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.
Get Everything in Writing – And Keep it Forever
A verbal promise is a contract. Except when it’s not. The military is a massive organization, and unless you have an enlistment bonus or reenlistment bonus in writing, it never happened. There are many stories of recruiters or retention officials making promises of bonuses for signing on the dotted line. But unless you see it in your contract, it isn’t official.
You also need to keep a copy of your contract forever. In fact, you should keep all important military records forever. Getting copies of them after the fact can be difficult, and sometimes impossible.
This is especially important for military records such as contracts, training records, enlistments and reenlistments, promotions, benefits, and similar records. If you don’t have copies of your records, you will need to contact your respective military personnel or human resources office (AFPC, Army HR Command, Navy BUPERS, etc.).
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.
This last statement is very important – you may sign a contract that wards you an enlistment bonus, but you don’t actually earn that sign up bonus until you complete initial training. So if you fail AIT or Tech School, you may not earn that bonus.
Reenlistment bonuses may be available to current service members when they reenlist for another term, again, usually in 3-, 4-, or 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 upfront (again, upon completion of training), and the remainder spread out among annual installments.
The Navy pays out its 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.
Update: a reader recently wrote in to tell us the Navy now pays out reenlistment bonuses on the anniversary of your reenlistment, just like the other branches do.
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.
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?
The Code of Federal Regulations (CFR), Title 26, Section 1.112-1 covers tax-exempt combat zones.
In short, money earned while you are serving in a combat zone is tax-free. This can include your reenlistment bonus, provided you signed the reenlistment paperwork while you were in the tax-exempt combat zone. This also covers your annual installment bonuses, even if they are later received when you are no longer serving in the tax-exempt combat zone.
However, if you signed the paperwork outside the combat zone, it is not tax-exempt, even if you receive the bonus or annual installment while you are in the combat zone.
Let’s look at U.S. Code – 26 CFR § 1.112-1 – Combat zone compensation of members of the Armed Forces, paragraph (b), Example 5 and Example 6 for more information.
Reenlistment Bonus & Annual Installments When Papers Signed in Combat Zone
From U.S. Code – 26 CFR § 1.112-1, paragraph (b)
In July, while serving in a combat zone, an enlisted member voluntarily reenlisted. After July, the member neither served in a combat zone nor was hospitalized for wounds incurred in the combat zone. In February of the following year, the member received a bonus as a result of the July reenlistment. The reenlistment bonus can be excluded from income as combat zone compensation although received outside of the combat zone, since the member completed the necessary action for entitlement to the reenlistment bonus in a month during which the member served in the combat zone.
Reenlistment Bonus & Annual Installments When Papers Signed Outside Combat Zone
From U.S. Code – 26 CFR § 1.112-1, paragraph (b)
In July, while serving outside a combat zone, an enlisted member voluntarily reenlisted. In February of the following year, the member, while performing services in a combat zone, received a bonus as a result of the July reenlistment. The reenlistment bonus cannot be excluded from income as combat zone compensation although received while serving in the combat zone, since the member completed the necessary action for entitlement to the reenlistment bonus in a month during which the member had neither served in the combat zone nor was hospitalized for wounds incurred while serving in a combat 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 $19,500 contribution limit only applies to taxable income. If your bonus is tax-exempt, you can contribute up to the Annual Addition Limit of $57,000 ($63,500 for age 50+). You would be able to contribute up to $19,500 of your base pay, and up to $37,500 of your bonus pay, to reach the $57,000 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 – Paying Back Your 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, cross-training into a new career field before completing the terms of your contract, 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. This may include involuntarily cross-training into a new career field. Be sure to speak with your finance and personnel office for verification.
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. They usually change on an annual basis, but sometimes it may occur more frequently. Also, these lists aren’t always made public, so you usually need to go through a recruiter or retention office to view the list.
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.
What if I Never Received My Bonus?
Several readers have left questions in the comments section, or have contacted me via email to ask what they should do if they never received their enlistment bonus or reenlistment bonus. This is not a common situation, and each case will be unique. Here is how I would handle this:
Visit your Personnel, Human Resources (HR), or Retention Office. These are the units that handle the paperwork for enlistment and reenlistment bonuses. They should be able to give you an idea of whether or not you met the requirements for the bonus, and can help you make sure all your paperwork is in order. They may refer you to the Finance office if you have met the requirements, but the bonus hasn’t yet been paid. Keep in mind there may be a delay from the time you earn the bonus until it is paid.
What if you have already separated from the military and you never received your bonus? This is a tricky situation, and one we have been asked about several times. The best I can say is to review your contract and verify you should have earned the bonus. Each contract is unique, so I can’t offer much advice other than to review it thoroughly. From there, you should contact your main branch of service personnel section (AFPC, Army Human Resources, Navy BUPERS, etc.). Ask them to review your contract and see what you should do from there.
You may also wish to contact Defense Finance and Accounting Services (DFAS) once you have your paperwork in hand. They will need to review your contract and all your pay stubs to verify 1) you should have received the bonus, and 2) that you never received it.
Is there a statute of limitations? I have no idea. The military isn’t shy about going after people who owe them money. So it stands to reason that if you have a signed contract, you should be able to file a claim and receive the money that you are legally entitled to. Keep in mind this process will likely take some time, as they need to verify all records before they can authorize payment.
Don’t have a copy of your contract? Again, you will need to contact your personnel or HR command to try and obtain a copy of your contract. You may need to contact your Guard or Reserve unit if you served in the Reserve Component and not Active Duty. Each branch of service maintains records for a set amount of time before they send them to the National Archives. So depending on how long you’ve been out of the military, it may take some times to track down your records. As with everything, you will need to have patience.
- 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!