Can You buy out your military contract?

Can You Buy Out Your Military Contract?

If you’re thinking of exiting the military and are currently serving, one of the questions you’re likely wondering is: Can You Buy Out Your Military Contract?

As a servicemember, you signed a contract to serve your country for a specific term, whether it’s three years, four years, six years, or beyond. Sometimes, circumstances may arise where you want or need to get out of that contract. Luckily, the US military has provided a mechanism for you to do just that: contract buyouts.

What is a Contract Buyout?

A contract buyout is a financial compensation package provided by the US military to allow enlisted service members and officers to opt out of their contract in exchange for a significant portion of the remaining service pay and incentives. This provision is governed by the US Military Compensation Program and is primarily intended for service members with critical skills or expertise in high demand.

Why Would I Want to Buy Out My Contract?

There are several reasons why you might want to consider buying out your contract:

• Unfulfilled Service Obligations: You have changed your mind about a military career or want to pursue opportunities outside of the military before your obligated service time has expired.
• Military Career Changes: You are considering a new Military Occupational Specialty (MOS) or career transition, making it necessary to buy out your contract and start over.
• Family and Personal Circumstances: You may face family issues, medical needs, or other personal factors that necessitate a temporary or permanent exit from military service.

Types of Contract Buyouts

There are three types of contract buyouts in the US military:

• Buyout 5: Eligible service members can choose to accept an immediate 10% severance package, paid on the front end, without requiring military service. Buyout 5 is considered a ‘golden parachute,’ allowing servicemembers to transition into civilian life while retaining access to GI Bill benefits and other educational advantages.
• Buyout 13: Offers 10% of the outstanding contract service pay and the retention bonuses paid up until the release date.
• Supplemental Benefit Payment (SBP): The military offers additional funds in exchange for 20 days of accrued annual leave (vacation). SBP is intended to compensate servicemembers who are willing to depart on short notice.

How to Get a Contract Buyout

To get a contract buyout, you need to meet the following conditions:

1. Service Member Type: Both enlisted personnel (E1-E9) and commissioned officers (O1-O10) may be eligible for a buyout, but there may be variations in eligibility for different services.
2. Years of Service: You need to have accumulated a specific number of years of active duty, including separate commissions for warrant officers. Contact your Branch’s Military Human Resources personnel for exact numbers.
3. Good Conduct Discharge: In most cases, service members must maintain a ‘Honorable’ or ‘General (under Honorable) discharge to qualify.
4. Exception to Policy (ETOP): An ETOP, granted at the discretion of the US military, waives service obligations under various circumstances.

Who Approves the Contract Buyout?

The decision to approve or deny a contract buyout lies with:

1. Chain of Command: Commanding Officers (COs) from battalion/command to major commanders make determinations, influenced by Military Personnel Command (MILPERCEN).
2. MILPERCEN: Makes the final decision after weighing the Service Member’s exceptional circumstances against the military’s operational and personnel requirements.
3. Secretary of Defense (SecDef): Approves buyout amounts under certain conditions (e.g., force-reduction scenarios).

Processing the Buyout Request

When filing a contract buyout request, ensure that you submit a Complete and Sufficient Request, including:

1. Service Agreement: Present proof of commitment to a separation agreement and release.
2. Service Records: Provide complete service history, to include your branch’s individual personnel records and personnel data.
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3. Compensation Claim: Offer written proof of financial claims to be fulfilled upon contract settlement.
4. Acceptance/Decline Response: Once approved, carefully review the buyout details and acceptance/decline within a specific time frame, usually within 72 hours.

Post-Contract Buyout Considerations

Once a contract buyout is executed, the following steps and benefits take effect:

• DD Form 1431 (Record of Service Break): Completed within 6 months after service termination to record separation entitlements, such as retirement credits, seniority, or promotion history.
• GI Bill Benefits: Remains valid for the term agreed upon in your Military Contract.

Conclusion

In conclusion, the ability to buy out your military contract offers invaluable flexibility, allowing you to navigate significant life changes without the risk of breaking military contracts or facing consequences.

When making a decision about contract buyouts, take the following key steps into consideration:

1. Evaluate your service contract type, military obligations, and available leave.
2. Assess eligibility for the relevant buyout type and program.
3. Document proof of intent to depart service, meeting specific criteria, and compensation claims.
4. Collaborate with Command and relevant authorities for Buyout and ETOP waivers.

Make informed decisions when exploring buyout options; ensure thorough understanding of requirements, timing, and follow-up processing. With diligence and research, you’ll be empowered to successfully execute a buyout, smoothly transitioning your military career or pursuing the next chapter.