Adjustments to 2011 Retiree Pay Calendar

An interesting provision of the 2011 National Defense Authorization Act means that retiree paydays will be changing, and that change will include two dates in 2011.   In the past, retirees received their military pay on the first day of the month, or the following business day.  The 2011 NDAA mandates a change that will mean that retiree pay will be processed on the first day of the month, or the preceeding business day.  As a result, the payment that was previously scheduled for 3 October 2011 will be issued on 30 September 2011, and the payment previously scheduled for 3 January 2012 will be issued on 30 December 2011.

This means that military retirees will receive 13 payments in the 2011 calendar year.  This could affect the tax liability of some reciepients.  Customers should check with a tax professional, the IRS, or their state tax department to see if they need to adjust their withholding.

From the press release,

This change affects regular retired pay, Concurrent Retirement and Disability Pay and Combat Related Special Compensation. The new rule also applies to retiree allotments, garnishments and court-ordered former spouse and child support payments. It does not affect annuity payments.

If retirees need to make changes to their federal or state tax withholding, the quickest and most secure way to do so is throughAvailable 24 hours a day, seven days a week, enables eligible users around the world to make routine changes to their pay information, including tax withholding, that become effective within days.

Customers who cannot access their accounts online can change federal withholding amounts by completing a new IRS Form W-4 or W-4P, or change state withholding amounts using a DD 2866. These forms can be found on the DFAS website ( and should be mailed or faxed to the below address once completed:

Defense Finance and Accounting Service,  U.S. Military Retired Pay, P.O. Box 7130, London, KY 40742-7130

Fax: 800-469-6559

It may take up to 30 days for changes to be made when mailing in a paper form.


About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Dave

    Makes me wounder who is running our Defense Finance Pay system. If they are reporting Jan 2012 pay , posted Dec 30 2011, as 2011 income for Tax purposes. Requiring every single individual receiver it to check with a tax professional, the IRS, or their state tax department to see if they need to adjust their withholding. How many will not be aware?, or how many errors will be made?, how many made decisions based on their annual income will now be messed up? (ME), etc. Why did they not coordinate with IRS and all State Tax Depts that it not be reportable as 2011 income or just change the rule for that date and pay it in Jan?

    • Roy Munson

      I had estimated a $152 refund on my 2001 tax. After adding the Jan 12 check I will now owe $248. That`s $400 to help pay for congress` cola raise next year. To add insult to injury, the cost for my copay went up to $16 when I got my 90 day prescription today. I guess a Thank you for your service has changed to sorry about that #10 GI._

      • sam

        Roy did you try to call your congressman about this.

    • So, I know I am late to this party, but as I was doing my taxes this year, I noticed how the taxable income of retirement was higher in 2011. The problem is that they did adjust our taxable income by one months pay (which we never received either in 2011 or 2012), and they taxed us for it. Can the government do that, tax us a months pay without paying us anything?

      • KateKashman

        lgbrakes, your taxable income was higher in 2011 because the pay calendar changed. As a result, you constructively received 13 payments in 2011. Your January 2011 income was received in January 2011, and your January 2012 income was received in December 2011. As income is taxed in the year it is received, not the year it was earned, this is accurate.

  • Dave

    Let me add, or they could coordinate with those who made this rule or wrote this 2011 NDAA mandate, that it only be effective with-in the calender year. This would be the simplest and would eliminate 10’s of thousands of individual errors, mix-ups, people not aware till its to late, etc, etc, etc. It would save ton’s in work , time, energy, etc in the office that inputs all the changes, etc.

  • Beans

    Huh? Who is whining? Which woman? That makes no sense.

  • Susan

    This change is rediculous and has a hidden tax for all retirees. One day early for your paycheck is nothing when it comes to helping retirees! What this amounts to is an increase in our tax burden to the federal and state government for the 2011 tax year, you get to pay an extra month’s worth of taxes this year. This higher tax will never be recouped. Just what we need, a tax hike for this year!

  • Jerome Goodwin Sr.

    It also means one less payday in 2012. 11 instead of 12 so it evens out.

    • No – it never evens out – there will still be 12 pay periods in 2012. Check the DFAS website. IT IS A HIDDEN TAX ON MILITARY RETIREES

      • Chaz

        Not exactly. it changes it back from when we had one fewer paydays in a year a few years ago. This evens that back out.

    • Fred

      No, you will get 12 checks in 2012. Grab a calendar. YOU may need a calculator, if you couldn’t figure it out in your head.

  • Charles

    So does this mean we get the 3.6% pay raise on this check?

  • Gunner

    I assume you are talking about the 3.6% COLA? It was effective yesterday but it will be paid on January 1, 2012.

  • Rocky

    I still haven’t received my disabilty pay for december. Is anyone else experiencing this or should I be worried and look into this further?

  • EAC

    If we all live long enough, it comes out in the wash. Not to worry, these small things.

    • rj55

      I agree on not worrying the small stuff, bu it will never come out in the wash. Since Jan 1 is always a holiday, you will always now get your “Jan 1” payment in December, so there will always be 12 pay dates in all years to come. There just happened to be 13 in 2011 and you’re paying Uncle whatever your marginal tax rate is on an extra months’ pay. My only consolation is that I hope this was just an unintended consequence of some staffer trying to do a good deed without thinking through the results.

  • paul

    2012 Dec pick a number im so tired of the world’s bull shit. i’m so looking forward tp judement day. the hand writing is in the bible. i be ready. are you

  • Jerome Kubalewski

    Let go to House of Repressatives give us retired pay this year, we can use it!!!! right

  • Ray Willis

    It does look like they intend to ensure we pay an extra month of taxes. Jan 1, 2013 is a tuesday, which should be the correct payday, yet, the DFAS web site shows we do get paid on Dec31, 2012, for 12 paydays in 2012 instead of 11 which would even it out for 2011. They have got around ensuring it evens out because Jan 1 will never be a business day, which means they will always pay us on Dec31 or before. I say, Congress is out of control. Replace Congress. Do not vote for anyone now in office unless you feel they are exceptionally great. If you have to, vote for the other party, for someone who is not currently in Congress (or the President). Send them a message. We need to gut the good old boys club & ‘that’s just the way business is done’ attitude. Do not vote for an incumbent unless you are extremely happy with them. Ray Willis

  • Rick Orlando

    One more taxable month’s pay means one additional month of taxes withheld. For those of us living solely on retired pay the added tax burden will be a wash. There may be a small amount extra that we owe, or a tad more returned, depending on your state and additional income. I thought it would cost me lots of extra $$$, but I was surprised to see that running the 2011 fed tax return and the state return showed no additional burden because of the extra month of withholding. I hope this is the case for all my brothers and sisters in arms. I suppose I pay a little more this year to help fund my retirement and VA compensation next year. I know I earned it, but I’m still grateful. I hope the voting booth isn’t a scam, too.

    • It’s costing me over $1200 in federal tax and nearly 200 in state.

    • samuel kleinman

      c-a-l-l y-o-u’-r c-o-n-g-r-e-s-s-m-a-n. can you understand that.

  • Robert Townsend

    This tax increase is a great way of thanking all of us for our service, we need to thank all of those who set this up in the next election. Thank you Republican Congress, how could you allow this?

    • Rastus

      That is your punishment for not living on the Obama plantation.

  • Dave

    Completing my 2011 Federal taxes, I am paying $180.00 more in income taxes for a 3 day advance of my Jan 2012 pay due to the 2011 NDAA mandate. I receive no additional income or benefits other then a 3 day advance. Because of a technical issue and a mythical months pay, hundreds of thousands of retired military are paying large increase in Income Tax like me due to a mythical months pay. Why wasn’t there some coordination between Retired Military Pay and the IRS. One way is the IRS add an instruction that for Retired Military Pay its Jan pay is not added to previous year income even thou it is paid in Dec, that it is wavered from this issue. Someone could write it better then I can. This way would be an on going instruction and could cause problems down the line. Choice two I think is the best. A one time tax credit on Retired Military Pay in the amount equal to the Jan 2012 pay and subtract it from the 13 month (one month is mythical money) 2011 US Military Retirement Pay 1099-R. With all the tax issues going on such as between the President and Congress about extending the tax cut because of the economy, etc, etc, Added tax credits for dependents, energy or solar credits, prior buy a new car tax credit to help the auto industry. For sure correcting a wrong full tax issue for hundreds of thousand of retired military personal is a doable thing.

  • robert

    My total income for the year 2011 is exactly the same as it was in 2010. By adding an additional month’s pay to my 2011 income causes a 28% increase in my tax liability as a portion of my Social Security will now be taxed. I would call this a tax increase.

    • samuel kleinman

      you need to call your congress man. why complain if your not going to do anything.

      • robert

        I called and sent letter to Rep Ron paul. Seems he is to busy running for another office .They sent my letter to Retired pay section and they said they do not give tax advise.

        • samuel kleinman

          you have a couple of other congressmen working for you. keep trying. Ron Paul should have some free time now.