The Department of Defense sent to Congress a plan which would alter the current defined benefits retirement plan to a 401(k) style plan. Under the proposal, almost all members of the military would vest in the plan with those under four years of service time being required to contribute most of funds with government contributions rising significantly when the fourth year begins. The primary advantage of the plan is that it will save the department over $800 million per year and help with budget restraints that have been imposed. But not everyone is on board, The American Legion, a veterans group, is worried that the proposal would create uncertainty about retirement for soldiers with the switch from a defined benefit to contribution plan. No word yet on when Congress may act on the proposal.
See Jennie L. Phipps, Military Finalizes New Retirement Plan, Bankrate, June 12, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
