((a))

((1)) ** .—** Except as provided in subsection (b), the retired pay, other than retired pay received as a lump sum under , of a participant in the Plan who is providing spouse coverage (as described in paragraph (5)) shall be reduced as follows:

((A)) ** .—** If the annuity coverage being provided is a standard annuity, the reduction shall be as follows:

((i)) ** .—** In the case of a person who is entitled to retired pay under chapter 61 or chapter 1223 of this title, the reduction shall be in whichever of the alternative reduction amounts is more favorable to that person.

((ii)) ** .—** In the case of a person who first became a member of a uniformed service before , the reduction shall be in whichever of the alternative reduction amounts is more favorable to that person.

((iii)) ** .—** In the case of a person who first becomes a member of a uniformed service on or after , and who is entitled to retired pay under a provision of law other than chapter 61 or chapter 1223 of this title, the reduction shall be in an amount equal to 6½ percent of the base amount.

((iv)) ** .—** For purposes of clauses (i) and (ii), the alternative reduction amounts are the following:

((I)) ** .—** An amount equal to 6½ percent of the base amount.

((II)) ** .—** An amount equal to 2½ percent of the first $337 (as adjusted after , under paragraph (4)) of the base amount plus 10 percent of the remainder of the base amount.

((B)) ** .—** If the annuity coverage being provided is a reserve-component annuity, the reduction shall be in whichever of the following amounts is more favorable to that person:

((i)) ** .—** An amount equal to 6½ percent of the base amount plus an amount determined in accordance with regulations prescribed by the Secretary of Defense as a premium for the additional coverage provided through reserve-component annuity coverage under the Plan.

((ii)) ** .—** An amount equal to 2½ percent of the first $337 (as adjusted after , under paragraph (4)) of the base amount plus 10 percent of the remainder of the base amount plus an amount determined in accordance with regulations prescribed by the Secretary of Defense as a premium for the additional coverage provided through reserve-component annuity coverage under the Plan.

((2)) ** .—** If there is a dependent child as well as a spouse or former spouse, the amount prescribed under paragraph (1) shall be increased by an amount prescribed under regulations of the Secretary of Defense.

((3)) ** .—** The reduction in retired pay prescribed by paragraph (1) shall not be applicable during any month in which there is no eligible spouse or former spouse beneficiary.

((4))

((A)) ** .—** Whenever there is an increase in the rates of basic pay of members of the uniformed services effective on or after , the amounts under paragraph (1) with respect to which the percentage factor of 2½ is applied shall be increased by the overall percentage of such increase in the rates of basic pay. The increase under the preceding sentence shall apply only with respect to persons whose retired pay is computed based on the rates of basic pay in effect on or after the date of such increase in rates of basic pay.

((B)) ** .—** In addition to the increase under subparagraph (A), the amounts under paragraph (1) with respect to which the percentage factor of 2½ is applied shall be further increased at the same time and by the same percentage as an increase in retired pay under effective on or after . Such increase under the preceding sentence shall apply only with respect to a person who initially participates in the Plan on a date which is after both the effective date of such increase under section 1401a and the effective date of the rates of basic pay upon which that person’s retired pay is computed.

((5)) ** .—** For the purposes of paragraph (1), a participant in the Plan who is providing spouse coverage is a participant who—

((A)) has (i) a spouse or former spouse, or (ii) a spouse or former spouse and a dependent child; and

((B)) has not elected to provide an annuity to a person designated by him under or, having made such an election, has changed his election in favor of his spouse under .

((b))

((1)) ** .—** The retired pay, other than retired pay received as a lump sum under , of a participant in the Plan who is providing child-only coverage (as described in paragraph (4)) shall be reduced by an amount prescribed under regulations by the Secretary of Defense.

((2)) ** .—** There shall be no reduction in retired pay under paragraph (1) for any month during which the participant has no eligible dependent child.

((3)) ** .—** In the case of a participant in the Plan who is participating in the Plan under an election under and who provided child-only coverage during a period before the participant becomes entitled to receive retired pay, the retired pay of the participant shall be reduced by an amount prescribed under regulations by the Secretary of Defense to reflect the coverage provided under the Plan during the period before the participant became entitled to receive retired pay. A reduction under this paragraph is in addition to any reduction under paragraph (1) and is made without regard to whether there is an eligible dependent child during a month for which the reduction is made.

((4)) ** .—** For the purposes of this subsection, a participant in the Plan who is providing child-only coverage is a participant who has a dependent child and who—

((A)) does not have an eligible spouse or former spouse; or

((B)) has a spouse or former spouse but has elected to provide an annuity for dependent children only.

((c))

((1)) ** .—** The retired pay, other than retired pay received as a lump sum under , of a person who has elected to provide an annuity to a person designated by him under shall be reduced as follows:

((A)) ** .—** In the case of a person providing a standard annuity, the reduction shall be by 10 percent plus 5 percent for each full five years the individual designated is younger than that person.

((B)) ** .—** In the case of a person providing a reserve-component annuity, the reduction shall be by an amount prescribed under regulations of the Secretary of Defense.

((2)) ** .—** The total reduction under paragraph (1) may not exceed 40 percent.

((3)) ** .—** The reduction in retired pay prescribed by this subsection shall continue during the lifetime of the person designated under or until the person receiving retired pay changes his election under .

((4)) ** .—** Computation of a member’s retired pay for purposes of this subsection shall be made without regard to any reduction under section 1409(b)(2) or 1415(b)(1)(B) of this title.

((5)) ** .—** The Secretary of Defense shall prescribe in regulations premiums which a participant making an election under shall be required to pay for participating in the Plan pursuant to that election. The total amount of the premiums to be paid by a participant under the regulations shall be equal to the sum of the following:

((A)) The total additional amount by which the retired pay of the participant would have been reduced before the effective date of the election if the original beneficiary (i) had not died and had been covered under the Plan through the date of the election, and (ii) had been the same number of years younger than the participant (if any) as the new beneficiary designated under the election.

((B)) Interest on the amounts by which the retired pay of the participant would have been so reduced, computed from the dates on which the retired pay would have been so reduced at such rate or rates and according to such methodology as the Secretary of Defense determines reasonable.

((C)) Any additional amount that the Secretary determines necessary to protect the actuarial soundness of the Department of Defense Military Retirement Fund against any increased risk for the fund that is associated with the election.

((d))

((1)) ** .—** If a person who has elected to participate in the Plan has been awarded retired pay and is not entitled to that pay for any period, that person must deposit in the Treasury the amount that would otherwise have been deducted from his pay for that period, except to the extent that the required deduction is made pursuant to paragraph (2).

((2)) ** .—** In the case of a person who has elected to participate in the Plan and who has been awarded both retired pay and combat-related special compensation under , if a deduction from the person’s retired pay for any period cannot be made in the full amount required, there shall be deducted from the person’s combat-related special compensation in lieu of deduction from the person’s retired pay the amount that would otherwise have been deducted from the person’s retired pay for that period.

((3)) ** .—** Paragraphs (1) and (2) do not apply to a person with respect to any period when that person is on active duty under a call or order to active duty for a period of more than 30 days.

((e)) ** .—** When a person who has elected to participate in the Plan waives that person’s retired pay for the purposes of subchapter III of chapter 83 of title 5 or chapter 84 of such title, that person shall not be required to make the deposit otherwise required by subsection (d) as long as that waiver is in effect unless, in accordance with section 8339(j) or 8416(a) of title 5, that person has notified the Office of Personnel Management that he does not desire a spouse surviving him to receive an annuity under section 8341(b) or 8442(a) of title 5.

((f))

((1)) ** .—** A person is not entitled to refund of any amount deducted from retired pay or combat-related special compensation under this section.

((2)) ** .—** Paragraph (1) does not apply—

((A)) in the case of a refund authorized by ; or

((B)) in case of a deduction made through administrative error.

((g))

((1))

((A)) ** .—** Notwithstanding any other provision of this subchapter but subject to paragraphs (2) and (3), a person who has elected to participate in the Plan and who is suffering from a service-connected disability rated by the Secretary of Veterans Affairs as totally disabling and has suffered from such disability while so rated for a continuous period of 10 or more years (or, if so rated for a lesser period, has suffered from such disability while so rated for a continuous period of not less than 5 years from the date of such person’s last discharge or release from active duty) may discontinue participation in the Plan by submitting to the Secretary concerned a request to discontinue participation in the Plan.

((B)) ** .—** Participation in the Plan of a person who submits a request under subparagraph (A) shall be discontinued effective on the first day of the first month following the month in which the request under subparagraph (A) is received by the Secretary concerned. Effective on such date, the Secretary concerned shall discontinue the reduction being made in such person’s retired pay on account of participation in the Plan or, in the case of a person who has been required to make deposits in the Treasury on account of participation in the Plan, such person may discontinue making such deposits effective on such date.

((C)) ** .—** Any request under this paragraph to discontinue participation in the Plan shall be in such form and shall contain such information as the Secretary concerned may require by regulation.

((2)) ** .—** A person described in paragraph (1) may not discontinue participation in the Plan under such paragraph without the written consent of the beneficiary or beneficiaries of such person under the Plan.

((3))

((A)) ** .—** The Secretary concerned shall furnish promptly to each person who files a request under paragraph (1) to discontinue participation in the Plan a written statement of the advantages of participating in the Plan and the possible disadvantages of discontinuing participation.

((B)) ** .—** A person may withdraw a request made under paragraph (1) if it is withdrawn within 30 days after having been submitted to the Secretary concerned.

((4)) ** .—** Upon the death of a person described in paragraph (1) who discontinued participation in the Plan in accordance with this subsection, any amount deducted from the retired pay or combat-related special compensation of that person under this section shall be refunded to the person’s surviving spouse.

((5))

((A)) ** .—** A person described in paragraph (1) who discontinued participation in the Plan may elect to participate again in the Plan if—

((i)) after having discontinued participation in the Plan the Secretary of Veterans Affairs reduces that person’s service-connected disability rating to a rating of less than total; and

((ii)) that person applies to the Secretary concerned, within such period of time after the reduction in such person’s service-connected disability rating has been made as the Secretary concerned may prescribe, to again participate in the Plan and includes in such application such information as the Secretary concerned may require.

((B)) ** .—** Such person’s participation in the Plan under this paragraph is effective beginning on the first day of the month after the month in which the Secretary concerned receives the application for resumption of participation in the Plan.

((C)) ** .—** When a person elects to participate in the Plan under this paragraph, the Secretary concerned shall begin making reductions in that person’s retired pay, or require such person to make deposits in the Treasury under subsection (d), as appropriate, effective on the effective date of such participation under subparagraph (B).

((h))

((1)) ** .—** Whenever retired pay is increased under (or any other provision of law), the amount of the reduction to be made under subsection (a) or (b) in the retired pay of any person shall be increased at the same time and by the same percentage as such retired pay is so increased.

((2))

((A)) ** .—** Notwithstanding paragraph (1), when the initial payment of an increase in retired pay under (or any other provision of law) to a person is for a month that begins later than the effective date of that increase by reason of the application of subsection (b)(2)(B) of such section (or ()), then the amount of the reduction in the person’s retired pay shall be effective on the date of that initial payment of the increase in retired pay rather than the effective date of the increase in retired pay.

((B)) ** .—** Subparagraph (A) may not be construed as delaying, for purposes of determining the amount of a monthly annuity under , the effective date of an increase in a base amount under subsection (h) of such section from the effective date of an increase in retired pay under to the date on which the initial payment of that increase in retired pay is made in accordance with subsection (b)(2)(B) of such section.

((i)) ** .—** Whenever the retired pay of a person who first became a member of a uniformed service on or after , and who is a participant in the Plan is recomputed under upon the person’s becoming 62 years of age, the amount of the reduction in such retired pay under this section shall be recomputed (effective on the effective date of the recomputation of such retired pay under ) so as to be the amount equal to the amount of such reduction that would be in effect on that date if increases in such retired pay under , and increases in reductions in such retired pay under subsection (h), had been computed as provided in paragraph (2) of (rather than under paragraph (3) of that section).

((j)) ** 30 70.—** Effective , no reduction may be made under this section in the retired pay of a participant in the Plan for any month after the later of—

((1)) the 360th month for which the participant’s retired pay is reduced under this section; and

((2)) the month during which the participant attains 70 years of age.