After years of debate and false starts, Congress has finally settled on a plan for a major overhaul of military retirement, a dramatic cultural shift away from the traditional 20-year model to a corporate-style plan designed to better compete with civilian recruiters.

Now the question is whether lawmakers can seal the deal.

The plan is contained in the fiscal 2016 defense authorization bill, which must survive a White House veto threat over an unrelated budget issue. And outside advocates warn the compromise retirement plan still has problematic points, including a controversial lump-sum payout option that is sparking concerns about financial hardship later in life for retirees.

The new plan's details, unveiled by House and Senate negotiators on Tuesday, would for the first time give almost every service member some retirement benefits when they leave the ranks.

Instead of retirement payouts only for the one in five service members who stay in uniform for at least 20 years, the new plan would give almost all troops who serve more than two years some benefits upon separation from vested 401(k)-style investments into their Thrift Savings Plan accounts.

The proposed overhaul comes after years of research and study into modernizing the retirement system and nine months of focused congressional debate over government matches, financial literacy training and potential retention impacts.

Lawmakers have praised the measure as a much-needed tool to allow the military to attract better talent, and as a way to reward tens of thousands of troops who serve honorably but never make it to that daunting 20-year mark.

But the measure still must navigate the murky political waters ahead for the annual defense authorization bill, a normally safe piece of legislation that faces a presidential veto over Republicans' desire to use temporary war funds to get around mandatory defense spending caps — an issue that has nothing to do with the retirement plan.

If it survives, the new system would not go into effect until January 2018, and would be mandatory only for newly enlisting troops; those already serving at that time could opt into the new system or stay under the traditional retirement model.

Defense officials and military advocacy groups say that for the changes to be successful in coming years, the plan needs to move forward now.

Retirement funds for all

The goal behind the retirement overhaul is simple: Give some level of retirement pay to every service member, not just the roughly one in five who makes it to the current 20-year retirement threshold.

"The biggest surprise of this deal is that it's actually getting done," said Bill Rausch, political director for Iraq and Afghanistan Veterans of America. "We've been having this conversation about getting (retirement) benefits for everyone for at least a decade, and now we're headed there."

The new "blended" retirement plan would provide an automatic government contribution to every new enlistee's Thrift Savings Plan equal to 1 percent of their annual military pay. Troops would become fully vested in the plan after just two years of service, giving them a benefit they could take with them upon separation at any time after that point.

Congressional negotiators modeled their plan off recommendations from the Military Compensation and Retirement Modernization Commission released in February.

In addition to the automatic 1 percent government contribution, the government would provide matching contributions of up to 5 percent of military pay if troops make personal contributions to their accounts.

That means troops could see up to 11 percent of their annual pay flow into their retirement savings every year. Congressional staff said the compounding returns and portable investment accounts make for an attractive recruiting tool that compares favorably to many private-sector offerings.

However, money in these savings plan would not be available without tax penalties before age 59 and a half, a significant departure from the current system that begins payouts immediately upon retirement to troops as young as age 38.

Further, lawmakers will reduce the traditional payouts for individuals who serve 20 years by 20 percent to account for the investment contributions.

For example, those who serve exactly 20 years under the current system receive 50 percent of their average basic pay rate over their three highest "earning years" in uniform, almost always their last three. That would drop to 40 percent under the new plan.

Outside advocates have worried that this will discourage midcareer officers from staying to the 20-year mark and encourage senior troops to leave earlier than they had previously planned.

To counter that, the plan includes a "continuation pay" bonus for members who stay beyond 12 years of service, and matching contributions lasting until 26 years of service. Congressional aides said those moves will keep incentives flowing to all but a small percentage of senior service members.

Lump-sum concerns

Military advocates have largely praised the new retirement plan, with one glaring exception.

Capitol Hill negotiators opted to put in their final draft plan an option for lump-sum payouts for troops who stay in for 20 years, a feature that both the Pentagon and military advocates experts have called a potentially bad deal for troops.

"This is payday lending at its worst," said Norb Ryan, president of the Military Officers Association of America. "It's such a financial penalty for those who take it ... such a huge risk."

Under the lump-sum option, retirees could receive a one-time check for either 25 percent or 50 percent of their total anticipated retirement payments up until their 60th birthday. The remainder would continue as reduced monthly pension payouts.

It's a tradeoff of thousands of dollars in annual inflation increases in favor of immediate cash, one that Ryan and other advocates warn will be confusing and misleading to many troops.

But congressional aides said they believe the option is an important opportunity to include in the plan, even over Pentagon objections, since some retirees may need a big cash payout to start a small business, pay off college tuition bills, or to pursue other personal financial goals.

They also noted that as structured, the lump-sum payouts would not completely empty out retirement funds and cut off annuities. And the retirement plans also call for overhauled financial literacy training for all service members, at multiple occasions throughout their careers.

Ryan said he questions how effective that training can be in light of current service offerings on financial planning that he called uneven. He questions whether that will ever be enough of a safeguard against the temptation to grab that lump-sum.

"This is just not the right thing to do," he said.

Support, but uncertainty

Still, most outside advocates are pleased with the overall plan. Ray Kelley, national legislative service director for the Veterans of Foreign Wars, said the plan "looks like it has more good than bad" and represents an impressive improvement of the military retirement system.

If approved, the new system would go into effect Jan. 1, 2018. For individuals who enlist after that date, the new blended retirement system will be their only option.

Those who enlisted before Jan. 1, 2006, would be grandfathered under the current system and would not have the option to enroll in the new plan, except in extraordinary circumstances.

Those in between — troops with fewer than 12 years service when the new plan goes into effect — will have to choose whether to stay in the traditional 20-years-or-nothing system or enroll in the new investment-style retirement program.

Kelley said the new financial literacy training will be critical for individuals facing those choices, and for young troops unfamiliar with how stock market investments work. His group, MOAA and other outside advocates have promised close oversight of how those programs are developed, to ensure that troops getting the best information.

Final hurdles

But before that, the new system still has must be approved.

Both Defense Secretary Ash Carter and White House officials reiterated threats to veto the annual authorization bill, despite their past support for many individual provisions in the measure, including the retirement overhaul.

A defense bill veto could sideline passage of the retirement overhaul until later this year. Armed Services Committee staffers have not unveiled any strategy for reintroducing the authorization bill post veto, but the annual legislation has become law for more than 50 consecutive years, and remains a point of pride in the politically divided Congress.

A congressional aide noted that the current retirement negotiations dragged on for much of the summer, and a veto and resulting delay could open up opportunities for some of those compromises to be reconsidered, possibly creating even more delays.

If the plan is passed this fall, the first enrollees would not be vested for another four years, and the first opportunity for lump-sum payouts would not arrive for another two decades.

Rausch said the retirement changes already are long overdue, and advocates want to move ahead with solutions, not continue debate on a starting point.