(a) Each officer of the Regular Coast Guard appointed under section 211 of this title who is serving in the grade of lieutenant and who has failed of selection for promotion to the grade of lieutenant commander for the second time shall:

(1) be honorably discharged on June 30 of the promotion year in which his second failure of selection occurs; or

(2) if he so requests, be honorably discharged at an earlier date without loss of benefits that would accrue if he were discharged on that date under clause (1); or

(3) if, on the date specified for his discharge in this section, he has completed at least 20 years of active service or is eligible for retirement under any law, be retired on that date; or

(4) if, on the date specified for his discharge in clause (1), he has completed at least eighteen years of active service, be retained on active duty and retired on the last day of the month in which he completes twenty years of active service, unless earlier removed under another provision of law.

(b)(1) When the needs of the service require, the Secretary may direct a selection board, which has been convened under section 251 of this title, to recommend for continuation on active duty for terms of not less than two nor more than four years a designated number of officers of the grade of lieutenant who would otherwise be discharged or retired under this section. When so directed, the board shall recommend for continuation on active duty those officers under consideration who are, in the opinion of the board, best qualified for continuation. Each officer so recommended may, with the approval of the Secretary, and notwithstanding subsection (a), be continued on active duty for the term recommended.

(2) Upon the completion of a term under paragraph (1), an officer shall, unless selected for further continuation—

(A) except as provided in subparagraph (B), be honorably discharged with separation pay computed under section 286 of this title;

(B) in the case of an officer who has completed at least 18 years of active service on the date of discharge under subparagraph (A), be retained on active duty and retired on the last day of the month in which the officer completes 20 years of active service, unless earlier removed under another provision of law; or

(C) if, on the date specified for the officer's discharge under this section, the officer has completed at least 20 years of active service or is eligible for retirement under any law, be retired on that date.

(c) Each officer who has been continued on active duty under subsection (b) shall, unless earlier removed from active duty, be retired on the last day of the month in which he completes twenty years of active service.

(Added Pub. L. 88–130, §1(10)(C), Sept. 24, 1963, 77 Stat. 184; amended Pub. L. 93–283, §1(6), May 14, 1974, 88 Stat. 140; Pub. L. 94–546, §1(22), Oct. 18, 1976, 90 Stat. 2520; Pub. L. 97–295, §2(9), Oct. 12, 1982, 96 Stat. 1302; Pub. L. 104–324, title II, §205, Oct. 19, 1996, 110 Stat. 3907; Pub. L. 107–295, title IV, §416(a)(2), Nov. 25, 2002, 116 Stat. 2121.)

**2002**—Subsec. (b)(2)(A). Pub. L. 107–295 substituted “separation” for “severance”.

**1996**—Subsec. (b). Pub. L. 104–324 designated existing provisions as par. (1), struck out “Upon the completion of such a term he shall, unless selected for further continuation, be honorably discharged with severance pay computed under section 286 of this title, or, if eligible for retirement under any law, be retired.” at end of par. (1), and added par. (2).

**1982**—Subsec. (b). Pub. L. 97–295 substituted “of this title” for “of this chapter” after “section 251”.

**1976**—Subsec. (a)(1). Pub. L. 94–546 substituted “promotion year” for “fiscal year”.

**1974**—Subsec. (a)(3). Pub. L. 93–283 substituted “he has completed at least 20 years of active service or is eligible” for “he is eligible”.

Amendment by Pub. L. 107–295 effective 4 years after Nov. 25, 2002, see section 416(c) of Pub. L. 107–295, set out as a note under section 286 of this title.

Savings provisions in section 5(g) of Pub. L. 88–130 providing that Pub. L. 88–130 does not affect the retired pay of anyone retired on or prior to Sept. 24, 1963, are set out as a note under section 211 of this title.

Savings provisions in section 5(h) of Pub. L. 88–130 providing that notwithstanding section 1431 of Title 10, Armed Forces, an election, change or revocation thereof affecting an annuity, by an officer retired under this section, is effective if made prior to the first day of the third month following September 1963, are set out as a note under section 211 of this title.