Military service was brought under contributing social security coverage in 1957. Both military members and the Department of Defense (DOD), as their employer, pay social security taxes on basic pay.

Members whose basic pay is less than the social security taxable earnings ceiling are credited with additional covered earnings of up to $1,200 a year in excess of basic pay. Neither the member nor DOD pays taxes on these credits. The social security trust funds are reimbursed annually from the general fund of the Treasury for additional costs attributable to the noncontributory credits. GAO reviewed the rationale for providing noncontributory credits for service performed after 1956, examined their effects on current benefits, and estimated unforeseen costs that will result.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Matter for Congressional Consideration

Matter: Congress should terminate noncontributory social security wage credits for future military service. This result may be achieved by amending Section 429, title 42, U.S. Code to limit noncontributory credits to service performed before 1980.

Status: Closed - Not Implemented

Comments: On July 28, 1982, GAO sent a followup letter to the House Ways and Means Committee and the Senate Finance Committee pointing out again that the noncontributory wage credits are no longer justified. The committees considered this issue, but decided to take no action. Therefore, further followup on this issue is not warranted.