To amend title 10, United States Code, to ensure that commissioned officers who serve in a reserve component of the Armed Forces are able to retire in the highest grade in which they have successfully served.

Allows an individual to elect to receive retired pay for non-regular (reserve) service upon retirement for service performed in an active reserve status after attaining eligibility for regular retirement, as long as the individual successfully completes at least two years of active reserve status service.

Allows the Secretary of the military department concerned to reduce the two-year active reserve status requirement in certain cases.

Requires the recomputation of reserve retired pay and, if appropriate, the adjustment of the retired grade of reserve retirees to reflect the successful completion of at least two years of post-retirement service in an active reserve status.