special nuclear-training pay.
- You reenlist or voluntarily extend your enlistment for a period of at least three years.
- You enlist in a regular component of the service concerned; or continue in a reserve component of the service concerned.
How much can you receive as a bonus? Reenlistment bonuses cannot exceed the lesser of:
- The amount equal to the product of 15 times the monthly rate of basic pay to which the member was entitled at the time of the discharge or release of the member; and
- the number of years (or the monthly fractions thereof) of the term of reenlistment or extension of enlistment.
- Reenlistment bonus not to exceed $90,000.
Note on Special Retention Bonuses: Some specialties are eligible to receive retention bonuses of more than $90,000. These are usually limited to those in the medical field, aviators, and those in select nuclear specialties. These are all on a case-by-case basis and are spelled out in US Code: 37 U.S. C, Chapter 5.
How (Re)enlistment Bonuses Are Paid
This is the section everyone wants to read! If you qualify for a bonus, you want to know when you get paid, right? Fair enough. If your bonus is less than $20,000 you can generally expect to receive it in a lump sum, upon completion of the terms in your contract. This is generally after completion of your initial technical training. If your bonus is more than $20,000, you can generally expect to receive half up front (again, upon completion of training), and the remainder spread out among annual installments. The Navy pays out their annual installments on October 1, which is the start of the fiscal year. The other branches of the service pay their enlistment and reenlistment bonuses on the anniversary of the date you received your initial installment.
Why annual installments? The military wants to ensure they are getting their money’s worth. You must continue to meet standards for your Rating/MOS/AFSC in order to be eligible to continue receiving your anniversary bonus payments. Failure to meet the technical standards for your career field, or failure to meet other standards may make you ineligible to receive your bonus payment.
Example: If you have a $40,000 bonus, you would expect to receive a $20,000 lump sum upon completion of training (or when your reenlistment actually begins). You would receive the remaining $20,000 in 5 annual installments of $4,000 each on the anniversary of your reenlistment beginning, or on Oct. 1 if you are in the Navy.
Don’t forget about taxes! You will also have taxes automatically withheld from your bonus, generally at the 25% or 28% rate. This is automatically done by the government, and not something you can change. If the withholding is too high for your tax bracket, then you will likely receive a larger than normal refund the following year.
What About Tax-Exempt Bonuses?
Count yourself lucky if you reenlist or receive your bonus while you are in a tax exempt combat zone. If you reenlist in a tax-free combat zone, you will receive your entire bonus tax free, which can be a substantial savings. Even better – your anniversary installments will also be considered tax-exempt, even if you receive them after you leave the tax-exempt zone. This is because you signed the contract in a tax-exempt zone. It’s not uncommon for people who are due to reenlist to request to go on an overseas deployment and reenlist at that location so they can receive a tax-exempt bonus. This tax exemption has another important factor which we cover in the next section about the Thrift Savings Plan.
Contributing Bonuses to the Thrift Savings Plan
You are eligible to contribute some or all of your enlistment or reenlistment bonus to the TSP, from 1-100%, provided your contributions do not exceed the federally mandated TSP contribution limits ($17,500 for 2014; $23,000 for age 50 and over). However, there are some exceptions. The $17,500 contribution limit only applies to taxable income. If your bonus is tax exempt, you can contribute up to the Annual Addition Limit of $52,000 ($57,500 for age 50+). You would be able to contribute up to $17,500 of your base pay, and up to $34,500 of your bonus pay, to reach the $52,000 limit. Taking this a step further, tax-exempt TSP contributions are extremely valuable as the income has never been taxed. This gives you some advanced retirement planning options should you choose to go that route (we’ll save that for another article).
Refunding a Bonus
This is the part no one wants to read, but it must be understood. If you receive a bonus, you are on the hook for the term of your contract. You may owe a prorated refund to the government if you are unable to fulfill the terms of your contract. This will be based on the amount of money you have received and how much time remains on your contract. Reasons you might have to repay your bonus can include, but are not limited to: voluntary separation, misconduct, failure to meet standards, failure to meet technical qualifications, and possible other reasons.
You aren’t generally on the hook to repay a portion of your bonus if you aren’t qualified to serve due to illness, injury, or other reasons for which you aren’t at fault.
Note on repaying a bonus due to early separation: Voluntary early separation often requires you to repay a portion of your bonus, but it may depend on why you separate. Repayment of bonuses has been waived at times during Reduction in Force (RIF) measures, but only in cases when the branch of service specifically waived the requirement. In other words, don’t take it for granted! Be sure to read the contract you signed when you received your bonus, and the contract you will sign to separate early. The terms will spell out whether or not you will need to repay your bonus.
Meet with your finance and/or personnel office for more information: If it is determined you will owe a refund to Uncle Sam, be sure you know how much you will owe, and how you will be required to pay it back. Your finance or personnel office should be able to help you with this.
Which Jobs Offer an Enlistment or Reenlistment Bonus?
Great question, and I’m sorry, but it’s one I can’t answer because it’s a moving target. Each branch of service determines which specialties are eligible for enlistment or reenlistment bonuses, and they frequently change as the needs of the service change. If you are considering joining the military, then you will need to speak with a recruiter to find out if a bonus is available to you. If you are currently in the service, you can generally find a list on your service’s website, or by contacting your personnel or retention office.
Word of advice: Don’t just do it for the money. A bonus is nice, but make sure 1) you want to serve; you aren’t just joining the military for a fat bonus, and 2) you want to serve in the job that is offering the bonus. Nothing will make the next few years drag more than a job you hate. Secure happiness first, then worry about the money.
- Enlistment and Reenlistment bonuses are part of the US Code: 37 U.S. C, Chapter 5, subchapter 1 (§ 309 – Enlistment bonuses), (§ 308 – Reenlistment bonuses)
- There are special sections of the US Code that cover certain hard to fill specialties, particularly those in the medical, aviation, nuclear, and other professional fields. These are also listed in subchapter 1.
- Contact your recruiter or personnel office for more specific advice regarding any bonuses you may be eligible to receive. And as always, get it in writing!