Matter of: Chief Warrant Officer Jerry F. Adams, USA File: B-244824 Date: September 21, 1992

Matter of: Chief Warrant Officer Jerry F. Adams, USA File: B-244824 Date: September 21, 1992

CIVILIAN PERSONNEL Compensation Computation Retirement Retirement plans Reservists MILITARY PERSONNEL Pay Computation Reservists Retirement plans A civilian agency's contribution toward the retirement program of an employee serving as a reservist is not part of the employee's income from non-military compensation. Thus, a reservist who was injured while on active duty and received pay and allowances pursuant to 37 U.S.C. Sec. 204 may not be reimbursed for the retirement program contributions he would have earned from his civilian employer during the period he was unable to work. However, he may be reimbursed his 6 percent retirment contribution since they are deducted from his monthly pay.

DECISION

This action is in response to a claim from Chief Warrant Officer (CWO4) Jerry F. Adams, a member of the North Carolina National Guard, for civilian retirement contributions that would have been made to the North Carolina State Teachers' and State Employees' Retirement System on his behalf during the period when he was unable to work because of an injury incurred while he was on active duty. We conclude that a portion of the claim may be paid.

CWO4 Adams is a law enforcement officer for the North Carolina Division of Motor Vehicles. He is also a member of the North Carolina Army National Guard. On August 22, 1987, while on active duty with the National Guard, he sustained an injury that left him incapacitated. He remained unable to return to his civilian position until February 20, 1988. During this time, he received monthly military pay and allowances pursuant to 37 U.S.C. Sec. 204(h) for his loss of income for the period from August 22, 1987 to February 20, 1988. However, this monthly military pay did not cover contributions to his retirement program that would have been made during the same period had he worked.

CW04 Adams obtained documents from his civilian employer which he provided to the Army, identifying the amounts he needed to contribute to restore his retirement benefits for the period when he was incapacitated. The $1,650.45 total consisted of three components: CWO4 Adams' contribution, a matching contribution from the state, and a $25 administrative fee. He paid the total to his civilian employer out of his own pocket and then requested reimbursement from the Army. The Army decided that CWO4 Adams was not entitled to be reimbursed, based on the view that retirement benefits do not qualify as earned income for which he may be paid, but should be viewed as fringe benefits for which members are not entitled to reimbursement. CWO4 Adams has appealed that decision arguing that the retirement benefit is income.

Section 204(h) of title 37 provides in pertinent part that the member may receive an amount not to exceed the "loss of income from non-military compensation." [1] In calculating loss of income, such items as any income from a pay protection plan, vacation pay or sick leave used must be considered. The issue presented is whether the retirement contributions currently being claimed by CWO4 Adams constitute "income from non-military compensation" as provided in the statute.

The implementing regulations for 37 U.S.C. Sec. 204 are found in the Department of Defense Military Pay and Allowance Manual (DODPM). Table 8- 2-4 provides in pertinent part that entitlement exists "in an amount which equals the member's lost civilian compensation or full pay and allowances, whichever is less." Note 7 to this table provides that: "Lost civilian compensation is the difference between member's normal wages or salary or other earnings that would have been payable for the disability period had the member been fully engaged in civilian employment less any reduced payments made to the member."

Regarding CWO4 Adams' share of the contribution to the state retirement system, his contribution is a percentage of his gross salary (currently 6 percent) and is deducted directly from his monthly salary. We find that he is entitled to be reimbursed that portion of the $1,650.45 that constitutes his monthly contribution to the retirement system since it does come from his basic monthly salary and would be considered part of his gross income for tax purposes. [2] See, Megibow v. Commissioner of Internal Revenue, 218 F.2d 687 (1955).

However, we do not find that the state's contribution to the retirement system is for reimbursement. While the state's contribution may be a portion of his overall employment compensation package, it is not part of his current income such that it may be reimbursed under 37 U.S.C. Sec. 204(h)(2), which, at the time of his injury, authorized reimbursement of an amount not to exceed the "loss of income from non-military compensation."

Income, while not defined in the statute, should be read in the context of the statute. The wording of section 204(h)(2) clearly shows that compensation can be different or larger than income and that the loss to be paid an injured reservist does not have to equal all the benefits (such as accuring leave) he receives from his civilian employment. Therefore, we do not find that the state's retirement contributions constitute a "loss of income" which should be reimbursed to CWO4 Adams.

Likewise, the administrative fee he paid cannot be regarded as income he earned, and should not be repaid to CWO4 Adams.

Accordingly, if otherwise payable, the portion of the claim for retirement benefits which were CWO4 Adams' contribution may be paid.

Date: To: Director, Claims Group/GGD - Sharon S. Green From: General Counsel - James F. Hinchman

Subject: Chief Warrant Officer Jerry F. Adams, USA-- B-244824--(Z-2862432)

Returned herewith is your file Z-2862432 with our decision, dated today, Chief Warrant Officer Jerry F. Adams, B-244824, in which we conclude that a portion of the claim may be paid.

1. The language of the statute was changed to "loss of earned income from non-military or self-employment" effective September 29, 1988.

2. The record is unclear whether CW04 Adams has already been reimbursed this amount as part of his gross salary. If he has been, no further payment is due.