B-132215, SEP. 18, 1957

B-132215: Sep 18, 1957

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WAS TIMELY FILED. EACH OF THESE ANNUITIES ARE PAYABLE ONLY AT THE RATE OF EITHER ONE-EIGHTH. WAS DEFICIENT IN THAT TWO RATES WERE STATED. SUCH ELECTION WAS LEGAL IN OTHER RESPECTS AND EVIDENCED A CLEAR INTENT TO APPLY FOR COVERAGE UNDER THE CONTINGENCY OPTION ACT. SUCH ELECTION WAS NOT A NULLITY AND MUST BE GIVEN EFFECT IF SUCH ACTION CAN BE TAKEN WITHIN THE LIMITATIONS OF THE STATUTE. SECTION 3/A) OF THE CONTINGENCY OPTION ACT PROVIDES THAT A MODIFICATION OF AN ELECTION SHALL NOT BE EFFECTIVE IF THE MEMBER RETIRES WITHIN 5 YEARS AFTER THE DATE IT IS MADE. SINCE ADMIRAL PUTNAM WAS PLACED ON THE RETIRED LIST EFFECTIVE OCTOBER 1. THE MODIFIED ELECTION WAS WITHOUT EFFECT. IT IS CONCLUDED THAT IN DETERMINING THE AMOUNT TO BE DEDUCTED FROM HIS RETIRED PAY FOR COVERAGE UNDER THE CONTINGENCY OPTION ACT.

B-132215, SEP. 18, 1957

TO MR. L. A. CAMPBELL DISBURSING OFFICER DEPARTMENT OF THE NAVY:

THE JUDGE ADVOCATE GENERAL OF THE NAVY FORWARDED YOUR LETTER OF MARCH 28, 1957, REQUESTING DECISION AS TO THE VALIDITY OF THE ELECTION MADE BY REAR ADMIRAL FRANK R. PUTNAM, USN, RETIRED, UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, 67 STAT. 501, AND IF VALID, THE FRACTION TO BE USED IN THE COMPUTATION OF HIS REDUCED RETIRED PAY.

THE RECORD SHOWS THAT ON OCTOBER 29, 1954, AFTER COMPLETING OVER 22 YEARS OF SERVICE IN THE UNITED STATES NAVY, ADMIRAL PUTNAM EXECUTED FORM NAVPERS 591, ELECTING OPTIONS (1) AND (2) IN COMBINATION WITH OPTION (4) TO PROVIDE ANNUITIES UNDER THE CONTINGENCY OPTION ACT FOR HIS WIDOW AND ELIGIBLE CHILDREN IF THEY SURVIVED HIM. HOWEVER, IN THE SPACES PROVIDED TO INDICATE THE SHARE OF HIS REDUCED RETIRED PAY WHICH SHOULD BE PAID TO THEM, HE CHECKED THE ONE-HALF RATE UNDER OPTION (1) AND THE ONE-QUARTER RATE UNDER OPTION (2), BOTH IN COMBINATION WITH OPTION (4). THE COMBINED TOTAL OF THESE ELECTED OPTIONS THUS EXCEEDED 50 PERCENT OF ADMIRAL PUTNAM'S REDUCED RETIRED PAY. BY LETTER OF JANUARY 25, 1957, TO THE NAVY FINANCE CENTER, ADMIRAL PUTNAM STATED THAT HE HAD MADE AN ERROR WHEN HE EXECUTED HIS ELECTION FORM ON OCTOBER 29, 1954, AND PERSONNEL, HE MADE OUT A CORRECTED ELECTION FORM ON JULY 17, 1956, IN WHICH HE SELECTED OPTION (2) AND OPTION (4) AT ONE-HALF REDUCED RETIRED PAY. HE SELECTED OPTION (2) AND OPTION (4) AT ONE-HALF REDUCED RETIRED PAY.

THE ELECTION FORM EXECUTED ON OCTOBER 29, 1954, WAS TIMELY FILED. PURSUANT TO SECTION 4 (A) OF THE CONTINGENCY OPTION ACT, A MEMBER MAY ELECT ONE OR MORE OF THE DIFFERENT OPTIONS THERE PROVIDED WHEREBY ANNUITIES MAY BE PAID "IN AMOUNTS EQUAL TO ONE-HALF, ONE QUARTER OR ONE- EIGHTH OF THE REDUCED AMOUNT OF HIS RETIRED PAY.' OPTION (1) PROVIDES AN ANNUITY PAYABLE TO OR ON BEHALF OF A WIDOW UNTIL HER REMARRIAGE OR DEATH. OPTION (2) PROVIDES AN ANNUITY PAYABLE TO AN ELIGIBLE CHILD OR CHILDREN. EACH OF THESE ANNUITIES ARE PAYABLE ONLY AT THE RATE OF EITHER ONE-EIGHTH, ONE-QUARTER, OR ONE-HALF OF A MEMBER'S REDUCED RETIRED PAY. ALTHOUGH ADMIRAL PUTNAM'S ELECTION OF OCTOBER 29, 1954, WAS DEFICIENT IN THAT TWO RATES WERE STATED--- ADMITTEDLY THROUGH ERROR--- EXCEEDING IN THE AGGREGATE THE MAXIMUM RATE OF 50 PERCENT, SUCH ELECTION WAS LEGAL IN OTHER RESPECTS AND EVIDENCED A CLEAR INTENT TO APPLY FOR COVERAGE UNDER THE CONTINGENCY OPTION ACT. SUCH ELECTION WAS NOT A NULLITY AND MUST BE GIVEN EFFECT IF SUCH ACTION CAN BE TAKEN WITHIN THE LIMITATIONS OF THE STATUTE. IN THIS CONNECTION, SEE OUR DECISION TO YOU OF JUNE 17, 1957, B-132012, AND 34 COMP. GEN. 35. IT FOLLOWS THAT THE CORRECTED ELECTION FORM EXECUTED BY ADMIRAL PUTNAM ON JULY 17, 1956, MUST BE TREATED AS A MODIFICATION OF HIS ORIGINAL ELECTION SINCE HE ELIMINATED THE OPTION IN HIS WIFE'S FAVOR AND CHOSE OPTION (2) AT THE ONE-HALF RATE IN CLEAR VARIANCE WITH THE CHOICE OF HIS EARLIER ELECTION. SECTION 3/A) OF THE CONTINGENCY OPTION ACT PROVIDES THAT A MODIFICATION OF AN ELECTION SHALL NOT BE EFFECTIVE IF THE MEMBER RETIRES WITHIN 5 YEARS AFTER THE DATE IT IS MADE. SINCE ADMIRAL PUTNAM WAS PLACED ON THE RETIRED LIST EFFECTIVE OCTOBER 1, 1956, ONLY TWO AND ONE-HALF MONTHS AFTER HE MODIFIED HIS ELECTION OF OCTOBER 29, 1954, THE MODIFIED ELECTION WAS WITHOUT EFFECT.

IN THE CIRCUMSTANCES, IT IS CONCLUDED THAT IN DETERMINING THE AMOUNT TO BE DEDUCTED FROM HIS RETIRED PAY FOR COVERAGE UNDER THE CONTINGENCY OPTION ACT, THE NEXT LOWER FRACTION OF EACH CHOSEN OPTION ON HIS ELECTION FORM OF OCTOBER 29, 1954--- ONE-QUARTER UNDER OPTION (1/-/4) AND ONE-EIGHTH UNDER OPTION (1/-/4/--- SHOULD BE USED, SO AS NOT TO EXCEED 50 PERCENT OF HIS REDUCED RETIRED PAY. YOUR QUESTIONS ARE ANSWERED ACCORDINGLY.