ExclusiveWhat Happens To My Military Retirement Pay When I...

What Happens To My Military Retirement Pay When I Die

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Your Family May Also Be Eligible For Social Security Benefits

What Happens To My Social Security If I Retire This Year

After your death, your family may be entitled to Social Security survivor benefits. Eligible family members will receive monthly paymentsâas much as the full retirement amount that would have been paid to you.

Your surviving spouse qualifies for benefits if the spouse is:

  • at least 60 years old, or
  • at least 50 years old and disabled, or
  • any age, if the spouse is caring for your childâand the child is under age 16, or is disabled and receiving Social Security benefits.

Your unmarried children are entitled to survivor benefits if they are:

  • under the age of 18, or
  • between 18 and 19, but attending elementary or secondary school full time, or
  • age 18 or older and severely disabled, with a disability that started before age 22.

Other eligible survivors may include your dependent parents, divorced spouse, stepchildren, and grandchildren.

In addition to ongoing survivor benefits, your spouse or minor children may also be eligible for a one-time payment of $255 upon your death. For more information, see the Social Security website at www.ssa.gov.

What Happens To Your State Pension When You Die

Its possible to pass on your State Pension payments after death but this can only go to your spouse or civil partner. The main pension rule governing State Pensions in death is whether you reached State Pension age before or after recent State Pension changes came into effect on 6 April 2016.

If you reached State Pension age before 6 April 2016 and receive the Basic State Pension, your spouse or civil partner can claim your Additional State Pension, which is based on your National Insurance Contribution record. In some instances it may be possible to pass on a State Pension lump sum on death and your spouse or civil partner could qualify for bereavement benefits.

If you reached State Pension age after 6 April 2016 and receive the new State Pension, your spouse or civil partner may be able to inherit an extra payment on top of your pension.

Coverage For Military Members Retired From The Reserve Components

As with the Survivor Benefit Plan for active duty retirees, retirement eligible members of the reserves and National Guard may elect to provide SBP protection for their survivors. However, when the SBP was created, because members of the Reserve Components26 were not eligible to receive Reserve Component retired pay until age 60, regardless of the age at which they actually retire, the structure of the Reserve Component SBP is different from that applicable to active duty members.

Prior to 1978, Reserve Component personnel could not provide survivor protection for an eligible beneficiary until they were eligible to draw retired pay-then at age 60. 27 Legislation passed in 197828 allows Reserve Component members to decide whether or how they will participate in the RCSBP when they are notified of retirement eligibility âin almost all cases, many years before reaching age 60 or earlier if based on active duty credit.

Reserve Component members who are not yet eligible to receive retired pay and who are retirement eligible may elect to provide SBP protection under one of three options. The costs and amount of coverage available depend on the option selected and the category of beneficiary. A prospective Reserve Component retiree must select one of the following RCSBP options within 90 days of being notified of retirement eligibility:

before being notified that he or she had completed the years of service required to be eligible for Reserve Component retired pay or

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Assistance From The Social Security Administration

  • Monthly Social Security payments are paid to a spouse or a divorced spouse with children of the deceased service member under the age of 16, or disabled children in their care who meet the eligibility requirements.
  • Monthly payments are also paid to children under the age of 18, or 19 if they are full-time students, or older children who were disabled before the age of 18.
  • The amount paid will be determined by the Social Security Administration.
  • Up to $255 in Social Security benefits may be paid to the surviving spouse living with the member at the time of death.
  • If there is no surviving spouse, the sum is paid to the child or children who are eligible for Social Security benefits for the month of death.
  • If more than one child is eligible for the month of death, the sum is divided equally among all such children. No other survivors are entitled to this benefit.

Military Funeral Honors And Memorial Items

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Almost all veterans can receive military funeral honors at no cost. They are also usually eligible for free memorial items including:

  • Headstones, markers, and medallions

If youre a veteran or the spouse of one, you can apply to learn if you qualify for burial in a VA national cemetery. If you do, youll get a pre-need decision letter confirming your eligibility. This will make it much easier on your family when they schedule your burial.

Normally, the process to schedule a burial starts with verifying the deceased’s eligibility. To schedule a burial at a VA national cemetery, follow these steps.

Arlington National Cemetery

Eligibility for burial at Arlington National Cemetery is stricter than for other national cemeteries. Only active duty, military retirees, former prisoners of war, and recipients of the Purple Heart and other top awards may be buried at Arlington.

See how to schedule a burial at Arlington National Cemetery.

State Veterans Cemeteries

Requirements for burial in a state veterans cemetery are like those for VA cemeteries. They may also have residency requirements.

To schedule a burial at a state veterans cemetery, contact the cemetery directly.

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Difference Between Frozen Benefit Rule & Coverture Formula

The best way to illustrate the impact of the frozen benefit rule is with a hypothetical. Assume a soldier marries one year into his enlistment. Five years later, the couple obtain a decree of dissolution. By that time, the soldier is an Army Sergeant with 6 years of service, and there are 5 years of marriage overlapping the service.

  • Calculate Marital Percentage. First, we calculate the marital share as a percentage – that is 5 years of marriage divided by 6 years of service, or 83.33%. .
  • Calculate Hypothetical Retirement. While a soldier obviously cannot retire with just 6 years of service, we would need to calculate the hypothetical retirement of that servicemember. Assume that the E-5 had a High-3 pay of $2800/mo. And also assume that the members retirement benefits accrue at the rate of 2.5% per year . That means the hypothetical retirement amount comes to 6 x 2.5% x $2800, or $420/mo.
  • Calculate Spouses Share. The spouse receives one-half of the 83.33% marital share, or 41.67%. So her share comes to 0.4167 x $420, or $175/mo, plus COLAs. NOTE – this dollar amount is solely for planning purposes – the actual share should be expressed as a percentage to ensure the former spouse receives COLAs.
  • Multiply 8.9% x the $4760 retirement, and the former spouses share under the old system comes to $425/mo. Compare that to the $175/mo the former spouse receives under the frozen benefit rule, and the new rule cost the former spouse almost 60% of the pre-NDAA retirement.

    Update For Sbp School Certification

    The certification process has gotten easier for students age 18 and older covered as a child annuitant under the military Survivor Benefit Plan.

    The changes went into effect in May 2020, highlighted by the following:

    • A simpler certification form
    • A students ability to self-certify
    • An extension of the certification deadline to annually instead of each term/semester

    SBP annuity payments for qualifying high school and college students are not affected by school closures in the wake of coronavirus disease 2019.

    The DOD simplified the process of students becoming certified in other ways, including:

    • Students will now self-certify. So they will no longer need a school officials signature or school documentation when they certify full-time attendance. With COVID-19 school closures, this truly simplifies the process.
    • Simpler Child Annuitants Certification for Previous Attendance Letter for certifying past attendance.

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    How Beneficiaries Access Your 401 Or Ira After You Die

    The rules regarding inherited retirement accounts can be complex. Spouses who have inherited a 401 or IRA have the most flexibility they can “roll over” the account so that it becomes their own, subject to withdrawal rules based on their own age, or they can keep it under the deceased account owner’s name. On the other hand, non-spouse beneficiaries usually must deplete the retirement account within 10 years of the account owner’s death, but there are some exceptions. For a more in-depth discussion of these rules and recent changes to them, see How the SECURE Act Affects Your Retirement and Estate Plans.

    Joint Life Annuity Plan

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    Under a joint life annuity plan, when the employee spouse receiving benefits dies, the surviving spouse will continue to receive payments, tax-free until they die .

    The amount the surviving spouse receives may be reduced from what the employee spouse was receiving, but the surviving spouse of a joint annuity is entitled to the payment of benefits for the remainder of their life. This is typically the case, unless the surviving spouse expressly waived those rights before the employee spouse died.

    For defined benefit plans, a surviving spouses benefits will depend on whether the employee spouse retired before they died.

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    Student Eligibility For The Military Sbp

    The SBPs child annuity payments typically end when recipients turn 18. Children are eligible to continue receiving payments until the end of the school year during which they turn 22, as long as they remain unmarried and attend one of the following full time:

    • High school
    • Accredited vocational institute
    • Accredited college or university

    The certification process has gotten easier for students age 18 and older covered as a child annuitant under the military Survivor Benefit Plan.

    The changes went into effect in May 2020, highlighted by the following:

    • A simpler certification form
    • A students ability to self-certify
    • An extension of the certification deadline to annually instead of each term/semester

    SBP annuity payments for qualifying high school and college students are not affected by school closures in the wake of coronavirus disease 2019.

    The DOD simplified the process of students becoming certified in other ways, including:

    • Students will now self-certify. So they will no longer need a school officials signature or school documentation when they certify full-time attendance. With COVID-19 school closures, this truly simplifies the process.
    • Simpler Child Annuitants Certification for Previous Attendance Letter for certifying past attendance.

    The Defense Finance and Accounting Service details the new certification process on their website, including all the changes. Make sure to complete the updated Child Annuitants School Certification form.

    Who Is Considered My Survivor Under The Canadian Armed Forces Pension Plans

    Your survivor is the person of the same or opposite sex, who:

    • was married to you at the time of your death or when you reached age 60, whichever is earlier or
    • had been living with you in a conjugal relationship for at least one year at the date of your death and, if you are age 60 or over, has cohabited continuously with you since before you reached age 60

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    Legal Assistance After A Military Veteran Or Retiree Death

    Surviving spouses and family members of military personnel have access to free legal assistance at most military bases. The legal office can answer questions, offer advice and help you with forms or other documents like wills and powers of attorney.

    While the legal office is there to assist you, they can not represent you in a courtroom. For legal assistance near you, contact your local JAG office.

    What’s The True Value Of Your Service

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    Status quo military financial planning options do not know how to calculate military retirement pay present value in a way that reflects its true value. It’s important to not just rely on what an active duty retirement caluclator spits out. Consider this scenario.

    A 40-year-old retiring male E7 with 20 years of service has an active duty RMC of $104,000 a year This E7’s military retirement pay will be roughly $30,000 a year. If his spouse elects the SBP and he predeceases her, she would receive 55% of the pension. That’s $16,500 a year or about $1,375 per month until she, also, passes.

    So what is the true value of the E7 military retirement pay? Will the veteran and the spouse receive that true value in this scenario?

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    Eligibility For Coverage A

    For survivors to be eligible for the Coverage A monthly survivor benefit , you must have met the same eligibility requirements as for the one-time death benefit described above, and you:

    • Cannot have a preretirement election of an option in effect.
    • Must have earned at least one year of CalSTRS service credit since reinstatement from service retirement, if applicable.
    • Must have earned at least one-half year of service credit after a break in service of more than one year, if applicable.

    Under Coverage A, a monthly survivor benefit is payable to your:

    • Surviving spouse or registered domestic partner with eligible dependent children.
    • Eligible dependent children with no surviving spouse or registered domestic partner.
    • Surviving spouse or partner with no eligible dependent children.
    • Dependent parents.

    If you have no surviving spouse or partner, eligible dependent children or dependent parents, any remaining Defined Benefit contributions and interest in your account will be paid to your one-time death benefit recipients. If no recipient was named, CalSTRS will make the payment to your estate.

    For more information on how the family allowance is payable under Coverage A, refer to the Member Handbook.

    Dependency And Indemnity Compensation Explained

    The Dependency and Indemnity Compensation is a tax-free monetary benefit thats provided monthly. The DIC pays a different amount year over year, so youll need to check with the latest benefit information for an exact estimate. This compensation is typically around $1,100 per month.

    The amount received as compensation increases per child if you have other dependents. DIC benefits are permanent for surviving spouses. It lasts the entire life of the surviving spouse except in the case of remarriage. For surviving children, DIC benefits last until the age of 18. If the child is still in school, these benefits might go until age 23.

    DIC isnt available to every Veteran spouse, however. You need to meet the eligibility criteria established by the VA.

    For the Veteran, youll need to prove one of the following:

    • The Veteran died while on active duty or active duty for training
    • The Veteran died from a service-connected illness or injury
    • The Veteran was eligible for VA compensation due to a disability

    Similarly, the spouse also needs to meet one of the following criteria:

    • Were married to the service member or Veteran for a minimum of 1 year

    Along with Veteran death benefits, this compensation is a helpful safety net for providing ongoing support to military families. Including these benefits in your end-of-life planning checklist is an effective way to ensure your spouse and surviving loved ones have the help they need when the time does come.

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    Dependency And Indemnity Compensation

    This compensation is an important part of an eligible survivors long-range financial planning. It is paid to eligible survivors of active-duty service members and survivors of those veterans whose deaths are determined by the VA to be service-related.

    • It is a flat monthly payment, independent of the pay grade of the veteran. This payment is adjusted annually for cost-of-living increases and is non-taxable.
    • To help ease a survivors transition, the VA also adds a transitional benefit of $270 to the surviving spouses monthly DIC if there are children under age 18.
    • The amount is based on a family unit, not individual children.
    • It is paid for two years from the date that entitlement to DIC commences, but is discontinued when the child reaches age 18, or under the age of 23 if attending school.
    • This benefit is payable for the life of the spouse, provided the spouse does not remarry before the age of 57. However, should a remarriage end, DIC benefits can be reinstated.

    Health Care Commissary And Exchange

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    The death of your loved one does not end your rights to certain service benefits and privileges.

    • Surviving spouses who do not remarry are eligible to continue their TRICARE benefits as an active-duty family member for three years at no cost. Afterward, they become Transitional Survivors and receive benefits at the retiree family member rate, which may require a payment of a yearly enrollment fee.
    • You are also eligible to continue shopping at the exchange and commissary indefinitely unless you remarry.
    • Unmarried children of the deceased service member may use these privileges, at no cost, until they are 21, or 23 if enrolled in a full-time course of study in a secondary school or in a full-time course of study in an institution of higher education.
    • You may use the installation theater and some other Morale, Welfare and Recreation facilities.
    • Family members must ensure their information listed in the Defense Enrollment Eligibility Reporting System is updated.

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    Following The Death Of An Individual Their Survivors And Dependents Are Left Facing Difficult Financial Questions

    Losing someone is never easy, and having to deal with complex financial and estate planning issues while still grief-stricken is a horrendous burden to bear. If you served in the military and are currently receiving a military pension, you may be wondering: What happens to your military pension after you die? Will your surviving spouse be looked after?

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