Deposited funds will accrue interest at 10% per annum, compounded quarterly, based on calendar year. Interest only accrues on amounts up to $10,000 (principal and accrued interest combined). Deposits made on a cash collection voucher on or before 10th of the month accrue interest from the 1st of that month. Deposits made after the 10th of the month accrue interest from the first day of the following month. Deposit date is the date received by the servicing finance battalion regardless of date of entry into the financial system or submission to unit financial representative.
Eligibility for SDP stops on the day of departure; however, interest will continue to accrue up to 90 days after redeployment. If the service member requests withdrawal of funds prior to the 90th day, interest stops on date of request. (NOTE: If the 90th day falls on any day other than the last day of a month, interest will accrue through the last day of the preceding month.) Since the IRS considers SDP interest unearned income the interest is taxable even though the soldier is located in a combat zone tax exempt (CZTE) area.
