2022 AFBA Financial Planning Guide

Chapter 5. The Survivor Benefit Plan The Survivor Benefit Plan (SBP) .................................................................................................5–1 Who Can Participate? .................................................................................................................5–2 Who Can Be Beneficiaries? .........................................................................................................5–3 How Much Does The Beneficiary Receive? . ................................................................................5–4 How Much Does It Cost? . ...........................................................................................................5–5 Disenrollment . ...........................................................................................................................5–6 Dependency & Indemnity Compensation (DIC) ............................................................................5–7 Eligibility Requirements . ............................................................................................................5–8 Additional Provisions of the SBP ................................................................................................5–9 Taxation of SBP Annuities ........................................................................................................5–10

the maximum base amount; (c) wish to elect “child only” coverage; (d) with REDUX retirement do not elect as a base amount the full retirement they would have received under the High–3 retired pay plan; (e) with BRS retired pay elected lump sum retirement and did not elect as a base amount the full retirement pay they would have received without the lump sum. In summary, the spouse must specifically agree to receive less than the maximum SBP benefit allowance. The Reserve Component Survivor Benefit Plan (RCSBP) is available to Reserve and National Guard members who (a) made an RCSBP election when they received their Notification of Eligibility (NOE) letter for Reserve non-regular retirement; (b) received a NOE letter for Reserve retirement, but died within the 90 day period after receipt of the letter before making an RCSBP election; (c) are eligible for Reserve retirement but died before receiving the NOE letter; or (d)

5–1. THE SURVIVOR BENEFIT PLAN (SBP). Military retired pay stops upon death of the retiree. The Survivor Benefit Plan (SBP) allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents. The plan has several valuable features including government subsidization of program costs, payment of lifetime benefits to eligible beneficiaries, and inflation protection through cost of living adjustments. Additionally, the member’s SBP cost is paid from pre–tax dollars which means that the monthly premium payments reduce the retiree’s taxable income. 5–2. WHO CAN PARTICIPATE? Active duty members who are retiring are automatically enrolled in the SBP. This automatic enrollment is at the maximum dollar level of coverage for eligible dependents at the time of retirement. The spouse’s written consent is required if married members (a) do not want to join; (b) desire to participate at a level below

CHAPTER 5: THE SURVIVOR BENEFIT PLAN

Made with FlippingBook. PDF to flipbook with ease