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The Savings Deposit Program is a special savings platform maintained by the United States government explicitly for soldiers in active combat zones. By using the program, the soldier is offered a way to earn generous interest on saved money. This offer is only extended to those in active combat; if the soldier leaves combat, he has a 90-day window to return before the account is closed.
The main point of eligibility in the Savings Deposit Program is governed by Hostile Fire Pay. This special compensation is paid to any person serving in the military when in a location where attacks by hostile people are known or expected. In most cases, this is any active war zone, but is doesn’t need to be. Any location that has a real chance of being attacked, war zone or not, makes the soldier eligible for the bonus. The soldier may open a Savings Deposit Program account if he serves for 30 or more days in a location where he receives Hostile Fire Pay or if the soldier receives the bonus for three consecutive months.
After opening up eligibility for the account, the soldier is allowed to make deposits into it. She may opt to make deposits just like a normal savings account, or may choose to have money sent there directly from her pay. Withdrawals are normally not allowed while the soldier is still receiving Hostile Fire Pay, but any amount over $10,000 US Dollars (USD) may be removed quarterly.
There is one special circumstance where a soldier can withdraw money from his Savings Deposit Program while still in active danger. If the soldier believes that not having his money is jeopardizing his personal well-being or that of one of his dependents, he may attempt to remove his money. The soldier takes his case to his commanding officer who reviews the situation; if he agrees, then the soldier may withdraw his money. This is generally used to get money for covering problems for the soldier’s family back home, often medical bills or housing costs.
The main reason to use the Savings Deposit Program is to take advantage of its interest rate. The account earns 10 percent interest per year on any amount up to $10,000 USD. Any amount in the account above $10,000 USD is not included. This means that the maximum interest paid out in a single year is $1,000 USD. This interest is not shielded from taxation and must be disclosed when filing taxes.