10 U.S.C. § 12739

(a) The monthly retired pay of a person entitled to that pay under this chapter is the product of— (1) the retired pay base for that person as computed under section 1406(b)(2) or 1407 of this title; and (2) 2½ percent of the years of service credited to that person under section 12733 of this title . (b) If a person entitled to retired pay under this chapter has been credited by the Secretary concerned with extraordinary heroism in the line of duty and if the highest grade held satisfactorily by that person at any time in the armed forces is an enlisted grade, the person’s retired pay shall be increased by 10 percent of the amount determined under subsection (a). The Secretary’s determination as to extraordinary heroism is conclusive for all purposes. (c) (1) Except as provided in paragraph (2), the total amount of the monthly retired pay computed under subsections (a) and (b) may not exceed 75 percent of the retired pay base upon which the computation is based. (2) In the case of a person who retires after December 31, 2006 , with more than 30 years of service credited to that person under section 12733 of this title , the total amount of the monthly retired pay computed under subsections (a) and (b) may not exceed the sum of— (A) 75 percent of the retired pay base upon which the computation is based; and (B) the product of— (i) the retired pay base upon which the computation is based; and (ii) 2½ percent of the years of service credited to that person under section 12733 of this title , for service under conditions authorized for purposes of this paragraph during a period designated by the Secretary of Defense for purposes of this paragraph. (d) Amounts computed under this section, if not a multiple of $1, shall be rounded down to the next lower multiple of $1. (e) (1) If a member of the Retired Reserve is recalled to an active status in the Selected Reserve of the Ready Reserve under section 10145(d) of this title and completes not less than two years of service in such active status, the member is entitled to the recomputation under this section of the retired pay of the member. (2) The Secretary concerned may reduce the two-year service requirement specified in paragraph (1) in the case of a member who— (A) is recalled to serve in a position of adjutant general required under section 314 of title 32 or in a position of assistant adjutant general subordinate to such a position of adjutant general; (B) completes at least one year of service in such position; and (C) fails to complete the minimum two years of service solely because the appointment of the member to such position is terminated or vacated as described in section 324(b) of title 32 . (f) Modernized Retirement System.— (1) Reduced multiplier for full tsp members .— Notwithstanding subsection (a) or (c), in the case of a person who first performs reserve component service on or after January 1, 2018 , after not having performed regular or reserve component service on or before that date, or a person who makes the election described in paragraph (2) (referred to as a “full TSP member”)— (A) subsection (a)(2) shall be applied by substituting “2 percent” for “2½ percent”; (B) subparagraph (A) of subsection (c)(2) shall be applied by substituting “60 percent” for “75 percent”; and (C) subparagraph (B)(ii) of such subsection shall be applied by substituting “2 percent” for “2½ percent”. (2) Election to participate in modernized retirement system.— (A) In general .— Pursuant to subparagraph (B), a person performing reserve component service on December 31, 2017 , who has performed fewer than 12 years of service as of December 31, 2017 (as computed in accordance with section 12733 of this title ), may elect, in exchange for the reduced multipliers described in paragraph (1) for purposes of calculating the retired pay of the person, to receive Thrift Savings Plan contributions pursuant to section 8440e(e) of title 5 . (B) Election period.— (i) In general .— Except as provided in clauses (ii) and (iii), a person described in subparagraph (A) may make the election described in that subparagraph during the period that begins on January 1, 2018 , and ends on December 31, 2018 . (ii) Hardship extension .— The Secretary concerned may extend the election period described in clause (i) for a person who experiences a hardship as determined by the Secretary concerned. (iii) Persons experiencing break in service .— A person returning to reserve component service after a break in reserve component service in which falls the election period specified in clause (i) shall make the election described in subparagraph (A) within 30 days after the date of the reentry into service of the person. (C) No retroactive contributions pursuant to election .— Thrift Savings Plan contributions may not be made for a person making an election pursuant to subparagraph (A) for any pay period beginning before the date of the person’s election under that subparagraph by reason of the person’s election. (3) Regulations .— The Secretary concerned shall prescribe regulations to implement this subsection.