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The Divorce Encyclopedia
Voluntary Separation Incentive (VSI)

Term Definition Voluntary Separation Incentive (VSI) - a particular kind of military retirement benefit.
Application in Divorce VSIs are one of the two main types of military early retirement programs. VSIs and Special Separation Benefits (SSBs) are two ways the military eliminates officers whose careers are not advancing.

For divorce purposes, the single most important distinction in classifying military severance benefits is determining whether they are voluntary or involuntary. If an officer leaves the military voluntarily, his severance benefits are often considered lost retirement benefits; when he or she leaves involuntarily, his benefits are more likely to be considered compensation for lost future wages.

VSIs are periodic payments over time; SSBs are lump-sum payments. Both the VSI and SSB are voluntary, and "[f]or this reason, most court decisions to date have held that VSIs and SSBs are essentially alternative forms of retirement pay, and as such are divisible by state courts."

Both VSIs and SSBs are alterative forms of retirement, but that in itself does not mean they are always marital. If the owning spouse accumulated the benefits with service before marriage, his or her retirement benefits are partly nonmarital.

A service person who leaves the military with less than 20 years of service receives no retirement benefits. When an officer leaves involuntarily, his benefits are considered compensation for lost future wages.

See Military Divorce.

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