Savings Deposit Program (SDP): What You Need to Know

Keeping track of all the programs/benefits that come with military status is no easy task. With so many options available to you, learning about tools such as the Savings Deposit Program (SDP) can often fall through the cracks.

The Savings Deposit Program (SDP) is a special account for service members that generates a risk-free 10% return. The account has a $10,000 deposit limit, and only those actively deployed in designated combat zones are eligible. Understanding the SDP will generate thousands of dollars in risk-free returns, an opportunity that can be found nowhere else.

What Is the Savings Deposit Program (SDP)?

The Savings Deposit Program (SDP) is a unique financial opportunity for military members to quickly grow their savings.

The DOD offers the SDP for service members deployed to Designated Combat Zones. Offering high interest rates that earn you money even after leaving the combat zone (for 90 days) makes utilizing this account a no-brainer.

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SDP Versus Savings Accounts

Although Establishing an Emergency Savings Account is the most important step in getting your finances in order, the low-interest rates are often disappointing.

With the average national savings account rate hovering around 0.06%, and High Yield Savings Accounts (HYSAs) topping out around 0.6%, you often will be getting pennies on the dollar for interest.

However, the DOD Savings Deposit Program delivers nearly 40x the interest rate of banks such as USAA/NFCU.

Account	Annual Interest Rate	Money Invested	Monthly Return
DOD Savings Deposit Program	10%	$10,000	$83.33
Navy Federal – Share Savings Account	0.25%	$10,000	$2.10
USAA – Savings Account	0.01%	$10,000	8.4¢

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Who Is Eligible for SDP?

In order to be eligible for the SDP, you must meet the following requirements:

• Active duty service member, or activated reserve member
• Be receieving Hostile Fire Pay / Imminent Danger Pay
• Deployed to a Designated Combat Zone for 30+ days OR 1 day of three consecutive months

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How to Begin SDP Deposits

Deposits into your SDP account must be deducted directly from your paycheck.

Sign-up Process for SDP

Given that many things in the military require paperwork, the Savings Deposit Program is no exception.

You will need to pay a visit to your branch of service’s admin/finance office, typically bringing a copy of your Leave and Earnings Statement (LES), and decide on the amount of money you wish to contribute.

Single Transaction Maximum

In a single transaction, the minimum amount you may contribute is in denominations of $5 ($5, $10, $20, etc), whereas the maximum amount you can contribute is the total military pay you receive on your LES, minus previously set up allotments such as money designated for your Thrift Savings Plan.

*The only exception to this rule is if your CO gives written approval that it was impossible for you to contribute in an earlier month due to the mission.

Total Account Maximum

The maximum amount you can contribute to your SDP is $10,000 and after this point, you will have to stop making contributions. For those in the Navy/Airforce/Army, you must stop contributions manually, while for those in the USMC they will stop automatically once you hit the $10,000 mark.

100% Rule

The deposits into your SDP account will incur interest if it is present on or before the 10th of the month. This makes it important to get the money in as soon as you can in order to generate the most interest. One way of achieving this is to contribute 100% of your paycheck into the SDP, and simply live off of savings you stashed away at a different time.

While this does require you to have adequate savings to live off of before entering into a combat zone, it ensures that you will hit the $10,000 as quickly as possible, maximizing the potential interest you can make.

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How to Begin SDP Withdrawls

The type and amount of withdrawal will depend on if you are attempting to receive your money before or after leaving the Designated Combat Zone.

If 120 days pass since you left the combat zone and you haven’t requested a withdrawal, it will automatically be deposited into the account connected to your myPay.

After Leaving Designated Combat Zone

Once you have left the combat zone, you are eligible to withdraw the full amount from your SDP account. However, remember that your SDP will continue to generate interest up to 90 days after leaving, so it is advised you keep the money in your account to maximize the benefit.

*Before attempting to withdraw funds, ensure that your allotments to the SDP have stopped*

• Request withdrawl directly on myPay OR.
• Request withdrawl by email (CCL-SDP@dfas.mil) OR
• Request withdrawl by mail:

DFAS- Cleveland Center (DFAS-CL)
ATTN: SDP
Special Claims
1240 East 9th St .
Cleveland , OH 44199-2055

If requesting by mail/email, you must provide additional information for an Electronic Fund Transfer (EFT), or check.

• Electronic Fund Transfer: Bank name, routing number, account number, account type
• Check in the mail: Complete mailing address

Before Leaving Designated Combat Zone

While you may access any interest that has occurred quarterly over the $10,000 amount, you may not access your original contributions.

The only way to access contributed funds that are under the $10,000 amount is through a request for emergency withdrawal that is approved by your CO. An emergency is defined as, “directly affecting the health/welfare of the servicemember, or dependant.”

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Should You Use The Savings Deposit Program?

The Savings Deposit Program is simply another tool in your toolbox.

There may be certain situations where you should avoid contributing to the SDP in order to tackle other financial goals. Such situations are:

1. High interest debt (10%+)
2. Thrift Savings Plan 5% match

If you are in high-interest debt, like that from credit cards, it is better to aggressively pay them down rather than entering into the SDP. While you would be earning 10% interest with SDP, often credit cards will be charging 25%+ in interest, nullifying any gains you would have seen.

You should also prioritize your 5% contribution into the Thrift Savings Plan over the SDP (if in the BRS retirement system). The ‘free’ money earned through the employer match will easily outperform the 10% interest earned in the SDP.

If you are deployed, have zero high-interest debt, and you are receiving your 5% Thrift Savings Plan match (if available), then you should absolutely be utilizing the Savings Deposit Program. If you want to learn more about other programs like the Thrift Savings Plan (TSP) / VA Home loan that make the military a financially lucrative career, go check out other posts on my blog!