Separation Payments (Severance, VSP, Disability)

Start Here If You Are New to Separation Payments

Separation payments are the financial benefits Marines receive at involuntary or voluntary separation from Active Duty. The categories are Accrued Leave Pay (sell-back of unused leave), Full Separation Pay (10 percent formula for involuntary separations after 6 to less than 20 years), Half Separation Pay (half rate for specific conditions), Disability Severance Pay (2 months basic pay per year for medical separations), and Voluntary Separation Pay (VSP for voluntary separations under specific authorities). Recoupment applies if the Marine later qualifies for retired pay or VA disability compensation.

This page walks you through separation payments from your seat as a General Marine. By the end you will know.

• The Accrued Leave Pay framework (60-day career maximum)
• Full Separation Pay formula: 10 percent times 12 months basic pay times years of active service
• Half Separation Pay rate and conditions
• Disability Severance Pay: 2 months basic pay per year, tax-free if combat-related
• VSP and VRI for voluntary separations
• Recoupment from VA disability and retired pay

Every fact on this page comes from DoD 7000.14-R Volume 7ADoD 7000.14-R Volume 7A Chapter 35 (March 2024), Title 10 U.S.C.Title 10 U.S.C. sections 1174 and 1212, and DoDI 1332.14DoDI 1332.14 and 1332.30.

Accrued Leave Pay

Per Chapter 35 paragraph 2.1.1, a Marine discharged or separated under honorable conditions is entitled to receive payment for unused accrued leave.

Career Maximum: 60 Days

Per paragraph 2.1.1.2, a Marine is entitled to receive payment for no more than 60 days of accrued leave during a military career. The 60-day career maximum is a hard cap.

One-Time Leave Payment Option for Enlisted

Per paragraph 2.1.1.3, an enlisted Marine has a one-time option to elect payment of accrued leave at reenlistment instead of carrying it forward. The Marine may exercise this option only ONCE in a career.

Exceptions to the 60-Day Maximum

Per paragraph 2.1.1.4, leave accrued during certain conditions is in addition to the 60-day career maximum.

• Contingency operations. Active duty in support of a contingency operation under Title 10 U.S.C.Title 10 U.S.C. sections 688, 12301, 12302, 12304, 12306, or 12307.
• Active Duty of 31 to 365 Days (effective October 1, 2001).
• Death on Active Duty.

The exceptional leave does not consume the 60-day maximum.

Calculation

Leave is valued using BASIC PAY ONLY. BAH, BAS, and special pays do not enter the leave-pay calculation.

The formula is. Days of unused leave times daily basic pay rate (monthly basic pay divided by 30).

Combat Zone Exemption

A Marine selling leave earned in a Combat Zone qualifies for the CZTE exemption per Chapter 44. The pay is tax-free up to the senior enlisted basic pay rate (officer cap) or all of it (enlisted/warrant officer).

Full Separation Pay (Non-Disability)

Eligibility

Per Chapter 35 paragraph 3.1.1, Full Separation Pay requires four conditions.

1. Active service. The Marine has completed at least 6 years but less than 20 years of active service. Reserve members must have 6 years of continuous active duty immediately preceding separation.
2. Honorable separation. The character of service is "honorable" and none of the disqualifying conditions in paragraph 3.2 apply.
3. Involuntary separation. The Marine is being involuntarily separated through denial of reenlistment or denial of continuation under one of the four specific conditions (fully qualified but denied, Reduction in Force, regular officer separation under specific statutes, or accepted earlier separation tied to one of the above).
4. 3-year Ready Reserve agreement. The Marine entered into a written agreement to serve in the Ready Reserve for a minimum of 3 years following the separation.

Sole Survivorship Discharge

Per paragraph 3.1.2, a Marine receiving a sole survivorship discharge (only surviving child after specific family deaths or disabilities) qualifies for Full Separation Pay even with less than 6 years of service. The amount is based on years of active service completed at the time of discharge. Sole survivorship discharges do NOT trigger bonus repayment requirements.

Formula

Per Chapter 35 paragraph 3.4.1, Full Separation Pay equals.

10 percent times 12 times monthly basic pay times years of active service

Example

An E-5 with 8 years of service at $3,497.70 monthly basic pay separated under qualifying conditions.

0.10 × 12 × $3,497.70 × 8 = $33,577.92 Full Separation Pay

Half Separation Pay

Per Chapter 35 paragraph 3.1.3, Half Separation Pay equals one-half of Full Separation Pay. Eligibility requires the same active service threshold (6 to less than 20 years) and the 3-year Ready Reserve agreement, plus separation under specific listed conditions.

Half Separation Pay Conditions

Per paragraph 3.1.3.3.1, Marines separated involuntarily under one of these conditions receive Half Separation Pay (not Full).

• Weight control failure.
• Parent or custody of minor child issues.
• Military personnel security program (loss of clearance).
• Disability that existed before service (EPTS).
• Mental or physical conditions and circumstances not constituting a disability.
• Alcohol or drug abuse rehabilitation failure.
• Failure to meet minimum retention standards.

A Marine separated under a Service-specific Half Separation Pay program established by the Service Secretary also qualifies under paragraph 3.1.3.3.2.

Character of Service Threshold for Half Separation

Per paragraph 3.1.3.2, Half Separation Pay accepts both "honorable" and "general (under honorable conditions)" characterizations. Full Separation Pay requires "honorable" only.

Counting Years of Active Service

Per Chapter 35 paragraph 3.3.

Include

• Active military service in a Regular or Reserve Component.
• Active duty for training periods.

Exclude

• Periods of absence without leave.
• Confinement time awaiting trial that resulted in conviction.
• Confinement time while serving a court-martial sentence.
• Time lost while not on duty.
• Service as a cadet or midshipman.
• Service in a Reserve Officer Training Program.

Prior Separation Pay Periods

Per paragraph 3.3.3, periods for which the Marine previously received separation, severance, or readjustment pay COUNT for eligibility purposes (to confirm the 6-year minimum) but DO NOT count in the multiplier for the subsequent separation pay calculation.

Disability Severance Pay

Per Chapter 35 paragraph 5.0 and Title 10 U.S.C. section 1212Title 10 U.S.C. section 1212.

Eligibility

Per paragraph 5.1, a Marine separated for physical disability under DoDI 1332.18DoDI 1332.18 receives Disability Severance Pay if the disability rating is less than 30 percent and the Marine has not completed 20 years of service.

Formula

Disability Severance Pay equals 2 months of basic pay multiplied by years of service (rounded).

Service Years Calculation

Per paragraph 5.3.3, the calculation includes active service plus credited inactive duty training points (1 point divided by 360 to convert to year fractions). The total is rounded UP to the next whole year if the decimal is .5 or greater.

Example

An E-6 with 11 years, 4 months, 9 days of active service and 76 inactive-duty training points.

• 11 years 4 months 9 days = 11.3583 years.
• 76 points / 360 = 0.2111 years.
• Total = 11.5694 years.
• Round up to 12 years.
• Disability Severance Pay = 12 × 2 × E-6 over 10 monthly basic pay.

Maximum Service Cap

Per Chapter 35 paragraph 5.3.5, the maximum service used in the calculation is 19 years. A Marine with 19 years and disability severance receives 19 × 2 = 38 months of basic pay.

Tax Treatment

Per Chapter 35 paragraph 5.4.1, Disability Severance Pay is normally taxable income. It is NOT subject to tax withholding or reporting if at least one of these conditions exists.

• The entitlement resulted from a combat-related injury or illness as determined by the Secretary (direct result of armed conflict, extra-hazardous service, conditions simulating war, or by an instrumentality of war).
• The Marine is entitled to VA disability compensation, or has received a proposed VA disability rating at the time of separation through the Integrated Disability Evaluation System.

Voluntary Separation Pay (VSP)

Per Chapter 35 section 8.0, VSP is a lump-sum or installment payment the Service offers to Marines who voluntarily separate during specific authorized periods. VSP requires.

• Active duty for at least 6 years and not more than 20 years (varies by VSP authorization).
• Service Secretary approval per the specific VSP program criteria.
• Written agreement.

VSP amounts and authorizations vary. Coordinate with your career planner and the Marine Corps Manpower and Reserve Affairs office for the current VSP authorization (if any).

Repayment of VSP If Member Qualifies for Retired Pay

Per Chapter 35 paragraph 8.9, a Marine who receives VSP and subsequently qualifies for retired pay must repay the VSP. Recoupment is from retired pay until the gross taxable amount is recovered.

Voluntary Retirement Incentive (VRI)

Per Chapter 35 section 9.0, VRI is a lump-sum payment for Marines voluntarily retiring with at least 20 years of service under specific authorization. VRI is rarely offered and depends on Service-specific need.

Recoupment from Retired Pay or VA Disability

Recoupment from Retired Pay

Per Chapter 35 paragraph 3.5.1, a Marine who received Separation Pay (Full or Half) and subsequently qualifies for retired pay (e.g., through Reserve retirement after 20 qualifying years) is subject to recoupment of the gross taxable separation pay through monthly deductions from retired pay until the total amount is recovered.

Recoupment from VA Disability Compensation

Per paragraph 3.5.2, a Marine who received Separation Pay and is later awarded VA disability compensation is subject to recoupment from VA disability. The VA deducts an amount equal to the gross taxable separation pay (less the federal income tax withheld at the supplemental flat rate) until recovered.

Exception

Recoupment from VA disability does NOT apply to disability compensation based on a LATER period of active duty than the period for which separation pay was received.

Disability Severance Pay Recoupment

Disability Severance Pay is also subject to recoupment from VA disability compensation, but the recoupment is dollar-for-dollar (not the full gross taxable amount). The Disability Severance Pay reduces the VA disability compensation by the gross amount until recovered.

Pay Disqualifiers

Per Chapter 35 paragraph 3.2, certain separation circumstances disqualify the Marine from Separation Pay entirely.

• Other than honorable discharge.
• Bad conduct discharge.
• Dishonorable discharge.
• Misconduct separations under specific DoDI 1332.14DoDI 1332.14 or 1332.30 categories.
• Separation in lieu of court-martial.
• Member's request, except sole survivorship.

Verifying Separation Payments

A separation pay statement (DD Form 214DD Form 214, supplemental DFAS pay statements) confirms the calculation and recoupment posture.

Step 1. Pull Final Pay Statements

DFAS Marine Corps Pay generates a final pay statement at separation. The Marine receives.

• Final LES showing the last regular pay.
• Separation Pay payment notification.
• Accrued Leave Pay payment notification.
• Disability Severance Pay payment notification (if applicable).

Step 2. Verify the Calculation

For Full Separation Pay, verify the formula against your basic pay rate at separation and your years of active service.

For Disability Severance Pay, verify the formula and the rounded years of service against your service record.

Step 3. Document for Tax Purposes

Save all separation pay documentation. The recoupment posture (whether recouped from VA disability later) depends on the documentation. Keep records for at least 7 years.

Step 4. Resolve Discrepancies

Coordinate with your S-1 BEFORE final separation. The reporting unit (I&I S-1 with direct UD/MIPS access, or a battalion S-1 routing through their PAC) routes through DFAS Marine Corps Pay.

After separation, contact DFAS Marine Corps Pay directly at 1-888-332-7411.

Common Questions Marines Ask

I am separating after 8 years involuntarily for HYT. What is my Separation Pay?

Per Chapter 35 paragraph 3.4.1, your Full Separation Pay is 10 percent times 12 times your monthly basic pay times 8 years of service. For an E-6 over 8 with $4,200 monthly basic pay (example), 0.10 × 12 × $4,200 × 8 = $40,320. The actual amount uses your specific basic pay rate at separation. You also need the 3-year Ready Reserve agreement.

I am separating with a 20 percent disability rating after 5 years. Do I get Disability Severance Pay?

Per Chapter 35 paragraph 5.0 and 5.3.3, yes. Your Disability Severance Pay is 2 months basic pay times your rounded years of service (5 years). Verify the rating qualifies and the years of service calculation includes any inactive duty training points. The pay is tax-free if your disability is combat-related or if you are entitled to VA disability compensation.

I am taking VSP. Will it be recouped if I later get a Reserve retirement?

Per Chapter 35 paragraph 8.9, yes. VSP is recouped from retired pay if you subsequently qualify for retirement. Plan VSP acceptance against your retirement timeline.

I have 90 days of unused leave at separation. Can I sell all 90?

Per Chapter 35 paragraph 2.1.1.2, no. The career maximum is 60 days unless you accrued the additional days under contingency operation, 31-to-365-day active duty, or other specific exception. Verify the source of your accrued leave with your S-1 to determine if any qualifies for the exception.

How is leave pay calculated?

Per Chapter 35 paragraph 2.2.1.1, leave is valued using basic pay ONLY. Daily rate equals monthly basic pay divided by 30. Total leave pay equals days sold times daily rate. BAH, BAS, and special pays do not enter the calculation.

I receive Separation Pay then VA awards disability later. Will VA take it back?

Per Chapter 35 paragraph 3.5.2, yes. VA recoups the gross taxable amount of Separation Pay (less federal income tax withheld) from VA disability compensation. The exception is when VA disability is based on a LATER period of active duty than the period for which Separation Pay was received.

Where to Go for Help

Routing by Issue

• Separation Pay eligibility verification. Coordinate with your S-1 against the separation orders and DoDI 1332.14DoDI 1332.14 or 1332.30.
• VSP authorization for the current period. Coordinate with your career planner and Marine Corps Manpower and Reserve Affairs.
• Disability Severance Pay calculation. Coordinate with the Physical Evaluation Board liaison and DFAS Marine Corps Pay.
• Recoupment determination from VA disability. The VA Regional Office.
• Final pay statement and Accrued Leave Pay calculation. Your S-1 routes through DFAS Marine Corps Pay.
• Tax treatment of Disability Severance Pay (combat-related exemption). DFAS for refund within the same tax year, or IRS for refunds in subsequent tax years.
• DFAS Marine Corps Pay direct contact. Phone 1-888-332-7411 (DSN 312-571-9450 from overseas).

Where to Go Next on This Site

• Pay and Entitlements landing page lists all the pay topics.
• Pay Problems and Fixes covers the recoupment framework.
• Federal Tax Withholding covers tax treatment of taxable pay.

Related Roles

• Leaders coach Marines on the leave sell-back vs. terminal leave decision before separation.
• Admin at S-1 processes the final pay calculation and routes through DFAS Marine Corps Pay.
• Commanders endorse VSP applications and verify Separation Pay eligibility against the conditions in DoDI 1332.14DoDI 1332.14 or 1332.30.

Separation payments are the final pay event. The 10 percent formula for Full Separation Pay, the 60-day leave cap, and the 2-months-per-year Disability Severance Pay framework define the major payouts. Recoupment from retired pay or VA disability is real and applies dollar-for-dollar in many cases. Plan separation timing accordingly.